E-BUSINESS IN THE ARCHITECTURE, ENGINEERING AND CONSTRUCTION (AEC) INDUSTRY IN CANADA

Transcription

1 E-BUSINESS IN THE ARCHITECTURE, ENGINEERING AND CONSTRUCTION (AEC) INDUSTRY IN CANADA An Atlantic Canada Study Abstract This report outlines the broad findings collected from a structured questionnaire distributed to the membership of the Construction Association of Nova Scotia (CANS) about how the AEC Industry in Canada has adopted Information and Communications Technologies (ICT) applicable to e-business - that is, all business transactions (exchange of information) by electronic means. The findings are intended to be shared with TG83, an international collaboration forum, under the auspices of the International Council for Building (CIB). TG83: e-business in Construction

2 E-BUSINESS IN THE ATLANTIC CANADIAN ARCHITECTURE, ENGINEERING AND CONSTRUCTION (AEC) INDUSTRY AUTHORS Jeremey Bowmaster, Jeff Rankin and Srinath Perera Jeremey Bowmaster web: unb.ca Mr. Bowmaster is a graduate student and Research Assistant with the Department of Civil Engineering, University of New Brunswick, Canada. His current research is centered on the application of ICT in support of sustainable public infrastructure. Jeff Rankin (rankin@unb.ca); web: unb.ca Dr. Rankin is a Professor and holds the M. Patrick Gillin Chair in Construction Engineering and Management with the Department of Civil Engineering at the University of New Brunswick, Canada. He is a registered Professional Engineer, and Fellow and Officer of the Canadian Society for Civil Engineering. He has researched topics of ICT, innovation, and performance improvement in the AEC industry for over 20 years. Srinath Perera (srinath.perera@westernsydney.edu.au); web: westernsydney.du.au Professor Srinath Perera holds a personal chair in Built Environment and Construction Management at the School of Computing Engineering & Mathematics, Western Sydney University, Sydney, Australia. He is a coordinator of the CIB TG83 Task Group, e-business in Construction. He is chartered Quantity Surveyor and Project Manager and member of the Royal Institution of Chartered Surveyors (RICS), and Australian Institute of Quantity Surveyors (AIQS). He has over 100 peer reviewed publications and coauthor of Cost Studies of Buildings 6th edition. ISBN: ISBN: i

3 TASK GROUP TG83: E-BUSINESS IN CONSTRUCTION The TG83 is an international collaboration forum established to generate a program of actions directed at identifying best practice and promoting e-business in construction (web: construction-ebusiness.org). It was established in March 2011 with the objectives of conducting joint research with interested parties; to appraise and promote the use of web-based technologies for collaboration and e-business in construction; and to provide a forum for discussion, debate and evaluation of technologies, research and concepts in the area. This survey and the report has been produce as a key output of TG83 in association with Construct IT for Business. This report outlines the adoption of ICT by the Canadian construction industry and contributes to a global analysis. Other participating countries include Australia, Bulgaria, Ghana, Sri Lanka and the United Kingdom. ii

4 EXECUTIVE SUMMARY As part of an ongoing effort to better understand the delivery methods of construction projects, an investigation of the adoption and implementation of e-business within the construction industry in Atlantic Canada was undertaken using a questionnaire survey. The purpose of this survey is to collect the opinions of the Canadian construction industry in implementing electronic business (e-business) to support ongoing research by the Construction Engineering and Management Group within the Department of Civil Engineering at the University of New Brunswick (UNB). The survey updates a baseline that measures the extent that Information and Communication Technology (ICT) is incorporated in the operations of Canadian construction organizations. The current benchmark data is taken from a 2006 study that focused on e-procurement (a subset of e-business) in the Canadian Atlantic Construction Industry. In this survey, e-business is defined as the use of ICT in business processes or activities; more specifically, the exchange of information or business transaction by electronic means both within and external to an organization. The results of the study are intended to be shared with Task Group 83, an international collaboration forum established under the International Council for Building (CIB). The questionnaire included questions designed for the TG83 study with minor modifications to include questions that would provide data for comparison with the 2006 e-procurement study. While the 2006 survey focused specifically on e-procurement as defined earlier, the current survey attempts to align better with the overall objectives outlined by TG83. The firms comprising the membership of the Canadian Province s Construction Association of Nova Scotia (CANS) were used as a sample set of data. The CANS membership had been previously identified as a model for study as it attracts the full range of general contractors, trade contractors, manufacturers and suppliers, as opposed to the association structure of other provinces, where industry representation is composed of many layers of specialty associations (e.g., road builders versus commercial, electrical versus mechanical). The key findings indicate that the Internet is the primary conduit for connecting firms e-business processes and is a key enabling technology. The highest use of ICT for e-business in the Canadian construction industry remains related to financial business processes such as accounting & book keeping, invoicing and purchasing. ICT for project management is widely used but lacks integration with human resource management (HRM) and other labour procurement activities such as sub-contracting and downstream applications such as facilities management remain underdeveloped. Engaging in e-business is mostly perceived as a means of gaining a competitive advantage but is increasingly being driven by customer expectations. The largest impacts are still perceived as coming from financial transactions as firms have accepted the reliability of ICT systems over the past decade, however, the lack of supply chain integration suggests that e-business can have a far greater with proper systems integration. The cost of investment is still the largest perceived barrier to implementing e- business. Further, management appears to be aware that providing better training and recognizing the benefits and importance of using e-business can improve e-business processes. However, e-skills development remains a low priority in terms of investment likely due to a lack of reliable cost-benefit data. iii

