Based on the results of a recent survey conducted by the Construction Financial Management Association (CFMA), Princeton, N.J., interest in IT management is definitely on the rise among all types of contractors, especially specialty subs. In fact, to say that the group's “CFMA's 2006 Information Technology Survey for the Construction Industry,” released every two years since 1996, was a success would be an understatement — when you consider that participation in this year's call for information was up more than 200% from the organization's last attempt, despite the fact that the survey contained 17% more questions.
According to Erica O'Grady, director of instructional technologies at CFMA, two years ago — when the survey was last conducted — staying on the cutting edge of technology was not a priority for the construction industry. “Most companies either scrambled to catch up to their competitors and customers, or implemented minimum improvements to maintain a level playing field,” she says. “However, in 2006, many contractors sought more efficient design and construction delivery, with an emphasis on information technology as an important productivity tool.”
Characterizing the construction IT software market as “booming” since 2000, O'Grady finds the scope and timing of this survey significant for two reasons. Rising material prices and the 2005 hurricane season — changes that occurred since the last time the survey was given in 2004 — greatly influenced the results. To put these results into perspective, it's important to get a closer look at this demographic.
More than 2,400 companies participated in this year's survey, making it the largest sample of IT patterns tracked in the construction industry. At 1,041 participants, specialty contractors — 12% classified as electrical contractors — comprised the largest group, followed by general contractors (737) and heavy and highway contractors (496). Among specialty subs, company size varied with representation in the following categories: less than 25 employees (19%), 26-100 (49%), 101-250 (20%), 251-500 (8%), and more than 500 (4%). On the financial front, revenue size among subs was as diverse as headcount: less than $5 million (29%), $5 to 10 million (29%), $11 to $25 million (22%), $26 to $100 million (16%), $101 to $250 million (3%) and more than $250 million (1%).
Based on the 2006 results, management of IT and related issues has become increasingly important among contractors. But that doesn't mean they're creating new IT positions. Only around one-third (35%) of all participating companies reported employing dedicated IT staff, a decline from 47% in 2004. However, among those companies, the number of total staff dedicated to IT (both internal and outsourced) increased to 5.9 from 4.3 in 2004.
As far as specialty contractors employing dedicated IT staff, 69% (the greatest number among all respondents) said they did not staff these types of positions. Of this group, 72% reported outsourcing IT functions and averaged a total annual IT budget of $22,955. For the 31% of subs that did employ one or more IT person on staff, which varies by title and rank (see Table), the average yearly budget spent on IT totaled $241,833 — lower than the average of $531,528 among GCs and $279,404 among their heavy and highway counterparts.
This outsourcing trend does not appear to be exclusive to subs: 53% of total respondents did not employ dedicated internal IT staff in 2004 with only 19% outsourcing IT functions. In 2006, 65% of respondents indicated that they did not employ internal IT staff — 75% of which now outsource IT.
Looking at sheer computer usage, in-house staff is more likely than field staff to use computers, a trend that carried over into the specialty arena. Less likely to use computers relative to other contractor types, usage among subcontractors' field staffs varies somewhat by position (see Chart).
Comparing the results of this survey with those in past years, software trends in several application areas were identified, including CAD/drafting, estimating, job costing/accounting/payroll, project management, project collaboration, and project scheduling. Following are some specifics about how specialty contractors in particular answered on each front.
CAD/drafting. In general, most participants (62%) use a CAD/drafting software application — with the number of specialty trade contractors slightly higher at 66%.
An interesting variation among subs compared to GCs came down to software preference. According to CFMA analysis, while AutoCAD and AutoCAD LT had the highest shares (45% and 23%), 10% of respondents reported using QuickPen. Although the AutoCAD programs have significant shares among the largest companies, a handful of other applications also held their own (20% or more) among companies with annual revenues of less than $101 million.
Estimating. More than 86% of the survey pool indicated that they used estimating software with the highest usage found among heavy and highway contractors (90%).
Specialty contractors showed a similar trend to GCs, with Excel being the most widely used application (17%), followed by AccuBid (11%) and McCormick Estimating Software (10%). Among participants with volume less than $5 million, The American Contractor had the highest share (15%).
Job costing/accounting/payroll. Ninety-eight percent of respondents reported using some type of job costing/accounting/payroll software.
Among specialty subs, The American Contractor had the largest user base overall (25%) and has use across all revenue sizes, with the exception being companies with between $25 million and $250 million in revenue. Maxwell Management Suite was a close second with 23% followed by Forefront (11%) and Sage Timberline Office Accounting (10%). In the greater than $250 million specialty trade category, numerous products have reported shares about 20% (indicating use of multiple product lines among these large firms).
Project management. Ninety-five percent of respondents reported using project management applications, compared to 70% of respondents in 2004. Reported usage was consistent across all contractor types; however, use of project management software tended to decrease in companies with annual revenues greater than $101 million — an interesting finding.
Three products had double-digit shares among specialty contractors: The American Contractor (16%), Microsoft Office Project (13%) and Maxwell Management Suite (12%). Product usage varied significantly by annual sales volume. For companies with revenue greater than $250 million, there were numerous products with double-digit shares.
Project collaboration. In 2006, use by all firms surveyed increased to 43% from 18% in 2004, with general and heavy and highway contractors reporting the highest usage overall with 48% and 45%, respectively.
The American Contractor was the most widely used application in this sector (11%) among subs, followed by Microsoft Office Project (10%). For those specialty trade companies with revenues greater than $250 million, there were several applications that pulled in double-digit shares, with Buzzsaw leading all collaboration applications with a 50% market share.
Project scheduling. The majority (66%) of all firms used scheduling software with the highest us among GCs (82%), followed by heavy and highway contractors (69%) and specialty contractors (51%).
Microsoft Office Project was the only application with a double-digit share among specialty contractors, which came in at 27%. Other applications with significant shares were Primavera SureTrak (9%) and Primavera Scheduler (8%). Among firms with revenue greater than $250 million, Microsoft Office Project was the most widely used with a 75% share.
Editor's note: Portions of this text were excerpted from the full “CFMA's 2006 Information Technology Survey for the Construction Industry” report and are reprinted with permission of the Construction Financial Management Association.