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New age IT in the realty sector

Construction companies are sophisticated users of IT employing everything from ERP to GIS, says Nivedan Prakash

Of late, the realty sector has experienced phenomenal growth. Both, real estate construction as well as infrastructure construction, have experienced accelerated development during the last few years and the scenario may continue or even accelerate in the future. With FDI coming into this segment, the competitive scenario has altered, particularly in the infrastructure construction segment this has put pressures on margins.

IT has been perceived as a driver for many processes in the construction industry. During the late 1990s the realty sector was targeted by IT solution providers. Of late though there has been a technological shift in the construction sector from IT driven solutions to IT enabling ones. Now the industry players mold IT solutions to fit a business’ needs. Besides, there is a move towards cost-effective and innovative solutions.

As project geographies widen, real estate companies are spanning across India and beyond. Infrastructure construction companies always operate in tough and widespread terrain. With this kind of business scenario the importance of IT has grown and continues to do so.

World-class ERP solutions are fast becoming the basic business infrastructure. One is required to automate all the business process transactions, have end-to-end visibility of the business, standardize the business processes and make them more efficient. These requirements are catered to by world-class ERP solutions.

Logistics play an important role in the construction industry. The innovative use of GPS and GPRS technology helps to improve logistical efficiency and reduce costs. RFID technology also has considerable potential in the area of materials management. It can also be used to control fuel wastage. IT will also play a vital role in the areas of optimizing the use of expensive materials such as reinforcement steel, and reduce wastage of the same.

Document Management is another vital IT application used to electronically manage documents such as contracts, engineering drawings, business development documents, correspondence with clients, HR records, amongst others. The CIOs have also adopted video-conferencing and video-surveillance to a great extent. Even CRM is quite a useful application for real-estate organizations.

Avinash Sankholkar, Head-Business Operations, Infrastructure Management Services, L&T, said, “I have observed the realty sector from a distance. In my business IT utilization started much earlier and is at an advanced level today whereas in the realty sector it is only in the last three years that I can see significant uptake. We began with using IT for design and drawings then moved to 3D AutoCAD and from there to walkthrough models where a customer can see a simulated view of the future. The current trend is to use integrated procurement, inventory and site construction activity management tools with collaborative platforms. Incidentally we have worked out a engineering, construction and operations (EC&O) focused preconfigured ready to use solution on the SAP platform based on our years of practical experience along with SAP, and are selling that to the global EC &O Industry as an All in One Solution (AIO ECO Solution).”

Optimizing IT resources

Today construction companies such as HCC and L&T have optimized their existing IT resources to meet their day-to-day requirements. They endorse a process of continuous contact with business users and rejuvenation of IT systems so that IT and business are in sync. This consists of a structured survey followed by analysis of requirements and gaps followed by customization, procurement and integration of best of breed solutions to fill gaps and integration of all existing applications.

Sankholkar, said, “On the hardware front, server virtualization, Information Lifecycle Management via a EMC2 SAN and MPLS for WANs have helped in making the business user’s workplace more tidy and efficient.”

Optimization is a continuous process and can be done for various resources. Meanwhile the architecture is made scalable so that the investment at any given point of time can be reduced and at the same time future growth is taken care of with sufficient investment protection. “This is done in case of WAN, server infrastructure, etc. For server infrastructure optimization, virtualization is being considered now. Various applications are being added that leverage the same WAN infrastructure and specialize by using it during the off-peak hours. Optimization of human resources in the IT department is an ongoing challenge. Multi-skilling, increased process driven approach are some of the means for the same,” added Satish Pendse, Chief Information Officer, Hindustan Construction Company (HCC).

Industry players are also utilizing IT in keeping track of productivity and the status of various projects being handled by their employees. Commented Sankholkar, “As projects differ in complexity and size in this industry, we cannot standardize and calibrate human productivity like they do in the mass produced goods business. We maintain up to date databases of productivity for a large variety of roles and skills and use them to develop man-hour budgets for different roles in individual projects. These budgets form the basis of our cost estimates at the bidding stage and during execution they become a benchmark for judicious control of the man-hours deployed.”

Leveraging IT applications

There are various IT applications currently available for all stages throughout the lifecycle of a building project—from essential office and information management through to computer-aided design (CAD), cost estimation, project planning and scheduling, and facilities management and building maintenance.

In L&T’s Engineering and Construction division while SAP is used as a backbone application, the division employs many best of the breed products including PDS Intergraph for Engineering, Enterprise version of Primavera Project Planner for schedule control and for the minute site level work like the issue of materials to specialist sub contractor teams, stage by stage quality checks and customer inspection. The company also uses a parallel knowledge management system, which stores valuable learnings from past experiences and enables widely dispersed teams to share their knowledge and improve effectiveness. “In the ECC division we have a home grown fully customized Enterprise Information Portal built on Microsoft technology which is effectively an ERP system. This is further integrated with the Construction Management System (CEMA), which enable close management of all the construction work at the project sites,” added Sankholkar.

