Wednesday, 30 June 2010

As the construction industry continues to struggle, there is a temptation to simply retrench and wait for the market to improve. But in an industry overwhelmed with massive quantities of information and poor data management processes, this cannot be a robust business strategy.

Organisations cannot continue to ignore the potential risks of project overrun penalties, the risk of personal injury litigation or, simply, the huge administrative costs associated with the manual management of contracts, drawings, health & safety information in emails, paper documents and digital media.

As Andy Mais, ECM Solutions Specialist, The Content Group, explains, with a growing stakeholder demand for cost reduction and risk management, it is the construction companies that embrace the opportunity now to leverage Enterprise Content Management (ECM) to create a single information repository and improve internal processes that will be best placed not only to ride out the recession, but ramp up quickly once the good times return.

Falling market

While the UK economy is now officially out of recession, the construction industry is yet to see any improvement in business volume, according to recent figures from the Federation of Master Builders (FMB). With many companies having relied on the existing order book to survive the past 18 months, nearly one in three (30%) building companies are expecting their workloads to fall this year and more than half (56%) have seen a reduction in the amount of private sector housing work in the first quarter of this year.

Furthermore, the FMB highlights an abrupt slowdown in the amount of public sector work, with 51% of companies reporting lower workloads in the public sector compared to 31% just three months ago.

This demanding marketplace is encouraging growing numbers of construction companies to diversify the operational portfolio, with many now moving into facilities management in a bid to achieve a consistent and sustained new revenue stream.

But, irrespective of the success of these diversification strategies, construction companies need to address a fixed cost base that is simply too high. In the majority of companies, the administrative overhead associated with every aspect of the construction process from planning and day to day project management to building regulations and health and safety remains heavily reliant upon manual processes and huge quantities of paper.

In the good times of the last decade, with excellent profits and a strong revenue stream, most companies simply had neither the time nor the incentive to consider opportunities for streamlining processes and reducing administrative costs. But in 2010, with the financial future continuing to look bleak, it is essential for the industry to get its house in order.

Information overload

Of course many companies have made some attempt to manage the document overload associated with construction projects. The costs associated with simply storing the vast quantities of building plans and invoices to contracts and emails are significant. But, for most, these attempts have resulted in little more than dabbling with basic archiving solutions that have failed to address the core challenges or deliver real benefits.

Whist paper-based information storage is a cost, far more expensive for construction companies is the inability to rapidly track down information in a multi-project environment, with personnel located across multiple sites, and with the use of contractors, multiple organisations.

Legislative pressure

This poor approach to information management is creating significant business risks. From the inability to link key email dialogue that may refer to critical issues such as contract changes or waivers, to the need to immediately demonstrate compliance to a raft of legislative issues. For example, can a construction company that has moved into the facilities management marketplace manage the huge number of constantly-changing overseas workers to ensure work visas are accurate and up-to-date without incurring untenable administrative costs? Yet failure to put in place the right processes to manage this documentation could result in significant penalties.

And the business risk is not limited to existing projects. With the ever-growing incidence of personal injury claims from employees it is now essential to be able to rapidly demonstrate excellent health and safety processes, including signed documentation from employees of relevant training courses attended. This information may have been recorded and stored several years ago - but locating the information can take weeks.

And with a legal requirement to retain all paper-based and email documentation for up to 12 years, and the scale of the problem becomes rapidly apparent. It is not unusual for construction companies to have millions of paper documents archived. Not only does it take an indefensible amount of time to find the relevant document, but failure to do so could result in a massive, potentially crippling, compensation claim.

Reducing risk

Yet by implementing a robust ECM solution, a construction company could gain access to this information within three key strokes. The administrative savings are immediate and more than tangible, whilst the reduction in business risk is compelling.

By creating a central, accessible repository of all information, from emails to CAD, plans to health and safety records, organisations can ensure that both project-critical and corporate information is securely stored and easily accessed, irrespective of the employee's location. Indeed, with secure web-based access, contractors can also be provided with critical project information to further streamline processes and drive down administrative costs.

And with every related piece of information linked - by project, location, employee name -organisations can ensure users and groups of users have access to all relevant information within moments.

Efficient business

Simply archiving information once a project has been completed is not a sustainable strategy into today's very challenging and litigious marketplace, where construction companies face not only the pressure of a reduced revenue stream but also the growing use of performance-related penalties.

Now is the time for construction companies to impose far greater control, to create a streamlined business infrastructure that will be able to maximise opportunities as and when the market picks up. By providing a coherent source of all information, organisations can reduce day to day administrative costs, minimise the risk of project delays or problems caused by miscommunication, and critically, mitigate the risks associated with compliance breach.