The numbers are impressive but not flattering. Three of the industry’s Internet project management and collaboration companies, Bricsnet, Buzzsaw. com and Citadon, together lost almost $200 million last year. By themselves, the companies that merged to create Citadon–Bidcom and Cephren–posted combined revenue in 2000 of $5.6 million and had operating expenses of $125 million, according to a document produced for the merger. That means their operating loss for the year came to $119.4 million.

All three companies now are involved in raising more money. No wonder these project management and collaboration companies are using profit as the battle cry for 2001. The race to win customers and brand recognition through costly marketing campaigns and heavy discounting appears to be over.

Not only are investors less generous, but customers want to be sure a technology company won’t succumb financially in the middle of a long project. "If it went ugly fast, it would be bad. It’s not something we could hide from the client. This technology touches the client and sits on desktops," says Gary Koah, director of project technology of Jacobs Facilities Inc., Arlington, Va.

The very first question posed by Jacobs executives about a new technology vendor is "‘what’s the balance sheet look like?’" says Koah. "It doesn’t matter if what they provide is cheap or free."

For customers of companies that posted big losses, a new focus on profits could mean new realities. According to some designers and contractors, discounts already are dying.

There are other possible repercussions. Although Bricsnet, and Citadon all pledge to continue to innovate, these companies may not be able to add as many new features to their products as quickly as their customers would like. They also may have less money to spend on acquisitions or joint ventures that could inch the industry closer to the Promised Land of integration envisioned by technology managers. And if further consolidation continues, some believe the software companies that have only within the last year or so made the big jump to Web-related products may slow their pace of improvements to a frustrating crawl.

Koah believes the new tools have the potential to dramatically cut the cost and time of project delivery. But he wants it to happen sooner, not later. He’s hoping that the conservatism he had become accustomed to seeing from software companies before the dot-com boom doesn’t return. "Because of the funding the boom brought, we’ve seen more progress in the last 18 months than in the last few years," says Koah. "Now, the slow-moving, user-base-driven technology providers may retreat back to their old and comfortable product-development rut. I hope not. If they do, new competition will resurface and give them trouble."

The end of the dot-com boom has been part of a general economic slowdown that may finally give less-busy contractors and designers time and motivation to think about technology and how it can help them. For now, companies involved in guaranteed-price work and designers at risk in design-build projects may have more motivation to experiment and invest.

But with the focus on profits, can the technology companies produce the kind of hard-to-get, long-term metrics that will win people to the cause? "Clearly, there is resistance to adoption, so we need strong case studies and rationales," says Kristine K. Fallon, a Chicago-based technology consultant. "You won’t get people to volunteer to use these [new tools], so the decision to use them must be top-down. That’s why marketing strategy must be directed to management and owners."

Belgium-based Bricsnet NV has shifted its marketing focus to owners and recently made an arrangement with CB Richard Ellis, the El Segundo, Calif.-based real estate broker and consultant, under which Ellis will offer digital facilities management using the Bricsnet tools. Bricsnet now prices its Building Center product based on the number of square feet of space represented in the information it is storing.

As a result of its new focus on owners, the company must shift from selling its services for a few hundred dollars a month to providing major corporations with $100,000 and $200,000 solutions, says Yoav Etiel, a Bricsnet executive vice president. Bricsnet nv, the only one of the new companies to have raised funds through a public stock offering, must raise several more million dollars to get through the year, according to the company’s recent financial reports.

Bricsnet’s new owner-orientation has intrigued some users and consultants who welcome it as an admission that one company won’t be able to produce "the ultimate" all-encompassing tool for the industry. By separating into vertical markets, choices would be simpler for users and they would require fewer costly studies and evaluations. But so far, few have proclaimed their niche targets as openly as Bricsnet.

There is no single dominant player–yet. Only three construction-specific project management and collaboration companies–Citadon, E-Builder and Constructware–have been in business in some form for three years and have at least 10,000 users each. But other companies have been entering the field through their specialized markets. Bentley Systems, the engineering software company, offers a collaboration tool called And numerous niche players with different approaches abound. One of them, Cosential Inc., Wilton, Conn., has specialized in marketing tools, but also stores and organizes project data. Another, Web4engineers, rents out a wide array of engineering software that is accessed through the Internet.

