Emerging clients’ needs for Large Scale Engineering projects

Engineering, Construction and Architectural Management 1999 6 � 1, 21–29

Emerging clients’ needs for Large Scale Engineeringprojects

T A REK M HASSAN, RON MCCAFFER & TONY THORPEThe European Construction Institute, Loughborough University, Loughborough, Leics., LE11 3TU, UK

mation and Communications Technologies (ICT) vendorsAbstract In recent years the Large Scale Engineering(LSE) construction sector in Europe has seen profound and developers also need to understand clients require-change. This is mainly due to increasing competitive ments of systems and to align their products to them.pressures from the United States and the Asian–Pacific This paper reports on findings from a study within thecountries which has led in turn to increased pressures eLSEwise project to identify the emerging clients’

business and ICT needs within the LSE constructionto improve competitiveness, productivity and client sat-industry and to identify the changes in clients’ relation-isfaction. Lack of understanding of client’s requirementsships with the supply chain and the gaps in ICT provi-hinders achieving such goals especially with the in-

creasing trends of executing LSE projects in a ‘virtual sion.Keywords business processes, clients requirements, in-enterprise’ environment. Different parties within the

construction process need to understand and fulfil formation exchange, Large Scale Engineering, construc-tion, eLSEwise, ICTclient’s business and information requirements. Infor-

INTRODUCTI ON

The Large Scale Engineering industry operates in aglobal market. During recent years, it has been subjectto colossal political and economic changes which haveled to increasing market pressures. One of the goals ofthe eLSEwise (European Large Scale EngineeringWide Integration Support Effort) ESPRIT project is tocontribute to the future success and development ofthe European LSE construction industry by helpingthe different sectors and parties in their efforts toimprove competitiveness. A significant contributor inachieving such a goal is by increased client satisfaction.To achieve this the different parties of the supply chainneed to understand and fulfil the client’s business andinformation requirements throughout the product (e.g.a building) life cycle from inception to operation,maintenance and decommissioning. Information andCommunications Technologies (ICT) vendors and de-velopers should also understand clients requirementsof ICT systems to enable clients to achieve theirbusiness objectives. Areas where integration andsharing of information with other parties within thesupply chain are necessary also need to be identified.

Within the context of this paper, Large Scale Engi-neering (LSE) refers to the complex multidisciplineengineering (both design and construction) which isencountered at the top-end of the construction indus-try’s spectrum of activities (Watson 1996). LSE in-

cludes complex buildings, process plant, infra-structure, significant civil engineering work and othermajor construction works. An LSE project has thefollowing attributes (Watson 1996; Brohn et al. 1997;Hunter 1997):

� ‘High’ capital cost.� Long duration but programme urgency.� Technologically and logistically demanding.� Requires multi-disciplinary inputs from many

organizations.� Leads to a ‘virtual enterprise’ for the execution of

the project.

A virtual enterprise refers to a group of organizationsthat collaborate in partnership to execute an LSEproject. This partnership may continue to operate andmaintain the product until decommissioning, executeanother LSE project, or be a transient virtual enter-prise which dissolves once a project is executed or afacility is decommissioned.

The research described in this paper has been un-dertaken within the eLSEwise project. It aims to iden-tify clients business and IT requirements of the LSEindustry and presents clients views of the LSE environ-ment. This was achieved through a focused workshopsupplemented by a questionnaire issued to selectedLSE clients across Europe. The different parties withinthe supply chain were established at the beginning ofthe workshop. The main requirements and views with

© 1999 Blackwell Science Ltd21

22 Hassan, T.M. et al.

regard to the LSE business environment were iden-tified during the workshop and then ranked and prior-itized through the questionnaire. In the same manner,the usage of the different means of information ex-change was established and the degree of importanceof different information systems within the LSEclients’ organizations was identified. The areas wherenecessary sharing of information with different partiesof the supply chain and the main requirements ofclients in information systems provision were also ex-amined. Validation of the results with the FinnishAssociation of Construction Clients (RAKLI) is alsodiscussed.

