Design and Construction Value Chain

IMPACT OF THE INTERNET ON THE CONSTRUCTION INDUSTRY

This section will describe:

The physical design and construction value chain without the Internet backbone
A construction project team paradigm leveraging Internet-based communications
How the web can be used to support construction projects
A virtual value chain made possible by the Internet.

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:

Interaction among members of the construction project team was mostly paper-based and sequential, relying on faxes, couriers and regular mail to route documents to various parties
The concept of shared space was difficult to implement.

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:

A virtual project team be created consisting of sponsors/building owners, construction managers, architects, subcontractors and other parties in the construction effort. Members of this team will work on one common set of databases available anytime from anywhere. Ideally, communication among members will occur exclusively through this common project database.
The Internet be used to provide access to a project server for all of the key project databases like CAD files, specifications, schedules, cost estimates, shop drawing logs, etc.
Even if legal liability and security issues constrain the extent to which the above proposals may be implemented, other tools provided by the Internet may be leveraged:
- Email can be used more intelligently by utilizing automatic bulletins, notices of news and milestones, meeting notices, report issues, etc.
- Information distribution can be customized to suit the needs of the individuals in each firm. For instance, principals may only want general information, while project managers or supervisors may be interested in details that are within the scope of their responsibility.
- To facilitate the time-consuming process of delivering drawings, ftp (file-transfer protocol) can be used to post designs from architects, engineers, consultants, etc. Firms needing these drawings can thus copy the latest posted version from the server to their local machines. This pull system can save hours of transmittal writing, plotting, printing, diskette-copying and distribution using the sneaker-net or snail mail.
- Internet-enabled versions of software packages such as those from AutoDesk, Bentley, Lotus and Microsoft can be used to publish and serve pages on the web that are easily accessable by other team members.

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:

VIRTUAL COMMUNITIES

The Web helps build a sense of community among the various participants in the value chain by bringing together professionals with shared interests and providing forums for interaction between them.
See examples of these sites by following this link.
While these websites may not be sufficient to develop robust communities, they help build the foundation for this.

ONLINE MARKETPLACE

Through the Web, virtual value chains such as that shown below may be established that shorten the links in the physical chain by bringing together large communities of buyers and sellers in a dynamic, interactive environment where business can be done faster and more efficiently. The web provides a relatively inexpensive way of disseminating and gathering information on products and services.
Examples of construction-specific vendor directories are provided by this link.

COMMUNICATION AND INFORMATION CONDUIT

Several software tools are available that facilitate the flow of information among various members of the value chain. These range in sophistication from electronic forms (E-FORMS) to groupware and synchronous collaboration tools. Many software companies have begun to leverage the power of the net to extend the shared space of the project team, thereby alleviating the paper-based, sequential flow of information prevalent in the physical value chain, facilitating data-sharing and allowing direct (virtual) links to be established among team members.
This link offers examples of such tools along with actual case studies.

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.