Project Collaboration

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AberdeenGroup

Quantifying the Vision:

Building the Case for

Project Collaboration in

the Construction

Industry

An Executive White Paper

December 2002

Aberdeen Group, Inc.

260 Franklin StreetBoston, Massachusetts 02110-3112 USA

Telephone: 617 723 7890

Fax: 617 723 7897

www.aberdeen.com


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Quantifying the Vision: Building the Case for Project

Collaboration in the Construction Industry

Executive Summary

The lack of accurate and timely information has long been an inhibitor to the suc-

cessful, profitable operation of construction projects. Barriers that block access to,or degrade the distribution of, project information are major factors that cause a

projects cost to vary or schedule to slip. The ensuing unbudgeted costs and addi-

tional resource expenditures touch every stakeholder in the construction project

value chain owners, construction managers, architects, engineers, contractors,

and other suppliers of goods and services.

The speed and accuracy of communicating project data, information requests,

change orders, and other data has traditionally been a paperbound process of fax

and overnight delivery, frequently buttressed by dogged phone calls. This time-honored process is fraught with delays, errors, and redundant, non-value-added

resource consumption. Communication errors lead to delays and inappropriatebuild-outs resultant rework stretches out the project and accumulates unneces-

sary costs.

The devil is indeed in the details. Given the fragmented, geographically dispersed

nature of the AEC (architecture, engineering, and construction) industry, improv-

ing the movement of information presents many opportunities to reduce projectmanagement costs. As Intels Tom Kepper at commented, In the past, project

communications involved a 50-person team to manage handwritten notes and the

fax frequently resulting in lost or misdirected information.

The owner-operator communities are not the only benefactors of advanced, work-

flow-centric, project team collaboration platforms. Frequently, it is those on thefront lines who first encounter sources of project delays, so they are the first to re-

alize the benefit of better communication platforms. Collaborative project man-agement solutions form the basis for improved communication. Change orders

can be more effectively controlled and efficiently directed to the proper party. The

status of a wide range of project information can be monitored, tracked, and cap-

tured. Most important, the velocity of cycle times across the board can be in-

creased time is money. As David Chiesa, GE Productivity Analyst, succinctly

stated: If a process can be measured, then, and only then, can it be controlled.The difficulty [has been] that data is not readily available in a format that lends it-

self to measurement and analysis with [computational] tools.

Aberdeen research finds a direct correlation between the speed and accuracy of

information movement and the ability to improve construction project efficiencies,avert needless costs, and stave off schedule creep. Moreover, an order of magni-

tude of incremental value is imparted as the information is directed using intelli-

gent workflow; it is recorded and available for future analysis and used for proc-

ess improvements. This AberdeenExecutive White Paperexamines the need for

construction projects to move away from traditional paperbound information flow

and toward a single-repository, collaborative workflow environment. The paper


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Building the Case for Project Collaboration in the Construction Industry 2

presents an overview of early returns, analyzes the state of project collaboration

today, and closely examines some specific results.

The Challenge

Johnson and Johnson (J &J) has

utilized a project collaboration

solution to reduce the overall cycle

times on project-related

correspondence.

The ReturnsOn one project from June 2002 to

August 2002, J & J has reducedthe average RFI cycle time from

seven days to two days. Ingeneral, J&J project teams havewitnessed a 30% to 60% timesav-ing related to RFI turnaround. Alltold, potential savings from factorssuch as reduced printing anddistribution costs, reduced rework,and potential schedule savingsrepresent 9% of total project costs

representing an ROI of 283%on J&Js project collaborationinvestment. Improved project life

cycles have enabled J&J to reduceproject schedule by 5%.

The Early Returns from Project Collaboration

According to the U.S. Bureau of Labor StatisticsProductivity Index, productivity for all non-farm

industries has risen from a benchmark of 100 in 1964

to 180 in 1998. In that same period, the construction

industry has actually decreased to approximately 85. As

a result, industry-wide productivity (as measured by a

ratio of constant dollar size of contracts to work hoursof hourly workers) continues to lag all non-farm

industries.

In making the business case for industry-wide

investment in technology in January 2002, members ofFIATECHs (Fully Integrated and Automated

Technology) Capital Projects Technology Roadmapping

Initiative (CPTRI) committed to a vision where all

needed information is available on demand; where

different partners can instantly plug together their

operations and systems regardless of geography and

work culture. This road-mapping initiative integrates

input from more than 40 related industry road maps

and puts forth four action imperatives for its members:

develop and deploy an integrated life-cycle system;automate real-time performance/status tracking;

provide automated intelligent processes and devices for

facility life cycle; and provide unified data, information,

and knowledge management.

