Building on IT
Matt Villano. CIO. Framingham
Abstract
From design and planning to procurement and production, companies in every
corner of the architecture, engineering, and construction industry are undergoing a
foundation-to-roof renovation of the building process, rejuvenating traditionally
low-tech approaches with Internet-enabled IT. These changes appear to be
working wonders. Days, even weeks, are being shaved from project schedules. In
an industry where paper-thin profit margins of 1% and 2% have been attributed to
fragmentation, performance improvements have resulted in significant cost
savings overall. Integration of data and project plans with the web, third party
vendors, and wireless, are discussed.
IN THE HEART OF CHICAGO'S NEAR NORTH SIDE, ON THE
CORNER OF NORTH AND SHEFFIELD STREETS, A HALF-FINISHED
EIGHT-STORY BUILDING BUZZES WITH LIFE. ON THE GROUND
LEVEL, MEN IN HARD HATS AND FLANNEL SHIRTS WORK
FURIOUSLY TO FIGHT THE CLOCK AND INSTALL WINDOWS. Up
near the seventh floor, men weld, solder and hammer away, creating a cacophony
that mutes honking cars on the streets below. At first glance, the whole project
seems just like any other construction site-dirty, fragmented and remarkably low-tech. This building, however, is different.
In all, six architects, 40 engineers and more than 60 subcontractors will work on
the $24.2 million retail-- entertainment-residential project, and San Franciscobased architectural firm Gender will coordinate their efforts through a local Web
service that automates almost every aspect of the process using a collaborative,
password-- protected intranet. In the past, many of these contractors would
exchange blueprints and employment bids via fax or Federal Express. Today they
use the Web to quickly upload and send information electronically.
What's more, says Gensler's Chicago office CIO Randall Dolph, while
subcontractors used to spend hours on the phone with suppliers ordering from
catalogs, now they can connect to suppliers and order online. "This technology
enables us to triple or quadruple the speed with which we can pull off a project,"
he says. "It's like we've been waiting for this kind of improvement all our
professional lives."
Dolph discusses this new connective technology the same way a proud father
talks about his child. For the first time, superfast Web connectivity is available to
the midsize and small players, like Gensler, and not just the big guys like Bechtel
($15.1 billion in revenue), the Houston-based global engineering and construction
giant that has managed projects such as the $20 billion construction of Jubail
Industrial City in Saudi Arabia. From design and planning to procurement and
production, companies in every corner of the architecture, engineering and
construction (AEC) industry are undergoing a foundation-to-roof renovation of
the building process, rejuvenating traditionally low-tech approaches with Internetenabled IT. At a handful of the biggest companies, CIOs have incorporated new,
proprietary Web applications to reengineer the way they use data from the
beginning. Smaller companies without big IT budgets have opted for outsourcing,
relying on a number of new subscription-based Web tools to revolutionize
cooperation and collaboration in virtual space.
These changes appear to be working wonders. Days, even weeks, are being
shaved from project schedules. In an industry where paper-thin profit margins of
1 percent and 2 percent have been attributed to fragmentation, performance
improvements have resulted in significant cost savings overall.
Down the road, XML and wireless technology may pad margins even more. For
now, Kent Allen, research director at Aberdeen Group, an IT think tank in Palo
Alto, Calif., says industry bigwigs are simply enjoying the results of their current
technological forays. "Think about it: With all that dirt and grime, with all those
musclemen hammering away or firing up the blow-- torch, the construction
industry has been low-tech since day one," he says. "It's amazing to think about
how far a little technology in this space can go."
On the GROUND FLOOR
As Allen implies, companies in the $1 trillion AEC industry have become what
you'd call high-tech only in the past five years. Despite how information-intensive
these industries are, slim margins historically have made it difficult for AEC
executives to justify IT expenditures. The exception was the introduction of
computer-aided design (CAD) software, used by architects and designers to create
blueprints and drawings. More than a decade later, well after CIOs in the
manufacturing, aerospace and automotive industries honed enterprise solutions
that leverage backend data with front-end functionality, the AEC industry realized
it wanted systems that could integrate data and project plans with the Web. Basic?
Yes. Long overdue for the AEC industry? Absolutely.
