Construction profit and loss: The Impact of Admin Costs
Have you ever thought about the cost of Paperwork in Construction? Many would expect that it won’t be that high today, given the technological progress. But guess again! Admin costs have still a great impact on construction profit and loss.
Recently I cast my mind back to the time spent dealing with paperwork on site. Don’t mean reading it and subsequent actions; just filing the stuff away properly so it can be found again in a hurry. Looking at a £5 million contract that lasted 6 months I did some simple sums and was totally shocked at what I discovered!
Keeping it simple, this is what I reckon:
Main Contractor Costs:
-Site management and QS time spent filing £7,800
-Additional office space required for it £780
-Cost of filing cabinets and drawers £1,000
-Total for Main Contractor £9,580
-Then say 10 subbies chalking up a quarter of that each £23,955
-Same again for Architects and Consultants £23,955
-Then a half of that for the Client £4,790
That makes a shocking total of £62,280 !!!
Is it any wonder that the site paperwork is usually in a state of shambles? Just out of the top of my head, I could name the four following problems:
1. Need to plan anything in advance
Anyone has to know anything retrospectively and they have to root for hours through the heaps of paper lying around!
2. Disputes can be very expensive
Disputes cost over the £20,000-mark for experts to be able to find the right bits of paper and put together Claims. The only ones that benefit from dealing with all this paper are those on hourly rates working away from home!
3. Printing costs
There are other costs involved in our paperwork, the cost of the paper and printing, for example. Imagine how many resources go daily to waste due to the countless pages that have to be printed in the course of a project.
4. Postage and potential delays
Then there is another less obvious but bigger cost; not just postage, but delays and frustration caused by having to wait for the latest info to arrive by post or be dropped off by someone!
There is also one exemption to the rule and it has to do with drawing. It’s probably the one piece of paper I would argue sometimes is still necessary. In the light of the above figures, £1095+VAT for an A1 Plotter on every site is cheap! Do you now see how admin can affect construction profit and loss?! Sorting out admin is getting even as important as getting it right first time in construction!
Now let’s imagine a world where:
-All project information was immediately available to absolutely everyone concerned in the project!
-It is delivered electronically and instantaneously!
-Everything was accessible at the click of a button!
-You could carry all the project information around in your pocket!
-Any paper drawing can be binned when it is finished with.
-The project records are kept filed away on a server, not archived in offices!
Hey! We all have smart phones, tablets and computers; we could be getting our information in a paperless way!
The software is already here for us to do it with! Come into today’s world, people. Get rid of all the paperwork that you were used to and make your lives easy – as well as saving a fortune on a project!
Start using custom-developed software for our construction industry! It’s not just kids who can play with “gadgets”!
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