FIATECHs business case projects savings for the following stakeholders:

a 20% to 50% reduction in design cycle time for architects and engineers

a 20% to 40% reduction in time and construction cost for construction

interests

a 10% to 40% reduction in costs for owner/operators life-cycle opera-

tion and maintenance

Although these future savings may take time to materialize, this AberdeenExecu-

tive White Paperdocuments where progress is already being made. For instance,

Johnson & Johnson has used Web-based project collaboration to better measureand control a range of project-related business processes. Of particular note is the

2002 Aberdeen Group, Inc. Telephone: 617 723 7890

260 Franklin Street, Suite 1700 Fax: 617 723 7897

Boston, Massachusetts 02110-3112 www.aberdeen.com


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companys handling of RFIs (request for information) in which project collabo-

ration technologies have reduced cycle time by more than 50%.

Reality from the JobsiteProject collaboration software hasalso improved Baugh Construc-tions RFI processnot by justspeeding up processes that pushinformation to project stakeholders,but more importantly, by helpingproject team members get real,actionable answers during the RFIprocess. For example, Baugh usesdigital imagery in discussions witharchitectssuch a picture is

worth a thousand words as itspeeds up communications andensures that proper actions aretaken.

Having a central repository alsocreates efficiencies for Baugh. Asingle place to submit and retrieveinformation resulted in more timelyturn around of information requestsand served as a history log.

Baugh also pointed out that reach-ing small subcontractors can repre-

sent challenges for those usingWeb based project collaborationon a recent job only 6 out of 60subs had PCs.

The Collaboration Technology LandscapeThe market is awash with so-called collaborative

technologies, the precise meanings of which are as

varied as the number of vendors offering solutions. In

general, one consistent theme that surfaces is the need

to share information using a centralized repository

accessed with universal browser technology. Nowhere

is the need for closer collaboration more compelling

than the AEC industry a sector that easily accountsfor more than $3.5 trillion in global commerce

annually. AEC is immersed in the management of a

complex, interdependent web of value chains. Andnow project collaboration software is offering

integrated project teams and delivering a more effective

way to communicate in the AEC world (Figure 1).

The term collaboration is a bit overused in the

marketplace, but at its root, it involves streamlining the

two-way sharing of information across global enterprise

boundaries. Building on the concept of universal

access, IT vendors adopted technologies that move

away from the client-heavy, client-server deployment

models of the 90s. This movement dictates a browser-based, lightweight client (no software on the PC, so no

IT maintenance burden) and an intuitive (no training

required) user interface for the majority of applications

users.

By exploiting Web-based tools, developers find they have an opportunity to vary

the deployment of their application to better address the business needs and

processes of their customers and prospects. Aberdeen finds two primary deploy-

ment possibilities are available with Web-native applications, and each needs only

a Web browser. Each has certain advantages and disadvantages:

1. Inside the enterprise firewall This type of deployment allows any in-dividual within an organization (with proper permission) to gain accessto the application over the companys network. Vendors of so-called

self-help applications were among the pioneers of this usage. These

vendors touted the benefits of access to any employee, ease-of-use, and

integration with back-office systems. However, for many organizations





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incorporating external access for trading partners and customers, these

solutions continue to be a challenge and risk.

2. Outside the firewall as a hosted application This type of deployment

allows anyone on the Internet (with proper permission) to access theapplication. Internet public portals were the first example of this

method of deployment. Additionally, the data is available as a central

repository to all project participants. This type of deployment also re-lieves the company of any dependence on IT resources, and the applica-

tion being accessed is maintained by the vendors and is the same for all

users. However, access to an enterprises back-office systems is difficult

to integrate, and the security of distributing sensitive data via the Inter-

net continues to be a concern.

