Leverage On ICT In Construction Industry

Information and Communication Technology (ICT) has been widely applied across many sectors in order to increase competitiveness and reduce costs (Marsh et al 2000), and is today seen as a vehicle to gain a competitive advantage (Ives et al 1991, Earl 1993). The average annual growth rate of ICT investment in the construction industry is increasing every year and constitutes now a significant part of the total project cost.

However, some studies indicate that the ICT utilization ratio is still relatively low in the construction industry (Woksepp and Olofsson, 2007). A study about the usage of ICT tools in the European construction industry (InPro internal report D2, 2007), revealed a lack of use of ICT tools in construction projects, especially in the early stages, despite several good alternatives available. In Malaysia, during the two-day Infrastructure & Construction Asia’s Building Information Modelling & Sustainable Architecture 2009 conference (in August 2009), Public Works Department director-general Datuk Seri Prof Judin Abdul Karim urged the construction companies to adopt information and communications technology (ICT) to enhance their capability. He said the awareness of using ICT was there but the cost of investment prohibited companies from adopting the technology and upgrading the system especially for the small companies. It was not a problem of knowledge and information on the usage of the ICT. He also emphasized on the importance to have a integrated software system as a lot of professionals like architects and engineers within the same companies were using different kinds of software. Standardisation is important in obtaining effective workflow for the project development and implementation (The Star, 2009).

Some of the main causes for this were suggested to be deficient understanding and lack of knowledge about the possibilities of ICT, unsuccessful implementation into project organizations and limitations of software functionality. Another reason is most likely that construction companies often find it difficult to justify ICT investments in an industry that suffers from low profit margin (Alshawi et al 2003) and that many managers often view ICT investments as a process of consumption rather than capital expenditure (Irani et al 2002) and do not realize the importance of evaluating the IT investment (Willcocks et al 1997). Moreover, the traditional approaches to evaluate investments have been shown inadequate (e.g. Peacock et al 2005, Love et al 2001, Andresen 1999, Irani et al 1999, Shank et al 1992). DeLone et al (1992) argues that commonly used benefit and cost analyses are often found lacking due to difficulty of quantifying intangible benefits. The lack of effective evaluation models does not only have an influence on individual projects but also, in the long run, the motivation to innovate and introduce new ICT tools in the construction industry.

The main purposes of using ICT in construction projects are to improve operational efficiency of an organization, to improve quality and to reduce project time and to increase profit levels (Gunasekaran et al 2001). Intangible effects could be sustainable competitive advantage (e.g. Barney 1991, Powell et al 1997,Henderson et al 1999), better project control and understanding, marketing, customer service, et cetera. Carefully evaluated and considered ICT investments with established objectives can boost an organization forward with the increased likelihood to achieve successful implementation and improved project performance while reducing costs. Equally, poor investments, those that are inadequately justified or whose costs, risks, and benefits are poorly managed can hinder and even restrict an organization's performance (GAO 1997). The effects associated with an ICT investment are uncertain and difficult to measure (Ekström et al 2003) and the benefits and value of IT investments are being questioned by researchers and practitioners (Dadayan 2006). However, a great number of researchers have shown the values of using ICT in construction projects (e.g. Dawood et al 2005,Bouchlaghem et al 2005, Fischer et al 2004, Björk 2001).

The process of investment justification has been identified as a major barrier to implementing ICT (Love et al 2000, Andresen et al 2000, CIRIA 1996, Enzweiler 1996) and because of the growing concern about the effectiveness of information systems expenditure there is an increasing need to re-think approaches to the evaluation of information systems in order to demonstrate business benefits from these investments (Remenyi et al 1999).


EVALUATING ICT INVESTMENTS

According to Farbey (1992), the evaluation is envisaged to serve different objectives, such as:

1. Being used as a part of the process of justification of a system;
2. To enable an organization to make comparisons between different projects competing for resources;
3. To provide a set of measures that enables the organization to exercise control over the project.

