In: Wagner, Roland R.; Tjoa, A. Min (Eds.): Proceedings of Ninth International Workshop on Database and Expert Sytems Applications, DEXA’98, August 26-28, 1998, Vienna, Austria, IEEE Computer Society, 1998, pp. 1009-1014.
A Reference Model and Software Support for Bid Preparation in Supply Chains in the Construction Industry Mathias Krömker, Frithjof Weber
Viktoria Steinlechner
Bremen Institute of Industrial Technology and Applied Work Science at the University of Bremen (BIBA), Hochschulring 20, D-28359 Bremen, Germany, E-mail:
[email protected]
Swietelsky Bauges.m.b.H., Valiergasse 34, A-6020 Innsbruck, Austria, Email:
[email protected]
Peter Wänke TOP PROJECT, Hasnerstrasse 18, A-4020 Linz, Austria, Email:
[email protected]
Abstract This paper describes two results of the European ESPRIT project no. 22828 „CSCCM“, which aims at optimising the bidding process of small and medium companies in the construction industry. Firstly, a reference model as a description of an ideal bidding process is presented. The model aims to assist companies in redesigning their bid preparation by providing them with an example of how a systematic bidding process could look like. Secondly, a corresponding software system is outlined, supporting the complete bidding process, starting from capturing the customer requirements, up to pursuing of the bid. The software system provides specific support for sending price requests to suppliers by email and for importing their answers directly into the bid. Thus, it enables co-operation and electronic commerce in supply chains in the construction industry. The software system is currently implemented and validated in pilot projects in a supply chain consisting of a tiler company, a wholesaler and a manufacturer of marble and granite. These companies co-operate in the research project with three software houses and a research institute.
Keywords Bid preparation, construction industry, business process reengineering (BPR), enterprise modelling, reference model, electronic commerce
1 Introduction Small and medium enterprises (SMEs) in the building industry face a notable potential for improvement. In general, their current business processes are mainly based on traditional work procedures. Information and communication technology is exploited only to a small degree and if,
mostly in isolated solutions. For example, Email is scarcely used as a communication means and only few companies operate networks for data exchange. Thus, these companies cannot participate in electronic commerce. Further, business processes are characterised by intuitive, informal approaches, and systematic or methodical approaches are scarcely used. Consequently, decision processes are depending strongly on social factors and individual liking, and the reusability of existing results is low. As a result, building companies feel a strong need for reengineering their business processes. Being a non profitable process per se, bid preparation is a specific area calling for improvement: The costs and time for preparing a bid have to be little and the success rate must be high. Since construction work is typically carried out in a supply chain, construction companies have to interact with their suppliers when preparing a bid. The suppliers contribute prices for material or subcontracted labour, i.e. they prepare ’sub-bids’ in the frame of the overall bid. In today’s practice, fax and telephone are the major means of communication in this process. The CSCCM project – Computer Supported Cooperative Construction Management – which is funded by the European Commission's ESPRIT program, aims to redesign this bid preparation process. Objective is to demonstrate how modern information and communication technologies can be applied in typical SMEs for optimising the key success factors costs, time and quality and thus increasing their competitiveness. Specific emphasis is given to co-operation in the supply chain. The CSCCM consortium comprises three companies from the building industry (Baldauf: laying and trade of tiles and natural stones; COGEMAR: cutting of marble and granite; Stadlbauer: wholesale of building material), three
software houses (TEAM, IBK, ISD), and one research institute (BIBA). The partners are from four European countries (Austria, Germany, Italy and Portugal). Two of the industrial end users act mainly on the national market (Austria), whereas one partner's business addresses typically global markets. The three end users pair up with the software houses and the academic partner, so that all activities at their sites are accompanied by consultancy competence. This paper presents two results from the CSCCM project: A reference model for an ideal bid preparation process in the construction industry and the CSCCM software system which supports this process. The next chapter presents and justifies the CSCCM approach from the overall and the process design perspective. Chapter 3 presents the reference model and the target groups for its usage. Chapter 4 outlines the software system, which has been developed in the project and which is implemented currently at the industrial users. Chapter 5 concludes the paper.
2 Approach This section starts with a general outline of the overall CSCCM project approach and then describes the applied techniques and the rationale for the development of the reference model.
2.1 Overall CSCCM approach The CSCCM project applied a classical reengineering approach: Starting point for the project was the analysis of the business processes at the industrial partners’ sites. In a first round, the current as-is processes for each user company were captured and end user requirements for an optimised solution were identified. These were transferred into to-be processes for the three companies defining the target that is to be reached within the CSCCM project. From the similarities in the three to-be processes and other experiences, the reference model for an ideal bid preparation process was derived. Subsequently, existing business applications used by the industrial partners and software packages available on the market were analysed. They were examined concerning the provided and missing functionality and their usability. After these analysing work packages, the software development started with the specification of the CSCCM architecture. The CSCCM software consists of different modules, each one representing specific key processes in bid preparation. The solution is implemented in pilot projects at the three end users who will use the system in their day-to-day business for making bids and electronic commerce. The companies represent a supply chain in the building industry, so that the communication functionalities of the CSCCM system can be used for interaction among these companies.
