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September 27, 1999

InformationWeek500
Builders Rely On IT For Efficiency, Profit

Construction

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While codifying and reproducing the valuable intellectual capital possessed by these companies' engineers remains an ongoing concern, companies are also designing communications systems with a more immediate goal: helping remote workers and outside partners share knowledge. John Voeller, chief knowledge officer at Black & Veatch LLP, an engineering, procurement, and construction company in Kansas City, Mo., that specializes in building power and water-treatment facilities, says his company's primary deliverable is "a cost-effective, timely, accurate decision." The challenge lies in getting partners to function cohesively. "Construction is the dynamic assembly of a team of strangers," he says. "You're not going to change the other guy's process." In the past, project manuals could help bridge the gap. "Today, that has to happen on the fly and digitally."

Geographic spread means firms need mobile, reliable communications systems delivered in less-than-ideal conditions. In some remote areas, firms need to build as much as 100 miles of road just to reach a construction site. In others, phone lines and Internet access are unreliable, expensive, or nonexistent. "You can't find any ISPs in Algeria," Bailey says. In these environments, companies bring in satellite earth stations to run computers through a WAN.

Sometimes, the challenges lie closer to home. Barry Ross, CIO at Skanska USA Inc., a $3 billion construction company in Whitestone, N.Y., says phone lines and wireless service are poor in some rural parts of the United States and even outlying areas of New York City, andISDN connections are not available. The company is evaluating a virtual private network from AT&T that connects local Post Office Protocols to Skanska's frame-relay network.

At Granite Construction Inc., a $1.2 billion civil construction company in Watsonville, Calif., director of IS Larry Hazen is beginning a companywide installation of voice over IP. In addition to achieving significant savings on long-distance charges, Hazen says, the system will let Granite deliver training materials and regulatory videos over its WAN. Granite invested in IT when competitors were cutting back during California's recession five years ago, enabling it to move quickly now, says Hazen.

Marginal Advantages
Not every IT project constitutes a major overhaul. Many projects simply help companies boost customer satisfaction a few degrees or trim nettlesome costs. For example, Charles Irsch, VP of information systems at Centex Homes, a $2.8 billion home-building company in Dallas, says location and quality are more important determinants of success in the home-building industry than information systems, since this sector spends less on IT than other types of construction companies-about half to three-quarters of a percentage point of revenue, Irsch says.

"We tend to look at some of the more marginal advantages," he says. For instance, Centex is building a financial data mart using Hyperion's Essbase OLAP Server. When active, Irsch says, the system will measure housing starts that weren't sold, homes sold that haven't been started, as well as contract cancellations. That can help the company measure inventory more reliably.

Data warehousing and mining tools, which Centex hopes to build in coming years, can pinpoint more reliably than surveys how much options such as fireplaces or certain floor plans are worth to customers. "We're not a repeat business," says Irsch, "We won't sell them more homes, but we can identify more customers like them."

Granite is writing company-standard software that promises to streamline its daily dispatch system. Rather than post locations of equipment and crews on a "big board" on the wall at each branch office, Hazen says NT servers will drive a dispatch database of the hundreds of jobs run from each branch. When complete, the system will better enable foremen to track and rent out idle equipment. "The key to the construction industry is utilization of that equipment. If it's sitting there for a day, you're going to lose money."

Black & Veatch's Voeller says specification and procurement of equipment is the primary way IT can shave time off jobs. Since last year, the company has built an Oracle database interfacing with an Internet Explorer front end to manage on-site equipment. Tracking this information can head off unforeseen costs. For example, specialty equipment in some cases must be stored on site long enough that it requires preventative maintenance. Says Voeller: "It's these kinds of details that will kick your butt if you don't get them taken care of."

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