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ASC Proceedings of the 41st Annual Conference
University of Cincinnati - Cincinnati, Ohio
April 6 - 9, 2005         
 
Automation in the Construction Industry for Creating Paperless Processes
 
Thomas White and Anoop Sattineni
Auburn University
Auburn, Alabama
  
Every construction project generates an enormous amount of data.  Not so long ago, all of this data was captured in paper format and physically stored in an accessible location.  Today some of this data is generated electronically while most of it is still in paper format.  A few organizations are taking advantage of emerging technologies and are using only electronic means to document information that is needed to run their day-to-day operations.  They are essentially running a “paperless office” with some exceptions.  This study inspects current practices in the use of paper in a business environment.  The motives for choosing to transform into a paperless office are examined.  Factors that accentuate and inhibit the creation of a paperless office are elaborated.  The security and privacy issues surrounding this idea are addressed.  The use of digital signatures to authenticate scanned documents is elaborated.  Current technologies that encourage the adoption of a paperless office are presented.  This manuscript shows how contractors can more efficiently track invoices in a paperless format.  The advantages, disadvantages and legal implications of a paperless office are addressed.  The implications of a paperless office to the construction industry as a whole are also examined.
 
Key Words:  Paperless Office, Invoice Tracking, Scanners, Electronic Document Interchange (EDI), Digital Signatures.
 
 
Introduction
 
Throughout the history of civilization, communication has existed in many forms.  Written communication has been expressed on cave walls, stone tablets, parchments, papyrus, paper, and of late, as 1s and 0s.  Each mode of this written communication has lasted through a variety of life spans, where the old system remained until people successfully adapted to a newer, modern system.  Papermaking was discovered and practiced in China as early as 105 AD.  It was not until 1500 AD when paper replaced papyrus and parchment in Europe when in a span of 50 years about nine million books were printed (Baensch 2003).  After observing the exponential growth of technology within the past few hundred years, one might conclude that transitioning from one system to another is taking less and less time.  With the advent of the computer, many experts have predicted over the past thirty some years that the need for paper as a medium of communication will significantly diminish or even disappear (Schelberg et al, 2000).  Some thought this would happen right away.  Others have predicted a steady decline in the use of paper.  They have all been partially correct.
 
The term, “paperless office”, appears to have originated in the early 1980s in conjunction with the development of personal computers (PC).  Perhaps the initial thoughts encountered by business professionals at that time were that the PC would revolutionize the methods by which business transactions would be handled, stored, filed, and retrieved.  The ultimate goal was to enable a virtually paperless office with no printing costs. 
 
The dramatic advances in technology for hardware, software, and connectivity have exploded the potential for the home office and satellite offices to communicate in a predominantly electronic environment.  However this metamorphosis comes at the cost of converting all systems in an organization, training staff and potentially even altering the company’s organizational structure.  In addition to the common-place infrastructure of networks, servers, broadband access, and desktop PCs that several companies already have in place, necessary hardware includes high-speed scanners and high-capacity storage devices.  The efficiency of this system also relies in part on the reliability and bandwidth of the Internet Service Provider (Eastern, 2003).  Broadband connectivity can be an expensive item since remote locations might require satellite based communications which cost significantly higher than traditional broadband solutions.
 
This manuscript describes the popular definitions for a paperless office.  Issues that hinder the creation off a paperless office and technologies that foster the creation of a paperless office are examined.  The authors describe ‘Invoice Tracking’ process in a construction firm which may be automated using a paperless office.  The costs of implementing a paperless office are examined.    Strategies ranging from off-the-shelf solutions and custom solutions for implementing a paperless office are presented.  The legal implications of adopting a paperless office are also discussed.  The authors also present their opinion of what to expect in the future with the regard to the impact of a paperless office to the construction industry. 
 
 
The Movement towards a Paperless Office
 
One definition is “a business environment where the transmission, storage, and retrieval of information are not done through the medium of paper… but rather through electronic data networks” (Katib, 2003).  Data can be transmitted in one of several ways: hand-carried, postal mail, express delivery, facsimile, e-mail, or web-based applications.  From either a financial or an efficiency standpoint, the first three methods are less than desirable.  However, technology has facilitated the electronic delivery of data utilizing the last three methods, and therefore increasing business efficiency.  The only two truly “paperless” methods are the use of e-mail or web-based applications, and then that is only true if the sender or receiver does not print out a copy for themselves.  Current technologies make it possible to realize instantaneous, reliable transmission of data.  However, it is the retrieval of data, and the translation of that data into useable information, that makes a paperless office system very attractive (Bielski, 2002).  Elaborate paper filing schemes are still cumbersome at best compared to the searchable and index-able electronic filing systems that are available today. 
 