5 1. BACKGROUND The construction industry in Canada, includes all firms engaged in the Construction of Buildings (both residential, non-residential), Heavy and Civil Engineering Construction, and Specialty Trade Contractors. This important economic sector accounts for approximately 7% of total GDP (Statistics Canada, 2016), and in 2015 employed 1.2 million men and women. ICT adoption by the construction industry has been of particular interest given the potential for technology to increase efficiency and competitiveness in such a traditional sector. However, the analysis of the opinions collected across project owners, designers, engineers, contractors, and suppliers has shown that the adoption rate of ICT in the construction often lags behind other sectors such as advanced manufacturing and commerce. In addition, previous research indicates that the use and application of information and communications technology (ICT) provides a better understanding of technological development and innovation in the industry. 1

6 2. PURPOSE OF THE STUDY The purpose of this survey is to assess the extent that ICT is utilized in the operations of Canadian construction organizations at the present time. In this study the definition of ICT considers a broader technology scope but is intended to be synonymous with Information Technology (IT) as understood by many business organizations. This will establish current benchmark data to measure the adoption of e- business technologies within the construction industry in an effort to support ongoing research to better understand the delivery methods of construction projects. Earlier research conducted at the University of New Brunswick examined e-procurement as a subset of e-business in an effort to identify the issues surrounding the development of a critical mass of participants required to overcome the organizational and technology challenges. (Rankin & Christian, 2006) This research adopted the following definitions (Schneider, 2003) that will be continued here: e-business all business transactions (exchange of information) by electronic means e-procurement business to business purchase and sale of products and services by electronic means (i.e. the internet) e-commerce financial transactions by electronic means While the results of the 2006 research focused on e-procurement as a method for improving efficiencies of business processes, this research sets out to understand the broader applications of technology within the construction industry. The extent to which comparisons can be directly made are provided in the results section. Moreover, the results of this survey will be compared to a similar study conducted in the UK (Eadie & Perera, 2016) and intended to be shared with TG83 to understand the adoption of technology in construction industries as a more global perspective. 2

7 3. THE QUESTIONNAIRE SURVEY To collect raw data, the survey was conducted using the online cloud-based survey platform Survey Monkey (2016). The structured electronic questionnaire (see Appendix A) consists of some general questions in the following six categories: 1) Background Information; 2) Applications of e-business; 3) Organization Operation and Maintenance of e-business Systems; 4) Drivers, Impacts and Barriers of applying e-business; 5) Potential improvement of e-business applications; and 6) The future of e- Business. The survey was conducted over a 3-month period between March and May of The questionnaire included questions designed for the TG83 study with minor modifications to include questions that would provide data for comparison with the 2006 e-procurement study. While the 2006 survey focused specifically on e-procurement as defined earlier, the current survey attempts to align better with the overall objectives outlined by TG DEMOGRAPHICS The information collected in the BACKGROUND INFORMATION section provided demographic information used to classify the firms surveyed. The 2006 e-procurement study provided the foundation for the sample of construction businesses queried. The firms comprising the membership of the Canadian Province s Construction Association of Nova Scotia (CANS) was used as a sample set of data. Rankin et al. (2006) previously identified the CANS membership as a model for study as it attracts the full range of general contractors, trade contractors, manufacturers and suppliers, as opposed to the association structure of other provinces, where industry representation is composed of many layers of specialty associations (e.g., road builders versus commercial, electrical versus mechanical). Furthermore, the CANS membership was determined to be representative of the industry on a National basis with respect to distribution of company size (Rankin, Chen, & Christian, 2006) at that time. Figure 3.1 shows the make-up of the survey respondents by Membership type in Total Membership 15% 44% 33% 8% Survey Response 26% 33% 34% 7% 0% 20% 40% 60% 80% 100% General Contractor Trade Contractor Supplier/Manufacturers Associate Members Figure 3.1 Comparison of survey respondents to CANS membership by Membership type for