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Fragmentation is one of the obstacles blocking the creation of collaboration tools that mesh with design, estimating, project management, accounting and change order processing. As things stand now, the idea that these functions could be integrated into a seamless whole is regarded as a challenge on the order of a Mars landing. While several sources point hopefully to the few attempts to integrate different functions, such as Meridian Project Systems’ work with J.D. Edward’s business software, others say the efforts haven’t yet delivered as much as they had hoped for at first. "You need two consultants to understand each software, so there is some cost involved," notes Marnie Kimberlin, principal of Q.O.E. Consulting, a technology consultant in Davis, Calif. "This isn’t a simple ‘throw your software on your machine and it’s going to work.’ It’s an expensive undertaking."

Whatever problems it creates in the short-run, consolidation ultimately may smooth the way to integration by making it easier for industry-wide standards to be adopted. "We have too many providers fracturing us into different communities," says John Jurewicz, a technology specialist who works for Chicago-based McClier.

He says that standard-writing efforts are slow-moving and the results are uncertain. How will it really happen? User activism would help. "To make this scalable, we have to start demanding that accounting work with project management to process change orders. But so far, the users aren’t driving and demanding it," says Jurewicz. A likely scenario is that standards will be set after more competitors fold or are merged and "one or two dominant ones figure it out," he says.

Gaining a critical mass of users isn’t cheap, as seen by the challenge facing, the San Francisco-based company that is 40%-owned by computer-aided design powerhouse Autodesk. According to a recent survey by consultant ZweigWhite & Associates, Buzzsaw’s project document management and collaboration service has been used by 45% of design firms, more than any competitor. The company with the second most-used tool is Citadon, with 16%, according to the survey of 184 firms. Many of those surveyed are small to mid-sized firms.

While reaching this level of familiarity, spent three dollars in sales for every dollar of revenue last year. It had a loss from operations in 2000 of $50.9 million, on net revenue of only $5.3 million. Carl Bass, chairman and chief executive, says the $50.9 million includes the cost of new hardware and software and that the company’s cash burn rate is "a fraction" of the total operating loss.

To make ends meet, is trying to raise another $20 million from investors. The company also recently laid off 70 employees, or nearly one-third of its work force of 245. And Buzzsaw’s co-founder, Larry Wares, recently left in an unannounced departure. started by often giving its services away, but now it charges by the amount of storage space and number of users. A free trial of 30 days is allowed. The company will be profitable "by early next year" and Autodesk "is committed to funding the business," says Bass. Autodesk has taken steps to integrate into new versions of its software.

San Francisco-based Citadon is another company making major adjustments. Its three largest investors, Bechtel Group Inc., Fluor Corp. and ge Power Systems, are also its largest customers. For the time being, Citadon’s existing customers will be its focus. In March, Citadon laid off 75 people to pare its work force to about 100 and the board selected a new chief executive, Bernard Fried.

"We decided we are not going to be all things to all people," says Fried. The layoffs left behind a core team of engineering talent that will push for new features to Citadon’s tools and a sales staff of about 20 people, says Fried.

Citadon is close to closing a deal for more financing. "We are not excluded from difficulties" besetting other companies in the field, says Fried, "but we are in no worse of a boat. We will create a smaller but stronger foundation from which to grow."

For the companies that didn’t try to run the race as a sprint, but considered it a marathon, a certain satisfying sense of vindication is detectable. The co-founder and chief executive of E-Builder, a suite of collaboration tools that was an early entry into the field, says he feels vindicated about his company’s slow but steady approach. Jon Antevy says E-Builder refused to heavily discount its services and is almost cash-flow positive. About 75% of its business is collaboration related.

E-Builder has the advantage of a large investor and marketing partner. Last year, the Construction Information Group of the McGraw-Hill Cos. (the parent of ENR), invested $3 million in E-Builder in exchange for a minority interest in the company. McGraw-Hill also provides free advertising and sales and marketing personnel for E-Builder.

Another school holds that existing software companies, with their steady and reliable base businesses, are in a better position to offer services in project management and collaboration. Primavera, a $75-million-year, privately owned company, is targeting large owners, engineers and contractors. A smaller software vendor, Meridian, debuted its online applications a year ago and based them on the company’s Prolog project management software. Both companies now offer services as application service providers, meaning, they host software and data as a service to customers.

To Constructware, a company whose completely Web-based applications have been available for years, the software vendors are Johnnies-come-lately to the project collaboration game who may not be able to keep up the pace of change. Constructware, significantly, is adding staff and new features to its program and, in the words of Chief Executive Scott Unger, "We are a true ASP."