ASP A Preferred Model for Collaborative AEC Information

In the view of many owner organizations, technology initiatives for the engineer-

ing & construction department are not considered critical. Investing in additional

IT resources is often difficult to justify. And it is an equal challenge to compete for

Figure 1: Construction Stakeholders Project Collaboration Management

Source: Aberdeen Group, December 2002





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existing IT budgets that are allocated for other enterprise initiatives. As short-

sighted as this point of view might be, it is a reality. As a result, many of the con-

stituents in the AEC community have extremely limited IT departments (if they

have one at all). Therefore, the hosted model (the second deployment type citedabove) holds a great deal of appeal. This ASP (application service provider) modelrequires no capital investment in computer infrastructure other than a PC with

Internet access. The application and all of the related services are provided as part

and parcel of the model. The application is kept current, the hardware is main-

tained at an appropriate services level, and help is provided to assist with any

problems that are encountered.

The fragmented nature of the construction business makes it a perfect candidate

for the ASP (hosted) model of application deployment. With members of the AEC

community operating from a variety of organizations, geographies, and IT capaci-

ties, the universal accessibility of a Web-hosted application simply makes good

sense. All of the stakeholders can participate without the requirement of an IT or-

ganization providing support. Moreover, because the project data repository is

hosted on a Web site, any authorized project member can work with the applica-

tion from anywhere and at anytime in any time zone and from the office, the

job site, home, or a hotel.

Security of the Data From a Web Site on the Public Internet

Because the information pertaining to a project may be proprietary, the primary

concern of working with an ASP service is the security of the data. The concern

should be placed in two separate areas: (1) protection from prying eyes; and (2)

the protection of the data from physical circumstances, such as hardware failure,power outage, of loss of communications lines.

Providers of hosted services have a number of methods to protect against bothsituations. Standard browser technology provides for 128-bit encryption (practi-

cally impossible to break), which ensures that data moving across the Internet is

not viewable. The application and the underlying database technology also pro-

vide user authentication via login ID and password. User access to information is

also limited based on individual permissions and roles that are enforced by the

application. Concerns over physical circumstances are handled by server cluster-ing, redundant array of independent disk (RAID) disk arrays, and multiple feeds

for communications and power. Many hosted systems also have one or more mir-rored sites that are geographically distanced from each other to avert disruption

caused by a natural disaster.

Project Collaboration: Requirements OverviewEffective communication is critical to completing construction projects on time,

ensuring that they remain under budget, and maintaining high quality. Project





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collaboration software improves design and construction processes through func-

tions that expedite project communications, reviews, and approvals; reduce errors

and mitigate risk; improve work practices; and accelerate project processes from

start to finish. These processes are highlighted in Table 1.Results from the Field

For decades, innovative companies in the construction industry have utilized vari-

ous types of software project management, scheduling, estimating, and com-

puter-aided design (CAD). In the late 1990s, drawn to what appeared to be a

means for transforming their organizations into what one interviewee described as

a lean, mean contracting machine, these early adopter organizations tried differ-ent flavors of Web-based e-marketplace, collaboration, and business process auto-

mation solutions.

Today, these organizations understand that proactive data management drives their

ability to improve business processes and expose returns related to recent IT in-vestments. Aberdeen presents three examples that detail the goals of, and early

Table 1: Attributes of a Project Collaboration Solution

Project initiation Invite new project participants via automatic e-mailUsers have a single user name and password across multiple projects

Project repository A single place for storing and sharing all project-related information

Access by means of a Web browser and available through role-based security to any au-thorized project stakeholder

Project-wide

communications

Threaded discussions simplify comments and feedback on project issuesAutomatic subscript ion-based alerts are sent to the appropriate person when action isrequiredBroadcasts to announce milestones or general project news

Forms and

workflows

Use HTML or PDF forms to mirror existing documentsExpedite project processes with customizable workflowsReport status of documents in the review process

Automatic notificat ion to project par ticipants and tracking of resultant actions (or inactions)

Document

management

Application-independent view and zoom. Redl ine drawings and documents

Supports all major CAD file types, including AutoCAD and MicroStationSecure version control with full audit trail and check-in/check-out system

Easy navigation Project information is organized for quick access with customizable folders and hierarchicalproject treesEasily add and view documents and drawings






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returns gained from, companies in three different industries: entertainment and

hospitality, semiconductor manufacturing, and utility infrastructure. Each firm in-

terviewed shared a common challenge the timely sharing of information with all

of the stakeholders on a project. Moreover, each sought to use a centralized re-pository or hub to have a single place for all project information, making sure that

nothing was lost and that everyone was on the same page.