8 Currently, CANS members are classified by the type of services provided based on a list of 125 unique construction related service groups identified by the CANS executive. As a basis of comparison to the 2006 study these firms were further classified as either General Contractors, Trade Contractors, Manufacturers/Suppliers or Associate Members. For comparison, Figure 3.2 indicates the make-up of survey respondents by membership type in Total Membership 19% 26% 31% 25% Survey Response 29% 31% 27% 13% 0% 20% 40% 60% 80% 100% General Contractor Trade Contractor Supplier/Manufacturers Associate Members Figure 3.2 Comparison of survey respondents to CANS membership by membership type for 2016 Notably, in 2016, 15% fewer firms within the CANS membership identify as Trade Contractors from 44% to 26%. However, firms identifying as Associate Members that include consulting firms such as engineering, architecture or cost consultancy, as well as other professional services such as legal services has increased from 8% to 25%. For comparison it is important to recognize only the marginal changes in survey respondents across membership types from 2006 to To verify the CANS membership currently represents an average distribution of the type and size of construction industries across Canada, industry data using the North America Industry Classification System (NAICS) was investigated. However, the level of detail in the CANS membership data that was made available has been restricted since the 2006 research and rendered the NAICS data incompatible as a basis for comparison. Therefore, this study was conducted with the assumption that between 2006 and 2016 the CANS membership remains representative of the construction industry at the national level. 3.2 OVERALL METHOD Following the UK study by Eadie and Perera (2016), this study used a structured questionnaire that was delivered electronically via an online platform. The majority of questions asked respondents to evaluate to what extent specific criteria related to the question being asked ranked in importance using a scale of High, Medium, Low and None. To enable direct comparisons with the complimentary TG83 studies for 4

9 other regions, the responses were then weighted 3 for High, 2 for Medium, 1 for Low and 0 for None and a relative importance index (RII) was computed to produce an integer ranking for each criterion. The standard RII formula employed is defined by: Where: Relative Importance Index (RII) = w (0 index 1) A N W is the weighting given to each criterion evaluated by the respondent from 0 to 3, where 0 has no importance or least significant impact and 3 has highest importance or most significant impact; A is the highest weight given (3 for High in our case); and N is the total number of respondents for that question The criteria with the highest index was then ranked as 1 indicating the most significant criterion, second highest index as 2, etc. 3.3 SURVEY SAMPLE COMPOSITION The survey was initially distributed to 625 firms that comprise the general membership of the CANS through an invitation using the Survey Monkey online platform. Of the 625 initial invitations, 23 bounced back as having an invalid address and 26 respondents opted-out. Out of the remaining 576, 39 surveys were fully completed and 15 provided partial responses. All 52 completed and partially completed surveys had completed sections for background information and were deemed valid for analysis. The survey was analyses then based on 52 responses Respondent Profile Figure 3.3 shows the sample composition based on Organization Type which is directly related to Membership Type. This figure indicates that approximately one-third of the respondents identify as General or Primary Contractor (29%), about one-third as Trade or Sub-contractors (31%) and the remaining as Suppliers, Manufacturers, Fabricators (27%) and Consultants and other Associate Members (13%). 27% 13% 29% General Contractor Trade Contractor 31% Suppliers, Manufacturers, Fabricators Figure 3.3 Survey Response Composition based on Organization Type 5

10 Figure 3.4 indicates the respondents represent a variety of construction work specialties with the majority being Building Works contractors (25%), other non-specific Trade contractors (17%), and Building Material suppliers (17%). Zero percent of respondents identified as Architect or Facilities Manager, options which were selectable within the survey. Quantity surveying; 2% Engineer; 2% Property developer; 2% Other Associate; 8% Building works contractor; 25% Other Suppliers; 10% Civil engineering contractor; 4% Building material supplier; 17% Trade contractor; 17% Other maintenance contractor; 6% M&E contractor; 8% Primary Contractor Trade Contractor Supplier/Fabricator Consultants & Other Associates Figure 3.4 Classification of respondents based on work specialization Figure 3.5 indicates the type of work respondent firms engaged in. Seventy-five percent (75.0%) were involved in typical Building construction, 28.8% in Civil engineering construction, 25% in Refurbishment, 3.8% in Historic preservation and 7.7% in Other areas of work reported as support services such as Legal services, Insurance and Equipment sales. 6

11 3,8% 7,7% 25,0% 28,8% 75,0% Building work Civil Engineering work Refurbishment Historic preservation Other Figure 3.5: Classification of respondents based on area of work Figure 3.6 indicates that the majority (67.3%) of respondents identified as being Senior level managers within their firms, while Middle management comprised 17.3% and Support staff comprised 7.7%. Respondents classified as Other (7.7%) identified as Owners, Professional practitioners, or other non-management operations staff. 7,7% 7,7% Senior Management Staff 17,3% 67,3% Middle Management Staff Support staff Other Figure 3.6: Classification of respondents based on job title 7

