Web Editor’s note: This article originally appeared prior to September 2001, and has not been checked for accuracy.
Since the mid-1980s, project management in the construction industry has made major advances. Starting around 1985, many construction companies began to use PC, DOS-based software for construction scheduling. By the late 1980s, the advent of Windows-based software accelerated the trend of using the computer for more and more aspects of project management. Contractors increasingly began using software for preparing project bids. As time went on, leading contractors pushed the computerization of still other aspects of project management—including document management, real-time cost control of projects, and better management of people and equipment.
The biggest change in computerized project management since the dawn of the personal computer is now upon us: the movement of project management software from in-house PC local-area networks to Internet Web sites run by application service providers. Already many of the Engineering News-Record top-400 construction companies are exploring a move to the Web, and others have begun to manage major projects using Web sites run by outsiders. Within the construction industry, this project management revolution is being pushed by large general contractors (GCs). But over the next several years, this revolution is expected to diffuse downward to envelop medium and even small GCs. Subcontractors of all varieties, including those specializing in grading, excavation, and paving work, will necessarily be swept into this revolution whether they choose to be or not, as GCs draw them into their new way of doing business. The Internet revolution might also propel GCs to get more deeply involved in purchasing construction materials and equipment, heretofore the bastion of subcontractors.
What have been the major trends in computerized project management over the past decade? What major functions do GCs and grading and excavation contractors and subcontractors perform with their project management software? How are contractors currently using the Internet for project management and how are they likely to use it in the future? To provide insight into these and other pressing questions, we now turn to several in-depth case histories of GCs and grading, excavation, and paving contractors and subcontractors.
Midsize Contractor Computerizes In-House, Expanding Business 40%
One grading and excavation contractor putting project management software to profitable use is American Asphalt, a $40-million/yr. firm in Shavertown, PA, specializing in the construction of public and private highways, site excavation, and grading. “Not many paving contractors are using project management software at this point,” believes General Manager Tony Barbose, “just the very large contractors. But that will change as more contractors begin to use the Internet; for that will provide much cheaper access to project management software.”
According to Barbose, American Asphalt got started in computerized project management back in 1994 using a project scheduling program called Timeline, by Symantec Corporation. This program enabled the company to break down each project into tasks and assign a foreman to each task. Use of this software was a significant improvement over old methods of project management using a magnetic board. The firm was readily able to pinpoint gaps, tasks that had too few or too many foreman man-hours allocated. But such scheduling left out much detail. While it was adequate for making assignments for crew foremen, it neglected details such as the makeup of a particular crew or the particular equipment to be used on a task. The company management still had to spend much time coordinating with particular foremen about crews and equipment.
The next major step in computerized project management for American Asphalt was the computerization of estimating. For several thousand dollars, the company purchased a program called Estimating Office System, created by Hard Dollar Corporation of Tempe, AZ, and ran it on a 286 desktop PC. Barbose says that five years ago, before using this software, American Asphalt was able to bid 500 jobs a year using pencil-and-paper estimating methods, winning about 25%. With the Hard Dollar estimating software, it has been able to boost the number of jobs bid on annually by 40%, dramatically increasing its annual business. The boost in the number of estimates stems from the much greater speed of computerized estimating. Not only does the software enable estimating calculations to be done more quickly, there is also far less time spent inputting data that remain the same from project to project —the makeup of a paving crew (eight men, a paver, two rollers), hourly labor rates, equipment rental rates, and so on. Such data are stored on the computer’s hard disk and can be used over and over again.
Another advantage of using this Hard Dollar estimating software, notes Barbose, is that it is very user friendly. He was able to learn the program at home over a weekend, then train two company men with no prior computer experience. Within one to two weeks, they were highly proficient at job estimates. “Purchasing this estimating software,” remarks Barbose, “was one of the best investments we made at the time.”
With scheduling and estimating activities computerized, the next move for American Asphalt was to computerize other project management functions – budgets, resource management, field data recording, accounting and finance, and change orders. To that end, the firm purchased Hard Dollar’s Project Execution System. The software and project data were loaded on a server accessed by several laptop PCs networked together via Ethernet. The software was also loaded on the hard disks of each of the laptops. The initial outlay for hardware and project management software, Barbose recalls, was about $40,000, with most of this going for software.
For Barbose, the most important feature of this project management software is that it meshes smoothly with the estimating software. That is, all the data collected and generated using the estimating software—crew makeup, labor and equipment rates, materials, and so on—can now be automatically integrated into the project management software. “We don’t have to waste time generating all that information all over again.”
