Integrating information technology in the construction industry

INTERNATIONAL JOURNAL OF

PROJECT MANAGEMENT International Journal of Project Management 25 (2007) 115–120 www.elsevier.com/locate/ijproman

Integrating information technology in the construction industry: Technology readiness assessment of Malaysian contractors Mastura Jaafar a

a,* ,

Abdul Rashid Abdul Aziz

a,1

, T. Ramayah

b,2

, Basri Saad

a,3

School of Housing Building and Planning, Universiti Sains Malaysia, Penang, Malaysia b School of Management, Universiti Sains Malaysia, Penang, Malaysia

Abstract Innovation with emphasis on information technology (IT) is becoming a major issue in the construction industry worldwide. As a result of new technological advances, all businesses including those in the construction industry are on the thresholds of a major revolution [Arslan G, Tuncan M, Birgonul MT, Dikmen. E-Bidding proposal preparation system for construction projects. Build Environ 2005. Available from: www.elsevier.com/locate/buildenv]. In line with the aspiration to be industrialised by the year 2020, the Malaysian government has been strongly pushing for the Malaysian construction industry to enhance the use of IT. Technology readiness index (TRI) which measures people’s propensity to embrace and use technologies for accomplishing goals in home life and at work was developed by Parasuraman [Parasuraman A. Technology readiness index (TRI): a multiple-item scale to measure readiness to embrace new technologies. J Serv Res 2000;2(4):307–20]. We adopted this measure to assess the readiness of construction firm managers in terms of technology. The overall TRI score (mean = 3.18, SD = 0.23) of the surveyed managers suggests that they were moderate in terms of their technology readiness. Furthermore bigger firms were found to be more optimistic compared to smaller firms but with no significant difference in the overall TRI. The research findings are discussed in relation to the IT changes that the Malaysian government is trying to impose on the nation and the construction industry. Ó 2006 Elsevier Ltd and IPMA. All rights reserved. Keywords: Technology readiness; Information technology; Malaysian contractors and firm managers

1. Introduction The Malaysian government has been pushing everyone – businesses, public agencies and even individuals – to adopt IT as part of a larger objective to achieve the developed country status by the year 2020. The Ministry of Finance for example introduced the electronic Procurement System (eP) intended for all its suppliers. The Construction Industry Development Board (CIDB) implemented the E-Construction Portal and is currently working on E-tendering.

*

Corresponding author. Tel.: +6 4 6532827; fax: +6 4 6576523. E-mail addresses: [email protected] (M. Jaafar), [email protected] (A.R. Abdul Aziz), [email protected] (T. Ramayah), Basrisaad@ yahoo.com (B. Saad). 1 Tel.: +6 4 6532816; fax: +6 4 6576523. 2 Tel.: +6 4 6532827; fax: +6 4 6573889. 3 Tel.: +6 4 6532827; fax: +6 4 6576523. 0263-7863/$30.00 Ó 2006 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2006.09.003

In line with these developments, an exploratory assessment was conducted on the technology-readiness of managers of contracting firms in the Malaysian construction industry. The technology-readiness construct refers to ‘‘people’s propensity to embrace and use new technology for accomplishing goals in home life and at work’’ [19]. It measures an overall state of mind resulting from a combination of mental enablers and inhibitors to determine a person’s preference to use new technologies. Positive and negative feelings about technology may coexist. Moreover, the relative dominance of the two types of feelings is likely to vary across individuals. Using the technology readiness index (TRI), this study sought to find the answers to the following questions: What is the technology readiness level of Malaysian contractors? Does technology readiness level differ by firm size?

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The present study replicated the one done by Ramayah et al. [21] on Malaysian small and medium enterprises (SMEs) in public business, manufacturing and agriculture. This paper is structured as follows. After the methodology section, it deliberates on IT before dwelling further on the TRI. Before concluding, the paper dwells on the research findings.