12 Figure 3.7 indicates that only 4% of respondents identify as being an ICT specialist with their firm. This suggests that construction industry ICT personnel have additional ICT skills training rather than being specialized in ICT. 4% ICT specialist - YES ICT specialist - NO 96% Figure 3.7: ICT Specialist or not Figure 3.8 indicates a reasonably good equal distribution of firm size by number of employees with the majority of respondents being small and medium-sized enterprises (SME s). Larger firms with more than 250 employees are underrepresented and is in stark contrast to the UK study where 49% of respondent firms were in this category. 25,0% 15,4% 250 employees or more 23,1% employees employees 1 9 employees 36,5% Figure 3.8: Organization size by number of employees 8

13 Figure 3.9 shows the distribution of organization size by sales volume in dollars (CAD). Even though the response for this question was optional, a high number of firms (48) provided the data below. Thirty-one percent of respondent firms indicated that annual sales were between $1 million and $5 million. Surprisingly, almost one-third (27%) of respondent firms indicated sales between $50 million and $100 million. Note that this data was not collected in the UK study and there is no comparison data from the 2006 survey. 8,3% 6,3% 8,3% 6,3% 27,1% 31,3% 0~$1 million $1 million~$5 million $5 million~$10 million $10 million~$50 million $50 million~$100 million Over $100 million Don't Know 12,5% Figure 3.9: Organization size by volume of sales in dollars (CAD) 9

14 4. QUESTIONNAIRE SURVEY RESULTS The results of the questionnaire survey follow the order of the questions as they were presented in the questionnaire survey provided in Appendix A. Following the Background Information section, the results are grouped by section as E-Business in your Organization; Organization Operation and Maintenance of e-business Systems; Drivers, Impacts and Barriers of applying e-business; Potential improvement of e- Business applications; and The future of e-business in your Organization. These results present the application of a broad spectrum of ICT solutions pertaining to e-business in the construction industry that the UK study classifies as components of computerized Enterprise Resource Planning (ERP) systems and can be considered as either technical, relational or business components of ERP database systems. The tables included indicate the response count as well as the RII values and ranking for various criteria. The frequency graphs provide visualization of the data as percentages of the response count with the actual response count indicated within the colour-coded bars to allow the reader an optional method for interpreting the results. 4.1 E-BUSINESS IN YOUR ORGANIZATION This section considers business processes typical for firms in the construction industry and examines the extent to which these processes have been adapted to utilize ICT technology specifically for documentation and exchange. Further analysis includes the examination of ICT networks and the overall level of e-business application. These results highlight a major departure from the 2006 e-procurement study such that e-business technologies have had ten years to mature. Rankin et al. (2006) sought to identify issues related to the underlying electronic processes for the adoption of documentation and exchange such as cost appropriation, information ownership, standards, security and integration (with respect to legacy systems), where the current study focuses on the adoption of ICT with respect to various applications. 10

15 4.1.1 Core Business Activities This section considers core business activities or documents. These activities related to financial processes, human resources, physical plant, supply chain, and primary operations. Respondents were asked to rank the extent to which the listed core business activities were computerized and/or exchanged electronically. Table 4-1 and Figure 4.1 indicate Accounting, Banking, and Purchasing (procurement) are computerized to the greatest extent and therefore have the highest ranking. This is consistent with other sectors such as advanced manufacturing and finance. Table 4-1 Degree to which core business documents are electronic Core Business Activity High Medium Low None Response Count Ranked Sum RII Value Rank Accounting Finance Purchasing (procurement) Project Management Marketing Operations Human Resource Management Distribution Facilities Management If the results are grouped by RII values and include Project Management activities (and/or documents), these rankings suggest that all computerized project management activities are related to financial processes rather than design or collaboration. Similar to the UK study, Facilities Management appears to be an underutilized or underdeveloped activity although the extent to which these activities are not computerized is much greater in Canada. Additionally, Marketing and Human Resource Management (HRM) compare similarly for ICT adoption to the UK data and suggests that accounting or other ERP systems are not efficiently integrated with HRM. Accounting Finance Purchasing (procurement) Project Management Marketing Operations Human Resource Management High Medium Low None Distribution Facilities Management Figure 4.1 Degree to which core business documents are electronic 11