The Owner Perspective: The Walt Disney Imagineering

Disneys development team began utilizing project-specific extranets and collabo-

ration technologies in 1999. Disneys overriding objective in deploying a project

collaboration technology was to improve and/or implement new processes tied to

its performance management initiatives thereby improving overall project effi-

ciencies and avoiding sunk costs. The company believed (and has since foundout) that by pulling together performance-related data from scattered information

repositories, its construction managers would better understand the key differ-ences in how relevant business processesactually workand how they (and Dis-

neys senior executives) had traditionally thought these processes worked.

For example, consider Disneys contractor deficiency notification procedures.

Construction managers officially alert contractors of a defective condition (and at

which time a time ticker begins monitoring contractor responsiveness). Disneysought to improve this deficiency notification process by leveraging an ASP col-

laborative application. The company wanted to gain insight into whether:

1. It was allowing contractors too much time to rectify deficit work.

2. The opportunity cost of the traditional deficiency notification processwas too high.

Disneys chosen solution is beginning to deliver this insight. In addition to the re-

sults listed in Table 2, project collaboration is helping Disney to better manage pro-

ject data and drive improvements in its performance management initiatives. The

company has found that some of its processes are actually quite efficient. For in-

stance, less than 3% of Disneys request for information (RFI) processes led to

change orders. And cycle times associated with Disneys Hong Kong project havenot been a big issue, according to Chris Holm, a member of Disneys senior tech-

nical staff. This is an interesting finding because many construction projects have

adopted some type of collaboration platform, primarily to speed up a broad range

of cycle times. Also, unlike other companies that Aberdeen interviewed, Disney

does not foresee utilizing the solution to hedge the risk of post-project legal claims.

Disney understands that business process automation often has a very human face.

The company has achieved significant buy-in for utilizing project collaboration atsenior levels of management now the adoption challenge falls to the project





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management level, where, as Holm commented, many consider e-mail to be an

[advanced] technology.

The Construction Manager Speaks: GE Power Equipment ProjectsCommonwealth Edison Co. (ComEd) of Chicago has retained General Electric

(GE) Power Equipment Projects to manage the EPC (engineering, procurement,

and construction) of its substations. The relationship between the owner, ComEd,and the construction manager, GE, is somewhat unique for the industry. Realizing

years ago that its expertise was more aligned with maintaining and operating sub-

stations, ComEd signed on GE as an alliance partner in charge of all construction

operations. GE manages the procurement of everything from transformers to nuts

and bolts, and it acts as a product supplier. The company also directly manages

ComEds own project team, which, incidentally, ComEd hires and compensates

directly. The ComEd construction force is used for 90% of the construction effort,

Table 2: Walt Disneys Challenges and Returns

Project Team Profile The Challenge The Results Telling It Like It Is

Walt Disneys

Imagineering Research

and Development Team

Disneys selected Prima-vera PrimeContract foruse in the direct support ofconstruction activities atits Hong Kong theme parkand hotel complex a$700 million developmentproject with 16 differentmajor contract-biddingevents.

Disneys global construc-tion operations can bequite cyclical; in fact, his-torically, Disney has threeprojects under way (in

various stages of devel-opment) that collectivelyamount to five times Dis-neys current (and only)construction activity.

Disney was seeking acollaboration solution de-signed to capture andextend data to the appro-priate project stakeholder,and in doing so, speed up

the means for separatingrelevant information fromirrelevant data. Disneybelieves that strong datamanagement must driveits business processautomation initiatives.

Also, the lack of a com-mon data model that tiestogether separate mem-bers of project team hasprevented data standardi-

zation and in turn, thislack of standardizationhas created the data silosthat continue to slow therecent advances of com-munication technologies.

Arguably Disneys great-est return to date is thatthe company is evolvingfrom a learning-based to aknowledge-based organi-zation.

Disneys constructionproject management teamhas also found that Pri-mavera PrimeContractsolution is helping itchange some of the fun-damental practices thatstrain the profitability ofdevelopment projects practices that are tied tothe traditional get in, getout, and get paid mental-

ity of many constructionconcerns in the field.

According to Chris Holm atWalt Disney, The key tofacilitating knowledgetransfer at Disney will con-tinue to be the standardiza-tion of all the inputs and

outputs of its project man-agement system.

By leveraging project col-laboration technologies,Holm explains that the up-side of this journey is thatwe are starting to knowwhat not to do. But heacknowledges the nextchallenge: We dont al-ways have the time to per-meate [this learning]

throughout the whole or-ganization, [even though]we all have to constantlyoperate faster and betterand cheaper.






