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Mon 28 Mar 2011 12:00 PM

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Brave new world

It is a brave new world as contractors move beyond Excel and PDFs to embrace software in their quest to cut costs and boost margins

Brave new world
Construction software offers contractors the control, speed and accuracy necessary to minimise losses

Construction software companies are reporting a marked
upturn in business. Causeway Middle East chief operating officer Paul Madeira
says: “We had our biggest year in the Middle East
last year. We had something like 32 new clients.” Construction Computer
Software (CCS) GM Ian Hauptfleisch concurs: “It is precisely at times like
these that contractors really need close control of their work.” CAD+T Middle
East MD Martina Schwarz points out that, while the software market has always
been price-sensitive, the attendant benefits mean “we are now able to achieve
ROIs of even below one year.”

And there is every indication that the market will sustain
this growth. “By the end of 2010, and the start of 2011, we could recognise a
significantly higher demand for software solutions. And we believe this trend
will continue,” says Schwarz.

“The reason for that is quite simple: the more the
competition on the market increases, the more companies have to be productive
to win tenders. As the material prices are more or less maxed out, they have to
change their workflows, and that is only possible with software and better
organisation.”

“In 2009, considering the downturn in current and proposed
construction projects, we obviously lost a number of active systems worldwide,
but our market penetration still increased,” notes Hauptfleisch. “So really we
have not suffered much. 2010 proved a much better year for us in terms of net
sales, especially with the likes of Saudi Arabia,
Qatar and Oman taking
advantage of the post-economic crisis situation, while the UAE also showed
promising growth.

“In the UAE, predictions going forward are difficult,
considering the focus has been to complete existing projects, with very few new
projects planned, leaving some contractors with unfilled order books. However,
contractors are a wily bunch, and owing to the construction industry’s cyclic
nature, they have been through this type of thing before and survived. In the
UAE, I believe infrastructure developments will drive the market going forward,
while the other GCC and MENA countries have a unique opportunity to forge ahead
in the commercial, residential and infrastructure sectors,” says Hauptfleisch.

Aconex GM: Middle East Andrew Killander says that, “while
the past two years have no doubt been tough in the Gulf market, we are however
still seeing high demand for our solutions, and are forecasting strong growth
this year. Software solutions that can reduce costs, improve efficiency and
control risk will always be in demand.” This does seem to be the key drivers
for such strong growth in the market.

Madeira says the
construction industry is emerging from a tradition where “Excel spreadsheets
were the de facto mechanism for communicating.” At the height of the building
boom, “time was the critical factor in managing projects.” Then when the
downturn hit, “time was suddenly no longer of the essence; cost had become
key.” The boom period was actually a difficult period for the software market,
as contractors were focusing on delivery and were hesitant in incurring any
downtime to swop over their systems, says Madeira.

“In the last 18 months we have seen a tremendous uptake in
estimating and measurement software because everyone is trying to tender in a
more efficient manner,” says Madeira. With
major projects being awarded again after a stall in the project pipeline,
contractors are now asking: “What systems do we have in place to ensure that we
maintain maximum profitability on the fixed-price lump sum project we have bid
for successfully?” This is a particularly pertinent question, given that the
average profitability on a typical construction project is about 3% to 4%. “How
do you protect such a narrow margin unless you have good commercial
management?” questions Madeira.

This has placed many contractors in a quandary as they
discover that their existing software systems are not up to the task of modern
cost management. “The challenges presented by the construction slowdown
actually worked in our favour as companies realised the inherent benefits of
proper control, speed and accuracy required to make better decisions and
execute the right actions to minimise losses and maximise gains in a
challenging market environment,” says Hauptfleisch.

“Contractors are often indecisive when it comes to software.
During boom times, they struggle being too busy to evaluate and implement new
systems, while during slumps they feel ill-prepared or resourced to risk the
investment. Couple this with the difficulty of actually assessing good
construction software, and it makes them resistant to change. But in today’s
changing world, nothing works efficiently without appropriate computer systems,
and really, they should not rely on a spreadsheet-type of approach to do this.
That is suicide in today’s climate. Companies, especially construction
companies, suffer massively from poor information flow,” says Hauptfleisch.

The downturn made “clients and contractors alike realise the
significance of good time and value budgeting as a basis for effective cost
control and decision making, and ultimately the success or failure of a
construction venture. Informed and timely decisions minimise loss and risk in
this challenging environment,” says Hauptfleisch.

An upside of this is that “many companies took the
opportunity presented by the slowdown to consolidate and train staff to use
software products properly and maximize their investment. When the market does
pick up again, which it is doing now, they will be even better equipped to
utilise the software tools to aid decision making, accuracy and control to meet
and improve their margins.”

This paves the way for such advanced technologies as Building
Information Modelling (BIM) – which Madeira
points out has been in existence for about 20 to 30 years. “Where we find
ourselves now is that suddenly the world of BIM is coming to the forefront.”
What this means essentially is that all the requisite information needed by
contractors “resides in the model itself.” The major benefit of BIM, according
to Madeira, “is that it brings
inter-operability and open standards to the market.” This is a major leap from
an Excel, PDF world to the totally transparent, collaborative approach of BIM.

A new company established to help contractors manage this
quantum change is iTech of Dubai.
Founding partners and executive directors Jeffrey Freund and Marc Durand hail
from an architectural and engineering background, and therefore understand the
constraints and problems involved. “Our aim is to make the Middle
East an education and training hub for the implementation of BIM.
There is a demand for it here; it is a whole new approach to delivering
projects. Our vision is to share this knowledge with the market, from
architects to engineers, project managers, consultants and government
officials,” says Durand.

Also helping to spread the BIM message is modelling-software
provider Tekla, which is launching a new advanced application for BIM-based
project communication and cooperation. “Tekla BIMsight is ready for everyone in
the industry to download and share over the Internet for free. Contractors,
designers, architects, MEP detailers and fabricators can combine their models,
check for clashes, and collaborate using new and unique BIM software,” comments
Tekla executive VP Risto Räty.

“Understanding BIM as a centralised process rather than
’just a model’ requires cooperation and goodwill between the construction
disciplines.

“This is exactly what we want to achieve with Tekla
BIMsight, and our part of this industry-wide goodwill is to distribute it for
free for the whole market to easily take it into use,” says Räty.

Hauptfleisch has a last word of caution though: “However,
the success of these technology advances are still hinged on the fundamentals
of proper resource-based and analytical estimates, critical-path precedence
network planning and accurate forecasting/cash-flow projections. Many
construction companies are not even getting the fundamentals right yet.”

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