Construction e-Project Management

Construction e-Project Management Sunil Sharma July 1, 2002

To some die-hard technologists and construction industry veterans (who include the author, too) construction project management is tailor-made for Internet technologies--the ones with anytime, anywhere, anyhow functionalities. The industry is also full of skeptics who do not agree with this thinking and believe that the building and construction industry is too materials-, people- and far-flung-locations-oriented to take advantage of Internet technologies--the promises of which in their minds have remained promises.

Why Tailor-Made?
Construction projects are massive in size, not only in terms of dollar value but also in terms of number of entities involved and distances. A typical construction project could engage dozens of distinct companies, including architecture firms and construction companies, working closely together in an intense environment over a period of months or even years. Enormous numbers of documents come into play, from technical drawings and legal contracts to purchase orders, permits, requests for information (RFIs) and schedules.

Added to this are a number of inefficiencies. The building industry has traditionally been process-bound and paper-intensive, and projects are often slowed by workflow issues that are not found in other industries, for instance, building code compliance, union and prevailing wage concerns and even bad weather. The purchase orders are executed on paper and faxed or sent by messengers. Requests for changes in a project can take weeks to go through the approval processes that require contractors, engineers and architects to add their approval on a single sheet of paper.

These inefficiencies have serious cost implications, too. Up to 15 percent of projects are typically over budget and delayed. According to the American Institute of Architects (AIA), the miscommunication in a one-year construction project could cost a design firm up to $50,000 for design activities only. Industry experts say that many times subcontractors for large construction projects bid based upon insufficient information due to inefficient paper-based communication channels. If a discrepancy is not resolved at the bidding time, then it costs the owner greatly later in terms of changes and extras, which are usually priced at a much higher level.

All of these issues could be solved and to a large extent eliminated by web-based project management applications that enable bidding, document management and communication.

Imperfect Past
However, this kind of change is easier said then done as the recent dot-com boom and bust has shown. In the heydays of the dot-com boom, many ventures were launched targeting the $800 billion Building & Construction industry. Very few of these companies have survived in their original form and very few industry skeptics have become converts.

There are a number of reasons why the initial e-commerce ventures for the industry were not able to capitalize on their promises. These reasons include misplaced value attached to the IPO-bound exit strategy, not focusing enough on cost-efficiencies and not providing sufficient value to customers. The value for money propositions of these upstarts was not good enough to attract many clients. These reasons have nothing to do with the industry processes or the technology, but rather with the strategies and philosophies of dot-com companies.

Encouraging Examples
Once e-commerce companies targeting construction project management got over the initial hype of dot-coms and concentrated on providing value to the clients, the benefits of Internet technologies started to become visible. Now there are quite a few success stories that demonstrate the potential of Internet technologies for construction project management. Many general contractors, facility operators and customers have realized tremendous amounts of cost and time savings due to the deployment of Web- and Internet-based project management tools and applications.

Such examples include large airport operators, which manage multiple airports, like BAA in UK,   deploying the collaborative and document management technology applications that have improved efficiency, allowed for timely sharing of information, reduced errors and waste, facilitated better reuse of information, reduced life-cycle costs and improved capturing of knowledge.

Another example of such applications was demonstrated by a provider of sub-sea systems for oil and gas production. These types of companies support all aspects of a sub-sea field development that include initial concept screening, detail design, procurement, fabrication, manufacturing, assembly, testing, installation and lifelong field support. Their contracts may call for them to provide training, installation, operation and maintenance. With the Internet and intranets the contract may also require them to provide literature to the end user in an electronic format for all of the products being provided on the project. A number of these products are sourced from various facilities across different countries. This makes the project management challenging.

To solve such a challenge, Kvaerner Oilfield Products (KOP), a provider of sub-sea systems, used Citadon?s web-based collaborative system. The system allowed KOP to upload relevant information from anywhere in the world at any time. It also enabled KOP to implement a document access control system through which the users could access only those areas where permission was granted to them. It interfaced with other office productivity applications, like Microsoft Outlook. The benefits of the systems include faster and easier uploading, viewing, downloading, printing and plotting of documents without the user having to have the software applications that the original file was created in on their desktops.

Even architects have found that using web-based collaborative applications helps them manage the complexities and dynamics of long construction projects. One such architect is Clarke & Tamaccio of Hartford, Connecticut, which decided to use Buzzsaw to manage the reconstruction of Hartford Public High School building. The project complexity arose when the scope was changed and three other firms joined the project. Collaborating and sharing work between four architectural firms, engineers, owners and other contractors is a daunting task. The web-based collaborative system from Buzzsaw helped the team share files, drawings and other work materials with geographically dispersed teams across the Hartford metro area. Eventually the project involved 30 firms. The collaborative system brought in measurable improvements in productivity and one estimate puts the savings realized ? in terms of time, communication, distributing materials and eliminating errors ? at around 15 percent of total cost.

Though the track record of e-commerce companies providing web-based project management to the construction industry is not perfect, there is no denying the fact Internet technologies could bring tremendous economic benefits to construction projects. The collaborative and communication-intense nature of project management systems using web and Internet technologies make them ideal candidates for the industry. Communication and document management related activities affect nearly one-third of the total cost of a construction project. Deploying web-based project management applications have potential to realize 10-15 percent cost savings and their ROI could be as high as 300 percent.