The construction division of Trafalgar House has blazed a computerised trail across the group and the industry. By Jane Bird as a whole.
When Bill Bowmar joined Trafalgar House Construction (THC), one of the seven divisions of Trafalgar House, in 1989, he was shocked at the lack of IT. Never mind calculators, some of the division's businesses were still using mechanical adding machines, says Bowmar, who had been appointed as its first IT manager. When he asked one boss how he planned to spend his £10,000 annual IT budget, the reply was that he 'might buy a few electric typewriters' because his staff were still using manual ones. Now Bowmar has dragged the division into the electronic age with 1,500 terminals, 500 PCs, and 160 powerful distributed computers. Users have access to some 600 printers, 30 computer-aided drawing workstations and a variety of specialist pen plotters. The equipment is spread across 40 locations from the UK to Hong Kong, each of which can communicate with the others via a computer network.
Five years ago most of the division's IT was handled by a centralised data processing bureau which served the needs of the entire Trafalgar House group. 'Everything that is wrong with centralised systems was wrong with our bureau,' says Bowmar. 'It was a cost centre, not a profit centre; it didn't meet any of the business needs; it was slow in developing applications; and whatever you wanted, the answer was always IBM.'
Bowmar's appointment coincided with a board decision to devolve responsibility for IT down to the divisions. The aim was to align IT more closely to their diverse activities which include oil and gas exploration, property and leisure, container shipping and civil engineering. Since then, THC has blazed a trail for the group and for the rest of the construction industry. With an annual budget of £6 million - roughly £1,000 per head - it spends more than five times the industry average on IT. Even so, its IT investment is extremely low compared with other industries, at 0.5% of turnover.
The problem is that given the low margins of the construction industry, computerisation has been seen as an expensive luxury, says Bowmar. Where systems were in place, they were usually designed to perform one particular task, and did not communicate with anything else. The first goal for Bowman and his divisional MD, Barry Myers, was to design an IT strategy based on the business requirements. Working closely with the financial director, they identified 11 major functional areas common to most of THC's businesses. These included human resources, contract finance, accounting, manufacturing, estimating and procurement. Next, a high level manager known as a 'functional champion' was selected to take responsibility for specifying what each function needed from IT. Each was allocated an IT expert to help with the legwork. Together they consulted some 300 users.
By early 1990, 31 candidate applications had been identified, among them pensions, wages, personnel, stock control, scheduling and enquiries. Bowmar then did a one-page summary of each application and sent them back to each business for prioritisation. The candidate applications were considered in the light of five questions: how would they help meet divisional goals; how would they help meet business goals; what were the tangible savings; what were the intangible benefits; and technically how did they fit?
From the responses, Bowmar drew up an 'all-singing, all-dancing' proposal covering the computerisation of the whole division. He estimated the cost at £6 million including hardware, software, implementation and training. The tangible savings he put at an annual £4.7 million. Myers, who had been behind the project all the way, took the proposal to a sub-committee of the group's main board, the Trafalgar House Information Systems (THIS) committee, in mid-1990, and got it approved. However, it was agreed that Bowmar would still have to put together separate proposals for every phase of the project valued at more than £250,000.
The procurement process began with office automation which Bowmar hoped would help get a terminal on every desk. Choosing an office automation package was relatively easy, but when it came to core accounting software, the search was far more difficult. Software for the construction industry is in extremely short supply, says Bowmar. You might get more than 30 companies responding to your initial statement of requirements, but once you start checking to see which products have the functions you want, the list shrinks fast. Another problem is that salesmen are bad at distinguishing between a product that includes the features required and one that can be adapted to include them.
His view is shared by Derek Blundell, IT strategy project manager: 'Our ideal would have been to get one vendor who could supply all our functions, but we couldn't find one. There tends to be lots of niche suppliers specialising in a particular sector of the market. Their products overlap, but they are not integrated.'
