Economic efficiency of digital transformation of development and contracting organizations: development of a model for calculating return on investment and total cost of ownership of IT solutions

Abstract

The study analyzes the economic performance of digital transformations in development and contracting companies in the construction industry under conditions of a shortage of adapted methods for calculating costs and benefits. The aim of the work is to develop an integrated model that enables the calculation of the total cost of ownership of information technologies and the return on investment, taking into account direct and indirect effects throughout the project life cycle. The empirical base includes data from forty-five domestic medium and large-scale organizations for the period from 2018 to 2023, financial statements, internal project documents in the field of information technology, information from solution providers, and the results of twenty-five in-depth interviews with managers. The methodology is based on a systematic analysis of existing approaches to calculating total cost of ownership and return on investment, cost decomposition, economic and statistical modeling, and correlation and regression analysis of the relationships between investments in digital platforms at the levels of information modeling, accounting, and project management systems, and the key performance indicators of companies. A detailed structure of total cost of ownership has been developed, including more than twenty cost items, allowing the identification of a shift in the balance from direct capital expenditures to indirect operating costs as the scale of the organization increases, with the share of costs for integration, training, and process reengineering in large companies approaching forty percent of the total cost of ownership. The component analysis of return on investment shows the predominant contribution of risk reduction and quality improvement effects over direct cost savings, while the total impact of reducing clashes, rework, and delays exceeds one-fifth of the integral indicator. A comparison of separate and integrated implementation scenarios demonstrates the synergistic effect of combining information modeling and project management systems, expressed in the highest growth rates of productivity, schedule compliance, and reduction of non-productive losses compared to the isolated use of digital platforms. The constructed regression model, with a high explanatory power, quantitatively confirms the significance of the penetration of information modeling, integration of accounting and management systems, investments in training, and mobile technologies on the construction site, and can be used for scenario planning of digitalization and justification of investment decisions in construction companies.