The House That IT Helped Build

Construction firms turn to their IT groups to drive efficiencies in projects.

InformationWeek Staff, Contributor

September 15, 2001

12 Min Read

InformationWeek 500 - Construction & EngineeringConstruction and engineering companies have struggled in recent years to recast themselves as dot-com companies. But now that it's no longer fashionable to be a dot-com, they're going back to what they do best: building things.

"With all of the E-commerce activity, there was a lot of pressure to create E-commerce opportunities," says John Thomas, CIO of Parsons Corp., a construction and engineering firm. "We no longer have that pressure. We're back to our original focus." Although Thomas says the Pasadena, Calif., company has Web-enabled virtually every one of its applications, its directors aren't as concerned as they once were about transforming Parsons into a new-school hybrid. Instead, the IT group is applying technology to an old-school problem: finishing construction projects faster and more efficiently.

It's a problem that's plagued construction for centuries. "The construction business is notoriously inefficient," says Leif Eriksen, an AMR Research analyst who follows the use of IT in the construction and engineering industry. To make matters worse, project margins have become increasingly tight. Construction companies once charged clients on a cost-plus basis, but now they operate for a fixed price, often with penalties if they don't finish on time. That model means that the slightest time lapse or cost overrun on materials can put an engineering firm in the red on a billion-dollar project.

More-efficient practices could make it easier for construction companies to turn a profit. But construction, unlike industries such as manufacturing, relies heavily on human labor rather than automation. While a computer can be used to plot out a new water main, people are needed to drive the machines that dig a hole for the main and cut the pipes that carry the water. "There aren't a lot of places where you can improve the efficiency of the operation. A lot of people say there's no other way to lay a brick," says Keith Authelet, CIO of Gilbane Building Co., a Providence, R.I., engineering firm.

There are built-in limitations to automating construction, which is why engineering companies turn to IT to automate the flow of information throughout a project and to everyone involved. The right information at the right time can take days or weeks off the construction process. For example, Gilbane has deployed systems to integrate information such as a costing application that tells the company the cost of making changes to a plan, and a knowledge-management network that helps Gilbane employees and subcontractors collaborate on projects.

A smooth transfer of information is tricky even within a single, centralized, tech-savvy company. Companies such as Parsons and Gilbane may conceive and manage a project, adding some high-level expertise, but the bulk of the work--from architectural design to plumbing to bricklaying--is subcontracted. Moreover, a typical project pulls in internal groups separated by geography and division. A successful project requires that all parties share information and work together.

Construction IT departments try to link everyone through applications and systems integration, automating business processes that were previously manual. Homebuilder D.R. Horton Inc. in Arlington, Texas, used to have an information gap between the people who sold its houses and those who built them. If a prospective customer wanted to see whether a bay window was available with a particular floor plan--an option that has to be figured in before the foundation is poured--the salesperson had no way of knowing the answer. "The only option they had was to make some frantic calls," says Felix Vasquez, D.R. Horton's CIO.

But a portal initiative called DHI One (for one network, one system), deployed in 10 of the company's 40 operating divisions, ties the two groups together. D.R. Horton uses Lotus Enterprise to connect the sales software, a homegrown application based on Lotus Notes, and construction-scheduling software called MH2BuildPro. Changes to a project are replicated throughout the company within 30 minutes, so a salesperson can tell customers exactly where the construction stands. MH2BuildPro connects to D.R. Horton's enterprise resource planning system, so it can generate automatic payments when construction stages are completed and track subcontractors' delivery records. The integration, Vasquez says, has helped the homebuilder save as much as 20% of typical costs in the divisions that use DHI One.

Parsons has returned to its original focus-building things, CIO Thomas says.

Integration is important for Parsons, which ties its apps and those of its suppliers into one seamless system. With integration, Thomas says, "Power plants that went up in 24 months could go up in 22 months with no major change." A typical Parsons project is complex, with tens of thousands of supplies--roughly 80% of which are customized--to be ordered. If the right part isn't ordered in time, the project will be held up.

Integration links architectural drawings created in computer-assisted drawing software to Parsons' dynamic materials-control system, so that orders for unique parts can be automatically generated from the drawings. The control system will be further tied into project scheduling software from Primavera Systems Inc., which also manages workflow and documents. The integration could save Parsons hundreds of millions of dollars on a billion-dollar project, Thomas says.

However, not every interaction in a project can be handled within the constraints of an application. The need for frequent and easy communication among employees, customers, and subcontractors is driving an industrywide push toward collaboration software, perhaps the single biggest trend. "You're always building something for somebody else, so you have to interact with them," AMR's Eriksen says.

