August 2011
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The days of program management firms exclusively peddling proprietary in-house construction management software are over. With owners becoming increasingly aware of the capabilities Software-as-a-Service (SaaS) program management applications offer, their involvement as decision-makers is on the rise. So, too, is the number of owners purchasing the software for their own use. Discover what is driving these trends and what advantages SaaS systems provide to both program managers and owners.
Back in the day, program managers had no choice but to build their own computerized project or program management systems. But with the advent and maturity of independent, neutral program management software on the market today, Software-as-a-Service (SaaS) solutions are offering more than a program management tool; they’re giving everyone on the project team peace of mind.
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An increasing number of program management firms are recognizing the merits offered by commercially available construction software. “The pros that we see using off-the-shelf products are that there is no development time for us, it’s only the [configuration] to make this standardized tool most beneficial for the individual aspects of the program or project,” says Guenther Preuhs, Senior Vice President of Program Controls, The RISE Group, Chicago.
Not having to employ a staff of software developers and a support team is a big benefit. “Project and program management firms, generally don’t have the IT staff necessary to develop the kind of tools we need to provide the level of services that we want to provide to our clients,” notes Preuhs.
Using a project or program management application provided by a software company also releases the firm from its responsibility to provide system maintenance. With a SaaS solution, that is now the software provider’s obligation.
These independent applications separate out program management and software-provider responsibilities, leaving the project management firm to concentrate solely on their core competency: construction management. “Our clients hire us to manage their construction programs because construction is not their core business. We selected a vendor to provide us with a management system because software development is not our core business,” says Leon M. Barkan, Vice President Program/Construction Management, Volkert, Inc., Birmingham, AL.
Given the necessary software development, maintenance and support, customized proprietary software developed by program management firms doesn’t always make financial sense anymore. “We figured out 20-plus years ago [that] developing your own stuff in-house never pays for itself unless you go sell it, but then if you go sell it, you get out of your core business … and all of a sudden have to be software vendors and supporters. That’s not what we do well,” notes Dwain Brown, Program Manager, Freese and Nichols, Dallas/Ft. Worth area.
Leaving the application development, updates and support up to a software company means program managers are not accountable for the software working as promised. “Our risk is smaller,” says Preuhs, “because program managers don’t carry the risk for the system being up and available and doing what it’s supposed to. That risk is all carried by the software provider.” Clients concerned about data storage and security may very well question the ability of a program management firm to meet their expectations. “But software providers, that’s
Program managers may also have a difficult time providing owners the level of support that a software company can offer. And poor service and inattentiveness rarely leave a favorable impression on clients. “With the off-the-shelf [software], it’s also easier to get access to expert users and to product documentation that is available. You have user groups online where you can post a question or an issue and get almost immediate feedback. If it’s a custom-developed in-house, you really rely only on your internal IT development team to give you answers - which can pose a challenge specifically for the support of global implementations,” notes Preuhs.
While this is not always the case, most program managers agree that using a SaaS solution will reduce deployment time. Development of a fully customized system is time-consuming. “Trying to build a custom solution that really fits a client’s specific needs takes a significant level of effort,” explains Erik Blum, Program Controls Practice Leader for HNTB Corporation (Kansas City, MO).
Expectations are high today. Delivering a system even with limited functionality is anticipated in the first 60 to 120 days of engagement. “Time is always of the essence,” adds Ron Miller, Pittsburgh-based Director of Healthcare Program Management for Navigant’s Eastern Region.
While inexperienced owners with limited projects are less likely to be knowledgeable about project management software options, those with large capital programs and ongoing construction projects are more educated and more invested in the decision about project/program management applications. “I think there’s a general growth in the owner’s awareness,” says Blum of clients’ understanding related to the capabilities of solutions on the market today.
With a burgeoning awareness of the software’s features and functionalities, owners are beginning to see the potential long-term benefits offered by commercially available, independent SaaS construction management applications. “Software companies are starting to mature to the point where they have value to an owner, and owners have now seen it work so well for contractors, for example, that they’re starting to realize, ‘hey, this is something that we can use,’” explains Miller. “In the last five years, program management software has been primarily for the design and construction process, but it’s going to also become a building management system,” forecasts Miller.
Because owners are getting savvier, program management firms who have traditionally offered their own proprietary in-house application exclusively must provide options beyond their own customized solution. HNTB uses both in-house and off-the-shelf program management software, depending on the needs of the client and complexities of their program. “We acknowledge and generally believe that there are occasions where the extended and broader functionality you see in commercial tools is the right fit for our clients,” says Blum.