Major Project Management Tasks Computerized
Barbose lists the specific project management tasks for which American Asphalt uses its Hard Dollar project management software:
Budgets and Real-Time Cost Accounting. The software readily displays the budget for any given project task (e.g., paving a parking area), including a breakdown of planned labor, materials, and equipment costs. These budgeted amounts are then compared with the amount actually spent to determine whether the project, on a daily basis, is above, on, or below budget. Actual daily costs are calculated from cost-related information submitted by project foremen. They turn in hard-copy time sheets (indicating number of employees on the job, employee and equipment hours, and work accomplished) for a given day by 10 a.m. the following morning, a task that typically takes them about 20 minutes. Once these data are entered into the computer, the software displays in a matter of minutes what a particular task (e.g., excavating a parking area, laying down a base or a wearing course) is costing and whether work is under, over, or on budget.
“With such software,” states Barbose, “we can keep track of our costs on a daily basis with very little input. We need to have such near-real-time cost information so that we can make changes on a job as we are going along.” Why did it take a crew more time and money than budgeted to perform a task? Perhaps not enough equipment or men were assigned. Say a foreman believes that adding three more dump trucks will keep them on time and within budget. The project manager, using the software, would be able to instantly advise him that such a move seems good, but that daily production targets should be increased to a certain level (e.g., so many square yards per day paved) to remain within the budgeted amount for completing the task.
An example of how having real-time cost information paid off is an excavation project American Asphalt was doing for a municipal landfill. The project consisted of moving massive amounts of earth and rock from a site that was to comprise the “hole” for the landfill, then transporting this material to a dump site about a half mile away. Analysis of daily cost information with the project management software showed that budgeted costs were being exceeded, says Barbose. This forced the construction team to think about ways to reduce costs. The solution was to regrade parts of the 0.5-mi.-long uphill serpentine haul road running from the municipal landfill site to the earth-materials dump site so that it was less steep, thereby making it possible for dump trucks to complete their cycle. The net result, reports Barbose, is that this 16-month earthmoving project was brought in on time and 20% under budget. Under the old system, where time sheets were submitted to the accounting department, costs would not be available for about six weeks, not timely enough to affect the way a construction project is managed.
Resources Management. At any given time, American Asphalt typically has six projects active with another 30 waiting to be started. A major management objective is to ensure that labor and equipment are allocated to all of these projects efficiently so that there is a minimum of manpower or equipment idleness. In the past, Barbose explains, it was not uncommon for expensive rented equipment to be sitting idle, sometimes weeks at a time because of inadequate, paper-based project management methods.
But such waste is a thing of the past now that American Asphalt is using project management software for allocating resources among numerous projects. This approach enables the company to assign labor and equipment to the various projects, then to readily see where the problems are. If a given piece of construction equipment is sitting idle, it is either reassigned to another project or returned to the owner.
Barbose sums up things this way: “Using the project management software has enabled us to manage our construction equipment 10 times better than before. If there are any conflicts, we go out and rent more equipment or rearrange the project’s schedule to avoid such conflicts. If a rented roller or other piece of construction equipment is sitting idle, we return it. The money saved in returning idle equipment has more than paid for the cost of the software. Also gone is the tedium of manually assigning specific pieces of equipment to specific projects.”
Recording Field Data Electronically. In the past, American Asphalt’s project foremen were required to submit daily paper time sheets, which indicated important project cost-accounting data such as hours worked for specific workers, hours utilized for specific pieces of construction equipment, quantities of materials used, and amount of work accomplished. The company is now phasing in Palm Personal Digital Systems for its foremen and phasing out the old time sheets. All data formerly handwritten on the time sheets are now entered into the field Palm devices and then electronically transmitted to the company’s local-area network server. This method eliminates the need to enter all of the time sheet data into the computer in the office, saving time and reducing errors.
Company Cash-Flow Analysis. The Hard Dollar project management software also enables American Asphalt to foresee future company cash-flow problems. The program keeps track of the specific times that cash is expected to flow out of (expenditures) or flow into (revenues) the company and identifies those periods when there will be a company cash deficit. Company management is then able to plan corrective actions, such as arranging an increase in its bank credit line to cover money needs for those periods. The program also enables the company to calculate anticipated finance charges for borrowing money during cash-deficit periods and to bill them to a specific project.