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and ComEd reserves the right to reassign these workers to emergencies at a mo-

ments notice. GE is still, however, accountable for staying on schedule.

As the lead contractor, GE faced a common information management problem

the lack of a project-wide information repository. ComEd required GE to maintainan up-to-date file that provided information about all GE-managed projects. Be-

fore companies started utilizing a project management technology, this process in-

volved sharing Excel spreadsheets. Problems arose when dispersed members of

the project team routinely downloaded these files from a network and then up-

dated and reposted them. Because of a lack of any form of version control, freshdata would simply disappear when different people updated and reposted project

files at the same time. As David Chiesa, GE productivity analyst, lamented, Soon

we would have 50 different versions that no one could keep straight [to make

things more challenging] firewalls prevented different project teams from sharing

data.

Primaveras project collaboration platform offered GE a solution. Chiesa ex-

plained, With minimal effort, we established a shared project record and e-mailed

Table 3: GEs Challenges and Returns

Project Team Profile The Challenge The Results Telling It Like It Is

GE Power Equipment

Projects and Com-

monwealth Edison of

Chicago

The project scope ofindividual substationsvaries significantly, asdoes the size of thetypical field force,which can range any-where from 3 to 30hourly workers. In2001, GE built 40 sub-stations at approxi-mately $50 million in

construction costs this year, GE will buildonly 10, but at a cost of$60 million.

Although many in the indus-try may consider construc-tion schedule to be an

oxymoron, there can belittle or no schedule slip-page in the construction ofsubstations. To quote Chi-esa, Whenever the powerswitch is slated to be turnedon, we have to be ready.Therefore, GE and ComEdrequired a projectwide col-laboration technology thatalso helped drive adher-ence to construction sched-ules.

Managing cultural change,especially among olderworkers, was another chal-lenge.

At GE, countless in itiativesattempt to take the bureauc-racy out of business proc-

esses and push the day-to-day approval processes tothose who are best posi-tioned in the field to makethe correct decision. Bu-reaucratic, top-down ap-proval processes reduce theability of its professionals tobe creative and to reactboth quickly and correctly tochange.

The workflow capabilities of

PrimeContract representeda key value-add, cuttingresolution defects by morethan 50% and increasingthe speed of resolution by75%.

Chiesa explained, We areliving the change curveright now, and the only

constant is change. [Be-cause of the nature of thiswork], last years learningoften goes out of the win-dow.

Chiesa added that it couldbe a challenge to convinceworkers to take the time tolearn to use any new tech-nology. Neglecting newways of improving businessprocesses also stifles inno-

vation. As Chiesa stated,If you always do what youdid before, then you willalways get what you got inthe past.






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people to keep them on schedule; other project collaboration suppliers had a

similar functionality, but those solutions required hard coding. And what is the

one constant in construction? Change! If I had to pay a consultant to update [a

collaboration solution] every time something changed, it [the economics] justwould not work.

By first leveraging the data-sharing and versioning capabilities to create a digital

project information repository, and by then utilizing the solutions workflows to

streamline processes, GE discovered that the ASP model offers all the project

stakeholders easily accessible, flexible technology that empowers them to respond

immediately to often mission-critical project dynamics.

To date, GE has not viewed the software as a risk mitigation tool, partially owing to

the uniqueness of its relationship with ComEd (i.e., the contractor managing the

owner). Instead, GE has gained the most value by using the project collaboration

features and workflows to automate business processes, supporting its world fa-mous Six Sigma culture. The ability to easily exchange and redline smaller draw-

ings has also been a plus.

When Aberdeen inquired about the effect of a project collaboration technology on

the RFI process (for additional details, see Table 3), GE responded that the best

result lay in the technologys ability to help demonstrate to its clients that a co-

dependency exists between technology and business process automation.

PrimeContract not only helps bring RFI-related issues to closure more quickly, butalso prompts feedback that gauges whether the resolution of such issues is satis-

factory. GEs observation is that PrimeContract workflows can indicate unresolved

issues that can negatively affect future phases of construction.

Intel: Reducing Project Communication Bottlenecks on a Global Scale

Intel wanted to eliminate business process redundancies associated with maintain-

ing and manually integrating project-wide information. The preferred process was

conceptually simple enter data once and then reuse the information boththroughout the project management effort and across the entire project team, re-

gardless of physical location.

