Impact of Job Roles on Construction Software Purchasing Decisions Buyer Report – 2014

By: on December 5, 2014

Every year, Software Advice is contacted by thousands of organizations looking for the right construction software. While this provides us with great insight into the needs of software buyers, not all buyers are the same—especially in a market as large and diverse as construction.

We wanted to learn more about the impact of job role on construction software purchases. To do so, we examined the software buying preferences of three positions: construction business owners, project managers and IT managers, to see how they compare.

This report is intended to help other buyers in the market make a more informed decision.

Key Findings

  1. Beyond improving accuracy and organization, business owners most frequently cited company growth (24 percent) as their top reason for seeking new software.
  2. Project managers most frequently cited their desire for either an all-in-one suite or improved integration between best-of-breed applications (35 percent).
  3. Project managers most frequently cited their desire for either an all-in-one suite or improved integration between best-of-breed applications (35 percent).

Business Owners Primarily Focused on Improving Bottom Line

For business owners, a common theme in their interactions with us was how deploying new software could positively impact their bottom line, and the pain points driving them to seek new software were often compounded by one another.

For example, owners witnessing strong business growth often wanted to submit a greater number of bids for more expensive and competitive projects—but found themselves overwhelmed with maintaining the increased volume of work while ensuring everything was done correctly.

Thus, increasing accuracy in bids and estimates was the owners’ primary motivation for seeking new software, cited by 36 percent.

Owners’ Top Reasons for Purchasing Software

Owners’ Top Reasons for Purchasing Software

Another common refrain from the owners we spoke with was the inadequacy of their current software, particularly accounting functionality. In all, 19 percent of owners specified the need to improve their current accounting system as a reason for wanting new software, which also tied into their concerns over how software can impact the bottom line.

In particular, many owners expressed frustration with QuickBooks, the entry-level standard for small-business accounting. While QuickBooks is a cost-effective accounting solution for many small to midsize businesses, its offering for general contractors is often not flexible enough for larger projects—especially when it comes to handling estimates, changing orders and labor costing.

According to prospective buyers in our sample, it lacks the necessary depth of accounting functionality. For example, Quickbooks is not able to perform more complex functions, such as fully supporting multi-state payroll and tracking part prices from multiple vendors.

“Frequently, the actual contracts for the homes we put together are structured differently,” explains one home builder in our sample. “Sometimes, the homeowner will pay all of the bills. Sometimes the bank will pay all of the bills. Sometimes I’ll pay all of the bills. … [QuickBooks] doesn’t really give you options to pick who’s paying.”

Another buyer, who owns an electrical contracting company, was more frank in his assessment: “I’m not able to track costs, time and materials and expenses with specific jobs with Quickbooks,” he says. “It’s kind of convoluted and a pain.”

3rd Party Integration Is Top Priority for Project Managers

While the vast majority of prospective buyers who contact us for construction software advice are business owners, project managers come in second. And while project managers certainly care about their company’s bottom line, we noticed a few pronounced differences in how they framed their pain points with respect to what their job duties and responsibilities were.

For example, more than one-third of project managers cited their desire for a streamlined, “all-in-one” solution that would allow them to easily juggle scheduling, job costing, sending out bids, finding and qualifying subcontractors and so on.

To clarify, while it sounds like project managers are describing a preference for an integrated suite, many were fine with the prospect of using a host of best-of-breed solutions—so long as those solutions had strong integration capabilities. As we found in a previous report on the broader market for construction software, more than two-thirds of all buyers expressed a preference for best-of-breed solutions—but stronger integration was still a top reason for purchasing new software.

As further evidence of the need for integration, many of the project managers we spoke with expressed frustration with manual or double data entry: a problem that arises frequently when businesses use disparate systems and solutions that do not integrate well with each other.

Project Managers’ Top Reasons for Purchasing Software

Project Managers’ Top Reasons for Purchasing Software

Improving project organization was also a top concern for project managers, with 31 percent citing this as a reason for seeking new software. Project managers must straddle the responsibilities of managing a large team and communicating with subcontractors, and of having an active hand in guiding business decisions by helping craft bids and estimates. Naturally, it can be a challenge to keep everything straight.

Specialized construction software will typically bring a level of order and consistency to project management that manual, ad hoc processes struggle to replicate. For example, if a change order has to be made for a project, most construction software platforms are able to automatically update the new cost across all of the relevant documents and databases—which means the project manager won’t be stuck manually (and sometimes, inaccurately) updating each and every document.

