Product: HOUNDware Onsite
This is a summary of the case study. Please click here to read the entire case study.
Overview of the Solution
The total tools, equipment, construction consumables and personal protective equipment inventory on this project is catalogued in the HOUNDware Onsite database, which is located on the project intranet. Each item is identified by a barcode. Every construction worker has a unique ID badge.
A distribution centre operative, using a wireless handheld barcode scanner records each withdrawal or return from the project inventory.
The data is transferred through a wireless local area network to the central database in real-time, so that the history of every item and every worker is instantly available.
Numerous reports relating to such criteria as product, individual, construction trade, construction project zone, item price, overdue returns or low inventory level, can be automatically generated the database.
Construction organisations outsource the supply and management of plant, tools, equipment and construction consumables to AMECO, so that they can concentrate on their core business of building.
AMECO, delivers integrated equipment and tool solutions, to construction, mining, government and industrial markets in five operating regions - Canada, The USA., Mexico, The Caribbean and South America. Although focused on these regions, AMECO also support projects in other parts of the world such as Uzbekistan and The Philippines.
AMECO Canada, who are managing this project, have increased annual revenue from £225,000 in 1991 to £41 million in 2001. They are now one of the largest tool and equipment providers in Canada.
AMECO are responsible for the provision of fully maintained plant, tools, equipment and personal protective equipment (PPE) to the workforce on this project. Their scope of supply on this project ranges from marker pens, drill bits, welding kits, power drills, wrenches and safety glasses through to 125 different cranes of up to 300 tonnes in capacity.
The Project Overview
The £775 million Scotford Upgrader construction project is located beside Shell’s Scotford Refinery in Fort Saskatchewan, Alberta, Canada. The project involves the construction of a facility, which will convert 155,000 barrels day of bitumen, pumped from the Athabasca oil reserves 500 km away, into a range of premium, synthetic crude oils.
The project is part of a £2.4billion investment by the Athabasca Oil Sands Project partners Shell Canada Limited, Chevron Canada Resources Limited and Western Oil Sands Inc.
At the time of this study there were 8800 construction workers on-site.
- 780,000 Tools and Items
- £13.6m Inventory Value
- 8,800 Employees
The benefits generated by the use of HOUNDware Onsite on this project have been analysed with respect to the following 3 key business areas:
- The personnel manning the tool and equipment distribution centres.
- The construction team workforce and management.
- The central office and associated back-office functions.
Distribution Centre Personnel Benefits
35 AMECO personnel were working at the service windows of the 23 tool distribution centres.
If there are 21,000 dispatch and receipt transactions each day, then this means that each person is undertaking 600 transactions per day. (A unit time of 48 seconds per transaction, which corresponds with BSRIA observations.)
AMECO personnel stated that with a traditional paper- based record system, the recording of individual worker details and product details, combined with the collection of the required item, would take an average of 75 seconds.
To undertake 21,000 transactions per day, at a unit processing time of 75 seconds, would require 437 man-hours of effort. This equates to 54 people working an 8- hour day.
For the same level of service, the use of the Houndware Onsite system therefore generates a saving of (54-35) = 19 distribution centre personnel.
At an average hourly rate of £13 per hour, and assuming the distribution centres are operational 360 days per year, this is an annual saving of:
19 people x £13 per hour x 8 hours per day x 240 days per year = £474, 000
Several independent studies have concluded that error rates for data entry using barcodes are between 1 in 1 million and 1 in 3 million characters. In contrast, these studies have shown that manual data entry by humans has an error rate of 1 in 300 characters . It is evident that with over 7.5 million transactions taking place annually on this project, there are data integrity, as well as process speed, benefits of automatic identification and data capture. The AMECO team confirmed this.
Construction Team Workforce and Management Benefits
The time spent by a construction worker at the tool and equipment distribution centre is divided into two parts:
- Time spent in a queue waiting for their turn at the service window. During the site observations, the workers had an average of 1 person in front of them.