THE CL I ENTS ELECTRONIC WORKSHOP

The aim of the workshop was to gain LSE construc-tion clients views on current and future business andICT requirements of the LSE industry across thedifferent construction sectors including complex build-ings, process plant, infrastructure, and special largescale civil engineering projects. The objectives of theworkshop were:

� to investigate clients’ business drivers and objectivesand the application of ICT to serve the clients’current business needs and over the next 10 years;

� to investigate clients’ requirements from the supplychain to achieve business objectives;

� to identify areas of integration of different informa-tion systems within the clients’ organizations; and

� to identify clients’ requirements in information sys-tems provision.

Participants from large scale engineering client orga-nizations representing different sectors participated inthe workshop. The participants were carefully selectedto meet the following criteria:

� to be at a senior technical or managerial level;� to represent an LSE client view for business and/or

ICT aspects; and� to cover different sectors from the eLSEwise

perspective.

Data elicitation during the workshop was under-taken partly electronically via a local computer net-work and partly manually via discussions andcomments on initial results. The participants weredivided into two groups and each participant wasallocated a computer. The questions appeared on eachparticipant’s screen and the facilitator explained eachquestion in more detail. Discussions were generatedamong each group before each participant entered

their answer. A separate window on each screen dis-played the group answers. After all participants en-tered their answers for each question, the groups’answers were printed and distributed for further com-ments and discussions. The electronic workshop en-abled an equal participation of all the attendees,acquiring more ‘hard’ information in shorter timecompared to traditional workshops and better timemanagement for the workshop (Hassan et al. 1997).

Numerical data reflecting scores for importance ofdifferent information systems across the project’s lifecycle, areas of required integration between differentinformation systems and areas of required informationexchange with the supply chain were entered by eachparticipant. 3-D graphs representing the participants’answers were displayed on an LCD projector and agroup discussion was generated among the partici-pants. After the discussion each participant enteredtheir comments electronically.

LSE CL IENTS QUEST IONNAIRE

The objective of the questionnaire was to investigateand prioritize the different factors and issues that wereidentified by the workshop. It was important that therespondents to the questionnaire meet the same crite-ria as those established for the workshop attendees toensure consistency of the analysis. The questionnairewas issued to some 90 European clients. Although theresponse rate was disappointing (only 19%), coveringthe different LSE sectors, it did confirm one of thefindings of the workshop which is that clients organiza-tions are downsizing (and relying on more input fromcontractors) and there are increased time pressures onstaff which reduced their participation in research ac-tivities (Hassan 1998a).

CL IENTS’ V IEWS OF THE LSE BUSINESS

ENVIRONMENT: CURRENT AND FUTURE

Table 1 summarizes the workshop participants’ viewsof the changes in the LSE business environment be-tween the present and the future.

The changes occurring in the client/contractor inter-face were identified as follows:

� More risk to the contractor.� More reliance on technical input from the

contractor.� Risk/reward balance shifting.� Clients out-sourcing all non-core activities.

© 1999 Blackwell Science Ltd, Engineering, Construction and Architectural Management 6 � 1, 21–29

23Clients’ needs for Large Scale Engineering

Table 1 Clients’ views of the changes in the LSE businessenvironment

Increasing Decreasing

Size of clientPartnering/alliancingorganizationClients’ expertisePrivate finance in public sectors

Regulations, particularly health and Time-scale ofprojectssafety regulations

Risk allocation to contractorReliance on technical input from

contractorSharing lessons and expertise between

clientsElectronic documentation and

information exchangePressure to reduce project cyclesVolume of information exchanged

tions, partnering/alliancing, reliance on more technicalinput from contractors, and more risk allocation tocontractors currently represent the most importantbusiness factors in the LSE industry and this trend willcontinue over the next 10 years. Electronic informa-tion and documentation, changing size of clients’ orga-nizations, and clients out-sourcing non-core activitieswill gain more importance in the future.