The policy was to go for so-called 'open' systems - machines that are designed to communicate with those of other manufacturers. Bowmar hoped this would provide freedom of choice in applications at minimum cost, and would avoid lock-in to one supplier. He wanted the ability to re-use equipment elsewhere in the division for larger or smaller applications. Another requirement was to maximise THC's options because no one knew what its plans might be in five years' time.
The search for a core accounting system led to a joint venture with Unisys. The two companies have spent around 7,000 man-days adapting an existing application for construction accounting. Unisys also supplies hardware along with Olivetti, Compaq, Hewlett-Packard, Sequent, and IBM.
Bowmar is now about three years into his five-year plan and many of the applications are complete. The target is to put computers in the 100 top construction sites. 'It's taken off like topsy,' says Blundell. One big surprise has been the growth of the network which was originally planned to connect half a dozen sites. The network has proved particularly useful for software distribution and for maintenance because it allows most software problems to be sorted out from a distance. The only reason for sending out maintenance staff is to repair hardware faults. This is partly how THC has managed with so few IT people - it currently has around 50 staff, 25% fewer than in 1990.
he network currently costs around £300,000 a year to run and interconnects 60 locations. Its rapid expansion illustrates the problem of budgeting and forecasting in the fast-changing world of IT. To some extent, Bowmar reckons it is inevitable that a large-scale IT project will grow organically. 'We didn't know if we would want a big box or a small box, and whether we would want one box or 100 boxes.' The main task was to adopt a procurement strategy that didn't preclude any of these possibilities or prevent the purchase of hardware from a specific supplier.
Some of the remaining problems relate to the particularly hostile environment of the industry. Computers that have been used on building sites need to be vacuumed and 'hosed down' when they come back to base. Theft is another hazard - screens and keyboards are frequently stolen from Portakabins on building sites despite elaborate security precautions. For this reason, Bowmar is a firm advocate of 'dumb' screens which have no internal processors or computer memory. They can be used for all the main applications. Terminals are also much cheaper than PCs which tend to have hidden software and maintenance costs.
HC pays particular attention to the deals it signs with suppliers. Most IT contracts are not truly service-oriented, says Blundell. 'We want software and hardware delivered on time in working order, and we want it fixed quickly if it goes wrong.' He is interested not in how long a company takes to get an engineer on site, but in how soon the equipment is brought back on air. No software is accepted on a fixed-term licence unless it is for a minimum of 20 years. THC wants perpetual licences for software and if suppliers won't guarantee to maintain it for at least five years it wants the right to invest in and develop it. Every major manufacturer THC has dealt with has eventually conceded and signed its non-standard IT contracts.
Training is another top priority - Bowmar reckons THC provides more IT training than any other construction company - 2,500 days each year. To ensure that users exploit this opportunity, he operates a system of charging their businesses for places not taken up on training courses.
Independent recognition of Bowmar's achievement at THC came last year in the form of two IT industry awards for excellence - the end-user award from Datacom and Hewlett-Packard at Networks 93, and the Recognition of Open Systems Achievement (ROSA) award sponsored by Computer Weekly magazine and a group of IT companies. But for the future there is much more to be done. For example, the industry still relies on paper for orders, invoices, remittance notes and so on. Often this results in the absurd situation of information being prepared on one computer, printed out, then typed or scanned back into another.
And industry experts believe that better site management and control could slash construction costs by 35%. For example, computers could be used to generate labels for materials, specifying exactly where they are needed to avoid moving them around the site after delivery. Labels could also show the sequence in which materials are needed to ensure correct assembly. And video cameras can be used for monitoring defects.
Another potential application is expert systems, says Blundell. 'At present there is no easy way of looking back at all the problems we've solved to see what might be relevant to a new project.' A database of previous experience could help avoid re-inventing the wheel.
THC is trying to catch up fast with IT in other industries such as retailing and manufacturing. The aim is to be leaner and fitter than its construction rivals when the recession ends. 'It would have been easy to stop the IT project when times got tough,' says Bowmar. 'But our advantage has been that we've had a management board that has had the courage and conviction to carry on.'.