Moreover, evaluation and the subsequent measurement and comparison with actual achievements will provide the learning experience which is necessary if the organization is to improve its system evaluation procedures and development capability. Evaluation and justification of ICT investments is a complicated process, not only in the construction industry but also in all major industries, since cost and benefits associated with the investment are uncertain and difficult to measure (Ekström et al 2003). Early estimates, in general, are typically plagued by limited scope definition and are often prepared under time pressure (Trost et al 2003).

Traditionally, specialists in different areas have been engaged in the task of evaluating the benefits and costs of future ICT investments. Many times these specialists have little or no knowledge of the overall consequence of the investment. Andresen et al (2000) describe the IT managers’ large influence on the selection of data management systems on which the senior management uses to support their decision making. Specialists such as IT managers have mostly poor understanding of the company’s overall business goals and are often excluded from the decision-making process. The senior management on the other hand is well acquainted with the company’s business but has little insight into the fast-changing ICT development and often lacks feedback from previous strategic ICT projects. Anandarajan et al (1999) pointed out the influence of the accountants in ICT investment decisions. They usually focus on analyses that can be measured in monitory terms but lack insight into the effects on the work processes. Instead of making the analysis of ICT investment the task of a specific profession, general methods and tools should be developed to assist the decision-making process.

According to Lindfors 2003, DeLone et al (1992), the tool is divided into three basic levels:

1) First, a technical level that represents the accuracy and efficiency of the system;
2) Second, a semantic level that addresses the success in conveying the message; and
3) Third, an effectiveness level which measures the effect the information has on the recipient.

· Technical level comprises productions, process and system quality.
· Semantic level comprises system use, product and information quality.
· Effectiveness or influence comprises user satisfaction or individual impact to recipient and influence on system is more on the project and organizational impact.

According to (DeLone and McLean 1992), there are a number of variables that recognize the effects for each categories:

• System quality – effect on the information system itself which produces the information
• Information quality – accuracy, meaningfulness and timeliness of the information produced
• System use – use of the information system
• User satisfaction – interaction of the information system with its recipients: users and project owner
• Individual impact – influence on management decisions
• Project/organizational impact – effect on organizational performance
• Process quality – effect on information management process quality (Lindfors 2003).

Refer to Table 1 : Information System Success Variables (at the top of article)

A study done by Woksepp and Olofsson (2007), the expected project cost from realizing an ICT investment should be identified, structured and quantified using a theoretical framework developed from a project perspective. All costs are incurred and accounted for in the project. Costs can be defined as the expenditure necessary to achieve the benefits. The costs are divided into three categories, ‘Capital costs’, ‘Operational costs’ and ‘Indirect costs’. Each of the categories consists of a number of variables that recognize the effects according to:

• Capital costs – Up front costs, e.g. software and hardware.
• Operational costs – Start-up and on-going costs, e.g. personnel and consultants.
• Indirect costs – Indirect expenses, e.g. support and productivity losses.

This structure intends to enable easier identifying, quantifying and grading of the costs and it also facilitates an easier management and follow-up of the results.

Refer to Table 2 : Project Cost Categories (at the top of the article)

The capital costs – including the up front costs that can be attributed to expenses such as acquisition of software and hardware - have been separated from the operational costs so that the project owner can readily calculate the depreciation time. Capital costs also include additional hardware accessories, such as increased processing performance, memory or similar.

The operational costs - including the start-up and on-going costs, e.g. personnel and consultancy costs, are often underestimated and exceeding ‘obvious’ costs such as hardware and software costs. Operational costs also include the costs for carrying out the evaluation.

Indirect costs are those expenses that are not classified as direct, e.g. support and productivity losses (e.g. when introducing a new ICT system or tool into an organization).

