Closing the Project Process Gaps:

An Executive Conversation Jim Purcell

Former CTO of Brasfield & Gorrie

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Introduction Brasfield & Gorrie • Brasfield & Gorrie will observe its 50th anniversary on June 28, 2014. As one of the nation’s

largest privately held construction firms, Brasfield & Gorrie provides general contracting, design-

build and construction management services for a wide variety of markets, including healthcare,

commercial, institutional, federal, municipal, industrial, infrastructure, and wastewater treatment.

The company is one of the few self-performing general contractors today.

B&G Specs: • 2014 estimated revenue - $2.5B

• ENR Top 400 Contractors Rank - 22

• Headquarters: Birmingham, AL. Regional offices: Atlanta, Raleigh, Nashville, Orlando, Jacksonville, Dallas, Columbus

• Software of note: JD Edwards 9.1, Prolog, P6, Timberline, Hard Dollar, Box, PlanGrid, Jive, Sharepoint

Jim Purcell • CTO at Brasfield & Gorrie since 2002, Partner 2009, employed 1998

• Former president of Construction Information Executives

• Former president of SIM - Alabama Chapter

• Member Oracle EPPM board

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Manufacturing vs. Construction Labor-Productivity Declines in the Construction Industry: Causes and Remedies (Another Look)

Paul Teicholz, AECbytes Viewpoint #67 (March 14, 2013)

Professor (Research) Emeritus, Department of Civil and Environmental Engineering, Stanford University

• Coming out of WWII manufacturing and construction had similar productivity levels and efficiency.

• Manufacturing has constantly improved while construction has remained almost flat.

Over the past fifty years, productivity has either slowly declined or remained stagnant. This is in contrast to all

nonfarm industries (which includes construction) which have shown significant increases in labor productivity.”

Causes of Stagnant Labor Productivity in the Construction Industry

• Unique work products built by varying teams under varying site, regulatory and weather conditions

• A procurement system based on competitive rather than collaborative teams

• Poor use of data based largely on paper documents produced by a highly fragmented team

• An economic environment characterized by declining real labor prices

• An industry by many very small firms that perform a significant percentage of the work

• An industry where significant output consists of remodel and renovation of existing facilities as opposed to new work

“

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Manufacturing vs. Construction

The United States is well behind international best practice in the construction of infrastructure.

While measuring productivity in the construction industry, most observers agree that it has at the very

least stagnated and perhaps even declined over the last three-plus decades. The construction

industry needs to deliver greater value with existing inputs, or even fewer inputs.”

comparison and contrast with construction is helpful for understanding part of what’s happened in the

recent recession and recovery.

In absolute numbers, these two sectors remain the biggest jobs laggards since the recession started.

(Construction has 25 per cent fewer jobs than before the recession, and for manufacturing the number is

13 per cent, according to CreditSights.)

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The Way We Did It

• Timberline with Eos Advisor, Explorer and Navigator, Hard Dollar and custom estimating

• P6 for scheduling

• Prolog for cost and document management

• PlanGrid, BIM 360 Field, Latista model, punch list and plan management

• JD Edwards for payroll, cost, financials, billings

• Also Submittal Exchange, Vico, Prolog Mobile / Converge, Bentley Microstation and ProjectWise, eMars, SalesForce,

On Screen Takeoff, Bluebeam, Jive

• Business Objects and SharePoint for reporting and Dashboarding

Project cost

• Estimates rolling from tools to JDE original budget

• Labor, Payroll and Quantities tracked in JDE

• Schedule not integrated

• Costs, Purchasing, Change orders, and all job cost related in Prolog integrated at 23 points using Morpheus

• Owner billings, Accounts Payable, Certified payroll, etc in JDE

The Cost of Chasing Cost

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Hard Dollar

Timberline EOS

Tools

AS/400

Original

Budget

JDE

Quantities

Job

Cost -

Actuals

Labor

Prolog

Schedule

Certified

Payroll /

eMars

Billings Accounts

Payable Latista, Bim 360,

Plan Grid

On Screen

Takeoff

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Difficulties The costs and sheer effort to maintain systems

• Maintenance costs continue to rise and are 20% of IT budget

Integration costs and management

• Full time employees managing integration plus custom and off the shelf software

Each piece of software has its own upgrade schedule and efforts

Cloud? On Premise?

Storage costs and scalability

• 400% growth in the last 2 years

Joint Ventures

• Whose technology platform do you run on?

Mobility and using iPads for documents, plans and real time collaboration

• End users finding their own solutions like iAuditor and Excel

Schedule and Portfolio management

• No comprehensive portfolio management tied with actuals

Bid Day

• Multiple solutions. Still 40% of work hard bid

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What is the Solution?

Integrated solutions – the holy grail of data

Schedule, Crew and Quantities feeding payroll, billing and financials

• Post ERP era according to Gartner. The cost of doing business.

Integration with live plan management

• From conception through as-built into Facilities management

Mobile input and output at all levels

• iPad and similar have made their way into every level of the job site

Time and attendance tracking and cost code management to achieve historic estimating vs. actual

• Estimating to original budget with Warranty and change order estimating at the source all feeding historic

estimating data

• Easier way for Superintendents, Project managers and foreman to use estimated cost codes through construction

for historic cost tracking

- Helps estimating get better

- Shortens the time for conceptual estimates

- Reduces cost of preconstruction

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What is the Solution?