The drive for the paperless office can be attributed to a desire to find a more efficient way of doing business, especially as it relates to processing information.  Construction companies continuously aim to improve processes to give clients a better product and use it as an advantage over their competitors.  The ‘paperless office’ is a concept used to improve certain processes in a construction company.  In this era of information technology, a document that requires several personnel to process it for various reasons can be easily converted to a paperless format.  In a paperless format the same document is converted into digital format initially and any number of annotations can be made on the digital document.  The document itself can be routed electronically using E-mail or a web-based application.  The benefits of the paperless process are further magnified if all the participants are physically in different geographic locations.
 
There are actual implementation costs associated with real-time transmission and sharing of data in a paperless environment.  The most important aspect for implementing a paperless office is that all participants have access to digital tools to interact with each other.  These tools include a computer for each participant, mechanisms for the participants to communicate with each other, such as digital memory for storing the electronic data, central file-servers, database servers, high speed scanners, e-mail and broadband connectivity.  Custom software or off-the-shelf solutions to co-ordinate the entire process will also be needed.  While these represent real costs, the actual costs could be quite less since several companies have most of the above mentioned technologies already in place.  There are costs associated with traditional paper based processes as well.  Apart from the cost of the paper itself, the costs of transmitting paper using quick delivery methods such as Fed-Ex, UPS etc., can also be significant.  Costs are associated with storing these paper documents and retrieving these documents should a need to do so arise.  Hence the start-up costs for creating paperless processes can be offset somewhat by using existing technologies and by eliminating purchase of paper and shipping costs (Ruben D).  In the long run however, the start-up costs could turn into an investment due to cost savings in shipping, paper and storage.
 
Along with efficiency and financial benefits, environmental concerns are also a strong driving factor for adopting a paperless office.  A Worldwatch Institute report claims that one fifth of the worlds’ harvested wood ends up in paper and that paper accounts for 40% of the solid waste in the United States (Abramovitz, 1999).  The Worldwatch Institute also claims that the pulp and paper industry is the fifth largest industrial consumer of energy.  As a responsible participant in the society, the construction industry as well as all others must take all measures to have minimal negative impact to the natural environment.  The use of less paper directly translates to less consumption of energy and less solid waste.
 
The deterrents towards a paperless office include issues such as high initial cost for conversion to digital data and security and privacy of the digital data.  Long time users of printed material are often found to be reluctant to switch to paperless processes, expressing a lack of confidence in new technologies (Katib, 2003).  Advances in printing and copying technologies encourage users towards printed material rather than digital data.  Tendencies to print digital data from E-Mail and the Internet are actually causes for increasing amounts of digital data to be printed (Sellen et al).
 
 
New Technologies Encouraging the Creation of Paperless Processes
 
Many construction companies have some technology already in place, such as computers with internet access, file storage servers, and E-mail.  Some of the features and costs of new technologies to implement a paperless office are presented here.  These technologies include Electronic Data Interchange (EDI), document imaging systems, digital signatures and expanding data storage capabilities.
 
Electronic Data Interchange
 
A recently published study by the National Institute of Standards and Technology finds that building owners, operators, and their allies could save at least $15.8 billion a year through better coordination of electronic data (Gallaher et al).  The report also states that a number of factors were not included in the analysis and therefore this estimate is considered to be quite conservative.  Project management software in the last decade or so has gone from hand-written notes on paper to super-sized servers that store and mine data and use the Internet to facilitate communications (Dubernails, 2001).  In a survey conducted in 2003 by Constructech magazine of over 100 contractors, 86% of the respondents considered project management software as significantly important over other software (Guinta, 2003).  
 
Figure 1: Data Exchange in a non-integrated distributed enterprise.
 
Advances in the area of project management solutions such as web-based systems have helped companies reduce project durations and hence allowing companies to be more profitable. However these solutions have also created some redundant activities.  These activities are typically filled with human error and missing information. Many companies are now struggling with the problem of having to enter the same information into three or four databases.  Integrated systems will free the accounting department from time consuming, redundant data entry (Rakow, Aug. 2002).  The accounting department would no longer be burdened by requests for cost reports and processing invoices.  All of these advantages would lead an organization to have a competitive advantage over their peers (Sattineni, 2004).  The need for an easy mechanism to exchange data is shown in Figure 1.  This figure above shows the exchange of information in a non-integrated distributed enterprise.  Any document that is generated by a vendor is sent to the corporate or regional office and then to the project manager for that document to be processed.  The action taken is then reported back and entered into the company’s database in the corporate office.  This process requires a high amount of resources in terms of man hours, shipping costs and multiple entries into multiple databases.  
 