Table 2 Cronbach a for the measures

Optimism Innovativeness Discomfort

Number of items

Cronbach a

Sample items

10

0.75

7

0.70

10

0.63

9

0.72

36

0.63

Technology gives people more control over their daily lives Other people come to you for advice on new technologies Sometimes, you think that technology systems are not designed for use by ordinary people You do not consider it safe giving out a credit card number over a computer A combination of all of the above

2. Methodology This study collected data through mail from managers of contracting firms in the Northern Region of Peninsular Malaysia using a convenience sampling. Four hundred contracting firms registered with the CIDB were chosen as the sample. Table 1 shows the various CIDB grades and the adopted size categorisation for the present study [10]. The survey was conducted from December 2004 to February 2005. The managers were chosen as the respondent because they are the most important person in the company who will determine the level of technology usage [23]. The items to measure technology readiness was adopted from the US National Technology Readiness Survey (NTRS) which was intended to understand technologyrelated attitudes and behaviours of the client’s companies’ customers namely to look into customers’ receptivity to and use of various technology-based services [19]. Technology readiness consist of four components: optimism, innovativeness, discomfort and insecurity. There are a total of 36 items that assesses the respondents’ attitudes and behaviors towards the four components. A TRI for each respondent is obtained by averaging the scores of the means of the four components (after reverse coding the scores on the discomfort and insecurity components). The Cronbach a obtained for the measures are presented in Table 2. According to Sekaran [24], a figure of Cronbach a near to 1 shows higher internal consistency. The table shows that the a values for all four components of TRI were more than 0.6 which were acceptable. Table 2 shows a Cronbach a for the variables.

Table 1 Contractors’ classification according to total paid up capital, adapted from CIDB Registration grade (CIDB)

Minimum paid up capital (RM)

Minimum project price (RM)

Contractors category (size)

G1 G2 G3 G4 G5 G6 G7

5000.00 25,000.00 50,000.00 150,000.00 250,000.00 500,000.00 750,000.00

Not more Not more Not more Not more Not more Not more No limit

Small Small Small Medium Medium Medium Large

than than than than than than

200,000.00 500,000.00 1,000,000.00 3,000,000.00 5,000,000.00 10,000,000.00

Insecurity

TRI

3. IT application in the construction industry The benefits of using IT in the construction industry has been suggested by a few researchers [3,11,16,2]: 1. It can bring faster cycle and response time. 2. Business that has applied IT experienced significant gains in productivity and commensurate competitive advantage. 3. For some firms, IT has enabled expansion into new markets, and positioned them to compete internationally. 4. Sharing up-to-date information between projects teams can lead to minimising errors, reduction in time delays and breaking the widespread rework cycle. 5. It is important for the contractor’s success, i.e. completing project with the highest possible profit. IT can be applied in various ways in the construction industry. Already the Internet has been a major catalyst for change [22]. Internet-based tools have been used for tendering of services, awarding of contracts, monitoring of project and purchasing of products. The internet, however, requires the need for construction sector to change its traditional working practices in order to achieve competitive advantage. Arslan et al. [2] regard E-bidding as necessary for the US contracting firms in order to increase their market share and chance of surviving in the construction industry’s competitive business environment. In order to complete a project with the highest profit, they see IT as important in linking the main contractor with their sub contractors. Main contractors can adopt the same procedure adopted by their client in dealing with their sub-contractors. Basu [4] stresses the value of IT on construction project management. However, various assessment studies found that the application of IT in the construction industry was not very encouraging. In Malaysia, while a study by Lim et al. [13] found that the participating contractors had access to the Internet which was comparable to developed countries such as the United States, Karim and Marosszeky [11],


however, noted that consulting firms in South East Asia (including Malaysia) were still not using IT intensively compared to Australian firms, which says much when the situation in Australia was revealed by other scholars. A case study conducted by Steward et al. [26] involving a large multi-national construction organisation in Australia found it to be slow in embracing innovative IT/IS applications such as e-commerce, e-conferencing, intranets and internet. In general, they concluded that Australia’s construction industry still lagged considerably behind other industries in achieving comparable rates of IT implementation [25]. Ruikar et al.’s [22] application of the VERDICT model (an e-readiness assessment application to construction companies) on 10 construction company in UK found that they exhibit high level of e-readiness in the technology in comparison to the people, process and management dimensions. Technology refers to tools and infrastructure to support the business function; people refers to adequate skills, understanding of and belief in the technology; process is to enable and support the successful adoption of the technology and management specifically refers to the somebody or group of people that believes in the technology and take strategic measures to drives its adoption. Their study concluded that the practice of e-commerce is still not common within the industry. Various explanations have been given for the relatively low application of IT by the construction industry in comparison to others. Li et al. [12] pointed to two critical factors on why the industry cannot attain benefits from IT, firstly, organisation hierarchical structures which are ineffective and inefficient and do not support IT implementation, and secondly, IT have been implemented in an ad hoc manner. Most IT application is brought into the industry without planning and evaluation [14]. As such most of the impact has been allowed to just happen. It is not surprising that the full potential of IT to the organisational performance is seldom reached [15]. According to Steward and Mohamed [25], fragmentation is one of the barriers to the strategic use of IT. Similarly Arslan et al. [2] saw the multi-disciplinary, multi-national and multi-billion economies involving many actors working concurrently at different locations and using heterogeneous technologies as a barrier to adapt technology. Construction project teams with their own unique entities, created through a complex integration of factors, with interdisciplinary players, varying roles, responsibilities, goals and objectives have been noted by Goodman and Chinowsky [8]. Information produced by many sources, at many levels of abstraction and detail, also contributes to industry fragmentation [7]. A number of integration approaches and strategies for examples concurrent engineering, lean production, design and construct and many others which have been successfully applied in other industries have been put forward [16], but according to Mokhtar and Bedard [18], these approaches have been proven to be inadequate to cope with the increasing complexity of construction projects,

