Expense is putting smaller construction firms off IT – but only if they haven’t looked at the costs of not investing. But how can they find out what’s right for them?
Construction firms are slow to invest in IT because it is too expensive. But as the e-commerce age sets in, small to medium-sized firms that hold back could find they have made a big mistake.

The suspicion that the cost of IT is deterring investment is supported by a recent government-backed survey. More than 30% of the 400-plus people interviewed claimed that lack of investment or prohibitive cost would limit the spread of IT in the industry. This survey formed the basis of IT Usage in the Construction Team, a report published by the Building Centre Trust as part of the DETR-sponsored IT Construction Best Practice Programme.

Investing in IT can be a minefield for SMEs without the resources to ensure they get the right systems for them. In a bid to help, Construct IT is producing a guide that looks at financing an IT strategy.

When weighing up the benefits of IT, it is important to consider the cost of existing working practices. There is a danger that companies look at the cost of IT and try to find benefits they can measure in financial terms. Instead, they should look at how IT can help them change their way of working.

"For certain kinds of improvements there are clear, tangible benefits in efficiency," says John Connaughton, director of Davis Langdon Consultancy, which manages IT Construction Best Practice. “But there's another, much more powerful reason for investing in IT: it's about changing your way of working. IT enables you to work in ways that weren't possible before.”

Lack of investment is not the whole story. Even firms that have bought new systems may not be making the most of them, because they have not invested in adequate training or support. "Buying software isn't the last thing you do,” says Dave Clark, construction industry business development manager for CAD specialist Autodesk. “The software is just a small part of it. You've got to buy training and you've got to realise it's an annual expense. It's an investment."

Graham Storey, director of specialist financial consultant Cognition Solutions, also believes customers should know the real cost before they commit themselves. "We need to be honest with the client and say ‘You could put a JCB on site to do a job, but unless you've got a certificated operative you won't get much out of it.’ These are all costs that a reputable supplier should be making clear to the customer."

In some cases, the hard-nosed business approach of contractors is a disadvantage. Spending money is not the industry's favourite pastime, but getting a bargain is. "Because our clients are contractors, they are naturally sceptical," says Graham Cunningham-Walker, chair of the Chartered Institute of Building's IT steering committee, and a consultant for software house CSB. "My experience is that they will negotiate quite a hard contract, although there is a certain suspicion that if they don't ask the questions, they won't get the answers. We won't let them have the system without proper project management and support.”

There is help on the way. Recent budget proposals aimed at encouraging IT investment by SMEs will help promote the take-up of IT by the construction industry, and best practice in its implementation. Being able to write off the cost of hardware, software and peripheral equipment in year one means SMEs can earn tax benefits quickly and retain cash for further investment.

"On their own, the budget measures won’t persuade doubters to invest in IT and, obviously, a firm must be profitable to benefit at all,” says Connaughton. “However, the extra cash released can fund items – particularly training or consultancy – that SMEs all too often see as luxuries or extras to be bought in later when they can afford them.”

Derek Blundell agrees. "We at Construct IT always advocate that the benefit gained by the business is a better guide to value than any cost savings. However, in any business, cost will always be a major factor in the decision to invest in IT. This proposal will retain cash in the business, which is often more important to a small business than making profit."

The Egan report identified the importance of IT in the future development of the UK construction industry. IT can save time and money, improve links with clients and suppliers, and reduce the errors and misunderstandings that cause delays, drive up cost and damage the image of the sector. In short, IT is good news for construction and anything that makes it more accessible to the sector should be welcomed.

The chancellor has set a target of getting one million small companies online through the financial incentives announced in his budget. John Connaughton concludes: "The construction industry will have a big part to play in the realisation of these figures."

What does £15 000 buy you these days?

Kent-based building and contracting company AT Palmer recently invested in a networked computer system linking its eight head-office staff. It enables them to share company and project information and to do accounts, costing and estimating electronically. As managing director of AT Palmer, Marcus Palmer is responsible for IT. The company has an average turnover of £1.5-2m, so any investment has to be carefully assessed. Last summer Palmer spent £15 000 on a new, networked system with eight computers, printers and a dedicated server running Microsoft Office on Windows 95. Previously, the company had a handful of stand-alone PCs for its accounts and estimating systems. The network represents a significant investment for AT Palmer, but the managing director hopes the system will last for at least five years. On that basis, he has spread the cost over several years rather than buying everything outright. The system will save on administrative costs, as staff can write their own letters and send faxes from their computers as well as sending messages internally. Two staff can send and receive external e-mails, which can then be circulated around the office. The computerised accounts and costing package enables Palmer to examine the status of projects and the company, and the estimating package cuts out the drudgery involved in putting them together. Palmer and a colleague have been trained to use Microsoft Office, and the estimators were also given one session of software training by the supplier, FBS. Not all the staff are equally willing to embrace the technology, but Palmer is subtly introducing them to the network’s capabilities. For example, the company has a weekly meeting where the managers assess the status of jobs. Traditionally, Palmer has typed up a report after each meeting and given every manager a print-out. In the future, he will simply tell them that they can access the updated status reports on their computers. Palmer does not describe himself as an IT specialist, but says he “has an interest to go down that route and to keep up with modern technology”. He has not invested in IT simply for the sake of it, but because he believes that it will bring genuine business benefits in the long run.

How to get the most out of the Internet

Featherstone Builders of Ipswich has a turnover of £2.5m but the IT capability of a firm five times that size, including an interactive web site that allows clients to view progress on their projects using the Internet. Featherstone is a family-owned company founded by two brothers in 1980. Jamie, who has spearheaded the firm’s £15 000 investment in IT, believes its implementation has helped the company to grow. The web site is part of a strategy to use IT to enhance the firm’s image, improve communications and offer a high-quality service to clients. Featherstone’s first site, developed in 1997, was a simple page advertising services and giving contact details. The latest is more sophisticated, including pages showing pictures of staff, with e-mail links to each individual in the Ipswich office. There are regularly updated images and descriptions of projects, and an area in which to log comments. Anyone wanting to approach Featherstone for a job can go through the web site. A news section advertises new contracts or any specialist service Featherstone is offering. A secure password enables clients to log on to a section of the site, where photographs show the latest activities on their project. This has already proved popular with a local school, where pupils could watch what was going on behind the hoardings as a new block went up on their site. Jamie Featherstone is keen to take this further. “We’d like to get a web cam and offer a real-time viewing facility to clients,” he says. He intends upgrading the entire site next year and hopes to set up an intranet within the company. The company has developed a system of PCs networked through a Windows NT server by adding hardware as and when needed. It runs Computer Foundations’ Foundation 2000 accounts software and the Kestrel estimating package, as well as Powerproject and Microsoft’s Office applications. The accounts package was the first Featherstone bought. “It mirrored what we were doing in terms of subcontract 714s, sales and purchasing, handling of retention and so on,” he says. “People here could relate the package to their particular role.” The estimating package was bought on the advice of an estimator who had used it in a previous job. “It works brilliantly, and now more than 70% of our estimates are done over the network by computer.”

Postscript

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