The overall improvement of intercompany communications constituted the critical

success factor against which Intel would measure the functional utility of the Pri-

mavera technology. Before using project collaboration solutions, each organiza-tion kept its construction project information typically lodged behind its own fire-

wall. By breaking down these communication barriers, the entire project teamwould have the opportunity to create freer flows of information, which in turn,

would strengthen shared business processes. This end focus on improving ex-

tended business processes required a solution with strong intercompany workflow

capabilities.





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A high-tech company known as an early adopter of innovative technologies, Intels

decision to embrace the Primavera technology was not a difficult one. The project

team focused first on using the technology to streamline the traditional RFI process.

When a contractor or other relevant construction project stakeholder requiresmore information about project plans or specifications, the traditional process

typically involves routing the RFI through an administrative staffer who then

reaches out to the appropriate consulting architect and/or engineer. As is true for

most organizations in the industry, this process has historically involved paper- and

fax-based communications. And for a variety of reasons also evident to many con-struction concerns, important back-and-forth communications were also routinely

misdirected and/or simply lost. Eliminating such interruptions to project-critical

communication flows was one specific goal, while freeing up the administrative

staffer to perform higher value-add activities represented another key objective.

Initially, the company sought to measure returns based on total time savings in thefield. The thought was that a collaborative project management solution would

deliver, for example, a more accountable RFI process. Improving this processwould eliminate a significant cost burden the need for contractors to retool

and/or change project direction after communication of an RFI-related clarification

was delayed or simply lost. After reviewing internally developed benchmarks, the

company thought it could save one hour per man in the field by encouraging con-

tractors to conduct RFI processes while the project was in motion.

But according to the project managers, this approach received a lot of push-

back. So instead of measuring field productivity to ascertain ROI, the company

looked at how the solution-improved RFI process had reduced costs on three spe-cific fronts: administrative costs (i.e., the junior assistant who continually walked

the construction site with RFI data in hand), unbudgeted professional fees/hours

billed (primarily from architects, engineers, and other consultants), and post-

project legal claims. Eliminating these legal claims represented a key opportunity

because this companys experience was that 90% of its construction project dam-ages claims resulted from miscues in the RFI process problems that could be as

simple of a jammed fax transmission. Inevitably, the third-party filer would win the

majority of these judgments.

The most significant returns achieved to date are highlighted in Table 4. Althougha representative from this owner acknowledges that accurately measuring overall

ROI from project management software involves juggling many intangibles, he

added that summing up all the intangibles could quadruple the hard returns. You

may not see the returns on the first job. But by the second job, you will see the

returns. The first time [it is used], they [other team stakeholders] will think it

just costs more money and will say yeah, yeah, yeahshow me but you can





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prove to them that the collaboration tools arent that hard to use, and that it saves

money and reduces cycle times.

Other returns from the project collaboration platform include enhanced data-

mining capabilities and better, tighter project data security. Regarding security,one project team member commented, This system gives us accountability it is

password protected, and it locks down after too many tries [by someone without a

password] were glad we can do this especially when you consider the old way

of communicating locally (i.e., couriers on bikes).

Looking forward, this semiconductor company realizes that user adoption of any

technology poses an ongoing, often individual-based challenge that must be ad-dressed via change management, and not via new technology. One contractor may

embrace the solution, whereas another wants to reject it. Although the naysayer

will not put near-term contract work in jeopardy by avoiding use of the technology,

down the road the same organization may lose a bid to competing organizationswhose adoption of the technology has translated into lower overall project costs

and therefore a lower bid. On the overall adoption front, this company hasfound that architects and engineers have been the leading adopters, partially be-

cause of greater exposure to business software.

Aberdeen Conclusions

When investing in software, it is not always clear what returns will emerge or

when. For instance, Aberdeen found that one owners project team initially util-ized the technology primarily to save time in the field. Yet, after using the tech-

nology on several projects, they found that the most significant returns were actu-

ally associated with reducing unbudgeted professional fees from consulting archi-tects, engineers, and outside legal council.

It is not just the owner community that gains benefits from project collaboration

software. Other stakeholderseven those that are initially skepticalsoon find

that solutions, such as those provided by Primavera and its competitors, improve

the way they conduct business.

