TL;DR

Most construction companies struggle to see ROI on tech because of tight cash flow, poor adoption, and tools that don’t align with their workflows. The shift from subscription-based pricing to maintenance and outcome-based models is changing how ROI is evaluated. To measure ROI effectively, contractors need to set clear KPIs, track cost-saving metrics, and negotiate smarter contracts. Before renewing software, rethink its impact and explore new AI-powered alternatives that deliver tangible business outcomes.

Why Do Construction Companies Struggle to See ROI on Tech?

The Cash Flow Challenge

Cash flow dictates everything in construction. Contractors operate on tight margins, take on significant risk, and often unintentionally finance projects. Their capital is constantly allocated, making it difficult for software solutions to prove themselves as a must-have instead of just another expense.

Many software solutions come from Bay Area Outsiders who don’t understand construction’s challenges in a reaal way. This, combined with poor adoption, wrong tool selection, and implementation headaches, makes it hard to justify the cost.

The Reality of Adoption & Implementation

Top-down tech adoption is difficult. Decision-makers aren’t always the users, and shifting workflows takes time and resources. Instead of focusing on the core priorities of running a project, teams are forced to adjust to software that might not meet them where they are.

• Some tech solutions take up to a year to implement—burning time, money, and human capital.

• Many tech companies sell “efficiency” as ROI, but contractors prioritize hard cost savings over convenience. We would much rather save 20% than save 10 minutes.

• Contractors have a high tolerance for stress—they will tolerate inefficiency to protect cash flow rather than spend money to improve workflows.

The Pricing Shift – Why It Matters for ROI

The shift away from pure subscription models to maintenance and outcome-based fee structures is a game-changer. This model aligns tech costs with real business impact, making ROI more tangible:

• Contractors understand pay-for-performance models—it aligns with how we do business.

• Reducing rework, expediting payments, and optimizing schedules can now be tracked and billed accordingly.

• Instead of locking into high upfront or high monthly costs, firms can evaluate ROI as they go, reducing risk.

Should Contractors Demand This Pricing Model?

Not yet. Many construction firms are still beholden to legacy software providers, but new AI-powered solutions will push incumbents to adjust pricing. As more point solutions enter the market and prioritize clear deliverables, performance-based pricing will gain traction.

Measuring ROI – The Right Way

If you want to measure ROI, you need clear KPIs. Before implementing any software, define a baseline and track the following:

1. Reduced rework costs (How much rework was avoided?)

2. Labor efficiency improvements (How did technology improve resource allocation?)

3. Billing and collections velocity (Was underbilling reduced? Were payment cycles accelerated?)

4. Deliverable turnaround time (Did reports, submittals, or approvals happen faster?)

5. Litigation prevention (Did process improvements help avoid legal disputes?)

Which Tech Categories Show Clear ROI?

• BIM software (Streamlines coordination and clash detection)

• Time-tracking tools (Reduces payroll inefficiencies and prevents overages)

• AI-powered scheduling tools like Outbuild (Optimizes labor and materials planning)

• Financial tracking software (Improves cash flow visibility and reduces underbilling)

• Database tools to reduce input redundancy (Eliminates duplicate data entry and minimizes errors)

Avoiding the “Tech for Tech’s Sake” Trap

Here's how to filter through the noise before adopting any tool, ask:

1. Was this solution built by domain experts? Did the founders work in construction?

2. What do my peers think? Check Reddit, contractor forums, and industry groups for real feedback.

3. Is this a point solution or an ERP? Determine whether you need a niche solution or a broad platform.

BUT, before abandoning a tech tool, do this:

1. Assess the Workflows It Created – Does switching tools disrupt new processes?

2. Consider Reducing Licenses – Cut down on users instead of canceling outright.

3. Check Your Contract – If renewal is close, evaluate whether it’s worth sticking with.

The Future of Construction Tech Pricing & ROI

While no major construction tech providers have adopted full outcome-based pricing, it’s coming. As AI-powered tools deliver more measurable outcomes, contractors will have more leverage to negotiate pricing models that align with real business results.

For software firms, this model is highly scalable and increases wallet share by aligning with the contractor’s actual results. Rob Walling recently discussed this shift in his podcast, "Startups for the Rest of Us," covering product management and pricing strategies.

Keep in mind that AI is making custom, low-cost solutions possible.

The rise of custom AI wrappers means contractors can build lightweight, cost-effective solutions without relying on expensive enterprise software. Some developers are already using JSON-based search models to create CDE integrations that rival expensive enterprise tools—for almost zero cost. Check out Connor Johnson's most recent video where he covers this exact use case.

So, What Contractors Should Do Next

Rethink your tech contracts!

But, before renewing any software contract:

• Negotiate pricing models – Push for maintenance- or performance-based fees.

• Assess real ROI – If the tool isn’t reducing costs or increasing revenue, reconsider it.

• Look for alternatives – With AI-driven solutions emerging, explore leaner, cheaper tools.

3-Step Framework for Evaluating Tech ROI

1. Set Clear KPIs – Establish baseline performance metrics before adopting tech.

2. Demand ROI in Contracts – Push for pricing that reflects real business outcomes.

3. Be Willing to Switch – If a tool isn’t delivering, don’t be afraid to pivot.

Final Thought: The Future of Tech ROI in Construction

The biggest shift in construction tech won’t be new tools—it’ll be how those tools are priced and how they prove their value. Contractors who demand outcome-based pricing and track real ROI will stay ahead of the curve, while those who don’t will continue burning cash on software that doesn’t serve them.

The smartest contractors are already questioning their tech investments—are you?