Construction Software State of the Industry from Software Advice

My friends at Software Advice have sent over another interesting original article that they have put together pertaining to software in the construction industry. This one comes from Houston Neal and it kicks off a series of reports the group is doing on trends within the construction software industry. Please visit their site at www.softwareadvice.com for the original report.

Construction Software State of the Industry Report

This is the first in a series of “state of the industry” reports in which we will share our observations on construction software industry trends. While reporting the recessive state of the industry is not breaking news, there are some interesting trends that we can share. Not everything is gloomy, and significant technological shifts are underway.

Our observations are based on roughly 6,000 conversations with construction software buyers over the past year. In these calls, our team listened to buyers’ “pain points” – the business problems they were looking to solve with new software. From there, we recommended what we felt were the best solutions. We later surveyed each buyer to find out if they ended up buying software, what they bought and how it all went.

Estimating and takeoff solutions are in demand

We’ve seen a very healthy level of interest in construction estimating software across all divisions. Over and over we hear contractors saying something to the effect of, “Bidding has gotten very competitive, which means I’ve got to be as accurate as possible.” As a result, we’ve seen a lot of estimators replacing their spreadsheets and manual processes with database-driven estimating systems.

We’ve also seen plenty of interest in on-screen takeoff software. We’ve seen three primary reasons for this:

• Increasing the speed and accuracy of takeoff measurements (see previous paragraph);
• Avoiding the printing costs of paper plans; and,
• Responding to increasing electronic plan delivery and use of online plan rooms.

While demand for onscreen takeoff appears fairly strong and growing, we have seen a considerable amount of downward pricing pressure in that market.

Software as a Service is in the right place at the right time

Software as a Service (SaaS) is gaining momentum in many software markets. In fact, we would agree with other IT prognosticators that SaaS is a major structural shift in software deployment and is here to stay. We’ve seen this model succeed in the project management segment where there is a clear need for the collaborative benefits of web-based software. Moreover, the current recession is making the SaaS model more attractive to contractors because:

• Subscription pricing can easily be added to a project’s general conditions;
• Low up-front costs allow project managers to avoid an onerous approval process; and,
• Faster and less expensive implementation makes the new systems more digestible.

We have not seen much demand for SaaS accounting, estimating or service management, although we do get asked about it now and then. We also have not seen many vendors emerge to deliver that sort of solution. We would not be surprised to see SaaS accounting and/or estimating solutions emerge over the next few years.

LEED credit tracking creates new demand

Another trend driving the adoption of SaaS project management systems is the increasing demand for LEED credit tracking. LEED certification has grown in popularity; so too has the need to track the detailed documentation requirements related to earning LEED credits. At their core, projects seeking LEED certification need document control and efficient communication. This is the core of what project management systems deliver. Going one step further, we are seeing a number of project management vendors building in specific LEED credit tracking modules within their system. Houston Neal wrote a great post on how to Track LEED v3 Credits in Project Management Software back in July.

Stimulus funds are trickling down, slowly

Government and other civil construction has remained healthier than commercial and residential construction. However, we have not seen the American Recovery and Reinvestment Act of 2009 (ARRA) have a big impact on software spending. We believe that the temporary nature of stimulus spending is not enduring enough to drive capital investment in software systems. Our hope is that ARRA will help accelerate the economy to a point where traditional IT investment levels resume. However, Chris Thorman recently wrote a quick analysis of the ARRA that showed that stimulus spending has had a nominal effect on putting roughly 1.6 million unemployed construction workers back on the job.

There has been speculation that Stimulus-funded construction projects would drive sales of project management software. The thinking behind the forecast was that ARRA projects would require a higher level of accountability. Project management software – known for strong document tracking capabilities – would provide the audit trail needed for this transparency. However, we have not seen this translate into a meaningful increase in sales.

Fewer accounting & job costing replacements

We’ve seen fewer firms replacing their core accounting and job costing systems over the last year. In prior years, we had seen replacement activity when company growth pushed existing systems to their limits. In the absence of growth, more firms seem to be staying put with their existing systems. Firms that are buying new accounting systems tend to identify one or more of the following three pain points:

• Inability to achieve detailed job cost reporting from “generic” accounting systems;
• Lack of integration to project management or service management systems; and,
• The need to accomplish same amount of work with fewer employees.

Outlook for 2010

As the construction industry begins to rub its sleepy eyes, we agree with most experts who say that 2010 will be a transitional yet slow year for the industry as a whole. Company budgets likely won’t fully recover in 2010, limiting the purchase of construction software. However, so far we’ve noticed more activity this quarter than any other this year. Hopefully this level of interest will carry over to 2010.

This article originally published at: Construction Software State of the Industry Report.

Tracking LEED Credits in Project Software

I recently corresponded with Houston Neal from Software Advice (www.softwareadvice.com). Houston ran across PMTips while researching how to use software to track LEED (Leadership in Energy and Environmental Design) credits. Houston commented that they are seeing a lot of building contractors (and LEED APs) use construction software to manage LEED projects. As a result, some software vendors are starting to add LEED credit tracking capabilities to their software offerings.

A portion of Houston Neal’s article is included below…

Track LEED v3 Credits in Project Management Software

Given the recent deadline for registering LEED v2.2 projects, we were reminded of a post we wanted to write: how construction project management software can be used to track LEED credits.

Tracking LEED credits requires software functionality similar to that required for more traditional construction project management. Consequently, a few leading vendors have re-purposed their technology to make this possible; others have customers who have developed their own work-arounds.

We expect to see a lot more software development as the number of annual LEED projects continues to grow. In the meantime, we’ve researched what’s available, how it works and how you can benefit from it. Here’s the scoop.

To Start, LEED Requires Strong Document Control

Tracking LEED credits is a document-intensive process. Just ask any experienced LEED Accredited Professional (AP). Submittal documentation includes drawings, receipts, product spec sheets, photos, commission plans and more. Adding to the clutter, numerous project members will access and edit these documents.

Project management software, especially web-based systems, act as a repository for the storage and retrieval of critical project documents. Simply upload a document into the system, then attach it to the appropriate LEED-credit log. From there you can track the history of a document, see every change that has been made and who made it.

Additional Benefits

Aside from the aforementioned benefits, project management software can be used to schedule and coordinate important project dates (e.g. commissioning sessions), it can give you a competitive edge to win more LEED projects and it provides the document tracking required to get AP accreditation.

Finally, project management software mitigates risk. There are big financial ramifications if you fall from a gold to silver, or off the podium entirely. As Courtemanche explained to us, “Just as accounting software has become a ’source of truth’ for financial reporting, project management software is a source of truth for LEED certification.”

Future Potential

In terms of development, we’re only seeing the tip of the iceberg. There is great potential for software vendors to create advanced features and functionality to make LEED tracking a less complicated process. Maybe we’ll even see a “click to submit” function for companies to submit electronically to the USGBC.

In the meantime, here are a few of our ideas. Feel free to leave a comment if you have other suggestions.

• Executive dashboard – Shows up-to-date LEED scorecard and latest project activity
• Portfolio roll-up – Ability to look at a “portfolio” view of all past and current LEED projects
• Resource database – Share best practices and case studies with other APs and contractors
• ROI/IRR Analysis – Calculate internal rate of return for a building based on discounted cash flows and investment costs
• Submittal templates – Use templates to generate indoor air quality (IAQ) plans, construction waste management plans, credit interpretation requests (CIR) and other submittals

To view Houston’s full article including specific software discussions and screenshots go to Track LEED v3 Credits in Project Management Software. Feel free to comment on this topic either here at PMTips or at Software Advice.