Punch list and commissioning integrated

• Give the end users the mobile solution they are finding on their own with a reason to use it

• Safety walks, daily logs, weather logs, noise abatement, dust and particulate tracking

Joint Ventures

• The platform should be usable by all parties

• ideally hosted in the cloud

• license model should support flexible user model without project value as a factor

Dashboards and BI

• Platform for feeding data to BI tools

• BI is a very broad term and is serviced by an entire industry

• Impossible to pick the ultimate tool

• Benefits of data analysis outweigh the cost

All feeding the facilities management of the owners when possible

• Benefits to the owners and operators in reduced cost of loading FM solutions

• Reduced cost of warranty work

• Cost tracking of FM feeding preconstruction to achieve decision analysis about future projects

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Innovate Rather than Automate

Unique Work Products Built by Varying Teams under Varying Site, Regulatory and Weather

Conditions

• “There is a need for flexible approaches that minimize risk instead of the most efficient solution for a particular

case.” “…It also leads to resistance to change because the benefits of change may not be realized on the

current project and thus require multiple projects to achieve a payback.”

A Procurement System Based on Competitive Rather Than Collaborative Teams

• “These issues are frequently present on design-bid-build and even design-build projects where some team

members submit bids (typically sub-contractors), the low bidders receive awards and then try to benefit from

extra work.”

• Lock down procurement process that benefits all parties. Cultural hurdle.

• Better use of BIM and IPD

Poor Use of Data Based Largely on Paper Documents Produced by a Highly Fragmented Team

• “Interoperability problems in the capital facilities industry stem from the highly fragmented nature of the industry,

the industry’s continued paperbased business practices, a lack of standardization, and inconsistent technology

adoption among stakeholders.” – National Institute of Standards and Technology Publication Citation NISTGCR

- 04-867 Cost Analysis of Inadequate Interoperability in the U.S. Capital Facilities Industry.

• “However, all stakeholder groups indicated that seamless exchange of electronic data would shorten design

and construction time.”

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Innovate Rather than Automate

• “Interviews with participants also included prospective discussions that focused on barriers to information management,

communication, and exchange within the capital facilities supply chain and the opportunities that exist to eliminate these

inefficiencies.”

• “In summary, they view their interoperability costs during the O&M phase as a failure to manage activities upstream in

the design and construction process. Poor communication and maintenance of as-built data, communications failures,

inadequate standardization, and inadequate oversight during each life-cycle phase culminate in downstream costs.”

2004 Study

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Innovate Rather than Automate

An Economic Environment Characterized by Declining Real Labor Prices

• “…tends to reduce investment in capital equipment and use of off-site prefabrication which might not be utilized during

a subsequent period of low demand. This reinforces labor-intensive methods, which in turn, puts an emphasis on

reducing costs by reducing training of the labor force and use of the cheapest labor available.”

• A study by Chuck Eastman and Rafael Sacks compared the labor productivity of off-site manufacturing of items used

on construction projects (structural steel fabrication, precast concrete, curtain walls) with similar activities at the

construction site. Using value added per employee, the Economic Census data showed that in all cases, off-site work

is more labor efficient and more capital intensive. - 2008 (“Relative Productivity in the AEC Industries in the United

States for On-site and Off-site Activities.” Journal of Construction Engineering and Management 234[7]: 517-526)

An Industry Characterized by Many Very Small Firms that Perform a Significant Percent of the Work

• “…roughly 62 percent of firms have 5 or fewer employees and generate about 10% of dollar volume. Including the next

three size groups (up to 49 employees) accounts for 96.7% of the firms and 51% of the volume.”

An Industry Where Significant Output Consists of Remodel and Renovation of Existing Facilities as

Opposed to New Work

• “…New Work represents only 65% of total volume, yet this is the segment that receives most attention in research and

trade press. The high proportion of remodeling and upgrading sets the construction industry apart from others, where

only new items are produced.”

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Things You Could/Should be Working on

• Wi-Fi on the entire jobsite

• Drones

• RFID / proximity tracking

• Augmented reality

• As-built feeding facilities management

• Internet of things, Smart Connected Real Estate

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5 Tech Trends Pushing Enterprises to Meet New Goals – DocuSign Blog, September 5, 2014

Big Data

• “What does that mean to you? Two things. First, there is a tremendous opportunity looming in front of you.

Businesses leveraging Big Data are more than twice as likely to outperform peers and generate double the

profit growth. Second, that you need to prepare your network to meet rising bandwidth requirements.”

Cloud

• “This year, for the first time ever, a majority of workloads will be processed in the cloud. By 2017, 63% will be.”

Mobility

• BYOD offers a variety of benefits to companies, including improved productivity (56%), better customer service

(40%), improved collaboration (35%) and higher employee satisfaction (31%).

Security

• “Cybersecurity is a top concern for enterprises, not just because of the increased amount of devices and

access points, but also the growing sophistication of attacks. The solution is not just enhanced policies and

cloud-based firewall services, but also selecting secure network services with built-in protections ensuring the

safety and accessibility of critical applications and data.”

BC/DR

• “To avoid a fast and painful death at the hands of the downtime monster, businesses must develop a solid

business continuity plan and disaster recovery procedures,”

Things you Could/Should be Working on

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Conclusions:

• Industry is ripe for innovation and improvement in productivity. Technology can facilitate.

Need to use integrated solution with reduced cost to run and maintain.

• Owners need to reduce cost to maintain. Comes from upstream lack of integrated information

during the design and build processes.

• Completing the information cycle for repeatable more efficient construction and renovation.

• Innovation drives profits not only in business development but in risk decisions.