-
- Automation in the Construction
Industry for Creating Paperless Processes
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- Thomas White and Anoop Sattineni
- Auburn University
- Auburn, Alabama
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-
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.
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Key Words:
Paperless Office, Invoice Tracking, Scanners,
Electronic Document Interchange (EDI), Digital Signatures.
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-
- Introduction
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- 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.
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- 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.
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- 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.
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- 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.
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- The Movement towards a Paperless Office
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- 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.
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- 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.
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- 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.
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- 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.
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- 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).
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- New Technologies Encouraging the Creation of Paperless Processes
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- 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.
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- 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).
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- Figure 1: Data Exchange
in a non-integrated distributed enterprise.
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- 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.
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- 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.
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- Document Imaging Technologies
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- 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”.
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- 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.
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- Expanding Data Storage Capabilities
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- 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.
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- 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.
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- Digital Signatures
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- 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.
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- 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).
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- Invoice Routing in a Construction Company
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- 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.
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- Figure 2: Invoice
routing process without the use of electronic data
|
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- 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.
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- 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.
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-
- Conclusions
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- 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.
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-
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-
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-
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