Published In November 2000
There are people out there, working in not-so-quiet corners of the construction industry, trying to shape your future. If they succeed, the workaday life of the mid- to large-sized electrical contractor will never, ever be the same. They’ve got plans for you—you and all of the other 5-million-plus people in the construction industry. No, they don’t know you. They don’t know your company. They don’t spend a lot of time thinking about the electrical trade; at least, not specifically. And it’s extremely likely that you’ve never met one of them. But be assured: They’re working really hard to solve a problem on which you’ve probably never focused your attention. If they solve it, you will have to fall in line with however they structure the solution. While the solution isn’t being structured for you, if these folks succeed, their fix will be imposed on you. And since they don’t know you or your company, or this industry—or even your customer, to whom they’ll sell their services—the solution seems unlikely to be tailored to you and your company. No, this isn’t another episode of X-Files. We stand right now at the dawn of e-commerce’s intrusion into the construction industry. Two main classes of e-commerce vendors are chasing construction business: the procurement people and the project collaboration people. This article focuses on the latter. Collaborators Target Construction’s Inefficiencies Communications savings “Collaborators” are not necessarily evil. Here’s their pitch: Construction is a messy, fragmented industry. Just to get a job done, you need 20 or 30 subcontractors, plus engineers, plus architects, plus general contractors and maybe construction managers and a/e firms. And then there’s the owner. Transition from design stage to construction is awkward; transition from construction to operation is messy. Communication is awful. Essentially, the collaboration vendors are pitching what has been called a “project extranet” or “project-specific Web site.” It’s also been referenced as “e-PM” and “Web-enabled project management.” In any of these schemes, a project’s site could be hosted on the Web by the vendor, or run by the GC or construction manager or architect/engineering (a/e) firm on behalf of the owner. These project collaboration Web site vendors are pitching a “virtual” mission control center, online, specific to an individual project owner’s desires and the project’s needs. In most variations of this approach, the concepts share a core approach: all of the design, communication, and other on-paper spadework will go electronic—and go through “mission control.” (See the sidebar, “The Web Resource Guide” to explore the various vendor offerings.) Note that these developments are moving rapidly. How about online “meetings” in a “virtual” chat room . . . yes, much the same as those America Online (AOL) chat rooms where your teenager yaks via a keypad with other kids. It sounds speculative in relation to staid old construction—but it has already taken place! Going one step further, consider the likelihood that a given future project will require all project managers (PMs)—every single one, from every trade—to use handheld computers and pagers. This equipment would have to be on the PM’s person at all times! Why? This makes possible instant notification (via pager) to the PM of an important e-mail . . . and his/her ability to instantly access it, via the handheld, wherever the location. Owner’s perspective To an electrical contractor, this trend toward all-electronic project management might not necessarily be attractive. In fact, it might actually sound like a nightmare. (See accompanying story, “Likely Effects on Your Business.”) But just for the next few paragraphs, stand in the project owner’s shoes—the builder, or developer, or ultimate building owner/occupant. Here are the facts as she or he sees them: A. I’m paying everybody on the job—all of the 23 subs, the general contractor (GC), the architect, the engineer, and the specifiers. Yet they are all fighting each other. My money is paying each of them, but they spend some of their time—seemingly each day—actively not cooperating with each other? They don’t answer each other’s calls right away? Explain why this is good. B. I ask for information, and it takes forever to get to me. One of many people working for me to build this thing requests information, and it can take days to get an answer. During one of my recent projects, a simple Request For Information bounced among the engineer, GC, architect, and sub for more than a week. That cost me money—my building is going to open seven to 10 days later. Is this anyway to run anything? C. After a job is built, I ask for as-builts, and I get a mess. The electrical engineer didn’t fill in the branch circuits, I have no physical representation of where the riser cables are, and even some of the redundant power feeder cables are missing from my drawings, because much of this was in a change order. I’m going to be doing constant updates and changes to my systems to keep up with the state of the art. I paid for this building to get built, but because of poor documentation, upgrades and maintenance will cost me a bundle! Much more could be said here, but construction owners—the savvy ones, anyway—realize (as they have for years) that the process doesn’t serve them as well as it could. That’s been one driver behind the move away from the old design-bid-build process toward design/build. Anything, the smart owner thinks, to get my project away from confrontation and delay and toward cooperation and faster completion. As one participant in a construction e-commerce conference said: “This business of ours is screaming for a solution like this to come along.” Collaboration’s promise Who can verify the “promise” claimed by the Web vendors? Here are some answers from a study done earlier this year. Datatech, Inc. (Cambridge, Mass.), performed the research on engineering/construction/operation (E/C/O) projects for industry software giant Bentley Systems. * “The traditional dispersed model of asset creation is changing.” To what? “To a far-more-integrated model, in which a network of companies and individuals pools its economic and intellectual resources