Managing Project Change Orders. Change orders, which are contractor requests for additional reimbursement for work not covered in the original contract, can be an emotional topic between contractor and owner. Barbose believes that project management software can help alleviate tensions because it enables a contractor to keep track of all change orders on a project, store them, and print out a single report for the client that details all changes.
To sum it up, Barbose says the benefits American Asphalt has derived from using project management software have easily paid for the $40,000 investment the company made in hardware and software. The Hard Dollar software does most of the things the firm wants. His only suggested improvement would be to make the software compatible with Microsoft Project (it is already compatible with Microsoft Word and Excel). That way he could transfer the output from his scheduling software to Microsoft Project, where he could more readily manipulate scheduling diagrams before printing.
Barbose believes that only large GCs are currently using project management software. Many contractors are not even using estimating software. But all of that could change in the next several years, he thinks, now that costly project management software is becoming available on Internet sites. These sites will make the burden of owning, updating, and supporting project management software much lighter.
He claims that a construction contractor doesn’t have to be huge to benefit from computerized project management. “Any contractor should be interested if he desires to reduce costs and increase profits. Making project management software available on the Internet will stimulate much contractor interest and greatly lessen the cost of getting involved.” American Asphalt isn’t using an Internet site as of yet, but it readily acknowledges that, in addition to providing low-cost project management software, such a site could be useful for project collaboration among client, architect, consulting engineers, GC, and subcontractors on large projects.
In-House Project Management
Pepper Construction, a large ($700 million/yr.) Chicago-based GC specializing in the construction of commercial and retail buildings, hotels, high-rise office towers, hospitals, malls, and other commercial projects, began to get involved in PC-based project management around 1985. During that period, recalls Pepper’s computer-applications expert Howie Piersma, the company had an MIS department based around the IBM System 38 minicomputer, with only three PCs in the entire company. With Piersma’s prodding, this GC giant moved quickly to install a local-area network of PCs connected to a Dell server, with the entire network running initially under an IBM operating system and later under Novell and Microsoft NT operating systems.
In 1985, recalls Piersma, there was little project management software on the market, though spreadsheet programs were available, as was scheduling software. Pepper quickly adopted Primavera’s DOS-based Expedition software because, at the time, it felt it was one of the best programs on the market for project scheduling. At the time, the company’s most pressing project management challenge was document management: keeping systematic track of the thousands of documents (engineering drawings, memos, requests for information, submittals and transmittals, punch lists, samples of construction materials, and so on) connected with a major construction project. To help with that exceedingly burdensome and time-consuming task, Pepper developed in-house (little relevant software was on the market then) a DOS-based program called Construction Expediting. Since this was before the dawn of Microsoft Windows, engineering drawings were not yet available on computer hard disks; they were still sent as rolls back and forth through the mail, but their location and current status were tracked using this in-house document-management software.
With the establishment of Windows-based software by the early 1990s, Pepper began to look for a graphics-based document-management program that could meet its needs. In 1995 the company selected Meridian Project System’s Prolog Plus because of its excellence as a document-management package. “What we wanted,” Piersma explains, “was project management software that could handle document management. We were not all that interested in systems that could also perform job-cost and other accounting functions because we had already developed our own system for budgeting and job-cost control. So we might be somewhat atypical as a general contractor.”
The graphics-based Prolog Plus enabled Pepper to electronically store all project engineering drawings on its central Dell server, making them instantly available to anyone in the company with a PC connected to the in-house local-area network. This software was also very good for organizing instant-access meeting minutes, requests for information (RFIs), submittals and transmittals, punch lists, and other construction documents.
A Bold Move to Web-Based Project Management
By 1998, Pepper began to worry that its project management software might not be Y2K compliant, so it upgraded to Meridian’s Prolog Manager. By July 1998, Piersma recalls, the company began to look at Internet-based project management services, narrowing down its choice to an Atlanta-based site run by Constructware (formerly Emerging Solutions). Piersma and his colleagues felt that going to a third-party Internet service provider such as Constructware for access to their project management software would have these advantages:
- Y2K compliance;
- software for document management; project team members would get information almost instantaneously and in standardized formats;
- all the functionality Pepper would need, yet easy to use;
- software that would be updated and supported by the application service provider;
- a 24-hour-a-day Internet site that would be readily accessible to not only the GC’s in-house staff but to all project team members – owner, architect, consulting engineers, and subcontractors.
