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Developers' Internet Use Building Slowly

Study says Web-based project management could save time and money and reduce the risk of miscommunication.

August 22, 2000|BOB HOWARD | SPECIAL TO THE TIMES

Developers and builders who use the Internet can cut their expenses and improve project management from the planning stages through to completion of construction--but not many of them do so, according to a new report.

Web-based project management already is reducing the traditional risks associated with development for those who use it and "creating opportunities for increased returns to investors," according to the report released Monday by consulting firm Arthur Andersen.

The report, which analyzes the effect of the Internet on various types of real estate firms, said Web-based project management and materials purchasing systems save money in two ways: by trimming time from the development process and by improving communication in an industry in which miscommunication often requires costly change orders.

"The Internet is allowing companies to reduce the time it takes [to build] and coordinate very complicated projects, so there is less risk that something falls through the cracks and has to be done later and more expensively," said Daniel Aronson, manager at Andersen's North American E-Business Strategy Team.

The Internet is already being used for project management in some quarters. Architects, developers, environmental engineers, contractors and others working on a construction project can log onto a common Web site to share information.

Such Web-based systems have great potential to reduce risks, according to Aronson, who explained that the complex construction process offers numerous chances for miscommunication.

One example: Ordering steel usually requires a series of faxes back and forth, with each fax having the potential to be misunderstood.

"Each time someone has to key a set of specification into a computer, it introduces another opportunity for mistakes," Aronson said, "but if the specifications need to be entered only once on the Web site, it greatly reduces the possibility of error."

Mistakes aren't just inconvenient. They often result in costly change orders or lead to costly lawsuits. Aronson and others throughout the industry cited lawsuits as one of the biggest risks that could be reduced by improved communication.

Improved communication is Costa Mesa-based Birtcher Construction's objective in switching to a Web-based project management system that the company will adopt Sept. 1, according to Andrew Youngquist, Birtcher president. Birtcher has chosen a system operated by Bid.com. Others offering Web-based management include Cephren, BuildNet, Struxicon and Buzzsaw.

Youngquist explained that a message will pop up on the screen of a construction team member saying, in effect, "The ball is in your court" whenever there is a question that must be answered to keep the project moving.

"It forces you to make a decision on a timely basis, or everyone else will know you're holding up the process," Youngquist said.

Birtcher is already using Web cameras to monitor five construction sites, according to Youngquist. Customers, project managers and others involved with the developments can view progress at http://www.birtcherconst.com. The Web cameras eliminate the need to take traditional monthly project photos, allow the company to monitor the weather, and enable Birtcher execs to see if work is on schedule.

The process saves money on construction costs, puts rental revenue in the owner's pocket faster, and frees workers sooner to move on to other jobs, Youngquist said.

One of the biggest benefits of improved communication is in reducing change orders, which are "one of the most common reasons a project goes bad," said George Minardos, chief executive of Newport Beach-based Struxicon, which provides Web-based project management.

More often than not, change orders are the result of "erroneous communication," according to Minardos, who said such changes can add 15% to the cost of a project.

Change orders typically involve routing paperwork to half a dozen or more people who must approve the changes, according to Minardos, who said the Internet can expedite the process by making the same information immediately available to all parties. "One of the things that plagues our industry is a lot of paper shuffling that allows you to hide accountability," Minardos said, "but we now have a means of identifying who's accountable for what and doing it much faster."

Industry leaders also expect to transfer materials procurement to an Internet-based system. Among companies working on this approach is Redwood City, Calif.-based Twentypounds.com, a consortium of construction firms that hopes to use its clout to buy materials and equipment in bulk, said Eric Lamb, managing director of Twentypounds and an executive vice president at DPR Construction Inc.

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