July 1, 2002
A key element for the profitability of a construction project is time. The ability to recognize a problem and resolve it quickly can make the difference between a successful project and one that ends up over time and over budget. Effective communication is one of the most important requirements in ensuring timely completion of a construction project. Another aspect is the prompt availability of project documents to different team members.
These two elements combined affect more than one-third of a construction project?s overall cost. A Virtual Project War Room, using cutting edge web- and Internet-based communication and document cell phones, digital cameras, wireless laptops, LAN and WAN, etc., can save significant amount of cost overruns arising due to poor communication and document management.
Situation
A typical problem in construction projects arises when a discrepancy in the blueprints results in some jobs being done incorrectly. Such incorrectly-done jobs need to be remedied, and those remedies may involve a number of subcontractors, may require a large change order and could be expensive. Most likely, not all subcontractors would be located in the same geographic vicinity, as it is quite common for a construction project that the mechanical engineering firm could be in one city, the electrical engineer in another and the general contractor in yet another. Another complexity is that some contractors may have completed part of their jobs and may not be scheduled to come back on site for several weeks to do the finish work. If this problem in not fixed soon, other components of the job would be delayed down the line. Hence the fixing of the problem is usually very critical to the schedule.
The Typical Approach
The approach that the construction project teams have typically employed deals with face-to-face interaction. A meeting would take place on the job site, where everyone would inspect the problem. Such a meeting might require several people from various firms to travel a long distance, with all the attendant costs and inconvenience. Apart from time spent by the personnel, schedules need to be juggled, airplane tickets need to be bought and other resources need to be marshaled to solve the problem, resulting in significant opportunity cost. Other affected contractors would also need to estimate the cost of remedy. The remedial work may not begin until a change order is issued, which may hold up several other aspects of the job. The problem may turn into a large cost overrun. A job that might require $35K in direct cost ? materials and other activities directly related to fixing the problem ? may end up costing the general contractor close to $100K.
The Virtual Project War Room Approach
The Virtual Project War Room provides another approach to such a problem. In a Virtual Project War Room, when the problem is identified, the site superintendent takes digital photos, goes online from the job site and downloads the photos, along with a report and a change order request. The system sends an e-mail to the required parties, alerting them to the condition. The e-mail also schedules an online discussion for a suitable time when all participants can access the photos on the web. During the conference call, all participants could also visually inspect the site if needed. The conference and all communication to plan the resolution are completed online. The change order is agreed upon and issued online the same day.
The Outcome
Nobody has to travel, so there is only the time involved in the on-line meeting itself. This saves most of the travel, on-site meeting expense and the opportunity cost. The solution gets in works within a few hours instead of several days, cutting down on secondary schedule slip. The remedial costs are limited to the direct costs of added expense to the work to be redone. This not only saves two-thirds of the direct cost of the error, it reduces the likelihood of future complex litigation. Including the overheads for using the Virtual Project War Room (the total cost to run the application would be spread over multiple projects and problems) the total cost to fix the problem would be around $60K-$70K, as compared to $100K for the conventional approach.
There are various success factors for a Virtual Project War Room but there is no denying the fact that they have potential for cost-savings, which in some cases could be as high as 40-30 percent. A project team that masters new technologies and deploys such project management applications using cutting-edge technologies to improve communications and document management builds competitive advantage.
Strategic and results-oriented, Sunil has more than fifteen years of experience in management and IT consulting. An entrepreneurial consultant, he had founded a business-to-business eCommerce company for Building & Construction Industry, Sunil has provided consulting services to large and small firms in the