The healthcare industry is an example of industry process integration. The Administrative Simplification provisions of the Health Insurance Portability and Accountability Act (HIPAA) of 1996 require the Secretary of Health and Human Services (HHS) to adopt standards for electronic, health care transactions.  As of October 2003, all large firms (more than 25 employees) in the healthcare industry are required to send all claims electronically and confirming to the HIPAA format (Centers for Medicare and Medicaid Services, 2004).  The International Alliance for Interoperability (IAI) and the Associated General Contractors of America (AGC) are currently partnering for the creation of industry standards for project management software.  Implementation of this system will mean that accounting, estimating, scheduling and project management software can share data electronically without having to re-key the information several times.
 
 
Document Imaging Technologies
 
Several high speed scanners were researched and an analysis of the scanners found is presented in Tables 1 and 2. The minimum, maximum and average prices are presented in Table 1. These scanners are also categorized by the maximum page size, number of scanners found for each size and the number of scanners that scan color pages and the number that scan only black and white pages. It is worthwhile to note that the average price of a scanner increases by about 53% as the page size increases from 8.5” x 14” to 11” x 17” and by about 410% as the scan page size increases from 11” x 17” to 12” x 30”.
 
Table 1:
 Price Comparison of scanners categorized by scan page size
Scan
Size in Inches
Minimum
Price
Maximum
Price
Average
Price
Total Number of Scanners
Number of Color Scanners
Number of
Black & White Scanners
8.5 x 14 *
 $   632.00
 $  6,127.00
 $  2,542.00
12
11
1
11 x 17 *
 $1,649.00
 $19,525.00
$ 3,843 .00
35
20
15
12 x 30 †
 $6,399.00
 $40,199.00
 $19,516.00
11
7
4
Notes:
*       Actual scan sizes may vary by an inch.
†      The 12 x 30 size includes 12 x 26 and 12 x 34.
Source: Each individual scanner was found on the respective company web-site. The companies that were looked at include Bell & Howell, Kodak, Cannon, Panasonic, Visioneer, Richo and Fujitsu.
 
Table 2:
 Comparison of number of pages scanned per minute organized by scan page size
Scan
Size
Minimum
Pages per Minute
Maximum
Pages per Minute
Average
Pages per Minute
Total Number of Scanners
Number of Color Scanners
Number of Scanners
Black & White
8.5 x 14 *
20
70
37.17
12
11
1
11 x 17 *
25
100
59.80
35
20
15
12 x 30 †
90
250
178.18
11
7
4
Notes:
*       Actual scan sizes may vary by an inch.
†      The 12 x 30 size includes 12 x 26 and 12 x 34.
Source: Each individual scanner was found on the respective company web-site. The companies that were looked at include Bell & Howell, Kodak, Cannon, Panasonic, Visioneer, Richo and Fujitsu.
 
The data presented in Table 2 seems to indicate that the average number of pages scanned increases by the size of the page scanned. By considering this data presented in Tables 1 and 2 it may be concluded that the price of scanners, maximum size of page scanned and the number of pages scanned per minute increase together.
 
 
Expanding Data Storage Capabilities
 
Memory is cheap compared to five years ago. While the processor speed of computing has followed Moore’s Law, the cost of computing has not changed significantly over the last few years other than to perhaps go down slightly. A direct comparison between digital storage and physical storage would obviously prove more initial costs for the digital data. However, rental space and the life of this digital data must also be considered.  The rental costs exist as long as there is information to be stored, which is to say it will always exist.  Since the cost of digital memory is a one time cost, the return on investment for digital memory will always be higher.
 
At the present time there are two new technologies on the horizon used for data storage management worth watching. The first is Storage Resource Management (SMR).  SMR tools, currently available in early rollouts, keep a bird’s eye view of capacity on the network and allocate more capacity as needed.  If the SRM software sees more storage is needed by applications, it will locate and allocate some unused capacity. Storage network management (SNM) tools create a map of all the devices on the storage network and monitor for errors, such as network or server failure, automating a manual process. Storage virtualization software acts as the Adobe Postscript for storage – it fools a variety of proprietary devices into thinking alike, thus vastly increasing interoperability among storage devices (Hildebrand, 2002). SMR tools are proving their worth in the field and providing a quick payback by finding unused storage on current networks thereby reducing the need to purchase new hardware for storage.  Out dated documents can be deleted with time and hence would mean that a company would not have to continuously expand its digital storage capabilities. These technologies work to reduce the cost of ownership associated with data storage hardware thereby making it more feasible to move towards a paperless office. 
 