Today, some of the industry leaders have implemented such applications,
addressing every aspect of the engineering, procurement and construction (EPC)
life cycle. For instance, Bechtel is working on a number of Web-oriented
upgrades in the area of procurement. Under the guidance of Director of
Procurement Jack Futcher and CIO Hank Leingang, the company recently
developed a password-protected intranet portal where project managers can
submit up to five times the number of employment and materials bids they could
before. Dubbed the BPS, for Bechtel Procurement System, this application
generates purchase orders in which project managers can solicit participating
subcontractors to submit bids. BPS is just one of the online tools that Futcher says
he hopes will slash Bechtel's $3 million annual FedEx bill.
At Pasadena, Calif.-based Parsons Corp., a private, global engineering and
construction company that recently renovated Ronald Reagan Washington (D.C.)
National Airport, CIO John Thomas is dabbling in other areas. Last October, after
years of handling project controls manually, Thomas launched
P-Works, a Web-enabled project control system that can access scheduling and
financial project information from anywhere in the world. Thomas followed this
with a $4 million commitment to DMCS, an offline document and material
control system upgraded into a Web-enabled platform where engineers and
managers track the progress of a job by ensuring that materials are ordered and
tracked on time for the least amount of cost. According to Thomas, this system
will upload new information several times a day, and he expects it to save Parsons
one year on a two-year project.
Similar proprietary efforts are underway at other privately owned construction
industry giants such as Fluor Daniel and Black & Veatch. But this new game is
not just for the big guys. Local governments and midsize and small AEC
companies are deploying homegrown Internet applications.
In Silicon Valley, civic officials from eight cities recently launched a website so
that contractors can apply online for building permits (see "Permit Hermits," Page
150). Late last year, $1.3 billion Knoxville, Tenn.-- based homebuilder Clayton
Homes unveiled a $300,000 extranet that Director of IS Kevin Banker says will
link retail stores with back-end office software to give service representatives a
legitimate sense of when customers can expect their manufactured homes. "Our
new system should make everything operate more smoothly," says Banker, who
adds that by switching communications online as opposed to offline as they'd
been doing in the past, Clayton should save an additional $2 million to $3 million
each year.
Second Floor: THIRD-PARTY VENDOR SERVICES
Banker's colleagues elsewhere in the industry also see IT as a panacea but can't
afford to engineer applications of their own. Instead, like Dolph, the CIO at
Gender, these executives have turned to vendors to provide the technology they
need. For a monthly fee, they can tap in to services ranging from procurement to
recruitment, and project management to all-out document sharing and
collaboration.
According to Ray Levitt, director of the Center for Integrated Facility Engineering
at Stanford University in Palo Alto, Calif., vendors work well and are perfect for
those AEC companies that decide software development is not a core
competency.
San Francisco-based Buzzsaw.com, the 2-year-old company that helped Gensler,
offers customers a shared space where project managers can exchange documents
with engineers and architects, bid for subcontractor services, and even track
scheduling and performance. Citadon, also based in San Francisco, is the 4-yearold byproduct of the merger of dotcom companies Bidcom and Cephren, and has
similar offerings to Buzzsaw.com.
Such technology enables customers to manage communication among the
hundreds and thousands of individuals involved on a particular project. Phil Go,
CIO at Barton Malow, a construction management and architectural firm in
Southfield, Mich., agrees, saying that without signing on to use the Citadon
service last year, managing the development of the $325 million future home of
the New England Patriots and New England Revolution sports teams in
Massachusetts would have been exorbitantly expensive. "We're here in Michigan,
and we've got to coordinate hundreds of [subcontractors] 1,000 miles away-can
you imagine how much we would have spent on overnight mail?" he asks.
Other vendors cater to the AEC market too, offering targeted services to more
narrowly defined niches. TradePower, a company based in Linthicum Heights,
Md., offers materials management and procurement functions to contractors in the
electrical and electrical engineering fields.
Redwood City, Calif.-based BuildPoint, with a database of more than 30,000
contractors, offers similar platforms for contractors and small engineering
companies in the commercial construction sector. In New York City, architectturned-technophile Jim Lockwood, president of a company called Design Build
Partners, is going after a different kind of marketplace: His product helps clients
find human resources for projects that require extra hands.
