May 13, 2007]

Leverage on ICT in construction industry

(New Straits Times Via Thomson Dialog NewsEdge) INFORMATION and communication
technology (ICT) is the latest technology that has brought spectacular productivity improvement
to almost every aspect of civilisation. Construction is the process of converting an idea or
concept into information which is then transformed into a built environment. Although there is
tremendous potential for the use of ICT in the construction value and supply chain, ICT has not
achieved its full potential in the construction industry. However, in countries where the ICT
penetration rate is much higher than Malaysia, ICT has delivered positive results in the form of
higher productivity, greater participation and empowerment, greater transparency and more
flexibility.

It is obvious that the earliest benefactors of ICT are industries that deal mainly in the
management of data, information and knowledge such as the banking, finance and insurance
industries.

Although the construction industry handles voluminous amount of data and information, these
are only means to an end with the final output being a physical built environment. As such,
although ICT is easily absorbed at the knowledge acquisition, utilisation and collaborative stages
of construction, its full potential is not similarly utilised at the construction stage.

This phenomenon is not limited to Malaysia only but is a common feature in the construction
industry all over the world. In an industry that is plagued by problems such as fragmentation,
transparency, poor image and bureaucratic red tape there is much to be gained from the power of
ICT. In the construction value chain, issues that must be addressed include interoperability,
standardisation that will facilitate e-tendering and e-submission.

In the supply chain issues such as economies of scale, project management, e-payment, e-
financing and e-construction must be addressed.

E-construction can be defined as the application of e-commerce and technology in the field of
construction and engineering to improve the whole process of construction enterprise. This
includes the application of web-based project management systems, enterprise resource planning,
site work automation, automated data collection and processing, and computer-based integration
of project management information. Combine with remote sensing and GIS it is possible to
design and develop e-monitoring for slope stability (control/automation), interactive traffic
management, flood control and environmental monitoring. Realising the potential of ICT and
appreciating the current status of its development in the sector, the CIMP has devoted one
strategic thrust specifically to the development of ICT in the construction industry. Issues and
challenges: Notwithstanding the acknowledged benefits of ICT, for the construction industry to
leverage on these benefits there are numerous priory conditions that must be met and
requirements that have to be emplaced, foremost among them being the development of
computer literacy among the construction community.

In a survey conducted by CIDB it was found that although the professionals are fast to assimilate
computerisation into their processes, the contractors and builders have still large grounds to
cover. There are a number of reasons contributing to this factor including, among others, mindset,
remote project site, absence of appropriate platform for electronic business dealings, computer
literacy and ICT penetration rate among the construction business community all over the
country including Sabah and Sarawak.

However, the main reason that is slowing efforts to have the full value chain of construction
computerised is the perception that the contractor's main responsibility is to transform resources
into built environment, which is a physical function that appears to have little to do with
information, whereas the consultants' responsibility is to transform a concept or idea into
information to be forwarded to the contractors for implementation.

As such, ICT becomes a natural tool for consultants. This is obvious from the Mid-Term review
of the 8th Malaysia Plan (MP) where the ICT expenditure for professional services grew at an
average rate of 10 per cent, increasing from RM236 million in 2000, to RM260 million in 2001,
and to RM286 million in 2002. Other than computer literacy, another important requirement to
leverage of ICT is the existence of appropriate and sufficient ICT infrastructure. The ICT
infrastructure in Malaysia is better than most developing countries but must be further improved
to be at par with the developed countries, particularly in the hinterland.

Under the 9th MP the cellular telephone penetration rate is expected to increase from 74.1 per
cent in 2005 to 85 per cent in 2010, while the installed personal computers penetration rate is
expected to increase from 21.8 per cent to a forecasted value of 49 per cent in 2010. The
Government is undertaking every effort to address this issue as evidence by the importance
accorded to ICT as early as 1990's. Unfortunately, the construction industry has not fully
capitalised on this situation. Historical developments: To date, three Outline Perspective Plans
(OPP's) have been launched by the Government to guide development in Malaysia. OPP1 was
for the period 1971- 1990, encompassing the 2nd, 3rd, 4th, and 5th MP. OPP2 was for 1991-
2000 encompassing 6th MP and 7th MP, as well as the formulation of Vision 2020, and OPP3
covers the period from 2001-2010 encompassing the 8th MP and 9th MP. Although it was in
OPP3 that the focus was to create a knowledge- based economy, IT was in the Government's
agenda even in OPP2. Part of the strategies and programme thrust for the service sector for OPP2
was: "Apart from expanding the more prominent existing subsectors of finance, banking and
insurance as well as freight, shipping and general transportation, special emphasis will be placed
on the emerging subsectors of information technology and computer services, financial services,
stock broking and tourism as well as business, professional and consultancy services." Under the
Third Outline Perspective Plan (2001- 2010) ICT was given prominence as the Government
strived to develop Malaysia into a knowledge-based economy. The 8th and 9th MP that make up
the five-year development plans envisioned by the OPP3 strengthened the focus on the
development of a knowledge based economy.

