Optioneering in construction offers a quicker, more efficient way to plan projects. If you aren’t already using it, you may be considering making the change.
However, making a strong business case for its use may be necessary. Some may claim that the traditional way of doing things is more than sufficient, though a significant chunk might wonder if shifting over to a new method can increase efficiency, paying for itself in the long run even with an initial investment.
Platforms like ALICE that offer optioneering in construction can, in fact, make planning much faster and more effective. Scenarios can be modeled on the fly to evaluate possible alternatives and save time.
Regardless, wanting to know how an optioneering platform provides a return on investment is valid. If you’re thinking about integrating optioneering into your operations, check out these quantifiable advantages.
What does it mean to have a return on investment?
Return on investment (ROI) is a performance indicator used to assess how effective an investment is. ROI is used to quantify the profit an investment will generate in relation to its cost. In other words, ROI enables your company’s executives to comprehend the value of each investment.
It’s crucial to utilize the word “investment”. Rather than viewing construction optioneering platforms as a cost or expense, it helps to look at it as an investment that provides a number of tangible benefits, including financial rewards. This language will better help you determine whether the investment was worthwhile.
ROI is determined by subtracting the cost of the investment from the financial gain, and then dividing the answer by the cost of the investment.
However, beyond the purchase price, other costs may also be included in the investment’s total cost. The benefits and results that are significant and pertinent to the specific investment will determine how you assess the financial gain.
How to determine if you’ve achieved a return on investment
Let’s go through the process of determining your ROI.
The money you spend installing and maintaining your new software system constitutes the cost of your investment. But frequently, there are costs that go beyond the obvious.
A more appropriate method of approaching this is to look at the total cost of ownership (TCO). You should record both obvious and less obvious costs, such as:
- License costs
- Tech assistance
- Pay-per-use services
- Costs of installation
- Staff training costs
You should also think about incorporating some discussion of other costs related to the software deployment.
For instance, your IT team may need to assist with the project, and productivity may temporarily decline while your workforce gets accustomed to the new system. These more ethereal expenses don’t necessarily need precise financial figures, but identifying them is crucial.
Gains are the profits you will receive from your investment. There are different ways to measure gains. However, the most common method for doing this is to first determine how many hours your planning team will save.
As a general rule, you should anticipate that employing specialized optioneering software will enable you to cut the time it takes you to do project planning by 50%. This equates to producing twice as many bids or having twice as much time to do so as you currently have, which might result in up to twice as many wins for your business.
The benefits of an optioneering platform for an ROI
So what are the benefits of using an optioneering platform for ROI?
Increased productivity can be achieved without the need to hire more people, thanks to optioneering’s ability to increase efficiency. The impact of losing an important member of your planning team is also lessened.
Increased productivity creates more time for value engineering, allowing you to take on more jobs to increase revenue.
The likelihood of error is also decreased with optioneering platforms. Your planning team can achieve consistency thanks to the platform’s core database and adaptable structures.
This results in fewer human errors, reducing the likelihood that issues end up in the final plan. Teams can achieve improved accuracy, which raises profit margins and gives them more confidence to take on bigger and more ambitious projects.
By comparing several labor options and various building possibilities, you can significantly lower construction expenses. Contractors can evaluate possibilities using optioneering technology to select the most cost-effective course of action. This may entail figuring out whether using concrete slabs or brick and mortar will be more affordable, for instance.
Contractors may quickly and easily identify alternatives to lower construction risk thanks to optioneering technology. For example, consider a project that is behind schedule and in danger of halting. Contractors can employ optioneering technology to find the best possible route for recovery before it’s too late.
Optioneering offers a lot of financial advantages
Needless to say, optioneering pays for itself in the long-term, and you’ll likely see a huge ROI by making use of it. Platforms for optioneering are beneficial in every way, with the end result being cost reductions and higher revenue.