16 4.1.2 Workflows Workflows can be derived from the core business activities and describe the types of activities firms are engaged in on a day-to-day basis. Table 4-2 and Figure 4.2 indicate that the highest level of ICT adoption is applied to invoicing and tendering which describe workflows associated with the core activities of accounting, finance and procurement. The ranking of Cost Planning/Cost Control confirms the use of core project management (PM) activities especially where Project Planning and Change Management (fundamental PM activities) rank lower on the scale. Interestingly, where the use of ICT for Procurement was ranked high as a core business activity, procurement of Sub-contracts and Labour ranks at the bottom of the list where approximately one-third of respondents do not use ICT for these processes. Table 4-2 Ranked degree to which construction documents are exchanged electronically Workflow High Medium Low None Response Count Ranked Sum RII Value Purchase Orders/Invoices Tender Documents Estimating Contract Documents Tendering process Cost planning / Cost Control Administration Documents Valuations & Final Accounts Design Specifications Project Planning Project Monitoring Change Management Materials Procurement Subcontracting Labour Procurement Plant Procurement Rank The bottom ranked results compare directly with the UK data, whereas the top results indicated in the UK study corresponded to design and specification. This would suggest that project collaboration in the UK is driving ICT adoption compared to business acquisition (through tendering and contracting) in Canada. This is in part due to the imposed 2016 deadline by the UK government to mandate Building Information Modelling (BIM) deliverables for public buildings projects. 12

17 Purchase Orders/Invoices Tender Documents Estimating Contract Documents Tendering process Cost planning / Cost Control Administration Documents High Valuations & Final Accounts Medium Design Specifications Low Project Planning Project Monitoring None Change Management Materials Procurement Subcontracting Labour Procurement Plant Procurement Figure 4.2 Degree to which construction documents are exchanged electronically Communication Networks Respondents were asked to identify the types of computer networks utilized by their organization. Computer networks were classified as Intranet type (those not accessible to outside users), Extranet type (those partially accessible to authorized users from outside the organization, Internet (the World Wide Web publically accessible) and the use of Cloud Networks (icloud, DropBox, OneDrive, etc.). Since Cloud Networks and Extranets are inherently linked to the internet, respondents that access the internet may also access cloud services or other networks. Table 4-3 and Figure 4.3 indicate the degree to which respondent firms access both internal and external information. Table 4-3 Communications networks utilized by respondent organizations Communications Network Response Count Response Percent Internet % Intranet % Extranet % Cloud Networks % None 1 2.3% The Internet was the most widely used communication network, however it is interesting to note that 11.4% of respondents indicated that the internet was not used in their organization suggesting that internal communication is largely personal and undocumented. The large use of Cloud Networks indicates that more organizations value access to information from multiple device and across platforms as well as the ability to share information across organizations. The low number of respondent consultant firms (architects and engineers) suggests that the cloud services being utilized are primarily for uses other than design. A further classification of cloud services that distinguishes between pure 13

18 Response Count E-Business in the AEC Industry in Canada storage like Dropbox (2016) for example, and computing processes like Autodesk360 (2016) for BIM or collaborative tools such as Google Docs (2016) or MS Office 365 (2016) would yield a better understanding of the level of technology being utilized through cloud services. 100% 89% 80% 60% 59% 66% 40% 27% 20% 0% Internet Intranet Extranet Cloud Networks None 2% Figure 4.3 Communications networks utilized by respondent organizations Internal & External Communications These results are intended to understand the degree to which respondent firms share information electronically both internally and externally. Not surprisingly, Figure 4.3 shows that Medium and High levels of electronic communication are used within the construction industry for both Internal and External communication with External communication to a slightly greater extent Internal External High Medium Low None 0 Figure 4.4 Degree of electronic communication internally and externally 14

19 4.1.5 Level of e-business usage Respondents were asked to rate the degree to which certain activities within their organization were carried out on the internet. Table 4-4 shows the RII values and ranking for the suggested activities and indicates that Bidding and Tendering Online is the highest use with Procurement being the second highest. Interestingly, internet use for Supply Chain Management is utilized to medium-low degree indicating that there is little integration of ERP systems for project delivery within the construction industry. Table 4-4 Ranking of preferred activities for internet use Internet Activity High Medium Low None Response Count Ranked Sum RII Value Bidding and Tendering Online Electronic Procurement (purchase material & equipment) Project Collaboration and Management Product/Service Promotion Customer Relationship Management Supply Chain Management Lessons Learned Documentation Rank Figure 4.5 shows that Project Collaboration and Management ranked third highest for internet use suggesting that a systems approach to project delivery is increasing. The UK data showed these top results in reverse order, again suggesting the increased use of BIM for project integration and delivery mandated by the government. Lessons learned documentation ranked last indicating that this is still very much an internal process and may be considered proprietary or as having competitive advantages rather than contributing to industry efficiency. This data may also suggest a lack of knowledge management within the industry. Other activities that utilized the internet were identified as Human Resource activities such as time tracking, EFT payment and training. 15