Feedback from the pilot projects will be collected and based on this, an improved, generalised solution of the CSCCM system will be developed so that the outcome of the project can be adapted to a wide range of construction companies all over Europe.
2.2 Process modelling approach Business process modelling has become widely accepted as an appropriate approach for supporting the analysis and improvement of company processes [14]. However, when selecting appropriate methods, the target companies and their specific characteristic have to be kept in mind. In the CSCCM project these are small and medium companies in the construction industry. They are very much orientated towards craftsmanship and manufacturing (in the original sense) and the background of most employees is non academic. Also, they have been hardly involved in any modelling activities and have little knowledge about this area. This was taken as a key decision criteria when defining the CSCCM approach. The consequence was, that a very easy modelling method had to be selected. Comparing different modelling methods and tools [1], [3], [6], [14], IDEF0 was selected as being most appropriate. IDEF0 [5], [11] allows the hierarchical decomposing of business processes down to the required level of detail. It identifies functions, related in- and outputs as well as steering information, so-called controls. Moreover, mechanisms like e.g. a device or the person carrying out the function can be identified. This simple meta model was considered as a major advantage of IDEF0, resulting in its easy learnability and limited functionality, thus enabling new users to quickly use the method on their own.
2.3 Development of the reference model In several research projects (SINA, BIDPREP, DECIDE, CSCCM), the authors analysed the bidding process of different industrial companies: BWM, ABB, Krüger AS, Guehring Automation, Thomson TSI, Baldauf, Cogemar, and Stadlbauer [2], [4], [7], [8], [9], [10]. It was identified that the bidding process of the different companies was very much the same when describing the main activities. Decomposing the process in activities and sub activities with the IDEF0 methodology, the first three levels showed rather similar activities. Even more: Some of the analyses were carried out in companies from the construction industry, while others examined companies in the manufacturing industry - and in all, bidding was done with an alike process. This similarity was the trigger for developing a reference model. The rationale for its development is the fact that reference models reduce the modelling effort and increase model quality by reusing experience from existing models [15].
Figure 1: Central diagram of the reference model for bid preparation in the construction industry The model was developed by discussing and synthesising the knowledge about the bidding process of the mentioned companies and transforming it into a graphical model. In a second step, the graphical representation was extended with textual description. In a third step, the model was validated for its correctness and usefulness by Swietelsky as a typical user of the reference model in the construction sector.
3 A reference model for bid preparation This chapter presents the reference model for bid preparation in the construction industry, its target groups and indications how the groups can use the model.
3.1 Target groups and usage The reference model has been developed for usage by all groups who deal with the bidding process in the construction industry. It can be used for three major objectives: • to reason about the existing process and to redesign it by following the provided examples • to specify an appropriate software system to be used for bid preparation • to evaluate existing software systems with respect to their usefulness for the bidding process Four major target groups and their typical usage of the reference model can be identified: Companies in the construction industry: They use the model for improving their bidding process. For them, the model serves as a reference for a well designed, systematic bidding process. They take the model as the starting point
for assessing their current processes, for identifying potential improvements and for defining new to-be processes. They can also evaluate the functionality of their current IT system concerning its appropriateness to provide holistic support for their bidding process. The model can be used by the management and by the operational technicians and workers. Consulting companies: Consulting companies use the model for a similar purpose as the construction companies described above. As external consultants, they support construction companies from outside and use the model for assessing their as-is processes and defining improved to-be processes. From their external perspective, they can compare the company situation with the model and suggest improvements. Also, when they are not too familiar with the bidding process, the model helps them to get acquainted with the single activities of this process. Software vendors: Companies who develop bidding software can assess their software for its completeness and appropriateness. They can identify which activities of the bidding process are supported by their software and where new functionalities have to be added for a holistic support. The model can be used in sales talks when the customer’s requirements for a bidding software are specified. Researchers and students: They can use the model for getting a deeper understanding of the bidding process. Cooperating with other partners about this domain, the model can serve as a common view on the bidding process and thus take the role of a communication means and common standard for definitions and activities. Also, it can be used for identifying areas for future research by identifying
aspects which are not sufficiently supported by IT, organisational or human approaches at the moment.
3.2 The reference model The reference model represents the bidding process in eight IDEF0 diagrams and textual descriptions. It names the main activities, and their typical inputs and outputs. Also, it lists software functions, which can be used to support the respective activities. Figure 1 shows the central diagram of the model. Table 1 lists all activities in a node tree.
