Capturing Concerete SavingsBy Elizabeth Bennett | Posted 2007-10-29 Email Print
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When FNF Construction made the move from oudated project-tracking software to a customized business intelligence system, it hit pay dirt.
Sean Saunders, CIO of FNF Construction, gets his hands dirty—literally—at least once a week, visiting project sites where workers are expanding highways, repairing bridges and leveling land. He dons his blue jeans and spends time with the people who use the technology he implements.
Five years ago, when Saunders signed on as CIO at the Tempe, Ariz., construction firm, it took up to six weeks to determine whether FNF was meeting project goals or failing miserably. At the time, revenues were $160 million and about one-third of projects were on time and within budget. However, CEO Jed Billings couldn't pinpoint what contributed to a project's success.
Today, nearly every project component is measured daily, even hourly, against the forecasted budget, from how much rock is crushed, delivered and used to how much labor is expended and how much water workers drink. Now, 80 percent of projects are on time and within budget and FNF is on track to generate close to $250 million this year, Saunders says.
By outfitting workers in the field with mobile devices and implementing business intelligence tools that track and analyze project progress, FNF has been able to increase its project load by about 65 percent and boost revenues more than 50 percent since 2002—all with the same technology staff of three. Where project profit margins used to hover between five percent and six percent, today they are twice that.
The worldwide market for data analysis tools, including data warehouse systems, business intelligence tools and analytics applications, grew 11.5 percent in 2005 to $6.25 billion in license and maintenance revenue, according to a June IDC study. Todd Rowe, a vice president at Business Objects, says license revenue in the vendor's mid-market division is growing 50 percent faster than in the enterprise area.
Business intelligence applications are integrated with internal databases or data warehouses, from which they extract data and restructure it for easier reporting and analysis. While data captured in spreadsheets can be manipulated for certain kinds of analysis, spreadsheet functionality is limited and large amounts of data can quickly become unwieldy.
By contrast, BI tools take the relational data model several steps further. For example, FNF used to track risk management (injuries, theft, time lost and so on) with Microsoft Excel spreadsheets. There was no way to analyze the data against external factors, such as revenues or weather conditions, Saunders says.
With business intelligence software, he can determine how safety measures and compliance affect the bottom line. "Companies no longer have to model hypothetical scenarios that would affect the business," says Michael Speyer, a Forrester Research analyst who focuses on small and midsize businesses.
They can use actual data to monitor aspects of the business, he says. For mid-market companies that implement business intelligence tools after years of managing information on spreadsheets or simple databases, the shift "is like moving from the Middle Ages to the Industrial Age," Speyer says.
FNF handles 50 to 60 construction jobs annually, mostly for government agencies. Projects like the expansion of U.S. Route 60, which traverses Arizona, involve dozens of components, such as moving dirt to elevate or smooth out land, laying asphalt, crushing rock and pouring concrete.
All projects have an approved budget for materials, equip- ment and labor, and a project manager responsible for tracking and measuring against forecasts. Monitoring what's delivered and incorporated into each project used to be an arduous manual task, says Saunders.
When material arrived at a construction site, for example, managers used to fill out paper forms called quantity sheets stating how much crushed rock, wood or other materials had been delivered to the site and used each day. They hand-delivered the forms to accounts payable, where staffers entered the information into an Excel worksheet that tallied each project's budget. But the aggregate usage figures for each project weren't available to project managers until three to six weeks later—too late to make a course correction if there were delays or cost overruns.
Getting information from a construction site to the back office was primarily paper based and the accounting staff manually entered the data into a proprietary database in time to close the books for the month, Saunders says, but no sooner.