At that time, this last feature—Internet project collaboration—wasn’t the most important to Pepper since the Internet was still new and committed Internet surfers were few. But today, with millions of people having made Net surfing an obsession, Piersma says project collaboration is by far the most important reason for accessing an Internet site.
In the past, if an owner, a subcontractor, or other project team member wanted to view an engineering drawing or other document, he wouldn’t have been able to tap into the GC’s LAN server and electronically download the appropriate document. Instead he would phone the GC to request a copy; the GC would thereupon retrieve it from the server, print it out, and mail it. “There were tons of such paperwork on major projects,” says Piersma, “and responding to requests for documents was a huge part of project management, consuming much staff time, paper, and money.”
Many large GCs have been experimenting with Internet-based project management, but Pepper is among a small number that have made a total commitment. For about a year now, it has had all of its projects on the Constructware Internet site. Based on that experience, these are what Piersma believes are the major advantages:
- Project collaboration. Project team members are now getting information much faster and in a standardized format. This result is achieved by storing all project documents (engineering drawings, meeting minutes, memos, and so on) on the Internet site, where they are instantly accessible to all project team members from anywhere at any time; this database provides a permanent trace for all documents should disputes later arise.
- Standardization of formats for all documents;
- Accountability. All documents are date-, time-, and approval-stamped. For example, an engineer electronically transmits an engineering drawing to an architect. It is date- and time-stamped when it’s sent, when it arrives at the architect’s office, and when it’s approved. “Things are not getting lost,” states Piersma. “There is accountability. This system has legal value should there be any disputes. More importantly, the system helps get approvals done on a timely basis, thereby reducing the time and cost of projects.”
- Reduced computing costs. Using Internet-based project management means Pepper can now eliminate the substantial cost of purchasing, updating, and supporting software. Initially, Pepper paid Constructware $300 per user per year for use of the Internet site. But last fall, with more than 80 people at Pepper using the site, the company signed a multiyear contract with Constructware, allowing an unlimited number of users access to the site for unlimited time for a given annual fee. Such an arrangement helps break down communication barriers since the company is no longer concerned about the cost of giving more and more people access to the site.
- Posting construction-progress photos. Pepper has purchased digital cameras for its project supervisors. They take frequent photos of construction progress and post these digital photos on the Internet site. In this way, the owner, architect, or consulting engineer (who is typically located in a distant city), can quickly check construction progress by logging on to the Internet site. There is no need to take a costly and time-consuming trip to the actual construction site.
Is Internet-based project management the wave of the future? Says Piersma, “Our more techy clients are already asking us whether we have Internet-based project management. I believe it will be a standard in the construction industry in another few years.”
And how does this Internet trend affect grading and excavating and other subcontractors on a project? There is no question that the force pushing for the Internet site is the GC, since it is the GC that arranges to lease the site. The subcontractors will have to follow the GC’s lead and get involved in using these sites. And, adds Piersma, they are finding it useful in their RFIs and in viewing engineering drawings, meeting minutes, correspondence, and punch lists. They are also using it for submittals. Pepper does not charge its subcontractors a fee for accessing the project management Internet site.
Despite the move to Internet-based project management, Pepper continues to maintain and use its in-house local-area network of PCs. LAN is still the main way people within Pepper communicate with one another – and reach the Internet via a single T1 high-speed digital access line. Among its continuing uses: e-mail; document and spreadsheet sharing, job-cost-control software and other financial software, and change requests. Piersma says they have standardized on all hardware and software: the LAN is a fast Ethernet using Compaq and Dell servers operating under Novell and Microsoft NT systems software. The PCs are a mixture of Compaq Desktop Model EPs and Dell Latitude Notebooks. The construction accounting software runs on an in-house minicomputer.Another GC Jumps on Internet Bandwagon
Like Pepper Construction, Hathaway Dinwiddie Construction (HDC), a San Francisco-based GC doing $500 million/yr. in commercial construction, is also now starting to use Internet-based project management. As VP Mark Liew explains, back in the 1980s, HDC adapted a DOS-based database management program for document management. As more and more DOS-based commercial project management software became available by the late 1980s, HDC decided to purchase a software package, narrowing its list to Timberline, Primavera Expedition, and Meridian Systems’ Prolog. The company selected Meridian’s Prolog because it seemed best suited for project management, especially document management, and because of its responsiveness to customer needs.