ERP, basically an integrated design to construction lifecycle support system, is essential for the big players in this sector today considering the complexity, fast pace, competitive environment and consequent need for efficiency in work. Which is why, ERP has become a part of the business infrastructure.

Pendse pointed out, “The business leadership of HCC has a strong conviction regarding power of IT to add value to its business. We are the first organization to implement SAP ERP in construction in India.”

“In the E&C division, we have an integrated solution with SAP as a backbone, which connects engineering activity to the construction work at the project site. The ECC division has a highly customized home grown system which is in effect our own proprietary ERP,” added Sankholkar.

A lot is also being talked about the use of GPS-GIS in this industry. Construction companies have successfully used this technology to track the movement and delivery of large equipment to a project site. A transmitter mounted on the trailer or truck sends out a signal to either a GSM system or a geostationary satellite, which in turn beams the exact coordinates to a service provider who has GIS maps of the route. Logistics coordinators and construction teams can log into the service provider’s Web site and instantly know the speed of the truck or trailer and where it has reached.

“We have found that this type of monitoring helps in motivating the transporter to deliver items faster and also helps the construction team to make reliable plans for resource deployment to handle the equipment effectively on arrival,” added Sankholkar.

Speaking about the GPS-GIS technology, Pendse pointed out that logistics is an important part of construction work. For example, some of HCC’s projects span an area of over 50-100 kms and 60-70 vehicles move every day across the project site carrying men and materials. Some of the quarry locations (the ones where boulders are crushed to form small stones called aggregate) are more than 200 kms long and 80-120 trucks move daily carrying aggregate from that location to the main project location. Improving the efficiency of these movements will lead to overall improvement of project execution and reduction of operating costs. There is equipment that tracks the GPS coordinates of a place along with a date-time stamp. Such equipment also contains cell phone chips that can be used to send these GPS coordinates along with date-time stamp to a Web site where they can be pinpointed on a map. In this manner, the movement of each vehicle is available on the Web site and can be tracked and exceptions can be highlighted. The same can also be used to track imported material that is transported from ports to project locations that may be thousands of kilometers away.

On the other hand, GIS is a visual depiction of the database. In the construction business, GIS has multiple applications. For example, it can help to track the status of land acquisition. Utility construction done underground (pipes, electric cables, sewage carriages, etc.) needs to be available preferably in a visual format for quick action and control. GIS can be used for the same.

Other technologies

Construction companies are leveraging Supply Chain Management (SCM) systems that help in streamlining operations, reducing logistics costs and enhancing customer service. “The SCM engine helps in getting the best prices from our vendors in the shortest time. On an average we have knocked off three weeks from a 16 week procurement cycle of project materials and about 2% on costs. The customer benefits from our speedy response and completion of their projects as per the committed tight schedule,” said Sankholkar.

Pendse added, “The SCM engine will certainly help, the way it helps in other businesses. Here the usage will be primarily on the supplier side, unlike in case of consumer industry where the usage is on the customer side.”

Even the usage of e-business is growing. Many government agencies are adopting e-tendering, and consequently construction companies are required to bid for the projects online. In fact many construction companies have also have started to adopt e-tendering for sub-contractors.

Pendse pointed out, “The interactions with suppliers have started to happen electronically right from RFP, PO, delivery notifications and payments. Reverse auctions are also being adopted using software applications. In future the real-estate segment is likely to adopt payment gateways for receiving various payments from its customers.”

Sankholkar, added, “Not from experience but from my observations I can say that the realty sector is using Web sites quite effectively to attract customers giving them a view of what they are offered, but the actual deals are outside the system. However, on the procurement of material side, I find that there is greater exploitation of e-biz technology.”

Meanwhile, having deployed a vast array of technological solutions and having learned a lot from molding them to meet its requirements, L&T is now turning to IP creation in its domain through L&T Infotech, the IT services wing of L&T.

“We developed a unique connector called Inspire between Primavera the scheduling package and the SAP ERP system. Now we have built jointly with SAP, the All in One Engineering Construction and Operation solution, a ready-to-use package for the business. There are other such products in the pipeline too,” commented Sankholkar.

For better management, HCC has done some new IT deployments, wherein it has recently implemented a project budgeting solution developed internally, around SAP’s database. The company will now try to build an interface between construction equipment and SAP so that the data related to equipment usage, consumption, etc., can be taken into SAP seamlessly.

Pendse added, “We will also be working on capturing SAP data using hand-held terminals so that construction personnel will find it more convenient to interact with SAP. Besides, we will be automating all the employee-employer transactions using an employee portal. The same will also serve as a knowledge bank, community portal, etc.”

nivedan.prakash@expressindia.com