PROCUREMENT ROUTES FOR LSE

PROJECTS

Clients responding to the questionnaire were asked tostate their current preferred procurement route forLSE projects and their prediction of procurementroutes in the next 10 years.

The responses revealed that clients’ current pre-ferred procurement routes fall in the following fivecategories:

� Alliance to form integrated project team (seamlessteam concept).

� Construction management contracts.� Turnkey lump sum contracts.� Traditional procurement.� Performance contracts.

Respondents were of the opinion that there will bemajor shift in procurement routes during the next10 years towards strategic alliances and integrated sup-

These changes are leading to less experienced clientswho will, in the future, increasingly depend on thetechnical knowledge of their contractors.

The respondents to the questionnaire were asked torank the importance of the factors referred to in Table1 now and in the next 10 years. To analyse the results,the rankings were divided into three groups: 1–3, lowimportance; 4–7, medium importance; and 8–10,high importance. The results of the analysis are shownin Figs. 1 and 2.

The results illustrated that reduced projects’ dura-

Figure 1 Clients’ current perspective for the importance of business factors.



Figure 2 Clients’future perspective (10 years) for the importance of business factors.

ply chains. This will lead to more design/build/operatecontracts with total packages incorporating mainte-nance in one tender. There will be more focus on userrequirements and that Standards of Exchange ofProduct model data (STEP) will be applied to enableconcurrent engineering, procurement and constructionto take place.

FACTORS THAT CL IENTS CONSIDER

I MPORTANT IN THE BUSINESS CASE OF

LSE PROJECTS

Clients were asked to rank the importance of thefollowing factors, which have been identified fromother workshops within eLSEwise (Mitrovic & Davis1997), in the current business case of LSE productsand over the next 10 years:

� Profitability� Capital cost� Maintenance costs� Quality� Time-scale� Facility performance� Reliability� Early occupation

The results of these rankings are illustrated in Figs.3 and 4. At present capital cost, quality, profitabilityand time-scale of projects represent the most impor-

tant factors considered by LSE clients. It is importantto clients for project time-scales to be reduced to allowthe earliest possible returns on investment. The impor-tance of maintenance costs will increase over the next10 years showing that the clients’ cost focus is shiftingfrom that of capital expenditure to that of the totallife-cycle costs of the facility (Hassan et al. 1998).There is also an increase in the relative importance of‘quality’ as clients are demanding more value for theirmoney.

IMPORTANCE OF INFORMATION

SYSTEMS WITHIN LSE CL IENTS

ORGANIZAT IONS

The questionnaire investigated the importance (interms of business performance) of the different infor-mation systems identified during the workshop fromthe clients’ current perspective, and their anticipatedimportance in the next 10 years. The results are shownin Figs. 5 and 6, respectively. Fig. 5 shows that themost important systems for clients organizations cur-rently are finance and accounting, project planningand human resources. There is an anticipated increasein the next 10 years in the importance of projectplanning, QA systems and documents control, materi-als procurement, CAD systems and communicationssystems as shown in Fig. 6.



Figure 3 Importance of different factors that clients consider in the business case of LSE projects currently.

Figure 4 Importance of different factors that clients will consider in the business case of LSE projects in the next 10 years.

ELECTRONI C SHARING OF

INFORMATI ON WITH DIFFERENT

PART I ES OF THE SUPPLY CHAIN

Areas where sharing information is necessary betweenclients systems and those of other parties within thesupply chain were identified. Clients who responded tothe questionnaire were asked to complete a matrix

relating the different information systems to the differ-ent members of the supply chain. Required electronicsharing of information was represented by giving ascore of ‘1’ in the relevant cell. The total scores werecalculated and the results are shown in matrix formatin Table 2. The cells in the matrix represent H, M,and L for high, medium and low importance,respectively.



Figure 5 Importance of different information systems currently.

Figure 6 Importance of different information systems in the next 10 years.