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without the support of IT. This is because most of these approaches try to focus on elements linked to time, quality and cost but researcher has found that 85% of commonly associated problems are process related, and not product related [16]. Hence, IT should be considered as a very important tool to enhance the industry performance. 3.1. Technology readiness index (TRI) With focus on the two links of technology-employee and technology-customer, Parasuraman and Rockbridge Associates developed the TRI to understand technology-related attitudes and behaviors of the client companies’ customers. TRI is a multiple-item scale to assess people’s readiness to interact with technology. Technology-readiness construct refers to people’s propensity to embrace and use new technologies for accomplishing goals in home life and at work. The construct is an overall state of mind resulting from a combination of mental enablers or drivers and inhibitors that collectively determine a person’s predisposition to use new technologies [19]. Parasuraman [19] also suggested that people could be arranged along a hypothetical technology-beliefs continuum anchored by strongly positive at one end and strongly negative at the other. The position on this continuum can be correlated with the people’s propensity to embrace and employ technology, thus technology readiness. There are four dimensions of technology readiness: optimism, discomfort, innovativeness and insecurity. ‘Optimism’ refers to a positive view of technology and a belief that it offers people increased control, flexibility and efficiency in their lives. ‘Discomfort’ refers to a perceived lack of control over technology and a feeling of being overwhelmed by it. ‘Innovativeness’ refers to a tendency to be a technology pioneer and thought leader, while ‘insecurity’ refers to the distrust of technology and skepticism about its ability to work properly. The optimism and innovativeness dimensions are drivers of technology readiness whereas discomfort and insecurity are inhibitors. Respondents with high, medium and low scores on each of these dimensions differ significantly in terms of their use of high-technology products and services. Table 3 shows the characteristics of technology segments.

Table 3 Characteristics of technology segments Technology segments

Optimism

Innovativeness

Discomfort

Insecurity

Explorers Pioneers Skeptics Paranoids Laggards

High High Low High Low

High High Low Low Low

Low High Low High High

Low High Low High High

Source: aman.

http://www.arl.org/libqual/events/oct2000msq/slides/parasur-

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In general, people with ‘‘high’’ TRI believe in the benefits of technology, feel they are in control of it, are thought leaders and have confidence in the security of using technologies like the Internet. Parasuraman [19] also stated that the four dimensions are proven reliable (with high a values) and are good predictors of technologyrelated behavior. Companies can use TRI to gain an in-depth understanding of their customers (both internal and external) to embrace technology, especially computer/Internet-based technology. Internal customers namely employees’ technology readiness is important for making the right choices in terms of designing, implementing and managing employee-technology link in the pyramid model. Employees who rate high on both interpersonal skills and technology readiness are likely to be much more effective in tech-support roles than are employees who are efficient on either criterion. As such, the TRI can serve as a supplementary screening device, along with traditional peopleskills assessments, in selecting personnel for tech-support positions [19]. In the Malaysian context, technology readiness assessment was done by Ramayah et al. [21] on owner/managers of SMEs and found that owner/managers were neutral (i.e. overall TRI score of 3.03) which indicates that they were