The process of assessing the costs is similar to that for analyzing benefits using the collective experiential knowledge of the multi-disciplinary evaluation group. The cost evaluation procedure consists of four levels of cost variable aggregation. First, the costs are identified. The evaluation group proceeds methodically and uses the list of cost categories and their adjacent variables to establish the costs and to ensure that no hidden costs are overlooked. Now, in practice, this is nearly impossible because the hidden costs are often related to future events which yet can not be anticipated, e.g. staff hours for maintaining the system, cost for communication, etc. However, additional input can be added in a later stage. Second and third level; the identified costs are grouped into appropriate category (variable) and quantified in monetary terms. And fourth level, the variables are classified into one of three grades: 1 – ’Most likely’, 2 – ’Likely’ and 3 – ’Unlikely’, depending on the likelihood of that happening. The structure and procedure facilitates for the users to identify individual costs – effect and size – as well as take in the overall result. It also facilitates pinpointing the most significant costs, which in an early stage could be enough in order to put together a preliminary budget. Only those costs that directly or indirectly affect the project are dealt with. The sum of the cumulated categories together with respective classifications represents the total cost for the evaluated investment. The prerequisites can be adjusted on all four levels, giving the users a maximum of flexibility to adapt the evaluation to new conditions.


CONCLUSION

As many ICT investment also involves changes in the process, the traditional construction processes has to be changed to take advantage of the benefits that the ICT tools can offer. This is as an integral part of the concurrent engineering approach. Still, the shift in focus from individual stakeholders to benefits for the project gives a momentum to optimize the benefits in the use of a new ICT tools in construction. This will surely affect the processes and the contractual environment in the project, since it has to support sharing of information and achieved benefits and the costs of the investment in the project.


References

1. Woksepp, S. and Olofsson, T. (2007). “An evaluation model for ICT investments in construction projects. “ ITcon Vol. n (200n). eBygg – Center for Information Technology in Construction, Department of Civil & Environmental Engineering, Luleå University of Technology, and NCC Construction Sverige AB, SE.
2. Marsh, L. and Flanagan R. (2000). "Measuring the costs and benefits of information technology in construction." Engineering Construction and Architectural Management 7(4): 423-435.
3. Ives, B. and Jarvenpaa S. L. (1991). "Applications of global information technology: key issues for management." MIS Quartely, Mar 91 15(1): 33-49.
4. Alshawi, S., Irani, Z. et al. (2003). "Benchmarking information technology investment and benefits extraction." Benchmarking: An International Journal 10(4): 414-423.
5. Irani, Z. and Love P.E.D. (2002). “Developing a frame of reference for ex-ante IT/IS investment evaluation.” European Journal of Information Systems 11: 74-82.
6. Irani, Z., Ezingeard, J.-N. and Grieve, R.J. (1999). “Integrating the cost of an IT/IS infrastructure into the investment decision-making process.” The International Journal of Technological Innovation and Entrepreneurship (Technovation), 17(11/12): 637-647.
7. Willcocks, L. and Lester, S. (1997). “Assessing IT productivity: Any way out of the labyrinth?” In Management IT as a strategic resource, Willcocks, L., Feeny, D.F. and Islei, G. (eds.). The McGraw-Hill Company, London.
8. Willcocks, L. and Lester, S. (1996). “Beyond the IT productivity paradox.” European Management Journal, 14(3): 279-290.
9. Woksepp, S. and Olofsson, T. (2007). “Credibilty and applicability of Virtual Reality models in design and construction.” Submitted to the 24th CIB W78 Conference in Maribor, Slovenia, 26-29 June.
10. Woksepp, S. and Olofsson, T. (2006). “Using Virtual Reality in a large-scale industry project.” ITcon 11: 627-640
11. Anandarajan, A. and Wen, J. H. (1999). "Evaluation of information technology investment." Management
decision 37(4): 329-337.
12. DeLone, W. H. and McLean, E. H. (2003). “The DeLone and McLean Model of Information Systems Success: A Ten-Year Update.” Journal of Management Information Systems 19(4): 9-30.
13. DeLone, W. H. and McLean, E. H. (1992). “Information Systems Success: The Quest for the Dependent
Variable.” Information Systems Research 3(1): 60-95.
14. Lindfors C. (2003). “Process oriented information management in construction – Information systems supporting the work processes of project managers and project groups.” PhD Thesis, Department of Industrial Economics and Management, Royal Institute of Technology, Sweden.
15. Dadayan, L. (2006). “Measuring Return on Government IT Investments.” Proceedings of the 13th European Conference on Information Technology Evaluation, Genoa, Italy, 28-29 September.
16. Ekström, M. A. and Björnsson H. C. (2003). “Evaluating IT investments in Construction - Accounting for
17. strategic flexibility.” CIFE Technical Report #136, Stanford University.
18. Gunasekaran, A., Love, P. E. D., et al. (2001). "A model for investment justification in information technology projects." International Journal of Information Management 21(5): 349-364.
19. Remenyi, D. and Sherwood-Smith, M. (1999). “Maximise information systems value by continuous participative evaluation.” Logistics Information Management, 12:½: 14-31.
20. Trost, S. M. and Oberlender G. D. (2003). "Predicting Accuracy of Early Cost Estimates Using Factor Analysis and Multivariate Regression." Journal of Construction Engineering and Management 129(2): 198-204.
21. Björk, B.-C. (2001). “Document Management – a key IT technology for the construction industry.” Proceedings of the ECCE ICT Symposium 2001 Association of Finnish Civil Engineers, Espoo, Finland.
22. Thursday August 20, 2009, “Construction companies urged to adopt ICT”. http://biz.thestar.com.my/news/story.asp?file=/2009/8/20/business/20090820082547&sec=business