20 Bidding and Tendering Online Electronic Procurement (purchase material & equipment) Project Collaboration and Management High Product/Service Promotion Customer Relationship Management Medium Low None Supply Chain Management Lessons Learned Documentation % 20% 40% 60% 80% 100% Figure 4.5 Ranking of preferred activities for internet use Enabling Technologies A follow-up question asked respondents to what extent their e-business activities were driven by enabling technologies. Figure 4.6 shows that the Internet has the greatest effect on enabling e-business activities while CAD and BIM have a low impact on e-business activities. This may indicate that despite their maturity, more advanced collaboration tools are not being fully utilized to enhance construction business processes. The UK results showed that computer-aided design (CAD) was ranked considerably higher as an enabling technology driving e-business while BIM and Cloud Computing had similar RII values below CAD. 16

21 Internet Cloud computing High Medium CAD Low None BIM % 20% 40% 60% 80% 100% Figure 4.6 Ranking of preferred e-business enabling technologies 4.2 IT INVESTMENT AND E-SKILLS DEVELOPMENT IT investment is used to understand how respondents value technology within their firm by their willingness to commit financial resources to operate and maintain ICT assets that includes hardware, software and the skills personnel require to utilize these systems to be competitive now and in the future IT Investment Advice Table 4-5 and Figure 4.7 indicate that the majority 49% of respondent s turn to professional IT providers (those delivering ICT products and services exclusively) for advice on where to spend ICT investment dollars. This suggests that ICT professionals must be aware of technological developments that meet the specific needs of those firms delivering construction related services (Eadie & Perera, 2016). Also, there may still be some reluctance for designers to share knowledge amongst themselves. Table 4-5 Type of IT investment advice IT Investment Advice Response Count Response Percent Obtain advice on ICT investment from professional ICT providers 18 49% Obtain advice from in-house ICT department or ICT practitioners 11 30% Learn through educational or other research institutions 10 27% Implement ICT investment through government policy or third party recommendations 7 19% 17

22 Compared to the UK findings, these results suggest the construction industry in Canada takes a slightly more proactive approach to e-skills development and relies more on external advice and less on internal resources. 49% 30% 27% 19% Obtain advice from professionals Obtain advice from inhouse ICT personnel Learn through educational or research Implement ICT investment through policy Figure 4.7 Type of IT investment advice IT Expenditure IT Expenditure explores annual IT budgets that include hardware, software, training, personnel and other related services. Table 4-6 and Figure 4.8 show that approximately two-thirds (62.1%) of respondents identified the IT budget of their firm to be in the range of 0-5% of annual total operating costs, while eighty-six percent (86.2%) of respondents spent less than 10% of total operating costs on technology. Assuming an appropriate breakdown of ICT expenditure has been accounted for, these numbers (similar to the UK data) suggest that either the current level of technology is sufficient to maintain a reasonable competitive advantage or that the level of technology investment is underfunded in maintaining productivity of current ICT systems including systems for business processes. Although firms indicate that project collaboration and project management is a high use of internet for information sharing (next to financial activities), this level of ICT investment suggest that costly, standalone BIM software are not being used to fulfill this activity since they typically have high capital costs for both the software as well as the hardware to run the systems and steep learning curves for personnel to become skilled. Table 4-6 Average annual share of your ICT budget as a percentage of total costs Annual Budget Response Count Response Percent 0~5% % 5~10% % 10~15% 2 6.9% Unknown 2 6.9% 18

23 6,9% 6,9% 24,1% 62,1% 0~5% 5~10% 10~15% Unknown Figure 4.8 Average annual share of your ICT budget as a percentage of total costs E-skills Development E-skills describe the level of proficiency of staff members with ICT systems utilized by the firm. E-skills Development can be acquired through training within an organization by bringing in expertise, through external training courses or through self-learning. The majority of respondents indicated that to a High and Medium degree, ICT training is largely self-taught with very little commitment to provide access to training through in-house training. Further, staff are unlikely to attend formal training outside the organization. This indicates a low level of commitment of firms to ensure staff have high levels of ICT system proficiency. Together with low levels of ICT investment appears to suggest that ICT systems in the construction industry are not utilized to the maximum potential. The RII value indicates that staff are 43% more likely to learn new skills on their own compared to attending a training course offered outside the organization. Table 4-7 Ranking of e-skills development Use High Medium Low None Staff learn new computerized skills through self-learning Staff attend training courses outside your organization External ICT professionals staff are brought in to train your staff Response Count Ranked Sum RII Value Rank These data compare reasonably to the UK analysis. 19

