Large-Scale Builders Save By Outsourcing

Trying to get your electrician to connect with your carpenters during a kitchen remodeling project is a tough enough job. Imagine what it's like getting together dozens of subcontractors while building an urban light-rail system or an office high-rise.

That's what application service provider (ASP) Cephren in Palo Alto, California, is attempting to do with its Web-based project management, collaboration and large-format remote-printing tools.

"In the past, we did everything pretty archaically, using voluminous rolls of paper sent by Federal Express," said Clifford Macaylo, vice president of supply chain at Fishback & Moore Electric in New Providence, N.J.

According to Macaylo, Cephren's hosted application hasn't completely eliminated paper from his life, but it has helped him reduce and control it. Most important, he said, it brings as much as 5% savings to the company's revenue by cutting back on time spent communicating with other subcontractors, paper costs and staffing needs.

"It may even be more than that," Macaylo said. "All you need is one litigation lawsuit, and I can justify more than that."

Central to any legal action in a construction project will be the hard-copy plans. Often, just sorting through moun-tains of blueprints and change-order forms can take weeks. Having those immediately accessible to investigators during the discovery stage of legal proceedings will not only save time, but the parties are also likely to resolve issues before they go to court, Macaylo said. He pointed out that valid electronic sign-offs on documents of "who did what when" will be "irrefutable."

Webcor Builders in San Mateo, California, uses Cephren's application to solicit quotes from suppliers. Webcor President Andy Bell estimates that his company pockets $US50,000 per project in savings and said that amount would quadruple if all his subcontractors got online.

The savings alone justify using an ASP for a given project, Macaylo said, but he would like to see standards for integration with third-party applications such as Microsoft Project emerge among ASPs.

Macaylo said that during a construction project, the owner often dictates which information technology tools and ASP services to deploy.

"Standards make it easier to choose the right team," he said.

Getting in Agreement

Analysts said they agree that data integration is a problem in the construction industry. But Dennis Byron, an analyst at International Data Corp. in Framingham, Mass., said he believes that if the building industry wants standards, it will need to drive them. Once the construction supply chain agrees on what it wants to see in its protocols and processes, he said, "technical people will follow."

Byron said he's confident the builders will succeed.

"This is the industry that makes a two-by-four in Massachusetts the same as a two-by-four in Kansas," he said.

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