HDC ran its DOS-based Meridian software on a 486 IBM PC with a 500-MB hard drive. Typically two to 30 PCs were networked together at an HDC job site, with all data stored on a server. All engineering drawings and other documents – punch lists, meeting minutes, specs, daily logs (a daily record of site activities), and so on – were stored on the server. By the 1990s, HDC had upgraded its project management software to Windows-based Meridian Prolog 4.2. This was run on a network of Pentium chip-based PCs with 1-GB hard drives.
Liew says HDC, similar to other major GCs, is now in the process of switching to Internet-based project management, using Meridian’s projecttalk.com. And the reason is familiar: to dramatically improve project collaboration among team members. All project documents are stored on the Internet site, where they are instantly retrievable by any party with a password.
But Liew does not agree that Internet-based project management will be cheaper than the in-house approach. Monthly charges will be $50-$200 per month per person accessing the site. All big GCs ($100 million-plus/yr.) are now moving to the Internet; clients expect as much.
In the years ahead, Liew believes, Internet sites could also be important for the purchasing of construction equipment and materials. This change would especially affect subcontractors, who do the bulk of the buying on construction projects. But Liew thinks that move to e-commerce might not occur all that rapidly, for the construction industry is composed of tens of thousands of small subcontractors, many of whom are quite conservative in their business practices.
Determined to Not Be Left Behind in the Internet Revolution
Still another company that has made a commitment to Internet-based project management is The Beck Group, a large Texas-based GC specializing in the construction of telephone call centers, schools, churches, and hospitals. As with some other GCs, it began computerized project management in the 1980s using software developed in-house. About four years ago, it purchased Meridian’s Prolog. According to the firm’s Jon Fingland, this software was selected because it provided greater project management capability along with the ability to tailor the software to the company’s needs. A major use of the software was for document management, including engineering drawings, submittals, meeting minutes, and transmittals.
In June, Beck began using Meridian’s projecttalk.com. The main motive was to facilitate collaboration among project team members. Fingland thinks an important advantage is the time all parties save in RFIs: People will receive near-real-time answers to their inquiries. In the past, all the various project-related companies kept their own set of engineering drawings on their in-house computers. Now there is just one library of these drawings, located on the Internet site. Similar to other GCs, Beck is also using its Internet site to post construction progress photos.
How will grading and excavation contractors and other subcontractors fit into this picture? As previously mentioned, the GC is the prime mover in setting up an Internet project management site. It then invites other parties to partake in this online community—owner, architect, consulting engineers, subcontractors, and suppliers. (Beck is paying $150 per user per month and other parties pay $50 per user per month.)
One major way that subcontractors are using the Beck Internet site is in preparing bids on forthcoming projects. Beck still sends out requests for bids to subcontractors via mail. But no longer does the GC have to send out tons of paper in the form of engineering drawings, specifications, and other relevant construction documents. Prospective bidders can now get all this information off the Internet site. If they want a hard copy, they can print it themselves in their own offices.
Fingland sums it up this way: “Right now we are using the Internet as part of the bidding process. In the future, we as the GC may also get involved in requisitioning major equipment and materials—elevators, structural steel, et cetera—from appropriate e-commerce sites. For instance, at any given time our company might be buying 10 elevators for numerous projects scattered across the US. By our buying the elevators, rather than a small local subcontractor buying only two, we would be able to negotiate a better price. Given the future promise of construction products-related e-commerce sites, many other GCs are also thinking about getting more involved in purchasing, the traditional province of subcontractors.”
Fingland says Beck’s subcontractors will also be using the Internet site for submitting their monthly payment applications, indicating how much work has been completed. They will also use it for submitting change orders to cover requested or proposed work not covered by the original contract.
Grading and Paving GCs Push In-House Computerization of Project Management
An example of a small grading and paving contractor benefiting from computerized project management is Miller Pavement, a $25-million/yr. contractor in Columbus, OH. It does a mix of private (60%) and public (40%) work. When doing private work, such as constructing the parking lot and roads for a shopping center, it is a subcontractor, but on public-sector road-paving or sewer-installation projects, it is the GC.
According to General Manager Bob Westbrook, years ago the company used to manage projects using a magnetic board. About five years ago, it began using Primavera’s planning and scheduling software. But this program addressed only a small part of the complex activity of Miller Pavement’s project management. Company management felt that, beyond sketching out what sort of tasks needed to be performed when, it would also be important for a program to keep track of how well projects were proceeding on a day-to-day basis—what the real-time costs were and whether they were within budget and how an unforeseen event (e.g., encountering an unexpected gas main in the construction path) could affect the overall project schedule and cost.