PREPARED BY: HABIZAH SHEIKH ILMI (2007130933)

Masterbill Software For Quantity Surveyor In The Construction Industry

1.0 Introduction

The environment surrounding construction industries has changed drastically during the past decade. They are looking for new ways to compete effectively. One of the key factors of corporate success is the ability to quickly adapt to changing conditions in the environment, innovate continuously and achieve goals.

Organizational knowledge provides this capability. More specifically, organizational knowledge provides the capability to understand the market, asses the client's needs, and translate them into products and services by integrating various organizational resources. As we move from the industrial age into the intelligence age, knowledge has become a central force behind the competitive success of firms (Kim, 2001).

Information Technology (IT) is considered as one of the critical factors for effective KM (Junnarkar and Brown, 1997; Trussler, 1997; Ruggles, 1998; Syed, 1998; Skyrme, 1999; Sarvary, 1999; Zack, 1999; Choi, 2000). As the importance of organizational knowledge and the role of IT in KM increase, choosing the right of IT for different KM strategies is crucial. During the project management process, IT is extensively utilized.

However, the construction industry has been slow to recognize the benefits of IT as a major tool beyond communication (Egbu et al., 2001). Transferring knowledge and information across projects is a major challenge for construction industries. Much of construction work is project based, characterized as short-term and task-oriented, promoting a culture where continuous learning is inhibited. Subsequently, specialist and technical knowledge may be lost from one project to another. Gann (2000) argues that IT can assist the transfer of knowledge and information between project teams, enabling the development of new knowledge for innovation.

2.0 Masterbill³ Software

Established in 1981, having emerged from a Quantity Surveying practice, Masterbill have always set the standards by which Construction Industry Software should be judged. Since our first BQ system on a Micro Computer, through to the launch of the World's first true Windows 32-bit BQ system in 1997 and the development of a complete e-Tendering solution in 2001, Masterbill have always sought to think beyond products and encompass the entire solution.

In recent years Masterbill have become established in the estimating market, making us unique in serving both Quantity Surveying and Construction Company customers and this in turn has led to developments including CAD measurement, plus Site works measurement and modeling.

In 2005 Masterbill once again took the opportunity to think beyond products with the launch of Masterbill Elite which provides the complete solution from Feasibility through Cost Planning and BQ Production to Final Account in a single product with a single database.

One and the most popular product is Masterbill³. Masterbill³ is the complete BQ Production System, fully featured and including Pricing, Cost Analysis and Tender Comparison routines. Masterbill³ uses a Project Structure; i) Parts, ii) Elements, iii) References & iv) Cost Code ; which together with full sortation results in the ability to produce bills in almost any sequence.

