Source: Construction News Magazine

After the bloodletting of the dot.com crash, the gloves are off in the fight to establish the players who will shape the future of project collaboration. Just who are the contestants? Emma Crates investigates.
Does your sector have a theme tune? If Tony Blair swept to power with Things Can Only Get Better by D:Ream, perhaps e-construction should adopt Gloria Gaynor's disco classic, I Will Survive, as it's anthem.

Whatever their tune, providers of the systems for exchanging project information online can be sure of another bracing year in 2003. UK business investment in IT dropped 10 per cent in 2002 on the previous year. Those that have survived so far have done well, but more IT casualties are forecast before Christmas.

So who will stay and who will go? Who will merge and who will be eaten? As the TV show Big Brother puts it: You decide.

Until recently, many contractors have flirted with project collaboration tools but have been reluctant to back one until a clear market leader emerged. This could be the year that those sitting on the fence are forced to start making decisions. In 2002, 10 per cent of new projects used project collaboration tools. Analyst Barbour forecasts that this will double in 2003.

Savvy contractors and consultants know that choosing a preferred tool now could save them money in the long run. If they can seize the initiative they could avoid being bulldozed into using different systems by joint-venture partner or clients. This would add to the burden of staff training and create problems for data retrieval.

So the fate of many IT ventures rests on being able to prove that they have the business sense and financial stability to stay around for the long term.

If your company has not developed a strategy for project collaboration, prepare to be baffled this year. In a recent Construction Industry Computing Association survey, major contractors didn't see many technological barriers to integrating IT into their businesses but said it was difficult to sift through the vast quantity of options.

Even if they read everything they are sent, directors probably receive a distorted picture of the market. While some vendors have aggressive PR operations, other successful companies operate in media silence.

BuildOnline recently used the Barbour Compendium User Questionnaire of 2002 to claim the crown of "clear marker share leader in the UK". The survey said the company had a 20% market share, while BIW Technologies, Cadweb and Hummingbird - used predominantly by Bovis - each had a 10 per cent market share. Asite, known more for its procurement services, trailed at 3 per cent, and "other systems" accounted for a massive 47 per cent.

Colin Smith, BIW chief executive, questioned these figures. "We have 20,000 users, double that of our nearest competitor," he said. "I doubt that any of our competitors' chief executives would disagree that BIW has by far the largest market share in the UK."

BIW also supplies the majority of Asite's project collaboration tools and boasts high-profile users such as Sainsbury's, Crest Nicholson, Marks and Spencer, BAA, Asda, Kajima and Stanhope.

But BuildOnline - which claims to be the largest of its kind in Europe - also has a weighty list of customers, including Balfour Beatty, Carillion, Bovis, Skansa, the Highways Agency and Defence Estates. The company has just been selected by Metronet to collaborate on London Underground upgrades.

UK managing director Mark Oliver said contractors were stealing the march on clients and beginning to specify project collaboration tools for projects.

BuildOnline put out a lot of publicity when it reached profitability last November but have you heard of a small project collaboration firm called Sarcophagus? It has been in profit for 14 months. Meanwhile, 4Projects, the extranet tool originally developed in-house by Taylor Woodrow, (clients now include Pearce, Mott MacDonald and Six Continents House), went into the black last March.

Sanjeev Shah, group director of Group Business Collaborator, another firm omitted by the Barbour survey, also has reason to be disgruntled. "We've been making profit since we started in 1994," he said.

Mr Shah, who admitted that he does not court the press, is relying on "viral" spreading of Business Collaborator. He claims to have secured the affections of six of the top 12 consultants. Both Atkins and Halcrow have standardised on the system for project collaboration; Costain is using it where possible. Other coups include taking major clients Natwest and Shell. The latter is using BC for the refurbishments of all its forecourts across Europe.

Other contenders include BidCom and Causeway Collaboration. Arup sold its in-house system, Integration, to Causeway, and is rolling it out across the company. There is also Primavera, whose project management systems were developed under the influence of construction giant Bechtel. The system is Glaxo SmithKline's preferred tool, along with Ntel, Johnson & Johnson and Disney.

The multinationals are likely to have a large influence on the way systems are spread. But much also depends on the sales and strategy of the vendors. Vendors usually offer two options: renting the software per project, or charging a yearly or one-off licence fee.

BIW - whose growth strategy is to target PFI or large-scale collaborative projects - earns most of its revenue from renting out its software. The company's tools are more expensive than many competitors, something that Mr Smith is quick to defend.

He said: "Some of our competitors have suicidal pricing policies. Consolidation in the market will come from market failure."

Although BIW is not yet in profit, Mr Smith expects the company will reach this goal "very soon". Even if the company does not take on any new clients, it has an order backlog of £6 million, and has already achieved 75 per cent of its income for 2003.

But one large contractor criticised pricing structures. He said: "We would like to go with project collaboration tools but the companies have to get their commercial pricing right. Group-wide, it would cost us several hundreds of thousands a year to use the system."

Contractors now have to ask themselves whether they would prefer to rent software for a relatively low rate on a monthly or annual basis or take the plunge and buy a company-wide licence to roll out one system. This could work out cheaper in the long run but would mean giving more commitment to one project collaboration tool.
But for the visionaries, the argument about project extranets is eclipsed by a much more ambitious goal: system integration and knowledge management.

The ability to retrieve and analyse reliable data across a company group is the ultimate goal for those who want to stay ahead of the competition. While many contractors are still project-focused, consultants such as Costain are overhauling their business systems with this grail in mind.

IT analyst The Butler Group recently said knowledge management was the only growth area in IT investment.

Vendors whose products span from intranet systems to enterprise software are in a strong position. Balfour Beatty, for example, is trialling Business Collaborator and BuildOnline for project collaboration but it has just signed a licence for knowledge management tools with Business Collaborator.

William Yandell, founder of Union Square, which specialises in off-the-shelf knowledge management systems, said: "A lot more suppliers both from our sector and beyond, will be repositioning themselves as knowledge management specialists."

So, the long-term survival of extranets seems to depend on how easily they can be integrated into other operations. BIW has already formed an alliance with back-office giant Ramesys. Expect more strategic alliances this year.

But for those who are worried about the stability of the project collaboration market, hope is now at hand.

Eight UK players: BuildOnline, Causeway, Cadweb, Sarcophagus, BIW, 4Projects, Business Collaborator and Bidcom are forming an industry group, as yet unnamed. The group will promote the use of online project collaboration tools and aims to develop industry standards so that customers will be able to transfer data more easily between systems.

Mr Smith is also hoping that the group will act as a safety net for users, taking collective responsibility for customers should any of the companies fail financially, something in which his firm already has experience.

He said: "BIW picked up Iscraper's users when it failed. It cost us money to do it but we felt it important to support the market in such an early stage."