Digital Inspections ROI

Digitizing inspections come with many benefits such as eliminating paperwork and storage, ensuring compliance, and reducing labour costs. So how much do you really save?

To answer this question, we broke workplace inspections and documentation processes into 3 main components:

  • Paperwork and storage
  • Ensuring compliance
  • Labour costs

Paperwork and Storage
A popular method for inspecting locations/equipment is with pen and paper. Workers sign a paper tag at the location/equipment, then fill out a log sheet which is later submitted to the manager for review/action and eventually ends up in storage. When diving into the numbers, we found that the paperwork costs associated with inspections can really add up.

We used data from our existing clients, who include hospitals, storage facilities, factories and commercial properties to determine the costs of paperwork associated with manual inspections. We used 500 locations/equipment with inspections on a monthly basis as a conservative number. In a typical building, 500 locations/equipment would only be a small fraction of all the inspections conducted, however paperwork and storage costs related to manual inspections would be approximately $874 annually. This cost will scale significantly for locations/equipment such as washrooms, mechanical rooms, sprinkler valves, escalator inspections etc. which are completed on a higher frequency. This also does not take into account the extra money you could make off leasing your storage space that you use to house your paperwork for 7 years in order to meet legal requirements.

How did we come up with this?

The Math for performing inspections manually:
500 inspection locations/equipment

On average there's about 22 locations printed per sheet of paper
500 locations / 22 locations per sheet = 23 sheets of paper per month
23 sheets per month x 12 months = 276 sheets of paper per year

Size: 2.5cm thick of paper per year
Weight: 20 lbs of paper per year
Cost: $3 of paper (source) + printing ($0.05 per sheet black and white) (source) about $14 in printing = $17
Storage: $417.84 a year [Average market rent in Toronto is $34.82 per square foot, using one square foot of space x 12 months (source)]
Paper tag affixed to equipment: $439.80 a year [$21.99 for a 25pack x 20 packs needed for the 500 locations (source)]
Total cost: $874.64
Ensuring compliance
In 2014 Canada issued 230,562 non-compliance orders. Non-compliance orders essentially stop work. Based on the labour hours for your workforce to investigate and rectify these issues, it costs workplaces in Canada over $184 million every year. This cost was derived from the number of labour hours spent for management to deal with each non-compliance order (~$50/hr multiplied by 16 hrs per order). This number does not factor in costs associated with loss in productivity, late penalties for projects, injuries and worker compensation, fines and/or diminished brand as those numbers can range significantly depending on the severity of each non-compliance order.

Ensuring compliance is always the best policy as you avoid worker injury and fees incurred due to non-compliance orders. Many inspections are completed to meet compliance of laws, regulations and codes such as the Fire Code or Health and Safety Act; complying with these rules by performing regular inspections helps reduce non-compliance costs to $0, saving your organization a lot of money and embarrassment.

Ensuring compliance doesn't always need to include legal obligations mandated by regulations; it can include insurance obligations too. With my previous employer, we experienced a major flood from a fire hose connection, resulting in a significant amount of property damage. The first thing our insurance company asked for was our inspection paperwork for that particular fire hose cabinet over the past 3 years. Luckily, we performed our routine inspections of the fire hose connections and were able to produce the documentation that proved our due diligence. As a result, the insurance company covered the damages. If we were not able to show our inspection records, it would have been a very different outcome as our company would be liable for covering the costs from this extensive flood.

Ensuring compliance not only reduces costs, it also keeps you proactive in dealing with matters which can help one's brand and even prevent unforeseen costs such as sudden, expensive equipment failures or worker injuries. Going digital with your inspections ensures that each location is being inspected and notifies the right people of missed locations/equipment or deficiencies to help ensure compliance. It also ensures that you can easily access the inspection records when required.

Labour costs
We shadowed the post-inspection process of one of our clients before and after the installation of Tap Report to get a sense of the labour costs and time required. Post-inspection processes include compiling the inspection paperwork, submitting to management for review, review by management, submitting work orders or emails to fix deficiencies and follow-up work to ensure the deficiencies are rectified. Before using Tap Report, the post-inspection process for monthly inspections based on 500 locations/equipment took approximately ~6.90 hrs to complete, equating to about 82.80 hrs on an annual basis. The cost for an average manager reviewing this paperwork on an annual basis is $4,140.00 (~$50/hr multiplied by 82.80 hrs).

After installing Tap Report there is no post-inspection work required. Any noted deficiencies are flagged and automatically routed to the right personnel for rectification. This means that your worker could spend 40+ hours a year (a full week of work) focusing on more critical and proactive tasks instead of the administrative review of paperwork.

How did we come up with this?

The Math for performing inspections manually:
500 locations/equipment inspected monthly 

22 locations noted per sheet
23 sheets of paper per month for review
18 mins per sheet spent on reviewing paperwork, identifying and emailing deficiencies

*review time is based on reading all inspections results, comprehension, legibility issues, sheets not filled out properly resulting in followups with staff, sheets missing/damaged, sheets not submitted at all so followup is required, deficiency found out of reviewers scope so they need to follow up with other people about it, emailing staff about deficiencies or creating work orders, following up on deficiencies until rectification occurs, 
searching records for inquires (tenant, regulatory official, issuance, consultants, certifications and associations) or incident etc.
18 mins x 23 sheets = 414 mins (6.90 hrs) monthly
6.90 hrs x 12 months = 82.80 hrs annually
Inspections are critical for any building to ensure compliance and to be proactive. The documentation of those inspections is just as critical as the inspection and the decision to use a digital solution will save you money on paper and storage, non-compliance costs and labour costs.

So, what's the total cost for monthly inspections performed manually with pen and paper? It's $5,014.64
*based on 500 locations/equipment inspected on a monthly basis

Costs of purchasing a digital solution? Only $1,500.00 annually.
*based on 500 locations/equipment inspected on a monthly basis

Top 3 Benefits for going Digital:

  • Know each location was visited through advanced microchip technology 
  • Automated notifications and dashboard. See which locations were missed, are remaining, near-due or have deficiencies. 
  • Organized documentation that meets legislative requirements.

The business case for digital inspections is clear; this is true from a cost perspective, an efficiency perspective and a due diligence perspective. This becomes even more evident when you start inspecting and documenting locations/equipment for areas such as washrooms or hourly fire watches where the inspection interval/frequency increases, the ROI also increases substantially.

The COVID-19 pandemic has made the benefits and ROI of digital inspections even greater. Managers can oversee work from anywhere and there is a digital verification of work when inspections are completed which is critical for proving due diligence against the spread within your complex.  

The pandemic has put financial constraints on every company - making the dollars saved from switching to digital inspections stretch even further and more important.