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Cetrus Blog

3 Reasons Why AEC Firms Aren’t Billing for Application Use (and Why They Should)

Posted by Erik Hoogerhuis on Oct 10, 2017 7:47:35 PM

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AEC firms bill clients for their professionals’ time.  Geotechnical and construction firms bill for the use of physical assets, like bulldozers, ground penetrating radar, and drones.  So why not bill for specialty application use?

Think about it. 

The service firm spends a significant amount of money buying and supporting licenses. For some firms, it’s the third largest expense. According to Deltek’s 2017 Architecture & Engineering Industry Study, the number one challenge faced by financial leaders is “increasing profitability.” To stay competitive and on the cutting edge of technology, however, companies need to spend even more money to use top-of-the-line software.  

Depending on the project, some applications may be heavily used, or not at all.  Putting all application costs into overhead means some clients are overpaying and some are underpaying for your services.

So why aren’t firms billing for application use?  Our experience tell us that it’s a combination of three factors:

  1. “We’ve always done it this way.”

That may have been true in the past, but your application providers are changing their licensing and billing models. Companies need to stay current with technology to remain competitive in their fields. Research shows that the number one top business development initiative of AEC firms is “earlier identification of opportunities and requirements” (Deltek, 2017). So get with the times!

  1. “It’s too difficult/cumbersome/expensive to track.”

That was true in the past.  Technology, however, is continually improving, and with the new monitoring tools available today, this is now an unnecessary concern. In addition, you’re not helping your margins by leaving money on the table.

  1. “My clients would not accept billing separately for application use.”

We believe that if you use a tool to perform a service, and can provide documentation, they will pay.  Clients may argue with you over your staff billing rates (the much larger charges), but they will pay for value-added services such as specialty application software, especially when you can demonstrate increased efficiency and improved project outcomes. In fact, our angel investor (and initial customer) has never had a complaint on additional application charges.

See this case study for more information.

 

How to Recoup Application Costs & Increase Profits:

In order to bill for application use, you need a simple, easy to implement, and accurate monitoring tool.  For the most detailed and accurate data, the monitoring approach needs to be at the point of use, whether it be on the desktop or server.  Indirect forms of reporting, such as reading metered license server logs have two main problems:

  1. Don’t provide an accurate representation of whether the application is actively being used for a project, or
  2. Require too many changes in professional behavior to be easily implemented.

This could lead to inaccurate billing; let’s avoid that. Cetrus Process Meter is a real-time application monitoring platform that uses desktop agents to report activity status and monitor individual files, to provide the most detailed data.

Expense-2-Project (E2P), an extension of Process Meter, lets the user associate individual file sessions to projects, so your clients get accurate use information. Transactional desktop applications, such as Bentley’s MicroStation or Autodesk’s AutoCAD as well as server-based, compute-intensive applications like Plaxis are supported.

To turn your costs into profits, all you need is the ability to prove actual use for your clients.

 

Contact us to find out how E2P can improve your bottom line.

Get a 30 Day Free Trial HERE!

 

Resources:

“Clarity: Architecture and Engineering Industry Study .” Deltek, Inc, 2017.

Topics: Project Management