Published In January 2001
Electrical contractors are giving higher priority to bringing company and project management into the Internet age. While the final solution may take time, multiple choices are taking shape, each offering significant benefits. First consider the confusion. An estimated 170 products and services are available to help contractors, designers, and owners establish extranets—Internet-based computer networks—for collaboration, project management, and commerce. The list, updated regularly by Orr Associates International, Chesapeake, Va., has never been longer (see www.extranets.cc). “The present market for collaborative extranets is extremely unstable, with few differentiators and wild pricing,” said President Joel Orr. To confound matters further, providers who focused first on developing collaboration tools to facilitate file sharing and workflow are rapidly adding project management capabilities. Also, companies from both camps pursuing the profits promised by e-commerce. Further, mergers and acquisitions, press releases that stretch the definition of “hype,” daily announcements of new alliances, and headache-inducing pricing plans cause even the most stalwart construction techies to cry “E-nough!” So what’s an “e-lectrical” contractor to do? Most of your peers are letting others define how these systems will reshape your business. A recent American Subcontractors Association (ASA) survey showed nearly 90 percent of its members are accessing the Internet and 40 percent are purchasing online. But fewer than one in five have used it to educate employees or to handle project documentation or coordination. A survey of Associated Builders and Contractors members—one-third of which are subs—revealed that only 15 percent could identify a single “dot-com” company providing project-related services for the construction industry. Even most electrical construction giants and leaders interviewed for this article reported using project collaboration tools only occasionally. Also, they’re largely in the exploration stage in adopting Web-enabled procurement systems. Companies attribute the plodding pace to the following: * Many general contractors identify subs as the “weak link” in the technology adoption process, noting that the benefits of many systems become worthwhile only when all project team members participate. This claim persists, although numerous electrical contractors and other subs using computer-aided design (CAD) have become more computer literate than their GCs. * As often as not, when subs have tried collaboration through project Web sites their workload has increased. The culprit is similar: Some project team members, including GCs who specify the systems, don’t participate as a matter of course, forcing those who do to resort to paper and telephone calls when they get no response to their digital requests for information. Enthusiasm for extranet use will remain low, “as long as it’s viewed as another step in the process and not a better way,” said Joe Puglisi, chief information officer of EMCOR Group Inc., Norwalk, Conn. * To the extent it is used today, the GC or architect selects Web-enabled project management and collaboration software, unless the owner insists on making the call. “The GCs are not driving this yet, and we can’t afford to be on six or eight of these programs, said Bob Sawicki, vice president of Fisk Corp., Houston. * Web-based procurement systems have yet to attain critical mass. This applies to the numbers of suppliers involved, the range and depth of available products, and the ability to incorporate contractors’ pre-negotiated price schedules. Most important is to establish effective customer service and distribution systems, which ensure arrival of the right goods on time at the right place. * Many short-duration jobs do not appear to justify subcontractor investment in or use of new technology. * Software tools designed to manage various construction industry tasks, including design, estimating, purchasing, scheduling, and accounting are far from integrated, requiring duplicate data entry and introducing significant opportunities for error. As challenging as these obstacles are, the largest contractors expect that most technology challenges will have workable—if not perfect—solutions within one to two years. Meanwhile, the race to apply the complete e-toolkit will accelerate as companies seek to raise productivity and increase job margins ahead of their competitors’ in a traditionally, excruciatingly competitive industry. For example, The Pepper Companies, a Chicago-based builder, is aggressively driving management of its business onto the Web. “Our thinking is that collaboration between the owner, architect, subs, and ourselves is integral to keeping ahead of our competition,” said President Stan Pepper. Larger electrical contractors preparing to roll out e-procurement systems anticipate saving several percentage points on tens of millions of dollars in annual purchases. A procurement software company, Clarus Corp., Suwanee, Ga., estimates potential price reductions of 20 percent on “maverick” purchases that previously have circumvented company-wide purchasing agreements and procedures. But most electrical contractors agree that most procurement savings will come from reduced paperwork and expediting, not lower prices. “Especially with commodities, you can’t possibly lower the price enough to make up for the problems that happen if something is late in getting to the job site,” said Sawicki. The savings from collaboration may be even greater. Charlie Kuffner, senior vice president for Swinerton & Walberg Co., a San Francisco-based GC, tallied savings from its use of Bidcom, an extranet hosting company, on renovation of an 18-story, 440,000-square-foot building for a financial services firm. Collaboration on that project prevented a delay of at least two weeks, Kuffner said. It may not matter where a company chooses to start applying e-tools aggressively, because even taking simple steps can yield significant benefits. On several projects, George B.H. Macomber Co., a Boston GC, lets team leaders use an inexpensive Web service such as www. My.PlaceWare.com to “attend” weekly progress meetings by conference call, with visual materials, such as slides and white boards, displayed in the “virtual conference room.” Larry Richmond, vice president of Bennett Electrical Inc., Quincy, Mass., a self-proclaimed technophobe who had to “go to school to learn e-mail,” raves about Web-assisted meetings. “In a city like Boston, it can take half a day to attend one meeting at 9 a.m. Online, it takes 15 minutes and I never left the office.” The benefits can become more substantial when digital collaboration is extended to include design coordination, the processing of contractor information requests, construction planning, and problem solving. “If you’ve got a project Web site and don’t make CAD and teamwork part of it, you’re only going to get a small portion of the value out of this,” said Kenneth H. Stowe, director of project services for Macomber. The company pushes for coordinated development and sharing of 2D CAD files as a “bare minimum” for digital coordination, in part because “anybody can make anything fit on paper,” explained Frank J. Mortell, a project manager and mechanical coordinator for Macomber. Macomber project teams can choose from among several software packages with the goal of gaining maximum participation. One of the simplest to use is at www.eRoom.com, which hosts the renovation project Web site of Higgins Hall, a $60-million combination of renovation and new construction of science buildings at Boston College. There, the architect and its engineering consultants created AutoCAD files, placing them in folders on the eRoom Web site, where each successive trade from sheet metal to heating, ventilation, and air conditioning (HVAC), plumbing, and electrical contributed information. The site is set up to automatically notify project team members when particular tasks are completed. Even those subcontractors who aren’t involved in the design see the benefits. Having the current version of all project drawings posted on the site—and the ability to view them without design software—means that any contractor on the job can get necessary information without waiting for someone else to spend the time and money to duplicate and deliver particular drawings. For less technological subcontractors, Macomber color-coded specific information from drawings, so that individual trades had drawings with the most critical information to them highlighted. To increase the odds of completing difficult tasks correctly the first time, the customized output would be projected on a wall in the trailer for crews to review just before starting that work. Mortell estimated that about a month’s time was saved by just placing footings of varying sizes, elevations, and spacing. He said, “I don’t think we missed one.” The company used a similar approach when locating electrical duct banks in cast-in-place floor slabs. Bennett Electrical’s Richmond cites another episode when the light fixtures specified for a particular part of Higgins Hall wouldn’t fit. “We took digital pictures and posted them [on the Web site]. The supplier saw all of the information instantaneously as if we were at a meeting.... It might have taken us two weeks of ‘snail mail’ the old way to take care of it, but we had it resolved within hours,” said Richmond. “The sheet rock wasn’t delayed. The job wasn’t delayed.... That’s one small example.” He added that they can make a big difference when they’re on the critical path. For the moment, Web-based procurement offers only modest benefits. “We have a few local vendors who have Web sites that are password-protected,” said Jim Berard, vice president of Capital Electric Construction Co. Inc., Kansas City. “We don’t use it very much because it’s still easier to pick up the phone and call than to go through all the menus and scrolling.” Even so, he says, “It’s useful when you forget to do something, then remember it at 9 p.m. You can get on the site, see they have what you need and order it, rather than wait to call the next morning.” An important paradox has slowed construction e-procurement: Before committing to use a particular system, contractors want to maximize the value they receive from suppliers who have a broad range and ready inventory of necessary items. At the same time, potential e-procurement service providers have found it challenging to develop this critical mass of capable suppliers without being able to guarantee them a large volume of purchases. With several teams of large contractors and suppliers now working through these issues, leading electrical firms anticipate this conundrum will be resolved sooner rather than later. They expect to derive additional benefits from the Web as well. Encompass Services Corp., Houston, a growing company, has begun to launch a company-wide virtual campus. This is meant to meet its increasing needs for safety training, upgrading of journeymen’s skills, and having more workers capable of installing and upgrading telecommunications and data networks “virtual campus” company-wide. Educational material delivered on demand by the Web and CD-ROM “will not replace instructor-led training,” said Jack Smith, director of training for Encompass. Still, he expects the combination will help achieve its educational goals, which include preparing 700 California electricians for licensing exams required by 2002. The company anticipates benefits ranging from reduced costs per student to improved recruitment and employee retention. Making the Web a more valuable component in managing construction operations will take time, but less time than many contractors realize. To get started, or to move up the curve more quickly, consider doing the following: Connect your employees. Large companies including Ford Motor Co. have grabbed headlines by providing free personal computers and Internet connections to employees. A big-company budget is unnecessary to do this when a new PC and Web connection combined can be leased for as little as $25 per month. Electrical contractors may find the employee attraction and retention benefits alone will outweigh the out-of-pocket expense. Connect your job sites. Beyond the ability to collaborate on a specific project with designers, other contractors, suppliers, and the owner, employees who have comparable responsibilities can use Web-based communication to exchange ideas concerning all company projects. This works around town or around the world for employees responsible for construction operations, safety, procurement, human resources and more. By developing a common, secure platform for company-wide communication, you can increase the sense of community among employees, make it more likely that lessons learned on one job will spread to others quickly, and help employees solve problems efficiently. As high-speed Internet connections become accessible in more locations, this approach will become even more attractive. Start online collaboration now, to the extent that your owners and GCs are beginning to use Web sites for project collaboration and communication. It takes minimal instruction for electrical contractors to become proficient at using Web sites to handle fundamental tasks, which typically include submission of requests for information (RFIs) and change requests. One way to speed this process is to make sure that at least one experienced manager, or one who is interested in digital tools, is assigned to Web-enabled projects. Their enthusiasm can become contagious. Push prime contractors. Some owners, including the General Services Administration (the federal government’s landlord), have begun to require the use of extranets on certain projects. Likewise, many GCs who adopt project management software insist that all designers and subs use their system. So what’s to discourage qualified electrical contractors from encouraging their GCs to use the tools to help both companies? Already, subs on Macomber’s projects can have payments processed more quickly once new contracts and change orders are signed. That’s because the company’s accounting staff can see project information the moment project managers enter it. Similarly, Swinerton is working to make its payment process “more transparent to subs,” according to Kuffner. One of his short-term goals is allowing subs to see whether any of the GCs five red flags—such as expired insurance or unapproved change orders—is delaying a payment. Soon thereafter he hopes to add electronic billing and payment using “biometric,” digital signatures that are more easily authenticated than signatures on paper. The new millennium is a new world for contractors. One veteran contractor asked Electrical Contractor magazine, “Do you really want a general foreman who’s earning $60 an hour running a PC?” A second replied: “Considering some of the things we’ve got him doing now, that’s not always a bad idea.” KRAKER is managing director of Kraker & Company, Inc. He can be reached at email@example.com.