Alliance Perspectives

November 04, 2011

Case categories include: Strategy & Planning   Technology   

By Robert Sher 

Construction company, Webcor Builders, proved its competency in the building industry long before the computer became such a powerful force in business. But Alliance member and Webcor President Andy Ball always had the gut feeling that technology held great promise for his industry. For years he pushed his firm to be an early adopter. Today he has invested millions in supporting and developing software that allows him to reduce building costs by as much as 10% and shave an average of 30% off the time to complete a building. He developed a second core competency that helped fuel the firm’s growth from $400M in 2005 to $1.4B in 2008.

Andy has loved computers since his college days in the early ‘80s. He was the first one with a laptop on a job site in Irvine, California, and was quick to write macros for Lotus 123 to process project data and streamline workflow. He even bought a technology support company in the late ‘90s to increase Webcor’s internal capabilities.

As the new century started, Andy grew impatient with the limited features that building industry software firms were providing. AutoCAD had automated drafting, but the lines on the screen were as “dumb” as those on paper. Working two-dimensionally was still the norm, and the 3D programs that were available didn’t integrate with other programs. The Building Information Management (BIM) concept as a discipline was in its early stages.

Too often, Andy’s teams—and thousands of other teams like them globally—came to a crashing halt on a jobsite when following their 2D drawings led to an impossibility, like a beam running through a stairway. The architect was called out while crews would stand by. The delay could be days or weeks, and too often re-work was involved. How often have you passed a construction project with no activity—for days or weeks? Andy kept thinking about how the Empire State Building was built in only 13 months, well before Webcor’s time and the advent of computers. Today it would take 10 years to design and build the Empire State building, with seven years to get approvals, and three years for construction. He felt using computing technology to avoid all the delays had the potential to make building projects dramatically faster.

It wasn’t just a case of avoiding construction problems. Although manufacturers could access programs that included bills of materials, standard costs and Just in Time logistics, nothing close to that existed for the building industry. The process, especially for large projects, was inefficient and hard to manage closely against planned timelines and budgets.

It is all too easy to grow comfortable with wasteful practices if they are normal in your industry. If you don’t have an evangelist like Andy with a vision for move-the-needle change, make sure you carve out time as part of your annual strategic planning process to think outside-the-box. Spend enough time to entertain all the ideas, no matter how novel they may seem. For those suggestions where a positive outcome could really change your ability to compete, ask yourselves how you might validate the concept without breaking the bank.

In 2005, Andy decided to invest his time and share his vision. He teamed up with the Center for Integrated Facility Engineering (CIFE) at Stanford to create software that would allow builders to pre-construct a building virtually, one step at a time. The virtual builders could see the building in 3D, observe and manage the passage of time, and track the materials and labor costs at each step.

Webcor also joined CIFE and pays annual dues as well as being actively involved in the creation of the tool, now known as Vico Constructor. It didn’t work at first, but step by step, the commercial applications became clear. In 2007, Webcor went all in, investing millions in learning to use the system, and in building a “parts” database, with materials, subassemblies, productivity costs, and other data that would make the system usable and would make building more cost effective. Webcor’s intimate knowledge of the program put the company years ahead of their competition. Its investment in the database created a barrier that competitors would have to hurdle to leverage the Vico Constructor in the most powerful manner.

In 2002, Webcor formulated a proposal for the new California Academy of Sciences, promising to complete it in 24 months versus the next fastest competitor at 36 months. The Academy didn’t believe the company could deliver on its promise, but after Webcor showed them the step by step sequencing of the construction process, it was selected and completed it on schedule.

Webcor also leveraged CIFE to keep early development costs down. The work at CIFE was available to the entire industry, but Webcor was willing to give up exclusivity to reduce development risk. The stunning success on the Academy of Sciences project was the company’s beta test. It became clear that there would be a race over the next ten years to implement this complex technology, and that the winner could emerge well ahead of the pack. Staged development of a new core competency with planned de-risking makes good business sense.

Webcor created a Virtual Building Group as a service function within the organization to continue to build expertise. They staffed up, often hiring people out of the CIFE project team at graduation. The changes to workflow were massive. Not only were projects pre-built virtually, but the actual construction was tightly managed, with budget and timeline developed by the Virtual Building Group. For example, a construction team would be told that they have three men and 90 minutes per column assembly. Responding to a call to action from Andy, the firm continued using the application as it was developed, and a string of high profile successes rolled on.

Webcor won and is in the process of building the $750M San Francisco General Hospital. It won and is building the $1B Transbay Terminal project. It won and is rebuilding the California Memorial Stadium at U.C. Berkeley—on a very tight, one-season time frame.

Over the past 10 years, Webcor has consistently ranked in the top 50 of U.S. building contractors. Yet none of its competitors have fully embraced virtual building to the same degree. They might claim to use building information management, and may well think that they are leveraging technology. But since none of them have been part of the development and evolution of Vico Constructor, they don’t quite know what they are missing. Additionally, the cost to build their own database of materials and processes may appear daunting.

On the other hand, the fact that virtual building is not an industry standard or recognized best practice means that it is harder for Webcor to convince its prospects of its value. The company’s sales process has been modified accordingly. In the end, lower prices and quicker builds speak for themselves, so the track record of Webcor’s Vico successes is growing.

Another challenge Webcor faces is getting the internal organization to adopt all the changes in workflow and process that the new Virtual Building Group brings. It has required strong leadership from the top to support the pace of change. Younger team members seem the most eager to jump right in. With pressure from above, and eagerness on the front lines, the middle of the organization has followed suit.

Even though the Virtual Building Group has begun to sell its services to other builders and is becoming a profit center of its own, making money from software was never a goal. Because Webcor focused on a strategic competency rather than making a direct profit, they stayed focused on essential features that could be applied in the field, rather than “flashy” features that would sell to the broader marketplace. This focus on functionality rather than marketability minimized the costs and maximized the results. A venture-backed startup may well have failed to succeed.

I asked Andy what this might mean for Webcor’s growth or ranking in his industry. Instead of a concern with rankings, he said the company stays focused on the main goal—continual improvement of their construction process—all in keeping with its vision of delivering exceptional value through innovation.

Maybe Webcor will innovate its way to constructing the equivalent of the Empire State Building in 13 months.

Robert Sher is principal of CEO to CEO, specializing in assisting CEOs and business leaders as they navigate critical passages. He is the author of two books, Defeating Corporate Distraction and The Feel of the Deal; How I Built a Business through Acquisitions. He may be reached at Robert@ceotoceo.biz.