The construction industry, known for its complexity and reliance on precise coordination, with its intricate web of processes and stakeholders, relies heavily on extensive documentation from project initiation to completion.

Each stage of the project generates an extensive paper trail and as projects scale up and their scope expands, managing these documents becomes increasingly challenging. The massive volume of paperwork can lead to inefficiencies, including delays in information transfer and approvals, increased risk of errors, and difficulties in tracking and retrieving critical information.

The industry has long been burdened by the use of paper forms and these traditional methods, while once the standard practice, are now proving to be costly in ways that extend far beyond the initial purchase of paper and ink.

These practices not only weigh down the project team but also drive up hidden costs associated with document handling, storage, and retrieval. In this article, we will thoroughly explore the hidden costs associated with using paper forms in the construction industry. These costs encompass a range of factors which are broadly categorised as follows:

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1. Material and Hardware Cost

Paper:

****It is the primary material with costs varying based on paper type, quality, and volume. Standard office papers are typically used for most documentation needs, including contracts, permits, and reports. Specialized papers may cost more, that include forms with specific formats, such as carbon-copy forms, coloured paper for different categories, or high-quality paper for official documents.

The cost of purchasing paper can add up if large volumes are required for extensive documentation. Though this is one of the direct costs of the traditional paper-based documentation system, the preposterous amount of paper used through the project due to changes, reviews and loss of documents indirectly leads to much more than the ideal consumption of this material.

Printer:

In paper-based construction documentation, the costs associated with printers extend beyond the initial purchase price. These indirect costs can include maintenance, consumables, and operational expenses.

The most commonly used types of printers depending on size, features and capabilities are Inkjet, laser and large format printers and their initial investment ranges from $50-$35000.  For companies that opt to lease printers, monthly costs can vary between $85 and $900, depending on the type and capabilities of the printer. However, consumables like ink and toner cartridges further add to the documentation cost ranging from $15 to $200 per cartridge which are regularly replaced. Also, there are maintenance and repair costs of about $50-$500 annually for all these hardware.

This ongoing expense adds to the overall financial burden of maintaining a paper-based documentation system.

Ink:

Though this material cost might seem insignificant, it is one of the most expensive and important contributors in material cost especially it varies based on the colour requirement, type of printer and cartridges used and the volume printed. It costs $50 an ounce and ink cost can add up quickly as a cumulative effect of purchasing large quantities. Companies can spend thousands annually on ink alone.

Miscellaneous Stationary:

The ancillary costs for miscellaneous stationary- filing and mailing supplies also add to the already existing mighty cost of materials. Envelopes, file folders, binders, staplers and staples, paper clips and binder clips, pens, markers and highlighters are some of the essential items adding to the hidden costs of traditional documentation methods.

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2. Storage Cost

There are obvious direct costs involved when it comes to storage and inventory like renting or leasing off sites, warehouses for large scale projects generating a humungous volume of documents or at least setting up a dedicated storage area within your office or construction site. Also for better organisation, filing cabinets, shelving and labelling systems are established and the cost incurred for these physical entities can be projected as a direct cost. Nonetheless there are major hidden costs in maintaining these storage and inventory spaces.

• Document Preservation: Proper preservation helps maintain the quality of documents over time and hence there is a separate cost for materials to protect documents, such as archival folders, acid-free paper, and plastic sleeves.
• Security Systems: Costs for security measures such as locks, alarm systems, and surveillance cameras to protect sensitive or valuable documents.
• Disposal: Cost of using shredding devices for secure disposal of documents ****when documents are no longer needed and this ensures sensitive information is properly and completely destroyed.
• Insurance and Contingency Plans: This includes costs for insuring physical documents against loss or damage and for developing and implementing plans for disaster recovery or emergencies, which may involve additional costs for backup systems or duplicate copies.

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3. Labour and processing Costs

The hidden costs of labour and processing and their respective inefficiencies stemming from paper-based forms in the construction industry can be relatively significant. These costs include the time and resources spent on document preparation, processing, handling, and maintaining equipment and storage.

• Management and maintenance: A substantial amount of time and effort is spent by the staff organizing, filing, retrieving and managing documents diverting them from their core responsibilities or a separate team is employed for storage purposes. In both cases, significant cost is expended as the cost of salaries and benefits for employees, specifically involved in these tasks. Roughly on average, $30000 is spent on labour cost with a dedicated file manager.
• Data Entry: Many a times, it is required to input information from paper forms into digital systems or databases before it is further processed and organized. Innumerable man-hours are wasted in scanning, indexing, storing images of the original form or re-entering the data from a document. Adding to the already tedious documentation process, illegible handwritten forms or incomplete forms with missing fields may require back-and-forth notice further delaying the process leading to more time wastage. A report by Gartner Group has found that an amount of $30-$60 is spent on processing paper forms for every dollar spent on producing these forms and thus about $360 is annually spent on processing data from these paper forms. Also if the document is electronically received like emails, more resources are put to use to print it out and additional paperwork is done to organize it into a physical document. All these factors add up to the total processing cost indirectly increasing the cost of overall construction document management.

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4. Productivity Cost

The hidden costs due to low productivity in paper-based construction documentation stem from inefficiencies in document management, data retrieval, and overall workflow processes which can impact project timelines, budgets, and overall success. Here are some of the operational inefficiencies affecting the productivity of the entire documentation process.

