By Peter Lawrence
Many of us believe that the architecture, engineering and construction (AEC) market will inevitably convert to using color construction documents. We would prefer this to happen sooner rather than later so it would start providing us with a reasonable amount of higher margin volume.
As you recall, it took several years for the market to move from diazo to analog and then from analog to digital. In both cases, we asked our customers to pay more for the new technology, and it took some creative selling. Now it is happening again, so what will it take to get our customers to make the move to color?
This was the subject of a presentation I delivered with my colleague Bob Honn at the IRgA 2010 Convention called "Market Research Results – The Impact of Color on Construction." In order to understand the barriers and opportunities around color, Océ commissioned four studies in the United States and Europe over the last two years. The results are enlightening and provide an excellent foundation for a color sales approach that will directly address the key requirements of the construction industry.
The number one reason AEC firms don’t use more color prints is that color is too expensive. Therefore, the burden is on us to help them justify the color price premium. To do this, we have to understand what is most important to them:
- budget;
- schedule and
- legal risk.
We must show that color can positively impact the project in these key areas in order to effectively sell color.
One study was performed by Lyra Research with the goal of developing a color ROI calculator and accompanying whitepaper. Lyra identified the leading cost factors as a result of project inefficiency that can be improved by using color documents. Management fees for change orders and requests for information (RFI) are the biggest culprits, representing a combined cost of $.60 per square foot of construction, according to the National Institute of Standards and Technology (NIST). By reducing errors and omissions, color documents can reduce a portion of these RFI and change order costs.
Estimating cost contingencies is another problem area, with most sub-contractors padding their bids 6-8 percent for cost overruns and most GCs adding 10-20 percent. Because color documents help contractors estimate faster, more accurately and more confidently, they can squeeze down their contingency fees and win more bids, passing on the savings to the project owner.
Lyra’s four-step ROI calculator breaks down project costs using NIST values to determine a figure for total addressable project waste. Estimating a waste reduction factor allows project savings to be calculated. Subtract the color premium from the project savings and the result is a net ROI figure. Using this ROI calculator with extremely conservative values on a test project resulted in a savings for project owners of $3.16 for each dollar invested in color documents.
A three-to-one color ROI is a great result, but the primary beneficiary is the project owner. This means we must begin to form relationships with project owners. If we convince them that color will help deliver their project on time and under budget, they will mandate the use of color just like they are starting to mandate the use of BIM.
The calculator also yields a positive ROI for general contractors (GCs). Even though it is smaller, it is significant because GCs operate on very lean net profit margins (typically 1-3 percent). A GC would need a substantial increase in gross revenue to achieve the same amount of profit that even a small cost savings could provide. Speeding up the project lifecycle can help GCs achieve faster turnover of capital to drive more projects and help realize early completion bonuses and avoid late completion penalties.
Where do architects fit into the color puzzle? They already use color for sales and marketing, but they still distribute monochrome PDF files to contractors more than 80 percent of the time. If contractors downstream hope to utilize color, they must either request color files from architects or obtain the native design files and modify them for their own purposes.
Contractors that do use color are willing to sign a waiver and sometimes even pay a fee to get the native files. Architects who play along can differentiate themselves by promoting the fact that they are actively enabling color workflows and thus creating substantial cost savings for owners.
How about specialty contractors? Aside from the estimating benefits described above, subs have a tremendous amount to gain from using color documents during the installation phase. One electrical contractor prints different conduit sizes in different colors. They believe that every hour spent in the office improving and colorizing the drawings can save them up to five hours in the field. Color can also keep an apprentice from interrupting a journeyman and a journeyman from interrupting a superintendant. Minimizing field time at higher billing rates is critical in keeping costs down.
We often test audiences by having them count the number of sinks that appear in a B&W floor plan. It typically takes them about three minutes and they rarely get the correct answer. We then provide the same floor plan in color and the results are remarkably different. They count the correct number with complete confidence in about 15 seconds. This is a simple example, but if you extrapolate this to a large project, you can imagine the amount of time that could be saved and the number of mistakes that could be avoided.
Reprographers who are interested in learning more can visit the blog "Changing the Color Paradigm: Expanding the Role of Color in Construction Documentation" at www.colorforconstruction.com. This is a place to exchange information, present research results, and discuss best practices.
The Lyra whitepaper and ROI calculator will be available for download through the blog as well. If you familiarize yourself with these terms, benefits and calculations, you will greatly increase your ability to sell color and to convert B&W print volumes to color.
Peter Lawrence
Vertical Marketing Manager, AEC & Reprographics
Océ North America, Wide Format Printing Systems