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FMI Quarterly/June 2014/June 1, 2014

Technology and Successful Construction and Design Firms

Industry4_imageA company’s IT strategy must be in alignment with its business strategy, supporting operational, financial and/or resource initiatives.

Each new decade seems to bring several significant changes in technology and the way in which construction uses it. The 1980s saw departmental solutions, stand-alone PCs and eventually networks. The 1990s saw Windows, better networks and more user-friendly applications; the Web followed. The 2000s was “all net,” with a focus on enterprise solutions, collaborations and specialized solutions for each functional area. Now we are in the 2010s, and the focus appears to be on improved point solutions1, interoperability and mobile technology.

The lines are not as well-defined as these decades and categories might suggest, but it is worth noting that technology and solutions evolve over time. Businesses should not be so fixed in one decade’s technology and bound to legacy solutions that they find themselves behind their peers and competitors, limiting their future or even survival.

It is important when considering your company’s IT strategy to understand the direction of technology and how it is being deployed in the construction industry. In other industries, some technologies are applied more quickly or perhaps not at all. Occasionally, that, too, is instructive. Most importantly, what are your competitors, peers and customers doing and looking for in terms of technology? Consider all these shifts; then plan, select and implement according to what is best for your company and your markets. And remember that the last step, which sounds easy, is actually the one that determines value and return on your IT investment. An average system chosen and very well implemented is more likely to provide good return than the best of systems poorly implemented.

The following are specific IT trends to be considered as you develop your company’s strategy. Some of the trends are functional or applications-oriented, like building information modeling (BIM), enterprise resource planning (ERP) and mobile (tablets, smartphones and such), and affect the conventional application architecture and solution choices. Others are more technical (e.g., Cloud, agcXML) and affect interoperability and deployment options. Still others are more market-oriented (e.g., PPP/IPD) and could change the nature of how different collaborative systems work together. These trends and their various descriptions are offered for your own awareness as you contemplate, plan and execute your IT strategy.

BIM AND INTEGRATED DESIGN: WHERE IS THE MODEL HEADING FROM THERE?

To suggest that BIM is affecting construction and technology is almost too obvious. Clearly, the influence is present on the design function and close-in functions, like clash detection, schedule visualization, conceptual estimating and takeoff. However, what is equally interesting, but maybe more subtle, is an emerging data model from the use of BIM tools. As the all-data model moves from a design and marketing function to an operational tool, the data becomes richer, more accurate and ultimately far more valuable downstream.

Today a contractor can perform takeoff functions within the model, perform scheduling tasks and coordinate RFIs. Soon submittals and procurement will be performed within or in conjunction with the BIM model. The emergence of this larger and richer data model is bound to influence the way in which downstream applications, like ERP and facilities management (FM), are developed and deployed.

Companies will not be required to input as much data into base systems like ERP nor require as much function if those same functions are performed outside of ERP and within BIM tools using model data. The data will only need to be transformed or migrated over to the next system in line.

Currently, for example, estimating software develops a bill-of-materials (BOM) which may be transferred to a bid-solicitation software program in order to receive quotes. That same BOM is transferred to the purchasing application, which is commonly hosted within the ERP (accounting) suite. The purchasing transaction usually is completed with receiving and invoice processing. Now suppose someone develops a BIM solution, which uses data from the model to perform the bid request and purchasing function. This would leave the ERP solution to pick up the commitment transaction and post it to the appropriate job and vendor. This also leaves the major material purchases within the BIM model and transferrable to the owner’s facility maintenance system once the project is complete. Documents (e.g., warranty documentation, O&M manuals, etc.) associated with the items purchased as well as to the item records, but stored in enterprise content management (ECM), can be transferred too.

This evolution is just beginning, but the signs seem clear. The BIM model will have the data first, either before or during preconstruction and certainly before the ERP systems. Unless ERP system developers build cooperative solutions, they could force others in the BIM application area to build out competitive functions and thereby encroach on the traditional footprint of the ERP technology producers.

PRECONSTRUCTION

The common preconstruction functions, such as takeoff, estimating, bid solicitation, prequalification and scheduling, are changing rapidly because of specialized tools for those functions and the emergence of BIM tools and BIM data. Scheduling, estimating, buy-out and submittal processing historically have been performed by stand-alone tools, resulting in stand-alone data sets. This data was re-entered when necessary into the next system in line. BIM solutions are either creating their own capability in these areas or working with stand-alone solutions to integrate and move data back and forth.

For example, today many contractors move drawings generated by the model to an electronic screen-based takeoff solution, only to have those quantities moved to an estimating system and finally on to a budget in job cost when the job is awarded.

Further, plan-room solutions are developing both bid-solicitation capabilities and contractor prequalification. They are either building it themselves or buying solutions that accomplish the function. This is creating application overlap, which is a consistent theme in this article. This ultimately forces contractors to decide which applications they want to work in for a specific function, as they frequently are confronted with a choice.