According to one contractor, Primavera PrimeContract collaboration software is

all about getting more efficientif we dont do it, someone else will. For all

stakeholders in the construction value chain, improving business cycle timesrepresents a critical success factor. However, organizations acknowledge that it is

only now becoming easier to get a handle on quantifiable returns. One largeowner stated, We are starting to get data now which is something we did not have

[previously]. And our internal benchmarking is better a couple of years ago, we

made pretty good guesses [about returns], but now we have the data.





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Table 4: Intel: Trials, Tribulations, and Rewards

Project Team

Profile

The Challenge The Results Telling It Like It Is

Intel: the Worlds

Largest Manufac-

turer of Semi-

conductors

This organizationhas 115 projectsin progress onthree continents a constructionspend that collec-

tively totals morethan a billion dol-lars annually.

This companys over-arching goal for utilizingPrimavera project col-laboration software layin utilizing informationtechnology to reduceproject costs tied tocommunication bottle-necks.

The specific objective

was to eliminate reworkand dramatically reducepost-project legalclaims. Tactically, Intelwanted to eliminatesilos of information andprevent the future crea-tion of data silos.

Whereas Intel previously esti-mated the average cost to an-swer an RFI at $151, the newproject collaboration system hasreduced RFI-related costs by95% (primarily through reducingprofessional hours billed). Over-all, the service during construc-tion line-item cost dropped bymore than $400,000 a 77%reduction.

Project cycle times have alsobenefited. The total RFI-relatedthroughput has been reduced onaverage from 14 days to 2 days.This reduction has held up evenin light of the fact that the vol-ume of communications in-creased by an estimated factorof 20.

One interviewee commented,If project team members knowthey can get turnaround [totheir questions], they will askmore questions.

It can be difficult to quantify thereturn on software that acts asan incentive designed to in-crease the likelihood that onewill ask for direction in the face

of uncertainty. However, thepotential savings from not hav-ing to undo work in the fieldthat was done wrong are bothintuitive and compelling. Asone interviewee said, Tearingstuff down and doing reworkcan often be psychologicallydamaging for all.


This observation is important to note. Many construction firms bought into thevision statements promulgated by vendors of e-business and marketplace tech-nologies in the late 90s only to realize that vision does not always translate di-

rectly or easily into hard returns. Unfortunately, many of these technologies were

immature at the time. So, too, were the technology suppliers, who were often

more focused on sales and marketing than research and development and cus-

tomer execution issues. Other companies like Primavera those that had previ-

ously been vertically focused and had years of product development and customer

service behind them sometimes got lost in the bubble bath of the late 1990s.

Construction companies that became disillusioned by the distance between vision

and hard returns should now be careful not to abandon the promise of Web-basedcollaboration solutions. Owners have been patient and are now gaining insight

into solid, measurable returns. Other similar organizations must realize the im-

portance of internal benchmarking, and they must dedicate the appropriate re-

sources to make sure they are measuring the right returns. Technology is not a sil-

ver bullet capable of slaying the beast of process inefficiency.





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2002 Aberdeen Group, Inc.All rights reserved

December 2002

Aberdeen Group is a computer and communications

research and consulting organization closely monitoring

enterprise-user needs, technological changes and market

developments.

Based on a comprehensive analytical framework,

Aberdeen provides fresh insights into the future of

computing and networking and the implications for

users and the industry.

Aberdeen Group performs specific projects for a selectgroup of domestic and international clients requiring

strategic and tactical advice and hard answers on how to

manage computer and communications technology. This

document is the result of research performed by

Aberdeen Group. It was underwritten by Primavera

Systems, Inc. Aberdeen Group believes its findings are

objective and represent the best analysis available at the

time of publication.

Primaveras project collaboration solution has room to grow and mature. As is

true with most software, some improvements are necessary, but as one interviewee

said, Primavera has some serious potential. Although he says that the workflow

functionality is the best thing I have seen, he requires greater, project-wide visi-bility into individual workflows from start to finish.

As adoption of its solution accelerates, Primavera will need to improve its help

menus and focus on improving its user manuals. Expect Primavera to address this

need soon, for as Chiesa stressed, Primavera is very fair; we have no issues with

customer service. Tighter integration of its existing solutions will also be required.

Perhaps most important, Primavera should heed the lessons many others havelearned from the late 90s. The company must strive to effectively balance the

need for strong sales and marketing initiatives with the necessity to both address

current customer implementation challenges and proactively develop future en-

hancements. Primaveras customers appear to really like both this company andits offerings. Right now, the construction software vertical may well be Primaveras

to lose.
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Project Collaboration

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