Recently I was asked by a colleague to read and respond to an article published in the NISD Connections Magazine Winter 2017 addition. The article was entitled “The Elephant in the Room.” It was a good article that tried to delicately deal with the issues that are plaguing the North American steel detailing community. Three points I would like to address are:
• Fabricators are intrigued with “½ off sale” from our India-based brethren
• Lack of sufficient detailing resources in North America to handle the volume of projects on the market today
• “It’s a detailing error” as a substitute for poor project management on the part of our steel fabrication partners
These issues have been, and always will be, there until we, the detailers, change them. I am not a PC person. So, what I write is “down and dirty;” this way it will be remembered.
Our steel fabricator partners are not going to change old or entrenched habits until it is forced upon them. Cheapest price or “½ off sale” from our India brethren, will always intrigue large sectors of the fabrication community, regardless of quality, as does the concept that they have 250 engineers on staff with modeling technologies and that makes them a qualified steel detailer. The fabricators perceive they have a money-making scheme and they will not relinquish control until the revenue stream dries up or they are compelled to change through technological transformation and innovation.
Do you remember when fabricators had in-house detailers? When recessions hit, where was the first place the fabricator went internally to reduce cost? The answer was always; their detailing resource. I have been in this industry for 45 years and for most of my career this paradigm has been the “accepted norm.” The detailer has been viewed as a necessary evil. The detailer was the first to be laid off rather than sharing the reduction burden across all levels of management and production. This is one of the primary reasons we now have fewer numbers of steel detailers in North America. Who wants to return to a company where you are only considered a cost? That is also why those that remain in this industry struck out on their own. Self-reliance provided a more stable and reliable employment situation for them.
In the past 20 years, with the fabricator able to get the detailing service at a “½ off sale” from our India brother, has impacted the domestically operated detailing organizations’ profitability and further dwindles the number of domestically operated detailer. In addition, there are those fabricators who engage in services from off shore companies that have stolen/bootlegged/pirated North American and European based technologies to perform this work. And worse yet, those overseas countries and cultures believe that theft is an acceptable practice. As a true American, I find this attitude extraordinarily disheartening and unpatriotic. But, as someone once said, “business is business, principles don’t change a thing.” It isn’t necessarily true that fabricators are the detailer’s adversary but neither is it necessarily true that the fabricator is our allies. There is no illusion about it; they are looking out for their own interest.
On a side note, I do not believe that it is always in our best interest to create a governing body of mandated certification programs in hopes that this will better the ills that plaque our American-based industry. It may drive cost higher. For an example, consider the recent government program forced upon us. Did Obama Care reduce cost, increase competitiveness and improve health care? What about the Veteran’s Administration? Is it a model of efficiency? I think not. That isn’t to say all regulations are bad, but we must be cautious; there can be unintended consequences to regulations.
So, what is the answer to getting this elephant off our backs and out of the way? From my point of view, change the paradigm.
Just as the 3D technologies provided North American detailers a competitive edge in the early 21st century, the need for total interoperability across all the construction disciplines is beginning to drive the steel construction process. Owners and contractors are now looking to shorten the cycle time and reduce costs across the entire project, not just secure a cheaper cost of detailing for the fabricator. Or, be sold as a process a fabricator has created based on a custom-tailored detailing solution designed to fit only their manufacturing operations. And sold this system to an owner as the only way to lower cost. It was a system designed solely for the purpose of hiding the lack of knowledge based on the part of their employees and especially their project managers. The old “square peg in a square hole” style production line. Give them a round peg and they don’t know how to find a round hole.
The reality is that owners are weary of the endless change orders coming from organizations whose business models are built around the change order process. Yes, I said it, a business model based around the change order process. We all know the scenario. The project is bid at or below cost to obtain the project. This creates an illusion in the owner’s budgeting process. Then, ambiguity in the contract documents and the RFI process is used to justify costly changes at more than double the normal rates. Also, there seems to be an engrained philosophy that it is always a “detailing error” which justifies back charging the detailing operation. The change order procedures make cost recovery ineffective for the detailer. Yet, the detailing cost is passed on to the owner at sometimes, three and four times the detailer’s billing with little or no addition work required for the fabricators.
Consider the new Atlanta Falcons Stadium with over $200 million in change orders. I know there were many other circumstances surrounding the project’s cost overruns; but it is hardly an incentive for the next NFL owner to proceed with steel as the primary construction material of choice with this as an example.
In my opinion, today’s technology is produced at a rate faster than we can absorb it, probably three times faster than just five years ago. I believe that this accelerated rate of the technological change will be the catalyst for ending the days when just “shop drawings” along with the associated CNC files and production control downloads, are the steel detailers primary deliverables that the “fabricator” needs to do his job and may allow the domestic detailing community to re-dominate the steel construction/detailing processes.
The paradigm shift I am referring to is the comprehensive use of cloud based technologies that integrates the entire process from design through erection. This is accomplished in real time and eliminates the digital FedEX process currently in place.
From the steel construction point of view, imagine the design models, CAD files, and product models integrated with the steel detailing manufacturing model in a cloud based solution. Below outline the benefits:
1. Approval takes place in real time; thus, drastically reducing or eliminating the approval cycle.
2. With access to the design models, the detailer can reduce or abolish the need for countless RFIs and change orders. These items alone are a major factor in time and cost reduction.
3. With direct access to the design teams, the detailer is in communication with those that not only have the information needed for the steel manufacturing model, but the design team also has the authority and influence over other construction team members for information they don’t control.
4. Changes can be facilitated in real time thus minimizing the cost of rework. Remember, at the model state a lot of changes can be made that have minimal impact on the detailer’s cost. Always remember pixels are cheaper than physical steel and concrete.
5. The cost saving is realized over the whole project, not just the lower cost of detailing to a fabricator which are dollars that an owner will never realize.
With the detailer as part of the design team, it lowers the cost to the detailer and raises the odds of being more fairly compensated for the expertise they bring to the project. The process of playing the lowest cost bid wars, bidding to the fabrication industry, benefits no one except the fabricator, especially with their use of India based firms that did not pay for the technologies being utilized. But most importantly, it places the detailing community in charge of a much greater portion of the entire process. A process that currently few fabricators have the internal capabilities to handle. As far as this process having the capable of going offshore, there are currently too many barriers; namely, dependable expertise, internet speed deficiencies, language barriers and a stable, reliable and secure infrastructure. When you consider other aspects of the construction processes such as model based estimating for Fabricators, Erectors, process virtualization, critical crane path, construction planners, etc., the revenue streams can be considerably more lucrative than the historic steel detailing alone.
I know this does not address everything discussed in the article, “The Elephant in the Room.” It is a distinctive look at a new paradigm and other possibilities for the detailer to consider. Maybe it is time we put the “Elephant” in someone else’s room. It is a lot of weight to continue to carry around.
I believe the owners, developers, architects, etc., will be more intrigued by greater efficiencies which equates to lower cost over the entire project than the intrigue of lower cost of detailing to a fabricator alone.
As a military philosopher, General George Patton, once said “Anything made by man can be overcome.”
James P. Stever
President, Virtual Steel Technologies Inc.