A/E/C Systems is the computer industry’s chance to show off its construction- and design-related wares. The annual event used to be CAD heaven, dominated by packaged software exhibitors. This year’s spectacle in Washington, dubbed “From Bricks to Clicks: e-Solutions for the AEC Industry,” was built around dot.com firms that host various construction services over the Web.
By one count, there were 175 construction industry Web sites, although the estimator admitted to missing some and the number rises almost daily. Dave Weisberg, president of Technology Automation Services, told an audience that at least $450 million in venture capital had poured into construction Internet companies in the last two years. Those players, big and small, dominated the list of 245 exhibitors at A/E/C Systems 2000.
Perishable EntitiesAn interesting phenomenon occurred from my vantage point. In the weeks leading up to any trade show, it’s common for PR staff to try to entice trade editors into appointments to visit client booths and interview company executives. Normally, I might get a dozen or so invitations, of which I accept only a few, because I hate tying myself to appointment schedules when there’s so much going on at a trade show. This time, I believe if I had kept count, I would have tallied over 100 e-mails, faxes and phone calls trying to set up appointments.
The PR folks were anxious to earn their keep because the dot.coms are all too conscious of their perishability. When their seed money dries up, so will many of the dot.coms. What everyone is striving for is to become one of the alphas that can absorb some of the weaker entities and be positioned well enough to gain more infusions of capital from either private sources or a public offering—although the IPO dream was a lot more vivid last century before the boosters fell off the Nasdaq rocket.
Desperation could also be read into the fact that competitors are starting to snipe at one another. The heavy hitters brag about how much more money they have than their more budget-restricted brethren. Some disparage others for a lack of construction industry experience; their counterparts are as likely as not to retort that they don’t know nearly as much about how to make the electrons do tricks. It’s a cat fight out there, although it stops when one competitor buys out another. Then the former foe gets hailed as the epitome of technological genius.
Kissing SnakesThe construction dot.coms offer a variety of online services centered around bidding, project management, design, procurement and permitting. Few industries would seem as ideally suited for the Internet as construction.
This is a business involving an enormous amount of drawings, contracts, subcontracts, RFPs, RFIs, RFQs, liens, invoices, etc., etc., etc., all of which must be communicated to numerous people in rapid sequence. Those people work for many different employers, who are often spread out geographically. Miscommunication is the root of most mistakes, and even small mistakes can have big consequences in construction. The Internet can help solve many of these problems. Yoav Etiel, senior vp of marketing for Bentley Systems, Inc., came up with a figure of $400 billion in savings that could be realized if the construction world could adapt Internet technology efficiently. Anyone who sits through a demo of project documentation via the Web goes away wondering why anyone would ever again want to put ink on paper.
Yet, all that promise belies a reality best described by the following joke.
A dog food company hired the best management team money could buy. They spared no expense in product development, market research and advertising. Everyone agreed they had the best handle on the marketplace, but sales continued to lag. Their executives gathered one day to deal with this issue and sat through hours of PowerPoint presentations explaining market and industry trends. Still, nobody could quite explain to the CEO’s satisfaction why sales were far below projections.
Then, a tiny voice peeped from the rear of the room, “Dogs don’t like it.”
A similar experience took place in a presentation I sat through on the future of construction e-commerce. A very smart consultant from one of the Big Five accounting firms gave what I thought to be the best overview I’ve ever heard of the Internet’s role in the construction industry. Then, in the Q & A session that followed, a general contractor in the audience remarked, “Most of my subcontractors would rather kiss a rattlesnake than right-click a mouse.”
E-volutionWhen they let their guard down, many of the dot.com executives will admit to frustration in trying to get A/E/C firms and vendors to use their services. The Bechtels and Fluors of the world are forcing the issue on their project participants, but second- and third-tier companies with revenues under $100 million are still doing things the old-fashioned way—by phone, fax and meetings.
It’s why the prestigious market research firm Forrester Research predicts that by 2004, construction industry e-commerce is likely to total less than 11% of total construction spending, compared to about a fourth in the business world at-large. It is not a revolution taking place in this sector, but a gradual e-volution.
Why are A/E/C firms slower than most to adapt? Nobody has a real good answer. I would venture to say it’s simply what one would expect from such a diffuse industry in which much of the work gets done by relatively small companies that have their hands full fulfilling obligations even in ways that are familiar to them. The construction industry has been notoriously slow to adopt mechanical technological innovation. No reason to expect any different pattern in the electronic realm.
That’s the cup half-empty perspective. On the optimistic side, it’s hard to believe that it’s only been about five years since e-mail and e-commerce came to pass for most of us. The dazzling displays at A/E/C Systems 2000 would have seemed impossibly advanced to any of us touring the aisles circa 1995. Time gets measured in different terms these days. Being “slow” to adapt means being months behind the curve rather than years, or years instead of decades.
Meantime, buildings are still going up, and they seem to be holding together. It’s a great time to be alive and participating in this breathtaking era.