Capturing Concerete Savings
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.
Saunders observed the obvious business opportunity in the yawning gap between the realities of a construction project and the outdated technology FNF used to track them. "My goal is to find big sacks of money and hand them back to the company," he says. "If I can automate a task that used to be done manually, that's found money."
Saunders realized that getting timely and accurate information to project managers about equipment and materials usage would save time and money on each project. If he got it right, the company could save hundreds of thousands of dollars annually.
First Saunders migrated project data from 300 Excel spreadsheets and an outdated proprietary database to a custom application running on a Microsoft SQL database. Once the data was cleansed and proven accurate over the course of six weeks by Saunders and his staff, IT Synergy and Strategic Consulting Group helped implement a construction management software application called Viewpoint, from Viewpoint Construction Software.
The off-the-shelf program pulls data from the SQL database and generates reports analyzing all aspects of a construction project, such as how many hours in a month a particular backhoe was used or how efficiently dirt was moved on a project, and calculating the resulting profit margin. Margins vary according to type of work and range from one percent for guardrail installation to 45 percent for dirt moving, so keeping a close eye on the numbers could mean millions of additional dollars in profit. In Viewpoint, a project manager can even see how many bottles of water workers have consumed; if those numbers don't meet minimum safety requirements, the manager might schedule a meeting with workers to talk about the dangers of dehydration.
Workers can also upload project updates into Viewpoint from the field. A project foreperson with a Motorola Q smartphone running Microsoft Windows mobile operating system can e-mail equipment and materials updates to the project manager. The project manager, in turn, working from a Panasonic Toughbook laptop in an onsite trailer, can review the information before e-mailing it to accounts payable or entering it directly into Viewpoint.
Once the data is uploaded, reports can be run to compare, for example, the amount of asphalt used that day with the budgeted amount. If the project is under its asphalt-laying forecast by several tons, the manager can determine if the level of compaction in a road's shoulder is exactly as it should be or if the depth checks on the site were done incorrectly.
If there's a mistake, Saunders says, it could cost half as much to fix while the trucks and materials are on hand as it would to haul everything back later. A delayed fix could lead to increased client scrutiny and slower production.
Saunders attributes the spike in project efficiency to this sort of rapid analysis and physical assessment, which helps project managers identify problems shortly after they occur. "The idea is to give notice of when a project is sick, not dead," he adds. To do an instant examination of a project, Saunders built a piece of custom software that essentially takes a project's temperature.
It is a dashboard that provides a graphical representation of a project's progress. For example, if a project is beginning to veer off budget in any way, the component that is off-track will automatically be highlighted in yellow. A supervisor can click on that element—guardrails, for instance—to determine what went askew when. Each project has its own variances for healthy (green), sick (yellow) and flat-lining (red). "Every project should end up green," Saunders says. "But if a job ends up yellow or red, we have a large data record that maps the history completely."
Next year, Viewpoint plans to migrate its product, including FNF's implementation, to a Web-based thin client via Microsoft's .NET Framework. The application will then be accessible from mobile devices other than laptops, an advance Saunders says will introduce a level of accountability to those who gather information in the field and will expedite data gathering and analysis.
Until then, Saunders is focused on maintaining the more than 150 percent boost in project efficiency and 100 percent jump in project profitability he has wrung from the business intelligence tools. Oh yes, and sniffing out his next sack of money.
FNF Construction Base Case
115 South 48th Street,
Tempe, AZ 85281
(480) 784 2910
Highway and heavy construction company serving state and municipal agencies and private land developers
Financials in 2006:
$230 million in revenue
Implement a system to improve the entry, analysis and reporting of data to track project progress more quickly and efficiently
- Increase percentage of projects that are on time and within budget from 30 percent to 80 percent
- Reduce time to transmit data from a construction site to software for analysis from three weeks to three hours
- Improve average project profitability from six percent to 12 percent