24 Staff learn new computerized skills through self-learning High Staff attend training courses outside your organization Medium Low None External ICT professionals staff are brought in to train your staff % 20% 40% 60% 80% 100% Figure 4.9 Ranking of e-skills development 4.3 DRIVERS, IMPACTS AND BARRIERS OF E-BUSINESS This section explores the drivers, barriers and impacts of e-business processes for an organization. The 2006 study utilized a questionnaire with questions divided into 4 sections with regard to e-procurement: Advantages, Disadvantages, Organizational Issues, and Technical Issues. The results were interpreted as Barriers, Challenges and Solutions which may line-up with the results gathered here Drivers for Implementing e-business Drivers of e-business relate to how firms perceive others using technology to drive business processes from within the industry. Table 4-8 and Figure 4.10 show the extent to which firms engage in e-business as a result of those driving perceptions. The majority (51%) of respondents indicated that their firms engage in e-business to a high level because they believe that it gives them a competitive advantage while the next highest response (33%) was that they believed their customers expected them to conduct business in this manner. Seventeen percent (17%) that they believe their suppliers expected them to engage in e-business at a high level. Lastly, 17% indicated that they engage in e-business at a high level because they believe that their competitors also do. That Competitors engage e-business ranked last for drivers while Competitive advantage ranked first may imply that a firm s reputation for being modern has limited value as a driver. Table 4-8 Ranking of drivers for e-business Use High Medium Low None Response Count Ranked Sum RII Value Rank Competitive Advantage Customer expectation Supply chain expectation Competitors engage in e- business

25 The overall ranked results for DRIVERS OF E-BUSINESS compare similarly with the UK study which had slightly higher RII values for all drivers. The UK study suggested that customer expectation ranked second due to the demand being driven by public sector clients. The 2006 study identified greater access to markets and reduced paperwork as the greatest benefits (above 60% of respondents) of e-procurement. More than 40% of respondents indicated that Reduced data transaction costs, increased in Productivity, and reduced Procurement cycle time were advantages; while only 35% of respondents indicated that increased Data accuracy was an advantage of e- procurement. These can be generally related to all of the drivers identified in the current study but compare well to Competitive Advantage. Further, that a low number of respondents (~15%) in the 2006 study indicated that Long investment payback period was a disadvantage of e-procurement reinforces the perception that e-business does, in fact, provide a competitive advantage. Competitive Advantage Customer expectation High Medium Supply chain expectation Low None Competitors engage in e-business % 20% 40% 60% 80% 100% Figure 4.10 Ranking of drivers for e-business Level of impact for Implementing e-business For this question, respondents were asked to rank the impact that the listed influences had on their decisions to implement e-business processes at their firm. Table 4-9 and Figure 4.11 show the listed influences and their ranking. The top ranked influence, about 63% of respondents, indicated that Efficiency of business processes was the most important factor. The top four impacts have very close or identical RII values but do not necessarily describe a particular pattern or group and include Quality of customer service, Time and savings cost, and Competitive advantage. Research and development, was the lowest ranked influence for implementing e-business. 21

26 Table 4-9 Ranking of impacts on e-business Use High Medium Low None Efficiency of business processes Response Count Ranked Sum RII Value Quality of customer service Time and cost savings Competitive advantage Productivity Management and Control Accounting and Administration Organizational innovation Innovation Growth of revenue Internal organization relationship Rank Improving collaboration Quality of products Market reach Staff training Procurement cost of supplied goods Visibility to supply chain Expansion of partnership Research and Development Again, these results compare reasonably to the UK study and unsurprisingly relate to primary workflows around financial aspect of business operations. 22

27 Efficiency of business processes Quality of customer service Competitive advantage Time and cost savings Productivity Management and Control Accounting and Administration Organizational innovation Innovation Growth of revenue Internal organization relationship Improving collaboration Quality of products Market reach Staff training Procurement cost of supplied goods Visibility to supply chain Expansion of partnership Research and Development High Medium Low None 0% 20% 40% 60% 80% 100% Figure 4.11 Ranking of impacts on e-business Level of Barriers for Implementing e-business This section asked respondents to rank the extent to which the listed barriers influenced their decisions to implement e-business. Table 4-10 and Figure 4.12 show the ranking of each barrier and the percentage of respondent that indicated either a High, Medium of Low level of barrier. The RII values for all barriers was below 0.7 on scale of zero to one (0-1) indicating that none of barriers were critical to the decisions around implementing e-business. However, factors remain that prevent the construction industry from fully utilizing e-business practices in an integrated way. Unsurprisingly, Cost of investment is ranked the highest with 77% of respondents indicating either a high or medium level of barrier for implementing e-business. A slightly higher number of respondents indicated that Security of data transmission should rank second highest. There is a noticeable decrease in the percentage of respondents that rank any of the remaining criteria as having high levels of barriers but a consistent number of respondents indicate medium and low levels of barrier for most of those listed. Interestingly, lack of technical skill or competency was not ranked as a high level barrier although most respondents indicated that staff had little to no access to training from within the firm and e-skills are mostly selftaught. Legal and Cultural influence barriers also ranked low suggesting that issues with intellectual property and ownership identified in earlier research has been overcome to some extent. The Lack of power supply barrier described in the questionnaire was an issue respected by the TG83 for global regions without widespread electrical infrastructure, however, that over 25% of respondents indicated that Lack of power supply remained a barrier for implementing e-business to some degree may indicate the need for reliable mobile technology. 23

