I am not criticizing him. I believe that someone of Horn's caliber to be quite capable of the exercise. My assertion is this: He could not document the savings because there aren't any significant savings yet to report. Even if he had experienced such savings, he had no agreed-upon metrics with which to document and communicate them. So I ask: Extranets have been around for a while, so why haven't there been metric studies about them?
Fast-forward to the recent PikeNet Forum in San Francisco where attendees discussed information-technology strategies of contractors, owners and developers such as Bovis Lend Lease, Bank of America and Cushman & Wakefield. Everyone listened respectively as keynote speaker John Hagel, author of Net Gain and Net Worth, gushed about the "systematic reduction of interaction costs" by the Internet. But none of the other speakers felt that the Internet had reduced their overall costs. Many felt burdened by increased technology expenditures. And they wanted to know: "Who will absorb the costs of making the industry more efficientbrokers, landlords or tenants?"
Since the early days of computer-aided design, software vendors have claimed that their software increases business effectiveness in engineering, construction and operations projects. But during the last 30 years, clients have not been able to quantify the overall savings. Sure, they've noted that software has eased certain tasks such as design and drawing. But the design phase typically accounts for just a small fraction of the cost and time of a construction project.
HYPE. The most-hyped construction-related information technology tool these days is the project extranet. Private areas of the Internet, extranets provide central places to store information, communicate with team members, review schedules and milestones, and find status reports, bulletins and change orders.
Some analysts have claimed that there is $400 billion to be saved in engineering, construction and operations by better use of information technology. Sounds great. So why can't the savings be documented? Why aren't the necessary metrics available, and what could such studies reveal?
Surely one problem is the dynamics of acceptance of what Living on the Fault Line author Geoffrey Moore calls a "discontinuous innovation." Who's going to buy the first fax machine? Who is that person going to send a fax to? That's moot now, since everyone uses fax machines. But extranets are still subject to Ethernet inventor Bob Metcalf's law that the value of networks increases exponentially with the increase in users. If you join a project extranet but your business partners don't use the Internet yet, what have you gained?
No one sees the Internet as a passing fad any more. It's just a matter of time until it becomes a ubiquitous business tool even in construction. But with that still several years away, project extranets are not yet the panacea that the industry has been hoping for. A little extra efficiency doesn't save a lot of money. In the project extranet world, there are a lot of weak links.
Huge savings won't come about until there is straight-through processing all the way to the client, throughout the building life cycle. The data you enter once into the system must remain usable all the way through design, engineering, construction and operations. Each human interruption in the flow of information takes time, costs money and introduces fresh opportunities for error.
The reason for hope is that, with extranets as central places for collaboration, all software vendors finally have a compelling reason to make their offerings compatible with each other's. Project extranets should be breeding grounds for straight-through processing, direct communication and interoperability between the programs. But it's a technological challenge. A joint effort by the construction industry, its information technology suppliers and clients is needed to develop metrics that will measure and reward this progress.
Project extranets make it easier to conceive design, scheduling and procurement applications that work together and minimize human intervention. Only when the entire process is virtually integrated will we see significant benefits, and a synergistic effect from getting everyone in the project life cycle on the network. But we still have a long way to go.
PERSUASION. The real challenge for software vendors is to demonstrate straight-through processing of the kind that is common in industries such as financial services or travel. Some critics say that software vendors have been guilty of spending too much on studies that back their marketing claims and not enough on metric studies that contractors would find truly useful and persuasive.
Certainly, the construction industry wants to save money. it suppliers need to show us straight-through processingof information creation, collaboration and commercefor construction projects from design through construction and into operations and maintenance. Vendors need to undertake studies and distribute metrics that the industry widely accepts as valid.