Published In July 2001
From Louisville, St. Louis, and Leavenworth, Kan., the three contractors profiled—last month, this month, and the next—are working to become even more lean and efficient. They’re including the Web in their plans, not because it’s “hot” or because of product pricing, but because they think it will help. The last two columns described the wisdom of waiting before becoming too Web-reliant, given the elimination of many construction Web vendors. However, electrical contractors are preparing to make the Web an important part of how they will conduct business in the future. United Electric, featured this month, upgrades an auto manufacturing plant’s electrical control systems on a hectic schedule. So, their use of the Web is all about project scheduling and reducing transaction costs. This includes project collaboration and procurement. As in the case of Sach’s project scheduling, which was described last month, United Electric’s view of collaboration differs from what is generally marketed to the construction contractor. With time and scheduling as keys to the auto-plant shutdown jobs, United wants to see the project all the way through to the manufacturing operations of its original equipment manufacturers (OEMs). United Electric: Horses for courses As the racetrack saying goes, there are different horses for different courses; that’s been heard in and around Louisville since the time before electricity! And for United Electric, use of the Web now and in the future is a way of being different from many other electrical contractors. United specializes in auto manufacturing plant shutdown work. Typically taking place over 12 to 14 days, the company will come in (along with other trades) and upgrade a plant’s electrical and control systems on a hectic, do-or-die schedule. United performs such work all over North America, including Canada. One job that stands out (for a company that typically runs 100 electricians) was a two-week project with a crew of more than 700! As a result, for United, use of the Web is all about scheduling. This includes the project collaboration piece and procurement functions, according to John Henle, an internal consultant with the company. “There are two things, at least, that are really key for us,” he explained. “One is controlling the flow of work—scheduling. The other is reducing our transaction cost.” Project scheduling: As in the case of Sachs, United’s view of collaboration is different from what is generally marketed to the construction contractor. With time and scheduling as keys to the auto plant shutdown jobs, United wants to see all the way through to the manufacturing operations of its OEM equipment suppliers. “As electrical contractors, we’re the first on and the last one off of the auto jobs,” Henle said. “We’re always the one driving the schedule. Project coordination is vital to us. “Time after time, the OEMs we’re working with will tell us they are going to ship machines one, two, and three for arrival on the fifth of the month. But when we get things ready for installation of those units, and our crew is there on the fifth... it turns out they shipped units six, seven, and eight! “We’ve been looking at this for the past year or so, to see whether or not it’s feasible. We’d like to have the whole process, including the OEMs, online—to really be able to see what’s happening. We can get the GC and the owner involved, too, so everyone will really know what’s happening. “Where we’d like to get to is to avoid a lot of confusion. We can do that if the information is really current.” Additionally, Henle believes design changes can move faster with the Web as the communication device. “Design changes can take weeks now,” he said. “We think using Web collaboration, with the OEMs, will drive it down to hours.” Note that it is typical for United, which makes heavy use of CAD, to have a CAD operator on-site for auto plant shutdown work. Procurement: United isn’t looking for Web-based procurement systems to cut the price paid for a given item by some huge percentage; at least, not primarily. Instead, the company is working with GE Supply to use the distributor’s system to drive transaction costs down. Henle also thinks the Web system’s visibility will enable project managers to keep an eye on job progress. “Let’s take a job that we have in Portland, Texas,” he said. “The superintendent working for us in Portland can order online—or he can fax it in, if he likes, but it will be updated on the Web in real time. “But when he orders, he will be able to order from what we’ve prepared with GE Supply. For example, let’s say there are 500 of a certain type of receptacle on a job. We have specified a certain vendor for this, and the price is at $2.50. But the guy on the job site decides he wants to go with Hubbell—and these are priced at $11.05 each for the same item! Sounds strange, but this has happened in the past. “Today, we don’t find out about what has been done until the job is over. I call this renegade buying. With the Web ordering system in place, the guy at the job site can still buy what he wants, but we’ll get a red flag much earlier in the process. “Also, you can have a situation with multiple people ordering. On a given job, perhaps the night-shift guy sees 50 receptacles on-site, and he knows we need to have 200. So he orders. Then the day-shift guy comes in, and sees the same thing—and he orders. “Yes, this sort of thing has happened! It shouldn’t happen once we have this information on the Web.” Beyond that, Web ordering enables project tracking. “Let’s say our project manager is here in Louisville. He gets online and sees that the guy in Portland, Texas, ordered 10,000 feet of 3/4-inch pipe a few days ago. Now, we’ve got a good idea of how long it takes to put in that pipe. With Web ordering, our project manager in Louisville can track the job’s progress, by seeing what’s been ordered and delivered, and when.” Finally, from a company-wide perspective, Henle thinks on-line orders will enable United to better control material costs. “If you know how many of a given item you’ve ordered in a given year, you can talk to manufacturers. You can tell one of them, ‘Hey, we buy 300,000 of your items a year, give us the best price you can.’ “With ordering on paper, you can’t do that easily. You have to take all of the purchase orders, on all of the jobs, and have someone here in Louisville spend weeks inputting this information—so you can get the totals. “With the Web, we’ll have a record, a trail, a history. We want to keep working at controlling our cost, through project planning and scheduling, and planning our purchasing, too. With the Web, we can do that.” SALIMANDO (firstname.lastname@example.org) is a Vienna, Va.-based freelancewriter. He also writes a monthly e-commerce column for www.tedmag.com.