ERP

The landscape ahead for some ERP solutions is treacherous. If software developers are not already prepared to work with BIM data and in a more interoperable manner with project management solutions, ERP software developers’ futures are likely bleak. Point solutions and the emergence of the BIM model are changing the way ERP applications are going to market, designing applications and anticipating the next generation of software. As described earlier, the BIM model is hijacking some of the data and function normally handled by the ERP solution. ERP solutions were developed with a double-entry design paradigm that ensures integrity and auditability, necessary for the accounting office. Operational functions that required less structure were built with the same level of stringency, which led to the comment, “It feels like a PM application built by an accounting software vendor.” This was the gap the project management software vendors were looking for as they developed more functional and intuitive free-standing applications.

Separating project management and accounting systems failed in the 2000s for a number of reasons, which have since been overcome in the early 2010s. Collaboration has become more important as owners and architects demand a solution they can work on with the general contractor. More owners are demanding the contractor use their project management system of choice. Internet connectivity at jobsites has improved to the point where contractors are willing to choose a web-based platform versus one that can run disconnected from the site. The functionality of these stand-alone project management solutions has improved and broadened, making them more appealing to operations personnel.

Truly cloud-based ERP solutions have not caught on yet, but may not be far away. Today many solutions are being marketed under a “cloud” moniker but are in fact simply a software as a service (SaaS) solution, which is software hosted outside of a contractor’s office but provided through an Internet connection. Until the benefits of a truly cloud-based approach are made evident to the construction marketplace, an application service provider (ASP), hosted or SaaS strategy may prove sufficiently compelling to get the software and hardware out of the contractor’s office.

The ERP software developers are facing confrontation and competition on many fronts. The battles they choose will determine their fate. As a contractor, the solutions you choose will certainly affect your organization’s success with technology.

COLLABORATION

Collaboration was popular in the early 2000s when Internet applications were at an early peak. However, collaborative solutions for project management met with resistance due to lack of architect participation and concerns over duplicate entry. New solutions have entered the market to have another run and are showing promise. Interoperability will also have a positive impact on this trend (see Interoperability below). Collaboration can be provided in multiple ways rather than the single web-based platform of the early 2000s. Integration technology has improved, allowing for transactions to move between one solution and another. Others are using a workflow approach and email as a means of moving transactions from one solution to another. This is not the final solution, but is more easily established than expensive point-to-point integration exercises.

Collaborative solutions are also bringing other needed platform functions, such as dashboards, alerts and workflow. These could become the platform for operations personnel. And data from other systems will feed necessary tables within the project management or collaborative platform to provide the project manager access to the tools and data needed to monitor and maintain the project data. This can include cost data, project administration details and invoices for approval. In the 15 years since the experiment began, subcontractors and architects have come a long way in terms of willingness and ability to participate in these collaborative solutions. Finally, as the BIM solution providers move toward a more collaborative platform for working with BIM data, they will come into direct contact with the project management collaboration systems. These two solutions will benefit from having a more transparent integration model, sharing documents and records.

PERSONNEL

Most personnel in construction organizations are now younger than 40 years old and have grown up with technology and probably learned some construction functions (e.g., scheduling, estimating) directly on a computer in school. The demands from personnel for state-of-the-art tools, along with a need for people to “get on board,” are driving adoption among the current generation of users. This more advanced user community presents a double-edged sword. In addition to being more compliant and easier to train, they are also more risk-tolerant and experimental. They will download applications, share data and “play” with systems more readily. They are also members of the group that spawned the term “BYOD” for Bring Your Own Device … to work. This means IT has more devices to support and needs better controls in place to protect the enterprise environment.

And this movement within the organization has spawned an important new position, the super-user. Super-users are effectively the first line of defense for the user of a given software solution or application. Someone within the company familiar with the project management solution the company uses could be assigned to be the super-user, thereby being responsible for training new users, keeping documentation current and being the “first responder” to support calls from operations. This opportunity to leverage personnel from operations was not feasible in years past.

CLOUD DEPLOYMENT

Cloud computing is the rage these days, but the term is often misapplied and misunderstood. There will come a time when construction needs the cloud, but for the time being, ASP, SaaS and remote hosting achieve much of the desired results. Cloud computing seems to have more cachet than prior versions such as ASP and SaaS.

The objective of these different deployment models was to get the hardware and software out of the customer’s office and onto a server housed in a well-managed data center. This was achieved when application providers teamed with data centers to provide co-location capabilities. This meant the contractor owned the hardware and software but allowed it to reside at a professional data center and be maintained by its staff. This was followed by ASP and SaaS, which allowed the software to be provided to customers based on a different licensing model. Instead of licensing the software in perpetuity for an upfront cost, the developers were willing to “rent” the software out and include the hardware, services and storage in the price. This had the effect of lowering the upfront cost of the software and allowing software costs to scale up and down as the organization’s needs changed. Having software priced on use is appealing, as is moving the hardware and software maintenance out to a third-party service, particularly when you have complex software involved.

