Calculating the Financial Benefits of using a Construction Management Software Like Steer

Let’s look at a case study and determine the site productivity improvements & project cost savings you will enjoy by using Steer

CASE STUDY

Materials Ordering & Procurement

  • Mid-sized Builder
  • 3 mid-sized projects each valued at $500K
  • Processes involved: Ordering & approvals, receiving and updating site inventory, releasing, and payments
Materials-Ordering-and-Procurement

Summary of Financial Benefits from Using Steer for Materials Ordering & Procurement

CONSOLIDATED BENEFITS (1 Year)


Total Productivity Gains for Company

 $53,425


Total Project Cost Savings

 $29,250


Combined Benefits
(Productivity Gains + Project Cost Savings)

 $82,675

 

As seen in the table above, there are two key areas that contribute to the overall benefit of adopting a construction management software: site productivity improvements & project cost savings. We will go through the calculations for each of these areas in the following sections. 

Take note that this calculation accounts for only ONE key construction management process. Imagine the financial benefits once you implement Steer across multiple areas of your operations.

 

Measuring Site Productivity Improvement with Steer

Steer improves site productivity by doing away with a lot of paperwork in the materials ordering & procurement process.
Watch the video below to learn more:

 

PRODUCTIVITY GAINS
(in hours saved)

 

 Hours Spent
Per Process, Before Steer		 Hours Spent
Per Process, With Steer		 Saved Hours
Per Process


On-Site Engineer

 1.5 0.2 1.3


On-Site Planning & Scheduling Staff

 3 0.25 2.75


On-Site Inventory Staff

 61 42 19


On-Site
Project-in-charge

 1 0.2 0.8
On-Site Procurement 8 2 6


HQ Accounting & Finance

 34 1 33


Totals

 108.5 45.65  62.85

Taking each project stakeholders’ activity times in the Service Design Blueprint earlier, we first arrive at the total saved hours per stakeholder adding up to a total of 62 hours per run of the process. Typically, a company does this process weekly or 4 times a month. That’s monthly time savings of a staggering 240 hours.

PRODUCTIVITY GAINS
(in cost saved)

 

 Saved Hours Per Process Hourly Rate*
(USD)		 Total Productivity Gains Per Process Productivity Gain Per Month for Company


On-Site Engineer

 1.3 $9 $12 $144


On-Site Planning & Scheduling Staff

 2.75 $6 $16 $191


On-Site Inventory Staff

 19 $6 $110 $1,319


On-Site
Project-in-charge

 0.8 $9 $7 $ 89
On-Site Procurement 6 $6 $35 $417


HQ Accounting & Finance

 33 $6 $191 $2,292


Totals

 62.85   $371 $4,452

 


We’ve assigned an hourly rate for each stakeholder in the materials ordering & procurement process, based on Philippine rates. This, of course, can change depending on your location. Each run of the process saves approximately 371 dollars.

As mentioned, a typical company performs this process four times a month. And with at least 3 project sites being managed at any point, this translates to around $4,500 a month worth of productivity gains.

Get 589% Return on Investment

Get significant productivity gains and project cost savings by saying goodbye to inefficient paperwork and using Steer!

 Measuring Project Cost Savings with Steer

Using Steer also provides project cost savings that come from various areas such as preventing errors in materials ordering, and materials mishandling. Watch the video below to learn more:

 

PROJECT COST SAVINGS


Total Project Cost

 $1,500,000


Material Cost as % of Project Cost

 65%


Total Material Cost

 $975,000
Optimal Material Cost Reduction
due to Materials Management Software		 6.0%


Adjusted Material Cost Reduction

 3.0%


Total Project Cost Savings

 $29,250

 


In addition to the efficiency gains demonstrated, there is also a direct impact on reducing the cost of materials from the overall project cost.

The global industry average of digitizing the procurement and handling process of materials has a direct benefit of 6-9% savings in material consumption & waste resulting in substantial savings.

From the case presented above, we have a total project cost of $1.5M. We’ve made an assumption that materials account for 65% of the total project cost, leading to a total material cost of $975K. We’re also adding an adjustment factor of 50% because we recognize that it will take a bit of time to reach this optimal state. So we arrive at a material cost reduction of 3%.

By taking 3% of $975K, we arrive at the conclusion that companies can save approximately $30K on project costs.

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HOW WE ARRIVED AT THE TIME SAVINGS

We first established the baseline Materials Ordering & Procurement process using a Service Design Blueprint. Mapping out the before-and-after process lets you clearly see the time savings for each step and each project stakeholder. 

By using Steer, there are significant improvements in the cycle time, including the removal of two major steps in the original process:

1. the planning staff does not need to manually validate the orders against the BOQ/BOM anymore, as this can be automatically checked 
2. the updating of the inventory log will also be eliminated by going digital

Significant time savings are also realized via three-way matching of the purchase orders, delivery receipts and invoices are automated.

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About Steer

Steer is a construction management software that fits the needs of Real Estate Developer-Owners, Project Management Consultants, and Builders - making implementation easy, fast, and successful. Steer provides visibility over all risk areas in construction projects - anytime, anywhere, and on any device.​ It brings all construction project activities and stakeholders together in one place, to combat inefficiencies and lack of timely control

What sets Steer apart is the unparalleled flexibility, which makes it complete & extendible, fast to implement, and customizable to your needs.

Steer’s products (coming from 30+ solutions) include Project Management, Site Resource Management, Subscontractor Management, Finance, and Post-Construction.

Steer (as well as the QuickReach no-code platform behind it) was created by the same team behind BlastAsia, one of the largest software product engineering companies in the Philippines and a Microsoft Gold Partner for Application Development, Application Integration, and Cloud Platform.