The Intangibles - Measuring ROI
I’m a numbers guy. I was trained in accounting, so I like seeing the numbers, specifically the bottom line! However, when considering ROI, you can very often run into a wall when trying to put a number on your return. Some things you simply can’t quantify, and that can drive me crazy!
I’m the type that will search for hours over a $.10 discrepancy, so not being able to put a number on something makes me want to not even consider it. However, that would be a grave mistake when considering an MIS. Below are several areas you need to consider even though you may not be able to quantify the Return of Investment (ROI) for any of them.
An MIS by definition (and by name) is a management information system. Everyone has an information system but many are so fractured that no one in the company can find the information that need when they need it! An MIS such as Tekla PowerFab puts the information at your fingertips. Admittedly, that sounds very cliché but it is true. I’ve worked with fabricators across the country implementing Tekla PowerFab. Before implementing the system, most of them admit that they get interrupted many times throughout the day from people simply asking for information. My advice to them after the implementation is to hang up the phone or kick the people out of their office since every employee now has the information they need in front of them.
This is very empowering to employees. They have the data they need to manage a project better. They have the data they need to be confident that all material is ordered. They have the data they need to see whether all drawings for sequence 1 are approved. In short, you just reduced the amount of time they spend throughout the day interrupting others and being interrupted by someone else. Do yourself a favor…count the number of times you either call someone for information or someone calls you during the next day at work. I’d venture to say if it is a high number, you aren’t using your MIS correctly (or else it isn’t the right MIS!). Empower your employees with the information they need!
This is very empowering to employees. They have the data they need to manage a project better.
Employee Morale Booster
You will also see a boost in morale once your employees start managing the project effectively rather than the project managing them! I was recently at a client’s office where we were working on bringing hours from estimating to production control and subsequently into the schedule. They had been managing this process in spreadsheets and desperately needed to make a change in how they schedule. When the estimated man hours per ton for columns showed up in the project, it was applied to the actual material resulting in estimated/actual hours, and then the hours flowed into the proper sequences in the schedule, the fabrication scheduler said, “That is pretty freakin’ cool, man!” That is what I love to hear! When the data works for you, morale increases!
When the data works for you, morale increases!
When I say confidence, I’m not referring to someone feeling confident in their ability to use the system. That will simply come over time as you use the system. What I’m referring to is your confidence in the data that is actually floating around in your system. There is nothing worse than working with data when you aren’t sure if it is correct. I was recently helping develop a budget utilizing some data that simply looked inaccurate. I had zero confidence in the numbers, but I needed to put something together. The same is true for fabricators. You need to be able to rely on the data in your system.
There is nothing worse than working with data when you aren’t sure if it is correct.
With a system such as Tekla PowerFab, you have the ability to pull data from the model to estimating, to an ABM, to purchasing, to inventory, to the drawing log, to production control, to a shipping ticket, to a cut list, to machinery, all without any manual entering of data. That is a massive advantage. As an example, Tekla EPM allows you to push items to Purchasing from Production Control. It will not allow you to do that more than once. I’m told by most fabricators I work with that ordering material twice was one of their biggest issues before working with Tekla EPM. When you have to manually enter data into a system, you are introducing the possibility of human error. By eliminating this, you can have much greater confidence in the data in your system.
I’m told by most fabricators I work with that ordering material twice was one of their biggest issues before working with Tekla EPM.
Think of it this way. Detailing, which is about 1% of the cost in a project, controls 30%-40% of the costs in a project (fabrication costs). Do yourself a favor, use good detailers and import the data into Tekla EPM. Then use the imported data to push to all areas of the system. Not only will you save a lot of time by eliminating manual entry, but you’ll have much greater confidence in the data knowing that the introduction of human error has been minimalized.
Some of the other points have touched on this, but your employees will be much more efficient by using an MIS such as Tekla PowerFab. You’ve now given your employees the tools to react faster so that you are now proactive on the project rather than reactive.
Here’s a real-life example. A project manager at a client of mine was monitoring the shipping status of one of his projects by colorizing the model in Trimble Connect. He knew Sequence 3 just shipped so he filtered the model for the sequence and colorized. He was just looking to make sure everything was green, indicating that it had shipped. However, there was one red column jumping out of the screen at him! He checked on it, and sure enough, it was not on the truck that had just left. He made arrangement to have it on another truck the next day. He then called the contractor at the site and said, “I apologize but we left a column off the truck that is going to be at the site in the morning. Don’t worry though, I’ve already arranged for it to be on the next truck which you will receive the following day.” How much better is it to call them rather than receiving a scathing call from an angry contractor whose job site is at a stand still because of that one column!
You’ve now given your employees the tools to react faster so that you are now proactive on the project rather than reactive.
Perhaps this isn’t necessarily as much employee growth as it is the ability for the company to grow. Because of all the previous intangibles that have been mentioned, your employees can work more efficiently and likely get more done in the same amount of time. I’ve seen Tekla PowerFab allow fabricators to do more with the same employee base simply because they have a better system. Don’t use this as a club to beat over the heads of your employees, but the right MIS will definitely allow you to do more with less. That is one of the benefits of anything that makes you more efficient!
I’ve seen Tekla PowerFab allow fabricators to do more with the same employee base simply because they have a better system.
In addition, the proper MIS will allow growth in the organization without straining your system. I know of a fabricator that grew by 300% (in revenue) in about a 3-year period. Over that time period, their employee base almost doubled. Managing growth like that is tough. However, their MIS (Tekla PowerFab) was not strained in the least. They had a system that worked well for them, and it didn’t have to change simply because more work was being pushed through it. Sure, some changes were made, but they still used the system virtually the same as they did 3 years ago.
If I told you that you could have all these things by implementing an MIS, how much would it be worth? Would it be worth the effort to put it in place? Even though it is difficult to put a number on some of these points, these alone would create a return on your investment that would make anyone envious!
Next time, we’ll look at benefits that will bring a ROI that is more easily calculated.