The Project Structure is normally set up at the start of a project using the lists shown, although it can be amended later. As they are created dimensions are allocated to a Reference, Part, Element and Cost Code combination (a dimstore) from the Measurement Window using drop lists

Masterbill³ allows the user to create a Bill of Quantities at any point in the measurement process. In creating a BQ the user can set:

• The BQ sequence - the user may choose from the 10 available sequences allowing the BQ to be sequenced to suit their particular requirements.
  
• Measurement selection - the user may choose which Parts, Elements, Workgroups and Cost Codes they would like included within their BQ.
• Layout - with user-defined headers, footers, page numbering, fonts and column widths

Masterbill³ allows the user to store up to 15 sets of tender rates which may be entered as unit rates, lump sums, PC Sums, ‘Included’, 'Excluded', star rates or 'Rate Only'. The ‘Matching Prices’ feature also provides the opportunity to select an alternative tender on a previous project to use as a basis for pricing the current estimate. Once the BQ is priced user-defined and standard BCIS Cost Analyses can be obtained instantly and when more than one tender is present tender comparison routines come into play.

Masterbill³ is not just CITE compliant but it also includes all the tools to enable the user to take full advantage of Masterbill's own XML e-Tendering standard including the ability to track and distribute tender amendments.

In general, the system provide so much benefits to the user, in term of time, cost and quality of outcome products;

• Time saving - enables cost plans to be produced in minutes.
• Easy to use - simply complete the data entry screens to and the system does the rest.
• Enables the user to model quantities by building shape or width when limited information is available.
• Construction costs may be applied by direct entry, from a cost analysis and using a single or combination of user defined performance grades.
• The modeled scheme may be visualized as either a floor plan or an isometric sketch.
• Data entry looping enables the user to assess the effect of any variables.
• Simple clear reports generated that summarize the information entered and the results.

3.0 Benefits of Using Masterbill³ Software

The initiative of using this software is intentionally to improve our traditional way of doing measurement and preparation of tender documents, we already analyze the following reasons before proceed to implement this software at our office


Time Factor Consideration

Client always want the process to be done the faster time possible, in our normal practice quantity surveyor have been given 2 – 3 weeks period of time to prepare the ender documents; which should include taking of the quantity from the drawing and abstract it into the bill of quantity. There are some situation client ask for period of a weeks. With convoluted architecture and structure drawing it seem possible to quantity surveyor to prepare the bill in the short time. Except providing extra employees or and works extra time.

Masterbill³ absolutely can reduce time of preparing tender compare with the traditional methods. Time taken to abstract taking off to bill drastically reduces from hours only to few minute by using the software. Masterbill³ also available to create the template where by the user may use the same template for future similar (i.e. schools with schools or apartment with apartment) projects.

Beside masterbill³, the network itself will provided better information transfer, our staff will not any more travelling and spend their time in the car purposely to sending document, sending document can only be done via internet, facsimile and etcetera.

Cost & Investment Consideration
The overall cost to implement this system not really expensive compare to the benefit that will be obtained. The software itself may require Ringgit Malaysia; Twenty Five Thousand, extra networks to each computer may require three thousand each (proposed 4 computers to be direct linked); Installation of Local Area Network, for 2 storey office may spend Sixteen Thousand. The system can then connected to existing Internet Service Provider, which bill around Two hundred per month. In total it might required to have ringgit Malaysia Fifty Five Thousand and Four Hundred (RM 55,400.00).

In long term prospect investing to this system will guarantee a superior return to us. They will provide and give us better quality of products to our clients and customer, which indirectly make it our company more admired among the local construction industry.

In other aspect expenditure such as; travelling, phone calls, papers can be drastically reduced. The extra income may goes for purpose of awarding the employees or upgrading the information technology in the office from time to time.

Quality Consideration

The traditional ways doing taking off/measurement might be involved with several human errors, overlook on the drawing or arithmetical error while calculating, squaring, and timesings may occur, and this may result under measure or over measure for certain item in the bill of quantity. These problems indirectly affect the cost of project via variation works, which normally claimed by contractor

Understanding and Managing Systemic Innovation on Project Based Industries

In order to understand this, we need first to differentiate what are the innovations that happen in the construction industry. There are two type major of innovation which is the incremental innovation and the systemic innovation. Incremental innovation can be defined as those innovations that reinforce the existing product or process and provide a measurable impact on productivity.

