IMPACT OF THE INTERNET ON THE CONSTRUCTION INDUSTRY

This section will describe:

THE PHYSICAL DESIGN AND CONSTRUCTION VALUE CHAIN

The diagram below depicts the Physical Value Chain in the Design and Construction industry. The links represent contractual agreements between the connected entities. Because the left end of each link provides products and/or services for the right end, value added flows from left to right. Compensation, on the other hand, flows in the opposite direction.

Before the advent of the Internet:

A VIRTUAL PROJECT TEAM PARADIGM

Given the inefficiencies inherent in the model above, what can be done to improve the over-all output of the project team which consists of various members of the value chain, most of whom belong to different firms?

Following is a paradigm proposed by Tomas Hernandez, Jr in a June 1996 article in Building Design and Construction magazine entitled "Seize the opportunity: Join a virtual project team."

In this article, he proposes that:

Several hardware and software products are currently available to support various aspects of the virtual team paradigm (see follwing section). However, there is still much room for improvement in the technology area, especially where bandwidth is concerned since wider bandwidths are required to transmit large amounts of data in a reasonable time.

LEVERAGING THE WEB

In addition to the Internet tools described above, the World Wide Web can also serve as a powerful tool for the Construction industry by building and supporting the following:

THE VIRTUAL VALUE CHAIN

As a result of the ideas presented above with regard to the ways in which the Internet may be leveraged, the value chain presented earlier may be reconfigured as follows:

As in the physical value chain, goods and services flow from left to right while compensation flows in the opposite direction. Note, however, that the virtual chain is now flatter. This is because the role of middlemen such as manufacturers representatives and distributors may be diminished, removed or redefined due to the advent of the electronic marketplace. This generally leads to lower costs and project duration.

Another significant difference inherent in the virtual chain pertains to the flow of information among the project team members. Whereas communication tends to be linear and sequential in the physical chain (for instance, design goes from architect to GC to subs and back), information flow in a virtual team that has access to common databases/servers can be depicted as follows:

The establishment of a shared space which was made feasible by the Internet allows information to be broadcast to several team members at a time. Web-enabled document management and groupware tools foster collaboration and help establish and strenghten links between project participants.