• Lost and Misfiled Documents: There is a notable amount of wastage of time, money and resources due to documents being lost, misfiled, or damaged, which can lead to delays, additional work to recover information, or even legal issues if critical documents are unavailable. According to the Price Waterhouse Study, 7.5% of the total paper forms are lost and 3% of the remaining documents get misfiled. On average, for labour; $20, $120 and $220 are spent by the companies to file a document, to find a misfiled document and to reproduce a lost document respectively.
• Difficulty in change and control of document versions: Updating paper documents manually can be labour-intensive. Each change requires physically altering or replacing documents, which can be prone to errors and inconsistencies. Also keeping track of revisions in paper documents is challenging. There’s no easy way to view a document's change history, making it difficult to identify which version is the most current. Thus multiple versions of a document may be circulating, leading to confusion about which version is the authoritative one. This can result in the use of incorrect or outdated information. Besides, paper systems typically do not retain a comprehensive history of document changes. Hence when updates and revisions are made in the document, the previous versions of the forms become useless and wasted. This loss of historical data can hinder the ability to review or audit changes made over time. All of these challenges lead to hidden costs like extra labour costs to manage changes and control versions manually and administrative overheads resulting from tracking down and consolidating different versions of documents, managing document distribution, and handling errors arising from version discrepancies. Errors and delays caused by version control issues can lead to project delays, which in turn can increase costs related to extended timelines, expedited work, and potential penalties. Furthermore, inaccurate or outdated documentation can lead to compliance issues, which may result in fines, legal disputes, or additional costs for remediation and legal consultations.
• Inability to Monitor Progress: Paper documentation makes it challenging to monitor workflow and project progress in real time. This lack of visibility can lead to unforeseen issues that escalate costs and extend timelines.

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5. Cost of reproduction and communication

Physical documents must be physically transported or mailed for approvals and it is important to establish the correct chain of communication in order to know where the document is to be mailed next. In most cases, there is confusion and non-coordination between team members regarding the movement of the document leading to delays in distribution and communication between team members, contractors, and stakeholders.

Courier and postal charges further contribute to hidden costs of paper-based construction documentation. Paper forms lost during transit lead to labour wastage in searching and eventually redoing the form filling once again and this adds on to the overall cost of communication.

Workload distribution amongst the staff members is difficult too and it is hard to figure out impending work due to delays in communication in this form of documentation making this manual process slow and inefficient.

Reproducing multiple copies of the documents is essential for distribution or reference and the cost incurred to make copies includes the cost of paper, ink, and copy machines. According to stats given by Price Waterhouse, 19 copies are made for each document which either is used for distribution among stakeholders or even to replace the lost or damaged documents.

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6. Energy and Environmental Costs:

Energy consumption especially in the form of electricity is one of the major indirect costs incurred in traditional documentation methods. Energy is mainly consumed by printers, copiers and other office equipment and climate control systems like air conditioning or dehumidifiers are used to maintain optimal storage conditions for paper documents to prevent damage. For a small office climate control system, annual energy costs can range from $100 to $1,000, depending on the size of the storage area and local climate.

Paper production and disposal have an extensive impact on the environment that involves cutting off trees giving rise to deforestation and biodiversity loss. Also, production of paper is water intensive where large amounts of water are needed for pulping and processing, which can deplete local water resources and impact aquatic ecosystems. This process consumes significant energy as well often derived from non-renewable sources. The production and transportation of paper contributes to a higher carbon footprint and this includes greenhouse gas emissions from deforestation, energy consumption, and the production of chemicals used in paper processing.

The disposal process of construction documentation waste has a profound impact on the environment, similar to the production process. Disposal of printing inks and chemicals used in paper production can lead to soil and water pollution if not managed properly. These substances can be toxic to wildlife and harmful to human health. Also, paper products that are not recycled contribute to landfill waste. Decomposing paper in landfills can release methane, a potent greenhouse gas. Thus all of the above factors once again contribute to the hidden costs of paper-based documentation process in the construction industry.

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7. Cost of security and accountability

Tracking of physical paper forms is very challenging and often the visibility and traceability of these forms is very little. It is highly difficult to hold any team member responsible for any kind of mishap and this leads to difficulties in tracking document changes and approvals, leading to issues with accountability and audit trails and this in turn leads to financial loss due to costs incurred from errors or omissions in documentation, often due to lack of oversight and accountability.

Security risks in manual paper-based documentation process aid confidential information exposure where paper documents can be easily accessed by unauthorized individuals if proper security measures are not in place. This exposure can lead to breaches of confidential information, including sensitive project details, financial data, and proprietary designs.

Physical documents are at risk of theft or loss, especially if they are not securely stored or protected. In order to enable basic security and preventive measures, a considerable amount of expenditure is done and physical security measures such as locks, safes, or restricted access areas are implemented depending on the level of security.

Mitigation costs can lead to additional expenses for addressing breaches or security lapses, which can be difficult to quantify but may include administrative costs, legal fees, and fines. The loss of critical documents can disrupt project workflows and incur additional costs for recovery or duplication too.

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In summary, traditional paper-based document management in the construction industry results in remarkable amounts of hidden costs and operational inefficiencies. Moving towards digital solutions can mitigate these issues by enhancing efficiency, accuracy, security, and environmental sustainability, ultimately leading to more cost-effective and streamlined project management. Kyro’s digital construction forms feature precisely works to keeping the construction project documentation simple, user friendly where all the stakeholders involved can easily track and trace the forms and documents making the process very transparent with more field visibility. The Kyro dashboard collects and features all the data from the field helping clients make informed decisions thereby increasing smooth workflow and efficiency.

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