Table 4 Profile of managers Descriptions

Frequency

Percentage

Gender Male Female

82 14

85.4 14.6

Academic qualification Secondary school Diploma Degree Post degree

27 25 37 7

28.2 26 38.5 7.3

Age 40

24 39 33

25 40.6 34.4

Personal computer at home Yes No

86 10

89.6 10.4

Years of using computer 5 years

2 3 7 5 8 71

2.1 3.1 7.3 5.2 8.3 74

Years of using internet 5 years

11 10 10 13 14 38

11.5 10.4 10.4 13.5 14.6 39.6

not ready for technology. They further found that although owners/managers exhibited high level of innovativeness and optimism, they also experienced considerable discomfort and insecurity. 4. Findings A total of 400 questionnaires were sent out and a total of 96 questionnaires were received giving a response rate of 24%. The data were analysed using statistical packages for the social science (SPSS) version 11.5 software. 4.1. Respondents’ profile Table 4 shows the profile of responding managers. The majority were male with at least a diploma education. Most were above 30 years old and had a personal computer at home. The majority had been using computers for more than 5 years and internet for more than 2 years. 4.2. Firms’ profile Table 5 shows the frequency of responding companies by size. Table 6 shows the descriptive analysis for the main variables. Pearson correlation test has been used to test the intercorrelation for the main variables. The result is as shown in Table 7. Table 5 Firm size Firm sizes

Large

Medium

Small

Frequency Percentage

33 34.4

28 29.2

35 36.4

Table 6 Descriptive for the main variables Variables

Mean

Standard deviation

Optimism Innovativeness Discomfort Insecurity TRI

4.11 3.51 2.56 2.46 3.18

0.41 0.47 0.47 0.55 0.23

Table 7 Intercorrelations for the main variables Variables Optimism Innovativeness Discomfort Insecurity TRI **

p < 0.01.

Optimism 1 0.490** 0.193 0.177 0.513**

Innovativeness 1 0.160 0.284** 0.413**

Discomfort

1 0.286** 0.481**

Insecurity

TRI

1 0.548**

1

M. Jaafar et al. / International Journal of Project Management 25 (2007) 115–120 Table 8 One-way ANOVA by firm size

Optimism Innovativeness Discomfort Insecurity TRI *

Small (mean)

Medium (mean)

Large (mean)

F value

3.97 3.42 2.47 2.52 3.12

4.16 3.53 2.69 2.45 3.23

4.23 3.57 2.54 2.41 3.21

3.896* 0.867 1.871 0.362 2.162

p < 0.05.

Table 8 shows the result of a one-way ANOVA by firm size. This test was used to check whether there were differences in the individual dimensions and overall TRI score based on firm size. 5. Discussion A comparison of present data with a previous study on SMEs in public business, manufacturing and agriculture in Malaysia [21] provides a useful way to start the discussion. We found that participating managers of construction firms had higher mean scores for optimism and innovativeness and lower mean score for discomfort and insecurity. The higher score on optimism (mean = 4.11) compared to innovativeness (mean = 3.51) shows that the respondents have a positive view of technology which related to the IT advantage in terms of efficiency in their work; while they are not really keen to be a technology pioneer. Furthermore, they recorded higher scores for TRI (mean = 3.18) compared to the Ramayah et al.’s [21] (mean = 3.03, SD = 0.26). Since almost 66% of the respondents were from small and medium size contracting firms, we can conclude that, if results are reflective of the entire industry, then the Malaysian construction industry actually does not lag behind other industries in achieving comparable rates of IT implementation. The respondents’ profile gives possible insights into the why the finding is as such. The majority (i.e. 71.8%) possessed formal qualification above the diploma level. 89.6% of them had computers at home, 74% had been computers for more than 5 years and 39.6% had been exposed to the internet for more than 5 years (remarkable considering that internet was only introduced in Malaysia in the late 1990s’). All these can be related to the higher TRI score of the surveyed construction managers. The result bodes well for the Malaysian Construction Industry Development Board’s attempts to get the industry to become IT-intensive. In September 2000, CIDB launched its own E-construction Portal which provides the construction community with services such as Construction Industry Directory, E-Commerce, On-line Bidding, Shared Resources and Research and Development (R&D) [17]. Recently, the National e-Tendering System was introduced to develop greater corporate governance in the public construction tendering process, both at

