For a company that ‘makes things that make India proud,’ keeping track of its multi-locational operations—be it construction sites, manufacturing plants or field offices—is not an easy task. With the help of an enterprise information management solution, L&T’s largest division, ECC, has been able to keep the company’s decision-makers updated on the status of projects at the touch of a button, says Gaurav Patra

By collaborating and bringing together different stakeholders on a single platform, EIP is fast emerging as a powerful ERP solution, says K V Rangaswami

One of the largest engineering and construction firms in the country, Larsen & Toubro (L&T) has proven capabilities in infrastructure and basic industries. L&T is engaged in four principal segments and enjoys market dominance in engineering & construction, cement, electrical and construction equipment. The company offers turnkey construction services, undertakes industrial and infrastructure projects in civil, mechanical, electrical and instrumentation engineering through its ECC (Engineering, Construction and Contracts) division.

With liberalisation, like other industry segments, the construction industry too witnessed international competition. And this necessitated a change in L&T’s business model. The company had to integrate backwards and adopt a strategic shift to become a project-driven organisation. In mid-1999, with a mandate to enhance shareholder value, the Boston Consulting Group drew up a blueprint for L&T, targeting revenues of Rs 25,000 crore by 2006, christening it ‘Project Blue Chip.’ As a part of this initiative, ECC, the largest of L&T’s divisions, took upon itself the onus to provide a strong and robust technology infrastructure that would help streamline the company’s overall business processes.

The challenge
One of the biggest challenges faced by L&T’s ECC division was the Indian construction industry itself, which was not very IT savvy. There was no established IT product or solution to meet the specific requirements of managing information and projects on a large scale, spread over a wide geographical network. Typically, the length of projects lasted from six months to a year. And the ERP solutions that were available were rigid and catered to a limited number of people and projects.

This proved to be an obstacle when it came to customisation or flexibility in working within the requirements and processes in the construction industry.

The company had a huge task at hand with 210 work sites, and 350 of its turnkey projects spread over a vast geographical area. With no clear system to track job status or generate relevant MIS reports and optimise resources, the implementation of crucial corrective actions were delayed in several projects.

This resulted in increased costs. Apart from this, with over 6,000 vendors spread across 350 locations, the ECC division procured construction and equipment material and services worth $1 billion and generated over 70,000 purchase orders in a year. However, the absence of an efficient supply chain management (SCM) system limited the company’s ability to leverage its huge purchasing power.

The solution
To overcome the inefficiencies of the traditional ERP system (keeping the construction industry in mind), the ECC division decided to implement an enterprise information portal (EIP) based on Microsoft’s technology. With a team of 16 people and a one-year time frame, it rolled out its EIP offering, based on the Microsoft Exchange 2000 Server and SQL Server 2000 at the back-end, and Microsoft Share Point Portal Server in the front-end with Microsoft Project 2000.

“To succeed in today’s highly competitive environment, there is a need to manage business processes as efficiently as possible. IT offers many options to optimise our business processes. The earlier IT systems created disjointed islands of information, and consequently we were not able to achieve higher levels of value optimisation across disciplines in the construction process,” says K V Rangaswami, executive vice president, buildings and infrastructure at L&T.

Today, EIP provides a solid backbone to project execution through digital pictures of progress across all sites. Using Microsoft Project 2000 and Visual FoxPro-based CeMA (Construction Enterprise Management) at the back-end, complete job details from concept to implementation and completion are automatically uploaded onto the portal. This has helped speed-up access to all information, including financial status, seamlessly across business processes. “The EIP has provided us with the right solution. It has brought together different phases of construction cycles—design, development, tendering/bidding, budgets, planning/scheduling, etc. By collaborating and bringing together the different stakeholders—architects, designers, vendors, sub-contractors, clients and L&T—on a single platform, EIP has emerged as a powerful ERP solution for our construction division,” adds Rangaswami.

Apart from this, the company also decided to implement a Web-based SCM solution built on SQL Server 2000 and Windows 2000 Server. This solution not only enabled the company to streamline its entire vendor network but also help build an effective system for the RFQ (request for quotes) process. Today, all a vendor has to do is log on to the vendor registration window and put in a request to place an order. The entire process from request to payments (except for delivery of products and construction equipment) is conducted online. The SCM solution is also integrated with the financial and back-end systems, thus streamlining the accounts and purchase processes too.

Benefits
With Microsoft SQL Server 2000 at the back-end and Project 2000 on the desktop, L&T ECC is now in a position to provide a complete 3D view of projects—schedule, quality and cost from planning to implementation. This includes job details such as project deadlines, milestones and resource allocation. This has helped the company identify problem areas that might delay project implementation and mission-critical information on project financials.

Using Microsoft Exchange Server 2000 and Share Point Portal Server at the back-end, the company has converted the information portal into a knowledge portal for its employees across different project sites. It serves as the ideal platform for knowledge sharing and best practices on project work methods and its implementations across various sites.

The SCM solution based on SQL Server 2000 and Windows 2000 Server provides for a simplified and streamlined e-procurement procedure. The solution helped in delivering a systematic requisition process, including customer order and material visibility and logistical tracking by customers, vendors and engineering and onsite construction personnel.

This has helped put in place an efficient system where the ECC division controls purchase orders and project delivery, leading to volume benefits both in terms of time and costs involved. “Our projects are spread over the entire length and breadth of India and also over the Indian subcontinent and Middle East, with new markets getting added constantly. It was absolutely essential to develop a system where the geographical distance between the offices, the projects, the clients and the vendors is significantly reduced,” says Rangaswami.

“EIP is a one-stop ‘Net-kiosk’ where information from individual projects (physical and financial), divisional performance (across all parameters), e-procurement and design collaboration and resource information can be exchanged, monitored and controlled. This surely will be a trendsetter for the construction industry,” he adds.

In addition to this, the Exchange Server 2000 and Share Point Portal Server combination provides a unique platform for users to access information of their choice on the desktop. This also enables real-time information on performance of project sites to executives and officers of the ECC division.

To leverage the existing application infrastructure and increase productivity of the mobile workforce in the future, critical business applications are currently being developed on Microsoft’s .NET technology using mobile .NET components. When ready, it will allow access to relevant information through cellular phones and PDAs anywhere, anytime.

This feature is especially helpful in mission-critical project execution, and to get timely information on project and materials (P&M), equipment, customer feedback, quality and schedules, from the project location.