The highest importance for electronic sharing ofinformation is between clients’ systems and:

� Contractors information systems in the areas ofCAD, project planning, materials procurement, QAsystems and document control, modelling and cal-culations and communications systems.

� Project Manager’s information systems in the areasof project planning and QA systems and documentscontrol.

� Funding bodies information systems in the areas offinance and accounting.

� Consultants information systems in the areas ofmodelling and calculations.



Table 2 Areas where sharing information between client and supply chain is necessary

PartnersConsultants Licensor Contractors PM Suppliers Funding bodies

LCAD H M H H LMMMProject planning H MM H H

LMaterials Procurement L L H M H LLQA systems M M H H H MLFacilities managment MM ML M M

M HFinance and accounting HL L M HMProperty Systems M L L L L MLModelling and calculations MH LM H M

M LDatabase M ML H MLSafety M M H H M MMCommunications HH HH H H

L L MHuman resources M L M M

H, high importance; M, medium importance; L, low importance.

� Suppliers information systems in the area of mate-rials procurement.

INFORM ATI ON EXCHANGE USAGE

The current and future (10-year-period) usage of thefollowing means of information exchange wereranked by LSE clients who responded to the ques-tionnaire:

� Paper� Telephone� Fax� E-mail� Disks� Satellite� Video conferencing� Computer networks (exchanging information via

computer networks linking company offices andbranches, and/or linking different organizations).

Clients who responded to the questionnaire wereasked to rank their current and anticipated usage ofthe different means of information transfer (rank 1 isthe highest usage, rank 2 is lower, etc.). The meansof information transfer which were ranked 1–3 inclu-sive were considered the most used.

Figs. 7 and 8 show the distribution of the mostused means of information transfer. Whilst the mostpopular means of information exchange currently arepaper, telephone and fax with little use of computernetworks, there will be a major shift in the next10 years towards information exchange via E-mailand computer networks.

CL IENTS REQUIREMENT IN

INFORMATION SYSTEMS PROVIS ION

The following requirements for information systemsprovision were identified by clients who participatedin the workshop:

� Systems to be more user friendly.� Standardization and cross platform compatibility.� The use of specialist data managers.� Training senior managers in using the systems.� Systems to be dictated by the clients business.

Respondent clients were asked to rank the impor-tance of these requirements. ‘User friendliness’ and‘standardization and cross platform compatibility’were found to represent the most important require-ments for clients in information systems provision.

VAL IDAT ION OF THE WORKSHOP

F INDINGS

The observations and findings of the workshop werecirculated to the members of the Finnish Associationof Construction Clients (RAKLI) (RAKLI is a mem-ber of the eLSEwise consortium), to validate the re-sults across a wider spectrum of European LSEClients and to highlight any national differences.

RAKLI members emphasized that the key task ofICT systems is to support decision making by theclient during the LSE product life cycle. Theystrongly advocated that ICT systems should servethe business functions of LSE Clients and that it isnecessary to study the systems together with the pro-cesses of the LSE product. It is interesting to note



Figure 7 Current methods of infor-mation exchange.

that this was one of the main outcomes of the work-shop.

The RAKLI members also emphasized the impor-tance of the operations and maintenance phases to theLSE Client and that it is imperative to integrate thesephases with design and construction. This may beachieved through clear guidelines for designers andcontractors addressing the type of information that isrequired to be transferred to the LSE client and howsuch information would be transferred. They envis-aged that this would set the requirements of the com-missioning phase and highlighted the growing trend forstandardization of processes and information to betransferred to the client during this phase. With therelationship between the client and contractor movingtowards more technical input from the contractor, theimportance of these aspects is increasing.

Finally, the RAKLI members confirmed that theirfuture vision of the LSE industry coincides with thosedescribed in the workshop findings with respect to thechanges in the clients/contractors relationships and thetrends in the ICT usage within clients’ organizations.This confirmed a degree of commonality for clientsviews on the LSE industry in Europe.