28 Table 4-10 Ranking of barriers of e-business Barrier High Medium Low None Response Count Ranked Sum RII Value Cost of investment Security of data transaction and submission Changeable IT technical needs of an organization Resistance to change Interface with other systems Modification of legacy systems Confidence in using new technology Lack of technical skills Basic competency in IT Availability of professional software Lack of research in IT in construction (R&D) Rank Legal barriers Cultural influence Socio-economic problems Lack of power supply (mainly developing countries) While the criteria from the 2006 do not align well with the current study, in general, the former study indicated that increased efficiencies in financially related business processes (as discussed in the previous section on Drivers) involving either time, labour or capital costs were generally higher ranked positive forces for implementing e-procurement. Higher ranked negative forces were identified as Disadvantages such as Unreliable technologies; Organizational Issues such as Shifting the mind-set of people regarding technology for e-procurement and their Confidence in using new technologies; or Technical Issues such as Data Security or the affordability of Finding a technical solution. 24

29 Cost of investment Security of data transaction and submission Changeable IT technical needs of an Resistance to change Modification of legacy systems Interface with other systems Confidence in using new technology Lack of technical skills Basic competency in IT Availability of professional software Lack of research in IT in construction (R&D) Legal barriers Cultural influence Socio-economic problems Lack of power supply (mainly developing High Medium Low None Figure 4.12 Ranking of barriers of e-business 4.4 IMPROVEMENT OF E-BUSINESS This section explores the desire of firms to increase the utility of existing e-business systems or emerging technologies in terms of Internal Resources, Business Processes, Organizational Culture, and Business Goals. The frequency chart is presented where percentages exceed 100% due to respondents choosing multiple criteria. In the 2006 study the future of e-procurement with respect to improvement of systems was expressed as a vision of the connectedness of internal systems with open access systems where the majority of respondents indicated that closed internal systems should remain but have access to an open industry system such as those for online tendering Internal Resources Table 4-11 and Figure 4.13 show the percentage of respondents that believe the following internal resources would improve their e-business processes. An overwhelming 62.5% (compared to 28% for the UK study) of respondents indicated that providing better training to staff would improve their e-business processes. This may indicate that management has an awareness of e-skills development but as discussed earlier is unwilling to prioritize internal resource or that cost-benefit ratios are unknown. Only 15% of respondents indicated that increasing the number of IT staff or consultants would improve their e-business delivery. 25

30 Table 4-11 An organization's internal resources used in improving e-business Internal Resources Response Percent Response Count Provide better training 62.5% 20 Increase IT infrastructure expenditure 31.3% 10 Increase senior management involvement 21.9% 7 Increase IT investment funds 18.8% 6 Increase IT staff or consultants 15.6% 5 Other 6.3% 2 Other internal resources were identified as Staff acceptance and None. 70,0% 60,0% 62,5% 50,0% 40,0% 30,0% 20,0% 31,3% 21,9% 18,8% 15,6% 10,0% 6,3% 0,0% Provide better training Increase IT infrastructure expenditure Increase senior management involvement Increase IT investment funds Increase IT staff or consultants Other Figure 4.13 An organization's internal resources used in improving e-business Business Process Respondents were asked to identify which statements they believed would improve e-business in their organization with respect to Business Processes. Table 4-12 and Figure 4.14 show a majority of respondents indicated that integrating different existing business processes would improve e-business. 26

31 Table 4-12 An organization's business processes used in improving e-business Business Processes Response Count Response Percent Integration of different business processes % Automation of business processes % Connect e-business value to business performance % Re-engineering business processes % The UK study identified Automation of business processes as the most important process to achieve improved e-business function, albeit with only 25% of respondents indicating this. 70,0% 60,0% 50,0% 59,4% 50,0% 40,0% 34,4% 30,0% 20,0% 21,9% 10,0% 0,0% Integration of different business processes Automation of business processes Connect e-business value Re-engineering business to business performance processes Figure 4.14 An organization's business processes used in improving e-business Organizational Culture Respondents were asked to select statements about their organization s culture that best described how they believe their culture could improve e-business. The responses are summarized in Table 4-13 and Figure 4.15 that and a large percentage of respondents (69%) believe that having their staff recognize the benefits and importance of using e-business will have a positive impact on improving e-business systems. This corresponds directly with the belief that improved access to training will also improve e- business for their organization. Half of respondents indicated that more encouragement from upper management to utilize or implement e-business would improve e-business functions. 27