Digital Signatures
 
Decision-makers must ask themselves, ‘What would they do if a paperless infrastructure were to be rendered useless by acts of hacking?’, or, ‘What liabilities would arise if privacy of communication were completely compromised?’  User trust in the adoption of new technology is a critical issue.  Security could be the single largest issue apart from cost that would make or break the adoption of a paperless office.  The Millennium Digital Commerce Act, part of the Government Paperwork Elimination Act of 1998, which was signed into law by President Clinton, mandates that U.S. agencies accept forms signed with digital signatures.  Under a broad definition, the new bill would make commercial contract signed with electronic signatures legally binding (Macavinta, 1999).  Digital signatures may be used to transmit authenticated information between any two participants but also to secure electronic data.  A digital signature is an electronic signature that can be used to authenticate the identity of the sender of a message and possibly to ensure that the contents have not been tampered.
 
Digital Signatures are used to transform electronic data into seemingly unintelligible format and back again.  The creator of the document has what is called a ‘Private Key’ which is used to signing the document and transforming the data into unintelligible format. This is done by the document creator.  The receivers of the document have a ‘Public Key’ for verifying the signature of the document and transforming it back to its original form.  Any modifications to the document are automatically time stamped.  In a construction company a contract or a sub-contract after being executed by the relevant parties may be scanned and digitally signed.  The electronic document would then replace the paper document.  According to the American Bar Association, the likelihood of malfunction or security problems with digital signatures is far less remote compared to traditional paper based documents (ABA, 1996).
 
 
Invoice Routing in a Construction Company
 
Every construction project generates tremendous number of invoices from vendors that supply materials.  While these materials are received on the job site, the vendors are paid by the accounting department in the home office.  If the vendor is doing business with the construction company on more than one job or location at a time, the vendor would likely send the invoice to the home-office.  Prior to the payment of these invoices, the project manager has to approve the invoice and cost-code it for accounting purposes.  If the invoices are not transmitted to the project manager in an electronic format, they would have to be physically mailed to the project manager for the approval process.  The accounting department would be able to pay the vendor after receiving the invoice back from the project manager.  This process consumes precious time and is expensive due to shipping costs and the employee time needed to sort out each invoice and mail it to the appropriate person.  Vendors would undoubtedly be thrilled to have shorter turn-around time for the payment of invoices and would likely favor to do more future business with such companies.  Consider the flowchart shown in figure 2.  Once an invoice is sent to the accounting department, the accounting department is responsible for making a copy and sending it to the project manager.  If the project manager is in a different geographic location, the document has to be shipped to the project manager.  The project manager then has to verify the information, apply correct cost-codes on the invoice, enter that information into a job-site database or spreadsheet and ship it back to the home-office.  Apart from taking up three to four days at a minimum for processing this information, the invoices and all copies of it now have to be stored.  This paperwork is typically stored for five to ten years depending on company policies and is a cause for expensive storage space.  If an invoice is needed after the document has been stored, accessing it could be a problem.  If the document is stored in an off-site location, it would require an employee’s time to go to the storage location and search for the document which may or may not be indexed in storage.  Accessing scanned documents electronically is extremely sophisticated yet simple. 
 
Figure 2: Invoice routing process without the use of electronic data
 
In a paperless environment, several invoices would get scanned in batches at one time, using high-speed scanners.  After the invoices are scanned in batches a clerk will open a batch and pull up each invoice, one at a time, and enter some basic information.  This includes purchase order number, vendor number, job number, amount, invoice date and due date.  Once the invoice is entered, it will be routed to the person responsible for approving the invoice based on the job number via a centrally maintained database.  The mechanism of maintaining the central database can be accomplished using an off-the-shelf solution or by creating a custom solution.  The project manager could be electronically notified of the latest invoice and he/she will verify the information further by keying in the correct cost-code.  The accounting department can process the payment as soon as the information is verified.  Unlike the process described in figure 2, an invoice could be processed electronically the same day it is received.  It is also done by using the least amount of paper, without shipping costs.  The original invoice paper may be shredded and recycled since it is already stored in a digital format. Documents can be later searched based on date ranges or specific text within the document or other search criteria.
 