For all their power in connecting people, though, the one thing these services lack
is bandwidth. If a project entails particularly large CAD files, the online options
are severely limited. Most CAD files range in size from 30MB to 100MB, and
none of these vendors offer the bandwidth necessary to share files that are larger
than that. Some companies, such as Citadon and Trade-- Power, have developed
the capacity to take snapshots of large files and display them in a much smaller,
read-only format. This, however, only postpones the problem. As Stanford's
Levitt explains, even if project managers upload read-only copies of a blueprint
for approval, contractors and subcontractors accustomed to working off an
original that can be altered will still need to download the full file eventually.
Third Floor: WIRELESS
Vendors may be forced to find solutions to the bandwidth issue sooner rather than
later. As PDAs and other wireless devices proliferate, and as the capacity for
cellular phones to access the Internet improves, more and more contractors and
subcontractors will rely on these devices to download blueprints, specifications
and other data directly to the job site.
Some AEC companies have embraced wireless like a new friend. At D.R. Horton,
a $3.7 billion homebuilder based in Arlington, Texas, CIO Felix Vasquez
launched a pilot program where project managers can use PDAs to interface
directly with suppliers and order materials such as lumber and sheetrock for a job.
At a test site in southeast Florida, this feature worked like a charm, enabling
managers to complete a new housing development more than one week ahead of
schedule-and Horton did not have to install any new technology to make it work.
At Lennar Corp., a $3.1 million residential homebuilding company in Miami, CIO
John Nygard says project managers use BlackBerry pagers to facilitate e-mail
communication with suppliers and accomplish similar time-saving results.
Larger companies with international operations are piping wireless technologies
through satellites to bring data to job sites in Africa, the Middle East and South
America. At Bechtel, CIO Leingang says these wireless satellite hookups solve
the problems his field managers have experienced connecting to the network
through local telecommunications facilities.
At Fluor Signature Services, a business unit of Aliso Viejo, Calif.-based Fluor
Corp., Vice President and CIO J.B. King adds that on remote jobs in the United
Arab Emerites and Colombia, outsourcing satellite wireless technologies has been
the only way to enable architects and engineers to deliver data to project
managers in the field. "Our people need access in the middle of the jungle of
South America just like they would in downtown Houston," says King.
Top Floor: THE VIEW
Going forward, the AEC industry is focusing its attention on the technologies it
thinks will dominate the future-virtual simulation and 4-D CAD, or CAD with the
added dimension of time, as in real-time scheduling capabilities. Experts say
virtual simulation of building plans could become reality and indicate that a
handful of companies are already using it today.
At the Houston-based architectural firm Archimage, architecture and computer
imagery combine to create 3-D, fly-through blueprints and plans of attack for
projects of every size. At Vite, a Mountain View, Calif.-based software
development and consulting company founded by Levitt, managers most recently
applied similar fly-- through and simulation technologies to orchestrate a high
profile cleanup of the Chernobyl nuclear power plant last year. "Think of this as a
flight simulator for trying a number of different approaches to an architectural or
engineering problem," Levitt says. "With simulations like this, you don't need to
resolve yourself to one approach so soon."
Most of the advancements in this area come from Martin Fischer, who, as
associate professor of civil and environmental engineering at Stanford University,
has developed a methodology for modeling schedules as well as the projects
themselves. Fischer has tested this technology frequently over the past year, but
most recently, he worked with Disney on its new California Adventure theme
park, opened Feb. 8.
Just as the collaborative environments of Citadon and Buzzsaw.com enable
participants to integrate documents from various sources, Fischer sees a new,
XML-based industrywide platform that enables everyone from architects to
contractors to integrate applications, and links every program in the entire EPC
cycle.
At AutoDesk, a $900 million software design company based in San Rafael,
Calif., Vice President Phil Bernstein envisions the same Holy Grail. From his
office in Manchester, N.H., Bernstein playfully touts an "intergalactic scripting
device" that will someday accommodate all of the different back-end platforms
within the industry.
Until that day, though, the fragmented AEC industry will remain fragmented.
"How do you handle it if your sheet metal contractor can't use anything but a
drawing, or if the pricing system your HVAC guy uses isn't compatible with
yours?" asks Bernstein. "These are cool problems, and they're ones we can't solve
without IT."
Sidebar
See how the Web was used to CUT THE COSTS OF BUILDING the Venetian
Resort Hotel.