Aside from the functionality SaaS applications offer, program managers don’t want to push owners into using their in-house solution because it doesn’t communicate that they are looking out for the owners’ interests or objectively
evaluating what is best for the program. “When you’re serving in a program management role to an owner, to a client, you’re a trusted advisor,” says Blum.
Our clients hire us to
manage their construction
programs because
construction is not their
core business. We
selected a vendor to
provide us with a
management system
because software
development is not our
core business
Leon M. Barkan
VP Program/Construction
Management, Volkert, Inc.
Although he recognizes the benefits of SaaS solutions, Preuhs makes a distinction for some cases where customized solutions may offer certain benefits that make them the right system. “We have had experiences with software providers where neither we nor the client could influence product development – they wouldn’t listen” says Preuhs. In addition, upgrades to these systems were either too infrequent, or non-existent. “We have also dealt with clients who have not properly budgeted for a system, and under these circumstances, go with a custom-built solution might be your only option” added Preuhs.
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“There’s a perception that in-house systems can’t hold a candle to the external systems,” says Miller. “That’s usually the case. External systems do have different and better capabilities but it’s because that’s what [software compa-nies] do for a living.” The increased capabilities are appeal-ing to owners, who also find the SaaS solutions’ ability to more easily integrate with data from other software applica-tions to be a bonus. “It can be easier to integrate two sys-tems that are off-the-shelf if those integrations have already been done on other [construction] programs, so there is knowledge available,” explains Preuhs.
And because software companies provide the necessary support to aid users, service is often better. “I think a lot of owners have figured out they don’t get the same level of support and service from an engineering company that’s developed software than from a software company that’s developed software. We need to stick with what we’re good at,” says Brown.
A growing awareness about program management software options among owners has turned the tables on who the decision-maker is. Some owners are even mandating which program management system is applied now. “I want to have the ability to research and select both the technology and the
[program manager] in a combination that works best for our unique situation; not take whatever software the successful PM brings with them,” says Tim K. Woodley, Director, Department of Operations, West Linn-Wilsonville School District, Tualatin, OR.
“When our organization issued an RFQ for CM services, the question of CM software became a significant criteria for discussion amongst the participants,” says Woodley. “In the end, our choice for [a] PM was influenced primarily by their ability to learn the use of any CM software versus some judgment of the particular software they brought with them.”
Owners are not only playing an active role in what software is used, but some have even gone so far as to purchase the system of their choice, ultimately becoming the gatekeepers of all project-related information. “I’m a believer that a centralized project management information system hosted by the owner is the most efficient [means] of managing all projects,” says Guillermo Ramos, Director, CIP Construction Services, University of Texas Southwestern Medical Center, Dallas. Ramos speaks from experience; he is currently managing a $772 million construction program using a SaaS system. “I would recommend for the project management information system that is purchased by owners be from a company that their core competency is construction software,” advises Ramos.
On public projects which span many years, when owners have projects happening simultaneously or frequent capital improvement projects ongoing, owners may suggest (or mandate the use of) a particular system for the sake of continuity. “If you’re going to hire program managers and each program manager comes in with their own system, then you’ll have five or ten different systems you’ll have to try to access and learn,” says Miller.
“I want to have the ability to research
and select both the technology and the
[program manager] in a combination
that works best for our unique
situation; not take whatever software
the successful PM brings with them”
Tim Woodley
Director, Department of Operations
West Linn-Wilsonville School District
“A lot of clients in the past have voiced concern about using in-house developed systems, asking ‘what happens after your contract with us expires? How can we continue to use those systems?’ ” says Preuhs. When an owner selects and purchases SaaS program management software, the worry of not being able to access information when the project is complete is eliminated. And having access to that information shouldn’t be optional, but rather mandatory. “The world of design and construction has become more complicated in the last 30 years and more litigious,” says Miller. “Documenting every little thing, every step, has become, unfortunately, very important.”
Not only does owning the system limit the owner’s risk, but it also ensures that the software is configured to their specifications. “By the owner providing the software … the owner is in the driver’s seat when it comes to creating the custom features and reports necessary to respond to unique needs within the owner’s organization,” notes Woodley. Additionally, if the owner provides the software, they have access to robust technical support without having to go through the program management firm.
While customized project management software created by program managers still offers benefits such as the ability for these professionals to implement changes expeditiously, have complete control over when updates are released and tailor the application to a management firm’s specific business model, from the owner’s perspective SaaS applications offer far greater advantages while significantly reducing their risk.
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e-Builder would like to thank the professionals who participated in the development of this document. Their candid opinions help us to promote an open, ongoing dialogue on how organizations across different industries are improving the delivery of capital projects, and the industry as a whole.