3.3 Supporting means The reference model is intended for self-directed usage by small and medium construction companies. Since these are not familiar with business process reengineering, the model is accompanied with some supporting means, which aim to assist the companies in applying the model by providing knowledge about reengineering: • Change methodology: A description of 10 steps to perform the change from As-Is to To-Be • Selected methods and tools: An introduction into 22 methods and tools that can be used with the change methodology • IDEF0 introduction: A short overview about the method and some recommendations for its usage • Typical problems: A list with characteristic problems as stimulation for the analysis of own processes • General guidelines: Some basic best practice tips for improving business processes These materials and the reference model are available for public usage at the CSCCM World Wide We b site [12]
4 THE CSCCM SOFTWARE SYSTEM This section outlines the CSCCM software system which is currently under development and which provides specific support for bid preparation in supply chains in the construction industry. The CSCCM system is a modular system and designed especially towards the needs of SMEs. Figure 1 shows the overall architecture. The four major modules are explained in more detail below: Module 1: The Supervisor is responsible for capturing and assessing the customer inquiry and managing the bid projects. It provides an interface to the overall project data enabling easy and fast access to current project information and the re-use of existing solutions. Module 2: The Civil Work Modeller allows the project engineer to specify the product (or service) and to calculate its price. By selecting components from the company-specific product programme contained in the CSCCM database, a bill-of-material-and-labour is generated and a technical description of the components is automatically prepared for the Text Module. After the technical solution has been specified, its costs are calculated and a realistic
A0 Carry out construction work A1 Prepare bid A11 Capture and evaluate inquiry, plan bid prep. A111 Capture inquiry A112 Complete inquiry A113 Translate cust. requirem. in prod. model A114 Evaluate inquiry A115 Plan bid preparation A12 Draft technical solution A121 Identify similar solutions A122 Configure solution concept A123 Specify missing solution components A13 Calculate technical solution A131 Specify delivery conditions A132 Determine resource specific costs A133 Add overheads and surcharges A134 Fix price A14 Prepare bid document A141 Compile results into bid document A142 Write covering letter A143 Check and authorise bid A144 Send and present bid A15 Follow up bid A151 Archive bid A152 Check customer reaction A153 Negotiate contract A154 Document results of bid preparation A2 Handle order A3 Compare ‘to-be’ and ‘as-is’ A31 Compare bid and processed order A32 Analyse deviations A33 Feed back analysis and initiate actions
Table 1: Node tree of the reference model bid price is determined. The costs of components, including surcharges for transport, loss, packing, etc. are usually also contained in the product database or can be asked from the suppliers with the help of the Distributed Information Manager. Module 4: The Text Module supports the preparation of the final bid document and the creation of an attractive layout. It also provides overview lists with the data from the other modules (product lists, customer lists, prepared bids, etc.) and makes them available in the necessary formats. Module 5: The Distributed Information Manager (DIM) manages information and message exchange between the company and its suppliers. Its major purpose is to send electronic price requests to suppliers and to receive their electronic answer (i.e. their bid). It accesses the CSCCM databases to store or retrieve information which is provided or sent by Email. Figure 3 shows how the price
CSCCM Software System Architecture
MS Visual Basic
Supervisor
Civil Work Modeller
Capturing and assessing inquiries, managing and monitoring bids
Specifying technical solution (i.e. material, labour, services), calculating bid price
Text Module Preparing attractive bid document, printing lists (suppliers, products, bid statistics, etc.)
ActiveX function calls
Distributed Information Manager Sending, receiving and answering electronic inquiries
ODBC
Text blocks
Bid data
Customer data
Supplier data
Product data
MS Access / MS SQL Server
Figure 2: The CSCCM software system architecture request is prepared by selecting suitable suppliers for the components of a bid. The DIM is a central module in the CSCCM solution as it sets the pace to electronic commerce by supporting efficient and practical co-operation in the supply chain with simple means. Further, a downsized version of the CSCCM system (‘CSCCM light’) is available for companies who do not want to make use of the complete CSCCM system, but who want to participate in the supply chain by receiving or sending electronic bids and inquiries. The CSCCM software environment is completed with a multimedia based computer based training (CBT) package for educating the users (i.e. central user and supply chain) in employing the tools and new processes.
5 CONCLUSION The document has presented the CSCCM reference model for bid preparation and a corresponding software system. They can be used for reengineering small and medium enterprises in the construction industry by means of business process design and holistic computer support. Experience from the analysis of business processes at end user sites has shown, that there is still much potential for optimisation. On one hand, there are some activities which are not carried out systematically in many companies
at the moment. These are, e.g. filtering of inquiries for their likeliness to become an order, or the pursuing and systematic archiving of bids. On the other hand, it was identified that with most activities, it is mainly the ‘how’ that has to be changed and not the ‘what’, i.e. that the supporting means (especially information and communication technology) have to be improved. Major emphasis has to be given to the implementation of integrated software systems for supporting the bidding process in all phases and beyond and the effective integration of the supply chain for making e.g. price inquiries more effective. The problems and potential at end user sites were identified to be rather similar. Thus it can be expected that the developed reference model and software system is of significant help for the improvement of the bidding process. At the time of writing this paper, the project is about to finish the software development and starting to implement it at the industrial companies for usage and testing. Future findings and results will be made available on the CSCCM homepage on the World Wide Web [12].
Figure 3: Preparing a price request by selecting the suppliers who can provide a component by drag & drop. ‘COGEMAR’ is just about to be dropped as a potential supplier for a ‘table top’.
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