Collaboration is particularly important when working with subcontractors. If construction companies are always building something for someone else, they're also always building it with someone else. It's with the subcontractors that much of the communication on a project breaks down; a typical subcontractor may have only a few dozen employees and literally no technology infrastructure. "Some of our contractors don't even have a personal computer," says Philip Go, CIO of Barton Malow, a construction company with projects ranging from schools and hospitals to Baltimore's Camden Yards stadium. With that low-tech approach in mind, the Southfield, Mich., company is rolling out collaboration software hosted in an application service provider model by Citadon Inc. Rather than requiring invasive software, Citadon requires only Internet access. If subcontractors don't have Internet access--or computers, for that matter--Barton Malow gives them computers and shows them how to access and use the system. "We do everything short of spoon-feeding," Go says.

The effort is worth it. "It's changed the way people do projects. Decisions get made a lot quicker," Go says--50% quicker, in fact. Citadon uses workflow software to route tasks from one party to another. If a subcontractor wants clarification on specs, Citadon routes the information request to a construction manager, who in turn can ask the architect. The system also lets the parties involved with a project discuss issues and give feedback on blueprints. A "today" page alerts employees and subcontractors to critical tasks. Citadon handles roughly $800 million of Barton Malow's $1.2 billion construction business.

Other companies use collaboration primarily for internal systems. Granite Construction Inc., a Watsonville, Calif., engineering company, has deployed SiteScape by SiteScape Inc., with the goal of capturing the experience and knowledge of its employees. "Our biggest challenges in growth are getting the expertise and the people," Granite CIO Larry Hazen says. For example, the operators of heavy equipment such as cranes used to pass their knowledge from father to son--but now the sons don't want to go into construction. So Granite tries to gather the knowledge of its operators and use it to train future generations. New operators can pose questions to others in the company; "miners" gather answers to those questions and archive the information so it can be pulled up later.

Collaboration also can tie into procurement exchanges. Standalone exchanges have been largely ignored in the construction industry, but a few companies have found limited use for the exchange concept. Toll Brothers Inc., a manufacturer of luxury homes, built its own exchange,, to find subcontractors for new housing divisions. lets would-be contractors search for jobs by trade and geographical area and download floor plans to estimate costs. If they want to bid, runs a qualification program to make sure a contractor is reliable, then manages the bidding process. The exchange, CIO George Fenzil says, has helped the Huntingdon Valley, Pa., company expand its base of contractors in areas where it hasn't previously operated. "It's creating greater efficiencies and helping us reach a broader pool," he says.

Another major push for the construction and engineering industry is wireless and handheld technology, which helps answer the need for instantaneous information. Toll Brothers is deploying Palm handhelds that link to its Schedule Builder project-management package, so when one building stage, such as framing, is completed, the program can more quickly bring in other trades, such as electrical and plumbing. Granite is giving Palm devices to its supervisors so they can fill out weekly crew sheets without going to a distant office to do so. "We're hoping they'll spend those hours they would've spent driving back from the office doing more productive things," Hazen says.

Other companies are pushing more aggressively with wireless. Barton Malow is rolling out wireless Compaq iPaq devices, which will give users access to its network, including its scheduling software and collaboration system. D.R. Horton is using Palm devices and Nextel smart phones in Las Vegas and Austin, Texas. The devices are used to mark the completion of one construction stage so the next stage can begin. "It's more effective than asking someone to walk around with a stack of papers," CIO Vasquez says.

Effectiveness is key to IT in the construction and engineering industry. Companies no longer charge IT departments with transforming the business into something new--they charge them with making it run more like a business.

Closeup Construction & Engineering



Revenue in millions

Revenue Change

Income (loss) in millions

Income Change

IT employees


Gilbane Building Co.







Parsons Corp.







Del Webb Corp.







Fluor Corp.







Beazer Homes USA Inc.







Lennar Corp.







Standard Pacific Corp.







Centex Homes







Toll Brothers Inc.







Bechtel Group Inc.







Clayton Homes Inc.







Granite Construction Inc.







Barton Malow







Day & Zimmerman Group Inc.







D.R. Horton Inc.






SnapShot 500/Construction & Engineering

Inside companies

Average portion of revenue spent on IT

Portion of IT organizations that sell services or IT products to other companies

Portion of companies that say wireless E-commerce will contribute to E-business revenue stream

Senior IT executive is a member of executive management committee

Average portion of customers included in electronic supply chain

How companies divide their IT budgets

New product and technology purchases

IT consulting and outsourcing

Research and development

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Everything else

How often companies re-examine their IT spending plans





Twice a year



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