The construction industry, however, have lagged behind the other industries in embracing ICT.

The other sectors were quick to capitalise on the opportunities provided by ICT when the
Government embarks in the drive to embrace ICT in the 6th MP. The architectural, engineering
and construction sector involvement were only accounted at the end of the 6th MP in 1995 when
the sector recorded IT expenditure of RM 152 million. This constituted 4 per cent of the total IT
expenditure of all the sectors and is no where near the 27 per cent spent by the banking and
finance sector, the 13 per cent spent by the manufacturing sector, or the 10 per cent spent by the
Government and oil and gas sectors. Under the 9th MP the construction sector has been treated
separate from the professional services. The ICT expenditure of the construction sector is
recorded to be RM112 million in 2000, RM126 million in 2005 and is expected to increase to
RM135 million in 2010. These amounts represent a meagre 0.4 per cent of the expenditure spent
on ICT for the respective years in Malaysia. Notwithstanding the dearth of initiatives from the
construction sector, many of the projects under the e-Government initiatives can benefit the
construction industry. Among these are the e-procurement, Project Monitoring System, Land and
Property Application System, the G2E portal, the Local Government system and the Integrated
Financial Management System. Online submission, for example, has been tried in a three local
authorities but faced numerous problems including standardisation.

CIDB is currently in the process of setting up an online tendering system that has the potential to
reduce tendering cost of contractors and provide greater transparency to the procurement system.
Electronic Labour Exchanges are also available in the Ministry of Human Resource homepage as
well by CLAB, an entity created by CIDB, the Immigration Department and other construction
industry organisations to provide foreign and local labour to the construction industry. Another
service that has potential but has not gained ground is e-Draughting. Recommendations of CIMP
and CIDB's programme to address the issue: The CIMP has recommended the following: R13:
Encourage knowledge sharing for continuous improvement R14: Develop local construction
software industry The following programmes are deemed essential for the achievement of R13: *
Encourage knowledge sharing for continuous improvement * Create a user-friendly construction
knowledge and information portal for all stakeholders It is an establish fact that the construction
industry, by nature of its strong reliance on competition, does not encourage the sharing of
information among its members. It is for this reason that benchmarking exercise does not gain
much support from industry players, particularly those involved in downstream activities. This is
unfortunate as it is through knowledge sharing that knowledge will grow.
The thrust of OPP3 is to transform Malaysia's economy into a knowledge-based economy. A
knowledge-based economy will entail knowledge management at all levels of society and
organisations. The capability of ICT to handle large amount of data at high speed is necessary for
the formulation of information needed for the management and creation of knowledge. On this
note, knowledge management in the construction industry can be achieved with the evolution of
a knowledge community in the construction industry. This is easier managed by segregating the
various fraternities that make up the industry such as the professional fraternity, the contractors
fraternity, the consumers fraternity, and the supply chain fraternity. These fraternities can
develop their own portal for internal communication and can be interconnected through a central
portal to be managed by a central body responsible for construction. CIDB is best placed to
undertake this role. The following programmes are deemed essential for the achievement of R14:
* Develop local construction software industry * Promote the use of technology in the
construction community * Leverage on the MSC infrastructure and incentives Whilst many
specific computer applications needed for specific use are easily available and purchased,
developing systems-wide applications that serve the need of the industry, or an industry's niche
requirements, depends on leadership of thought leaders and innovative ideas. Thought leadership
can be provided by those who understand the needs of the industry in the context of ICT's
capability. This can be achieved by the collaborative effort of Government agencies, such as
CIDB, and the industry players conversant in ICT. More importantly is the development of a
community with sufficient ICT skills. It is imperative that the construction industry is able to
nurture its members to possess the capacity to develop these systems and applications to serve
their own community and fraternity needs.

In this context, the construction community should ride upon the opportunities and incentives
provided by the MSC. With the creation of a digitally connected construction community, the
construction industry will be contributing fruitfully to the formation of a knowledge economy in
Malaysia as envisioned by the Government. (The next series in a fortnight: ST7 - Benefits from
globalisation including the export of construction products and services).

Please visit CIDB's portal at http//www.cidb.gov.my. Feedback can be submitted to:

cimp@cidb.gov.my

Copyright 2007 The New Straits Times Press (Malaysia) Berhad. Source: Financial Times
Information Limited - Asia Intelligence Wire.