Understanding extranets...
contractjournal.com Newsletter: 07.07.05
Understanding extranets...
Mark Herbert, operations director at secure internet and e-mail specialist, intY, discusses why a new generation of project extranets could improve collaborative working in the construction industry.
The construction industry has taken great strides in embracing collaborative working since the Rethinking Construction report underlined the importance of collaboration for the construction industry.
However, while partnering and collaboration are common phrases, Collaborative Working Centre research revealed that while most companies answer 'yes' when asked about using best practice, close inspection reveals a different story.
While there's no single solution to seeing best practice adopted across the industry, technologies are now available to improve communication between contractors, clients and supply chain partners. Of these technologies, project extranets show the greatest potential to increase collaboration in the industry.
Put simply, project extranets are secure, online locations that manage and catalogue all information on a project enabling project teams to quickly and easily share all documents from CAD drawings and other complex files to straightforward e-mails, contact details and simple data.
Importantly, extranets are a great deal more than glorified e-mail. They are held on secure networks where people can only gain access if they are registered and have the right password. Using password access, restricted sections can be set up where a certain level of authority is needed to view information so, for example, a contractor could share information with a client without divulging details to the project team. It's also possible to monitor who's entered the extranet when and what they've looked out - a far cry from the world of e-mail when the scenario of "I haven't received it" is a common one.
It's here that extranets make a particularly valuable contribution - reducing the risks associated with litigation. It's estimated that constriction firms have spent more on litigation than on research and development. Extranets can help to avoid shifting of responsibilities and litigation brought about by communication breakdown. They do this by providing a detailed log of what's been viewed by whom, and by making sure everyone has access to the most up-to-date information. Revisions can be made to documents online where they can subsequently be viewed - more importantly revisions are logged and assigned to a project team member. It means that stakeholders are in possession of the latest versions of documents, helping to avoid mistakes that come about by people working from out of date information.
However, the most obvious impact of the extranet is the cost savings. Savings of up to 0.5% per project can be achieved simply by reducing printing, copying, filing and other such costs - an improvement on the typical construction profit margin of 2%. Based on these figures, the industry as a whole could have increased its margin by £40m last year.
So why is it then that if project extranets have the ability to deliver all of this, they haven't been more widely adopted?
Historically, extranets have been costly, making the technology prohibitive for smaller projects or construction firms. Ironically, it's probably SMEs who could benefit most from the cost savings and improved relationships with clients. Flexibility and ease of use have been two further influential factors. Some extranets have been overly complicated requiring specific training before use. People aren't going to be inclined to use an extranet if they don't know how it works!
Things are set to change. Advances in IT technology coupled with a more flexible approach to costing means that for the first time extranets can be introduced to projects of only a few hundred thousand pounds, without being prohibitively expensive.
concilio, a new extranet recently developed specifically for the construction industry is an example of this shift. It is one of the few extranets to have been developed in conjunction with the construction industry, based on the experience and feedback of real projects. This means it is geared toward the disparate nature of construction teams, unlike some generic extranets, which take a broader approach to project applications.
A further important difference is that this new wave of extranets is acquired by a company not per project and introduced as required. They're completely flexible and can be developed according to project need, with licensed users added and removed as required. Cost for storage of data is dynamic so you're only ever paying for the storage you need rather than needlessly paying for space that's never used. So cost effective is this flexible approach that on larger projects where the printing, postage, copying and filing costs are sizeable, they pay for themselves. At last it seems the SME can have a slice of the extranet action!
Project extranets show all the potential to help companies improve project communication and collaboration, without making any major changes to the way the construction industry is structured or managed. Equally crucial is that extranets could help reduce mistakes and confusion in the industry, two factors that most readily lead to breakdown in communication, waste and, in the worst case, litigation. It's time to start taking advantage of these benefits.