As one project manager we spoke with explains, “I’m just one guy that’s managing a lot of subcontractors. I just need something simple so I’m not bogged down in front of the computer the whole time.”

IT Managers Seek Better-Functioning Software

While we received significantly fewer calls from IT managers in the construction sector than from buyers in the other job roles we examined, we wanted to include their unique perspective in this report. Unlike owners or project managers, IT managers live and breathe software—and all of the problems it causes for the people they work with.

As we noted with project managers, we don’t wish to convey that IT managers are any less concerned about their companies’ bottom lines or financial situations—rather, how they framed their pain points reflects their particular reliance on software for performing essential functions of their jobs.

As mentioned earlier, project managers and owners were more concerned with how software features could improve their ability to work efficiently or boost their bottom line. IT managers on the other hand, focused mainly on the impact of outdated or inefficient software on their ability to do their job. Many were frustrated by having to constantly fix things, and thus essentially serving as glorified tech support.

“The less I have to run around and jack with the software, the happier I’m going to be,” says one IT manager we spoke with.

IT Managers’ Top Reasons for Purchasing Software

IT Managers’ Top Reasons for Purchasing Software

Indeed, the majority of IT managers (54 percent) cited outdated and inadequate software as their top reason for purchasing a new system, often framing their concerns in terms of how the deficiencies of their current system added to their already hefty workload. This makes sense, given that modernizing the office and streamlining daily operations through new hardware and software is one of the goals of the IT profession.

Project Managers/Owners/IT Managers Split on Deployment

When it came to deployment preferences, the vast majority of our total sample (84 percent) had not yet determined what they wanted. But of those who had made a decision, there were some marked differences across job titles: Owners and project managers seemed to be at diametric odds with each other, with nearly three-fourths of project managers preferring Web-based and almost three-fourths of owners preferring on-premise systems.

Project managers’ preference for Web-based software makes sense, as they are frequently in the field, thus requiring mobile access. What’s more, Web-based systems can streamline project communications and document control, which is especially helpful for complicated projects that involve many moving parts and third parties. For example, with remote access on a Web-based system, project managers can monitor job progress in real time, regardless of whether or not they are in the office.

Owners, who are often the general contractor for their firm, might be more reluctant to utilize Web-based systems because they either perceive that these systems take control and security out of their hands, or they do not like the subscription pricing that most Web-based systems utilize.

Indeed, according to a recent article in Construction Executive, “Many contractors lean toward on-premise software because their data is hosted on-site, which brings a certain peace of mind.”

Deployment Preferences

Deployment Preferences

The divide among IT managers still tilted towards Web-based deployment, but as our sample for IT managers who expressed a strong preference was quite small (23 in total out of the original sample of 136 IT managers), we hesitate to cast any broad strokes.

One IT manager we spoke with summed up why so many of those in his field may have felt conflicted over the choice: “On-premise is nice because I get to buy new hardware,” he says. “But the cloud is nice because it’s not my responsibility to make sure it’s up and running.”

Implications of Data

According to a 2014 report published by JB Knowledge Technologies, 71 percent of IT professionals in the construction industry who knew their firm’s IT budget said their firms allocate 1 percent or less of their corporate revenue for IT, whereas in other industries, IT budgets typically hover around 3 percent of revenue.

As profit margins for construction firms are slim—that same report estimates that most of them operate with 1 or 2 percent margins—it’s easy to see why owners place such a premium on ensuring that, above all, any software or hardware investment produces a strong return.

As project managers’ daily work schedule is directly impacted by the systems their firms use, it might be easier for them to see how new software can positively impact their workflow—especially if the software is Web-based. As there was a significant gap in deployment preferences between project managers and owners, it is important for owners to understand project managers’ perspectives, and vice versa.

Web-based systems, which are typically priced under monthly subscriptions, represent an ongoing operating expenditure to owners, whereas on-premise systems are more of an upfront capital expenditure. Still, it is possible to have the best of both worlds and take a hybrid approach by implementing a carefully selected set of both Web-based and on-premise construction software systems.

Lastly, IT managers find themselves in a tight spot: Only two-thirds of construction firms have a full-time IT employee, according to a survey conducted by Sage, and as we noted above, their budgets are slim. Suffice it to say, IT managers have to do their best with what they’ve got, while balancing the financial concerns of owners with the productivity needs of project managers and other staff.

The detailed methodology for this report can be found here.

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