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the federal and state levels. It covers tendering information system management, specific tender distribution and the selection of services for all types of construction work, be they new construction, renovation or maintenance. To coincide with the 9th Malaysia Plan (i.e. a five-year national economic plan for 2006–2010), all tenders from government projects amounting to RM186 billion will be advertised through the Internet. E-tendering will be implemented phase by phase, from advertising of tender documents, bid submissions, evaluating bids to awarding of contracts. According to CIDB’s E-Construct Services Sdn Bhd, the first phase of E-tendering whereby all tender for government projects can be viewed through the Internet has just started. The second phase will be implemented end of 2006 will allow for the uploading of Bill of quantities and drawings. The full Etendering system is expected to be fully implemented by the end of 2007. In fact a year before CIDB started with E-construction Portal, the Finance Ministry had already implemented an electronic Procurement System (eP) in 1999. eP allows for transactions between government agencies and suppliers of goods and services to be conducted [6]. eP currently has 95,000 registered suppliers and a total of 583,835 transactions worth RM16.8 billion were conducted through electronic fund transfers in 2004 [27]. Both the National E-tendering and eP are expected to shift the entire construction procurement supply chain to an electronic or digital medium in the hope of increasing speed, transparency, efficiently and ultimately profit for all players in the industry. The success of both these initiatives, however, depends on the willingness of the industry to change, which according to this study exists. It can be argued that, in order to stay competitive, contractors need to keep abreast with these changes. Otherwise they stand a strong chance of being precluded from public contracts. Indeed, a previous survey on the use internet in the Malaysian construction industry found that the majority of the respondents agreed that it was important to their organisations [13]. Even though limited to e-mailings and information search, they believed that there will be a time when they will be pushed to use it for e-Tendering or e-Meeting practices. The next important finding is that the level of optimism is significant for firms of different sizes. It shows that different firm size have different level of mentality in viewing the usefulness of technology in their lives. Even though the overall TRI was not significant, the figures indicate that bigger firms had a more positive view towards technology than smaller firms. This stands to reason as: 1. Big firms have a greater imperative to replenish their competencies in order to survive and thrive in the industry. 2. Big firms are normally involved with large and technologically challenging projects which require receptivity to new management systems and technologies.

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3. Over the last few decades, the big firms in Malaysia have been made to work under new non-traditional types of procurement systems such as build-operate-transfer (BOT) and design-and-build (D&B) which again required them to change their mind-sets so that they could work jointly with finance companies, consultants and perhaps other contractors [1]. Again, those unable to accept change were excluded from getting contracts let under such procurement systems. 6. Conclusion The important findings that could be drawn is that the Malaysian contractors have high level of technology readiness which can be supported by their background and the IT application practised in the industry. The construction industry which has always be a follower not a technology leader helps to explain the lower level of innovativeness compared to optimism. Interestingly the surveyed managers experienced some level of insecurity and discomfort towards the use of IT, which is quite common to the every IT adapter. It could be said that different firm size gave different emphasis to IT application. Bigger firms saw the opportunities given by the IT compared to smaller firms. Smaller firms may be operating locally and therefore may not fully embrace IT. The Malaysian CIDB can accelerate changes, beginning with providing IT training for managers in the construction industry. Investment in human development must be integral to changes that CIDB would like to see happen. For long-term effect, the CIDB should encourage R&D. Very often the construction industry has to wait a couple of years before technologies from other sectors trickle down to it [4]. References [1] Ariffin MH. Penggunaan komputer di dalam firma-firma pembinan Kelas G-7 C.I.D.B di Malaysia (Trans: The use of computers in G7 class CIDB construction firms in Malaysia). The Malaysian Surveyor 2002(Quarter 2):32–8. [2] Arslan G, Tuncan M, Birgonul MT, Dikmen I. E-Bidding proposal preparation system for construction projects. Build Environ 2005. Available from: http://www.elsevier.com/locate/buildenv. [3] Aouad G, Kagioglou M, Cooper R, Hinks J, Sexton M. Technology management of IT in construction: a driver or an enabler? Logist Inform Manage 1999;12(1/2):130–5. [4] Basu A. Impact of Information technology on construction project management. Transactions of AACE International. ; 1996 [assessed on 25.05.04]. [6] Daily Express. System enables online sale of goods to government. 23 April 2004. [7] Froese T, Rankin J, Yu K. Project management applications models and computer assisted construction planning in total project systems. J Construct Inform Technol 1997;5(1):39–62.

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