- The duration of their own transaction.
If there are 21,000 dispatch and receipt transactions each day, and 8800 construction workers on site, then this averages out at 2.4 withdrawal or deposit transactions, per individual, each day. During site observations, it was evident that this did not necessarily mean two visits to the distribution centre, so for the purpose of this analysis we will assume that each worker executed these transactions during a single visit.
Through the use of HOUNDware Onsite, unit transaction time has been reduced from 75 seconds to 48 seconds, when compared to traditional paperbased systems.
The time savings generated for a construction worker are therefore as follows:
- Waiting time saving = Duration of 2 transactions for the person in front in the queue = 2 x (75-48) = 54 seconds
- Own transaction time saving = Duration of their 2 transactions = 2 x (75-48) = 54 seconds
- Total time saving per visit = 108 seconds
Assuming a single visit to the distribution centre by each worker, per day, this would generate the following annual savings:
- 8800 construction workers x 1 distribution centre visit, per person, per day, x 240 days per year x 108 seconds time saving per visit/3600 x £15 per hour tradesman wage = £947,000
It is important to note that because HOUNDware Onsite enables accurate monitoring of peak consumption rates and stock levels of tools, equipment, construction consumables and personal protective equipment (PPE), it makes a significant contribution to ensuring that construction delays are not generating through the non-availability of specific items.
BSRIA research over the last 7 years has shown that on a typical construction project 1% of the average working day is lost due to delays associated with plant, tools and equipment not being available. For this construction project involving 8800 construction workers, this would equate to the following inefficiencies:
- 8800 people x 240 days per year x 8 hours per day x 1% = 168960 ineffective man-hours per year, waiting for plant, tools and equipment or
- 8800 people x 240 days per year x 8 hours per day £15 per hour x 1% = £2.5 million in ineffective man-hours costs per year, waiting for plant, tools and equipment.
A construction project is composed of a logical sequence of interrelated and interdependent site activities. It is also important to understand that in addition to affecting the installation productivity of individual workers, plant, tools and equipment delays also impact on the overall construction programme because delays prevent the timely completion of specific tasks.
It is well known that plant, tool and equipment loss on construction projects is a common problem. BSRIA knows of one UK specialist trade contractor, which has confirmed a stock loss of £250,000 during the 1999/2000 financial year, on an inventory estimated to be £8 million. The instant accountability generated by HOUNDware Onsite therefore provides a very strong return-on-investment argument when profit-inhibiting losses such as these are discussed.
Central Office and Associated Back-Office Function Benefits
AMECO staff stated that a distribution system of the magnitude running on this construction project could not be operated using a paper-based system.
They confirmed that the accountability that the system provides is crucial to preventing asset loss on the project. With an inventory of 728,000 items valued at £13.6 million this is an essential business driver for AMECO and the construction team that they serve.
Also, the ability to generate instant stock reports, as well as numerous other reports for their own use, for presentation to the ACJV consortia, or to the construction teams is crucial to their business.
The AMECO team also highlighted the massive savings in paper storage space that a digital asset management system generates.
If there are 780,000 items in stock and 3348 item types, then this means that the average stock level for each item is 217 units. We can examine a simple activity such as a quarterly stock take of this inventory: In contrast to the instant reporting of HOUNDware Onsite, it is predicted that a manual, quarterly stock-check of the 3348 different item types in the project inventory would take the following time:
3348 item types x 5 minutes average count and record per item type = 279 hours per stock-check
If these stock-check is undertaken 4 times per year this equates to a saving of: 4 stock-checks x 279 hours unit duration x £13 hourly wage = £14508
The AMECO team also stated that the use of the HOUNDware Onsite system allows them to transfer benefits on to future projects: They can accurately demonstrate to potential clients the volumes of plant, tools and equipment they will need to undertake projects, they can show patterns of tool use, they can negotiate for new work with authority and confidence, and they can populate new project databases extremely quickly.
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