Direct Costs of Electronic Plan/Document Review, Permitting, Inspection & Licensing solutions for Government Agencies

Permitting, Review and Inspection departments in Government Agencies (Ex. Cities, Counties, Utilities, Water & Wastewater Districts, Airport Authorities and School Districts) realize that Commercial Off the Shelf (COTS) software can help them be more efficient and improve customer service. They want to stay on par with software best-practices that their peer organizations are putting in place and also stay in step with technology improvements in other departments in their organization.

However, choosing the right Electronic Plan/Document Review, Permitting, Inspection & Licensing solution or product with the multitude of vendors and solutions available in the market today is a daunting task. This article is first in a series aiming to provide a framework for decision making that government agencies can use to decide which solution is right for them.

Electronic Plan/Document Review, Permitting, Inspections & Licensing Solution: Costs and Risks to Government Agencies

The budgetary environment today in government agencies of all sizes make Cost among the most important of parameters while purchasing a software product. In order to better understand the cost structure of the solutions you are considering, it is helpful to group costs into two distinct categories: Direct Costs and Indirect Costs.

This article is the first in a series of articles and will cover the Direct Costs involved in the purchase of a solution.

What are “Direct Costs” as it relates to the purchase of an Electronic Plan/Document Review, Permitting, Inspections & Licensing solution? What questions must we ask to uncover these costs?

The direct costs associated with the purchase of a software solution are usually easy to understand and measure. It involves money that is directly paid to the software and hardware vendors. Here are a set of questions to ask to uncover the typical direct costs involving a software purchase:

1. What are the Upfront costs involved with purchase of any software modules, licenses and hardware?

While there are differing pricing models that vendors use for Electronic Plan/Document Review, Permitting, Inspections & Licensing Solutions, most solutions offered today involve a significant up-front fee that goes towards purchase of the software itself, or towards licenses or seats to use the software. These up-front costs can start from tens of thousands of dollars and can range up to hundreds of thousands depending on the specific product/vendor. In addition to the cost of the software itself, investments in hardware (servers, desktop computers, network equipment etc.) must also be factored in.

2. What is the initial cost of configuring and customizing the software to match your organization's business process?

While it is desirable to purchase software that is in perfect alignment with your business processes and needs, in reality no off-the-shelf product will fit your organization's business processes in an exact manner. Therefore you will need to factor in costs to configure or customize the product to model the business processes in your organization. This configuration and/or customization is almost always done by the vendor.

3. What is the cost involved in the initial setup of the software and hardware?

Any reasonably complex software system has many moving parts. Each moving part has various dependencies on its environment in terms of both the software and hardware infrastructure that is required to run the system. The time and effort required to stand the system up in the your organization's environment is usually done for you by the vendor, so be sure to find out what the costs are relating to this.

4. What is the cost of integrating with other software systems in your organization?

If a lot of automation already exists in your organization, then making sure that the new system works seamlessly with the other existing IT systems can be a significant undertaking. Since the vendor is most familiar with their product, this integration will usually be performed by the vendor and charged on a time and material basis. Integration with existing systems is often complex and labor intensive. So this component of the solution implementation can turn to be quite expensive.

5. What is the Cost to train your staff to use the new System?

Most enterprise software systems seem daunting to new users. Since the success of the software relies to a large extent on how your staff feels about the product and how comfortable they are to start using it on a day to day basis, be sure to plan for either on-site or remote training sessions offered by the vendor.

6. What are the yearly costs for Support and Maintenance of the System and related Hardware?

Usually a 20% fee of the licensing cost is charged for Support and Maintenance. You need support and maintenance – even though the software systems themselves are stable and reliable, often times issues arise at the interface points between software systems. Having a strong support and service level contract in place goes a long way towards mitigating risk.

Additionally, your business processes are a living and breathing entities which often change as new and improved ways of doing business are put in place. While you can configure the system itself to an extent to adapt to these changes, be sure to factor in the cost to make corresponding changes to systems which integrate with the solution.

We have discussed the Direct Costs associated with the purchase of an Electronic Plan/Document Review, Permitting, Inspections & Licensing Solution in this article and in some ways Direct costs are easy to understand. They pertain to money that is paid to the software or hardware vendors when the decision to purchase software has been made. However, in addition to these apparent costs, factoring in a host of Indirect Costs might be even more important to the success of the implementation. In our next article we will discuss why these Indirect Costs matter and how Government Agencies can uncover and make sense of them.