Contractors should move cautiously into these new deployment models and understand the license agreements. It is another trend here to stay, but also one that is early and being fine-tuned by the software developers. Knowing where your data and backup facility (in case of a disaster) are and how you can integrate with other systems which reside elsewhere are important.

MOBILE

As with much good technology, mobile field applications were introduced ahead of their time. Management’s desire to have solutions in the field for foremen and superintendents has been around for nearly 20 years. Attempts were made with early devices, which were very specialized and with software written specifically for them. Today it is common to have an application running on an iPad or tablet that can collect time cards, units of production and equipment hours. Some of these devices can operate stand-alone without a persistent Internet connection, while others do require a constant connection.

More applications are being developed for field operations every day, and some application developers, who have server-based programs, are converting specific functions (e.g., foreman daily reports) for use on a mobile platform. In addition to importing time sheets into the payroll application, these devices will send copies of time sheets to the ECM application for permanent storage and reproduction when needed for an owner audit or billing backup. Tablets and iPads also are being used to access drawings and capture photographs and video. Companies are becoming wise, though, in their deployment of mobile solutions, finding the applications first for functions and then settling on the device.

ENTERPRISE CONTENT MANAGEMENT

ECM is one of the best-kept secrets in construction, unfortunately. Enterprise content management has long served other record-intensive industries, but was only lightly deployed in construction. Contractors seemed happy enough to get an invoice routing and storing function implemented. Early solutions to the industry were helpful with invoices but were misdeployed for many other important functions, like the handling of human resource records, project management documents, photographs, email and other important “content” common to a contractor’s business.

Interestingly, the vertical application providers, those working to bring ECM to construction, were initially focused on one of the big problems, invoice routing. Once that was solved, new workflows and document storage uses were next. Some ERP software applications are now offering an integrated document management function with some workflow capability; but the long-term storage and specialized requirements of ECM seem to require a more unique application and one that operates enterprisewide, rather than simply within a single application. More contemporary software products seem to be developed with this in mind, associating links with records stored elsewhere, rather than with the files. This allows the permanent records to be accessed from either within the originating applications or the ECM system.

The ability to access all records that pertain to a single project, sub or employee quickly, easily and accurately is worth a lot. Today’s discovery requests are expensive when you do not have good record management policies documented and supported by systems software. If you look around and find you have documents and records within shared drives, cloud solutions, local
laptops, email, file folders and banker boxes, you are likely a candidate for ECM technology.

INTEROPERABILITY

For some time now, there has been a significant demand for systems to share data easily from one application to another, both inside a single company and between companies. There are several industry-wide IT initiatives underway to standardize data design, thereby making the exchange of data (interoperability) easier. This will make data sharing across platforms and between companies far simpler and less costly for the contractor and vendor. Others are converting various common transactions or data sets into a standard version for industry use. This will allow every software developer who produces or “consumes” that particular record (e.g., RFI, submittal, time card) to depend on its data elements and thereby be able to import that transaction more easily. Today many of those interfaces have to be manually developed and maintained by one or more developers or someone who designs special “middle-ware” software that acts as an exchange. ACORD, agcXML and XBRL are a few key examples of public-private initiatives that are currently underway to standardize various data sets or transactional models. They are described in detail on the Internet for those who want specifics.

HOW TO PLAN FOR THE FUTURE

First, it is never a good idea to pursue technology for technology’s sake. This can be expensive and fraught with risk. It is tempting when these trends are read and seem right simply to pursue some solution within an appropriate category. But in fact, these trends, as published, are meant to direct strategy, not initiate a purchase of one thing or another.

A company’s IT strategy must be in alignment with its business strategy, supporting operational, financial and/or resource initiatives. For example, if a company is labor-intensive, solutions that support development of personnel, safety, mobile access to field solutions and productivity management seem natural. Also, the pace with which you move is very important. It is unlikely you can or should race to catch up or move quickly automating any one area of the company. Rather, it would be prudent to plan for a three- to four-year rollout and upgrade of current systems. Within this period, if well planned, a company can move to current technologies, improve the use of solutions already in place, train personnel on better use and integrate solutions new or in place. This is a sustainable pace the organization can handle and the IT department can support. It is unlikely decisions made within this three-year window will become outdated soon unless one was to disregard the markers provided in the article.

CONCLUSION

The above-mentioned trends will mean different things to different people. For some it could be a wake-up call to catch up and remain just behind the curve, rather than falling behind again within a few years. For others, there may be an indicator here of a strategy that should be adjusted slightly or a path that should be continued as it is already in alignment with the prevailing winds. In either case, there is no single time frame for these trends. They are all currently happening in varying degrees and will affect your business, depending on the type of contractor you are, the type of customers you serve, and other external and internal considerations.


Christian Burger is president of Burger Consulting Group. He can be reached at 312.651.4150.

1 Point Solutions are applications that are far narrower in scope and function than traditional programs, such as accounting, estimating or even project management. They typically do one function well, better than any other does.

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