to maximize profit over an asset’s life.” * “There is no question that E/C/O network projects will be Web-hosted. Internet access to project information and adoption of standards such as aecXML will facilitate access to and sharing of information, and will lead to significantly reduced costs over the life of an asset.” * “Datatech estimates that between 5 and 10 percent of a project’s total installed cost can be saved by Web-based data storage and more granular data access. Worldwide, such tools could save asset owners as much as $400 billion annually by 2004.” That $400 billion is less than one-tenth of Datatech’s estimated figure of $5 trillion for the E/C/O industry worldwide in 2004. The researchers define E/C/O as including buildings, manufacturing facilities, process plants, infrastructure, and “other built assets, both public and private.” The figure includes both asset creation (88 percent) and operation (12 percent). The report summary, distributed recently by Bentley, implies that the tremendous savings—the “promise”—will drive project owners of all types to insist that all project participants use the Web to drive down costs. In other words, for a construction buyer, the project collaboration Web solution looks like it might be the right one for his problems. Collaboration’s delivery Can the project collaboration Web vendors deliver on their promise? Maybe. A glimpse of this future was offered at one session of June’s AEC show, featuring AOL and its general contractor, Hitt, who together used the collaboration offering of E-Builder. AOL is “local” to the Washington, D.C., location of the AEC show; Hitt is one of the Top 100 general contractors, according to Engineering News-Record. Under discussion: a massive facility construction job undertaken by Hitt for AOL in Dulles, Va., involving three buildings and 570,000 square feet of space. The 90-minute AEC show session featured Bob Mandley, construction chief at AOL, and Reg Arnold, executive vice president of Hitt. Here are a few highlights of this session: * Hitt brought the use of a Web-enabled project collaboration approach to Mandley’s attention. * The collaboration site was used only for the design phase of this project. Subconractors were not involved. * Mandley was amazed to see responses to Requests For Information (RFIs) in “10, 20, 30 minutes . . . instead of days.” * Mandley is sold on the use of Web—forever. It will be standard from now on for AOL, he said, in any project of significant size. * Hitt feels the same way. The company plans, Arnold said, to extend use of such collaboration sites down to the subcontractor level (i.e., beyond the design phase) on projects now starting up. Jon Antevy, CEO of E-Builder, told EC magazine in an interview that, by year’s end, his company will have made an important transition. By that time, he said, most of E-Builder’s customers will be project owners, instead of architects, engineers, or others integral to the construction industry. Enthusiasm builds Beyond what Antevy and others like him can or cannot convince private construction owners to do, there is the federal government’s General Services Administration (GSA)—the largest office building owner in the world. Should GSA become enthused about the benefits of project collaboration Web sites, it’s probably “game over.” According to a July report from SunTrust Equitable Securities: “The Public Buildings Services within the GSA is likely to require that architects, construction managers, and contractors are part of an Internet-based project system. Otherwise, their proposals will not be considered.” One major “hard savings” of project extranets, as they are sometimes called, comes just in moving drawings around among the project participants. According to reports, Federal Express grosses $500 million a year just for expediting blueprints within the United States. The Web collaboration vendors say this expense is unnecessary. But time is where savings are most likely to crystallize to the satisfaction of project owners. “The ability to send out and respond to information requests—within a matter of hours—while tracking each response significantly reduces construction delays and crew down-time,” said Tim Horst, a construction manager for Bechtel. Some of the collaboration vendors claim taking time out of the design phase alone will pay off big in project savings. Others note that the advantage of having every project participant online—all the way to the subcontractor level—will mean much better coordination on a given job. Scheduling mistakes, delivery errors, and coordination foul-ups will all become a thing of the past, they claim. What happens next? Perhaps it all sounds like Construction Heaven—but there’s a great deal of promise, and a very marginal amount of actual delivery at the present moment. What there’s plenty of is conjecture and speculation on the near-term (a “shake-out” of the various vendors is projected) and long-term futures of Web-enabled project management. In interviews at the June AEC show, many vendors told EC magazine—off the record—that, despite their promotion and the hoopla at the event itself about project sites, the concept itself is not yet nailed down. “We’re a year or two away,” from getting the approach right, or “We’re really just starting down a long road,” were not uncommon comments . . . but off-the-record. On-the-record, obviously, the vendor comments are enthusiastic! No one promotes a revolutionary new concept in a circumspect “we’re sure to get this thing right someday” manner. A major challenge to the collaboration approach is the construction industry’s conservative tradition. For many years, the industry has resisted change. This resistance has usually stiffened in proportion to the severity of the change. A major change is that, if the collaborators succeed, everyone in construction will actually have to talk, respond quickly, and cooperate with everyone else. Using e-mail and online chat instead of telephone calls will even provide a written record of who cooperated and who put up roadblocks to completion. SALIMANDO, a Vienna, Va.-based writer, has reported extensively on construction e-commerce during its short lifetime. He can be reached at email@example.com.