How to Budget for Construction Technology in 2022

Your 2022 budget is done and just waiting to be implemented. That’s great news! This time around, were you hoping to finally allocate some funds for construction technology due to its impact, but ultimately couldn’t? There’s a good chance there still may be a way.

If you’ve been in the construction business long, you know that once January sweeps in, you’ll have to adjust your budget somewhat. Things change, you can’t control everything. The unexpected happens and you adapt accordingly. It happens every year.

Buckle up and get ready for a year that will be quite different from any other in recent memory. The year 2022 is going to demand even more than the usual rethinking and strategizing about your well laid budgeting plan.

Those funds you had planned to use for new equipment? Because it’s next to impossible to find new dump trucks and large yellow equipment anywhere in the country, you’ll most likely not even have the opportunity to spend in that category. This negative could be turned into a positive as we’ll discuss later. 

Another area of concern is the rising price of raw materials. Copper, aluminum, steel and PVC materials have all gone up due to the double whammy of the pandemic and unprecedented supply chain interruptions. 

It will be difficult to preserve margins on projects when you can’t get the necessary materials for the price quoted in your bid. It’s uncertain whether state DOTs will consider compensating you for the increased cost of items for existing projects and the logistics to get them on time. Best not to count on it.

These factors combined with an increasingly competitive marketplace mean it just might be the best time for you to invest in construction technology. For one thing, you can use funds designated for one of those areas where you won’t be spending (equipment) for the initial costs. Second, there is considerable return on investment to be realized. And finally, logistics software impacts the overall efficiency and productivity of your operations and projects.

Construction Technology: Why It’s Good for Business

Most industries these days use digital tools to improve their workflows, reduce paper-based processes, eliminate manual tasks and lower costs. The construction sector is beginning to jump on the bandwagon and see the value of integrating construction logistics software into operations. 

Major players in the heavy civil construction industry who started using digital solutions early on quickly realized the benefits of construction technology:

• More loads delivered per hour

• Reduced material waste (spoilage)

• Real-time visibility

• Streamlined communications

• Fewer invoice overpayments

• More efficient dispatching

• Improved back office operations

• Better relationships with haulers

• Elevated customer service

• More reliable data and reporting

• Enhanced fraud prevention

No matter the size of your business you too can experience these benefits and more. The key is to take the time to evaluate your current situation. What do you want to achieve with construction technology? 

Make sure the solutions or tool you’re considering matches the goals and requirements of your company. For example, if you typically use a lot of third-party haulers, you should look for a platform that lets you manage those hired haulers the same way you manage your own fleet--all the way from dispatch through payment management. 

As things are slowing down, right now is an ideal time to begin your research. You won’t feel as much pressure to rush through the process while you meet with different providers and watch their demos -- you won’t have job site logistics on your mind. 

Ask plenty of questions and consider inviting key members of your management team to join you during this phase of your investigation. They could have insights into company or department needs that you haven’t thought of.

What’s Construction Technology Going to Cost?

Like anything else you shop for, you’ll find a wide range in the price tags on construction logistics software. It depends on a variety of factors such as the software’s features and the size of your organization. There are, however, two costs you need to be aware of when you’re comparing solutions: 

1. The fee which is the purchase amount in dollars of the construction technology you choose. This could be paid in one lump sum or as a monthly subscription payment or some hybrid arrangement.
2. The time commitment which is how long it takes you and your team to train and implement the new technology. This will vary depending on the type of support the provider offers and the complexity of the solution.

While it’s pretty straightforward to understand the cost in terms of dollars, the cost in terms of time is a bit harder to grasp and plan for. But it’s important not to underestimate this part of the equation. 

Teams that are excited about how a solution will make their jobs run more smoothly will be more willing to learn how to use it. The potential for a significant ROI on whatever construction logistics software you choose is greatly reduced if it’s not actually put to use. For more about getting everyone on board with your new technology, this article is a good read. 

How to Figure Out Your Return on Investing in Construction Technology

Determining the return on investment for construction technology is not all that different from figuring out the ROI for any other piece of equipment. You’re simply using a formula to help you measure the value of an investment based on its upfront costs, the time commitment and the benefits you stand to gain over time--both hard benefits like money saved or soft benefits like time saved.

The biggest difference between calculating ROI for construction technology and another asset  is the type of data you need to look at. There are 5 data points helpful in calculating the ROI of construction logistics software and each one represents an area where you could potentially see significant improvements. Here’s a quick look at all 5 and why they matter to ROI. 

1. The average number of dump trucks used, per day

It’s actually quite common to use fewer dump trucks than the appropriate number for a given job. Construction and job site logistics software can help you identify the right trucking volume each day for optimum efficiency.

2. The average daily pay per truck, per day

Knowing this figure will prevent you from making changes that could inadvertently have a negative impact on your haulers. You want to improve unit economics while also increasing your haulers’ daily take-home pay.

3. Number of loads per truck, per day

Having a baseline allows you to measure increased efficiency over time as your drivers are able to deliver more loads in a given timeframe.

4. The total hours per day, per driver

By fully utilizing your haulers to deliver the maximum number of loads you create a better situation for both you and your haulers.

5. The payment type, by the load or by the hour

Although either way is fine, this data point impacts your unit economics. It also will help you determine how to best incentivize your drivers.

These specific data points may not be ones you’ve kept track of in a systematic fashion, and certainly not in real time. But you have to start somewhere to measure ROI, so do your best to come up with reasonable figures. (Another benefit to implementing construction logistics software is that the data is collected for you.) For a more detailed look at how your business goals relate to calculating ROI, check out this guide.

ROI with Trux

Most Trux customers started out the same way. They eventually came to the conclusion that it was time to get serious about streamlining their operations--from dispatch to the back office and everything in between. They wanted greater visibility (overall and in real time), fewer manual processes and more efficiency. 

After comparing various solutions in the construction space, they discovered that Trux is the only construction logistics software built especially for dump trucks from the get-go. It’s not a long-haul trucking solution or the tracking device intended for a retail delivery driver that was “retrofitted” for dump trucks. 

At Trux we understand the unique software needs of contractors, material producers and fleet owners as well as that of independent operators. And that makes all the difference to our customers and their ROI. 

Our customers experience greater efficiency and increased productivity with these Trux features:

• Faster and easier scheduling

• Drag and drop dispatching 

• Real-time visibility with GPS tracking

• Centralized communication

• Digital punch-in and out

• Automatically generated and consolidated invoices

• Digital load slips

• Cycle time analytics

• Mobile app

Our customers also find very real savings from using Trux construction logistics software:

• Up to 40% increase in dispatcher productivity
• 86% faster payments to haulers--by reducing invoice processing time
• 14 hours per week/ 728 hours per year savings-- from consolidated invoices and digital load slips
• 11 minutes per load savings --from optimizing with cycle time analytics
• 8% savings on hauler overpayments--from flagging discrepancies in real-time
• 12 additional hours per day, per truck potential earnings--by using the Trux Marketplace to find overnight work
• 2% savings in trucking costs for hourly work--from drivers digitally punching in and out

This is just a sampling of the time and cost savings Trux customers have realized by leveraging our software. If you’re interested in hearing more or watching a demo, give us a call. Our team is always excited to answer questions and learn more about your goals for 2022.