CONCLUSIONS

The relationship between LSE clients and contractorsis changing with clients seeing a shift of responsibilitiesand risk from the client’s side to the contractor. This isdue to clients out-sourcing their non-core activities tocontractors and relying on more technical input fromthem. The result is a decrease in size of clients organi-zations with the loss of construction expertise.

There will be a major shift in procurement routesduring the next 10 years towards strategic alliances andintegrated supply chains. At present, capital cost, qual-ity, profitability and time-scale of projects represent

the most important factors considered by LSE clientsin the business case of LSE products. There is anincrease in the importance of maintenance costs overthe next 10 years which shows that clients’ cost focusis shifting from that of capital expenditure to the totallife-cycle costs of the facility. There is also an increasein the relative importance of ‘quality’ as clients aredemanding more value for their money.

Health and safety represents an important aspect inthe clients’ current and future view of the LSE indus-try. Clients envisaged growth in health and safetyregulations and the use of information systems relatedto health and safety. This is due to increasing pressuresfrom the society on the environmental, health andsafety considerations of LSE projects during construc-tion, operation and decommissioning.

The current excessive volumes of information inpaper format are being replaced by similar amounts ofinformation in electronic format and during the next10 years there will be a major shift in informationexchange from paper, telephone and fax to e-mail andproprietary computer networks. However, managingsuch information remains a key issue. There is agrowing need to train managers and executives ininformation management. There is also a need formore electronic sharing of information between clientsand other parties within the supply chain. ‘User friend-liness’ and ‘standardization and cross platform com-patibility’ represent the most important requirementsfor clients in information systems provision.

The results of this study highlighted clients’ require-ments and views of the business and ICT aspects ofthe LSE construction industry. Understanding theserequirements by other parties of the supply chain iscrucial to ensure efficient and successful execution ofLSE projects and operation of the final product. How-ever, it is also important that clients understandrequirements and views of the contractors who



Figure 8 Anticipatedmethods ofinformationexchange (next10 years).

undertake their projects. These have been identifiedthrough a different study undertaken by the authors.The results of the study on LSE contractors showedthat they are responding to clients’ demands and havebeen extending their role from the traditional one ofdelivering a facility to delivering complete businesspackages to clients (Hassan 1998b).

AC KNOWLEDGEMENTS

The research presented in this paper is part of theeLSEwise ESPRIT project 20876 partly funded by theEuropean Commission.

RE FERENCES

Brohn, C., Gayoso, A., Male, S., Mitrovic, D., Hassan, T.,Garas, F. & Hunter, I. (1997) Large Scale Engineering inconstruction, user requirements for IT—initial results. In:

Proceedings of the 4th International Conference on ConcurrentEnterprising ICE’97, Nottingham, UK, pp. 407–419.

Hassan, T., Gayoso, A., Mitrovic, D. & Hunter, I. (1998)The Future Large Scale Engineering Industry. A report sub-mitted to the European Commission, Brussels.

Hassan, T.M., Thorpe, A., McCaffer, R. & Hodgson, G.(1997) eLSEwise Workshop for Clients’ View on Large ScaleEngineering. A confidential report submitted to the Eu-ropean Commission, Brussels.

Hassan, T.M. (1998a) Analysis of Clients’ Questionnaire. Aconfidential report submitted to the European Commis-sion, Brussels.

Hassan, T.M. (1998b) Analysis of Industry Questionnaire. Aconfidential report submitted to the European Commis-sion, Brussels.

Hunter, I. (1997) eLSEwise General Presentation. A presenta-tion to the European Commission, March 1997, Brussels.

Mitrovic, D. & Davis, T. (1997) UK National Workshop. Aconfidential report submitted to the European Commis-sion, Brussels.

Watson, A. (1996) Glossary of terms for the eLSEwise project.ELSEWISE web site: www.lboro.ac.uk/elsewise.

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Emerging clients’ needs for Large Scale Engineering projects

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