Commercially available software products are difficult to adopt for this process as they may not be compatible with the accounting or other software.  Instead of a central database electronic invoices may be routed using an existing e-mail system as well.  Using E-mail to route invoices electronically cuts down on the amount of time to process the invoice and storage of the physical document, while ensuring that the vendors get paid in a timely fashion.  However using e-mail to do this might create a situation where information has to be re-keyed more than once.  In the near future, EDI may play a critical role in this area by requiring information to be keyed in only once.  An industry wide standard for the format of common electronic documents is currently not in place in the construction.
 
 
Conclusions
 
A major deterrent to the creation of a paperless process in the industry is the need for re-keying the information in several different software programs.  This is due to the lack of interoperability within construction software programs.  Developing technologies such as a common EDI format will make a tremendous difference in the creation of paperless processes in the construction industry.  Document scanners can scan several sizes of papers at an extremely fast speed.  The cost of storing these electronic documents is reducing continuously due to inexpensive prices for digital memory.  Security concerns for digital documents are not an issue any more with the presence of digital signatures and other commercially available software.  The government is pushing private industries to adopt more paperless processes.  The construction industry may never be completely paperless but is definitely moving in the direction of the using less and less paper.  An example of that is the automation of the ‘Invoice Tracking’ process.  An electronic way of doing this process saves time and money for the contractors and vendors.  Several such processes can be automated to a paperless format in the construction industry. 
 
The idea of the paperless office promises many attractive benefits including accessibility, advanced data manipulation, and real-time project management potential for construction companies. The construction industry is uniquely positioned to take advantage of a paperless environment. The number of papers generated is rather large on a job-site in a period of one to two years on a typical commercial construction project. The culture to adopt new technologies evolves rather slowly in any industry and more so when security issues are a concern.  Other industries have successfully switched over to paperless processes and the construction industry will eventually do the same.  Future generations will benefit with a better natural environment due to the adoption of paperless processes.
 
 
References
 
Abramovitz J. N., Mattoon A.T. (December, 1999) Paper Cuts: Recovering the Paper Landscape [WWW document] http://www.worldwatch.org/pubs/paper/149/
 
American Bar Association (ABA) (1996) Digital Signature Guidelines Tutorial [WWW document] http://www.abanet.org/scitech/ec/isc/dsg-tutorial.html
 
Bielski, L.  (June, 2002).  So, what ever happened to the paperless office? ABA Banking Journal, June 2002, 94 (6), 57.
 
Baensch, R.  E.  (September, 2003).  The Transition from Papyrus, Parchment, Paper to Pixels [WWW document] URL http://www.ishss.uva.nl/Lectures/symp3Baensch.pdf
 
Centers for Medicare and Medicaid Services (December, 2004). Electronic Data Interchange. [WWW document] URL http://www.cms.hhs.gov/providers/edi/default.asp
 
 
Eastern, R.  (May, 2003).  Can construction sites go paperless?  Constructech [WWW document].  URL http://www.constructech.com/print/article.asp?ARTICLE_ID=367
 
Gallaher M., O’Connor A., Detterban J. and Gilday L. Cost Analysis of Inadequate Interoperability in the U.S Capital Facilities Industry. [WWW document]. URL http://www.bfrl.nist.gov/oae/publications/gcrs/04867.pdf
 
Guinta L (July, 2003). Technology’s Hottest.  [WWW document]. URL http://www.constructech.com/printresources/v6n7/2003v6n7.asp
 
Katib, H.A.  (May, 2003).  Factors impacting the realization of the paperless office.  Published doctoral dissertation, George Washington University, District of Columbia.
 
Macavinta C (March, 1999) Pennsylvania seeks to legalize digital ID. [WWW document] http://news.com.com/2100-1023-223281.html?legacy=cnet
 
Rakow, B.  (August 2002).  The Importance of Integration[WWW document]. URL http://www.constructech.com/printresources/v5n8/2002v5n8.asp
 
Ruben, D. Reduce Paper Use in Your Organization: How to Save Money, Time, and Trees.  [WWW document] http://www.healthynh.com/nhha/state_law/environment/he_reducepaperuse.php
 
Sattineni A, The Use of Extensible Markup Language (XML) in Creating Interoperable Construction Software Applications, Associated Schools of Construction, Annual Proceedings 2004.
 
Sellen A. J., Harper R. (2003) The myth of the paperless Office, MIT Press.
 
Schelberg N., Weinstein S., and Bitman C.  (July/August 2000).  Paperless Benefit Plan AdministrationCompensation & Benefits Review 2000, 32, 58-64