And on the other hand, we have systemic innovation where productivity for individual components can increase while overall productivity may increase, decline, or remain unchanged. Systemic innovations also refer to innovations that reinforce the existing product but necessitate a change in the process that requires multiple firms to change their practice. Systemic innovations typically enable significant increases in overall productivity over the long term. But these may create switching or start-up costs for some participants and reduce or eliminate the role of others.

From the paper we can see that there are several factors that affected the successes of systemic innovations to be implemented in a company. Listed below are the factors that should be looked into when systemic innovations are the case:

1. Organizational Variety

Most of the time, the parties involved from project to project is different even though the main company of handling the project is the same. This is just one of the unique characteristics of construction industry. The sub-contractor will change based on the type of project that is done by the main contractor. This will diffuse the parties of the project and when this happen a recreation of the team is needed. The rate of social reconstruction refers to the rate at which groups are required to form and reform into a cohesive unit from time to time. If the group’s constituents change from one project to the next, the rate of social reconstruction is considered high.

Organizational variety is high if the main contractor shows a tendency to use a different set of subcontractors for each trade classification from project to project. A long-term relationship with a particular set of subcontractors across projects would constitute a low organizational variety.

2. Degree of Interdependence

As tasks become more interdependent, the rate of diffusion for a systemic innovation will decrease. The least interdependent form is termed pooled interdependence to describe activities in which work does not flow between units. Sequentially interdependent activities are defined as those in which the output of one group is the input of another. Reciprocal interdependence is the most interdependent classification. It describes work in which the output of two groups must be negotiated to address sub-goal conflict.

Typically we expect the building industry to exhibit a high degree of interdependence as differing trade labor groups depend on the work output of others because the input of their own work is a non-linear process.

3. Boundary Strength

Construction project is full of specialists such as plumber, electrician and others. The more rigid the boundary that separates the impacted trades for a given systemic innovation, the more the rate of diffusion will decrease. The rigidity of these boundaries arises from the existence of separate distribution channels, different labor training requirements, jurisdictions of labor unions, scope of services of specialty subcontractors and path dependence.

4. Span

Innovation will not only affect one trade. It will affect other trades in the project as well. The span of the innovation need to be identified, so that steps can be taken to control the span. This can be done by integrating the trade labor groups into the innovating organization. When this is carried out, the systemic innovation can happen without bringing a lot problem to the parties involved in the project.

In order to make it possible for the systemic innovation to produce a great result, the project manager has a very vital roles in ensuring that the following aspects is given attention in handling the project.

1. Reduce organizational variety in their selection of specialist contractors.

If the systemic innovation impacts the process of multiple specialists on the project, project managers should choose one contractor from each specialist group and work with them on several projects. Over time, as inter-organizational routines are able to form, project managers can then begin to introduce new contractors to the bidding shortlist for each specialist firm type. However, project managers must handle this process carefully so as not to lose the productivity gains the firm has already achieved in adopting the systemic innovation.

2. Monitor degree of interdependence of the work on the project.

Project managers must know where interdependencies lay in the project in order to understand how a systemic innovation can be adopted over the course of multiple projects. If interdependence is significant, project managers must pay careful attention to managing the other constructs identified in this research. If interdependence is not significant, its impact on diffusion will be less.

3. Reduce boundary strength between specialists impacted by the innovation.

For the innovation to work well, the environment for the project should be built based on mutual trust. This will allow for the parties involved in the project to work well with each other. This can be done by having meetings and discussion between the parties impacted from the innovation.

4. Monitor the span of the systemic innovation.

Innovation need to be monitored so that how much impacts do this systemic innovation can be calculated and use to the benefit of the company which at the end will bring a lot of profits to the company. The wider the span of the innovation, the harder it will be for the project manager to control productivity of the works of his project. This happens a lot in a high specialist projects. The project manager should try to integrate those specialist works so that the span of systemic innovation can be decreased.

Posted by:

AHMAD FIRDAUS BIN ZAMRI (2008261138)