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What is an Extranet

And why should you care? Architecture, engineering, & construction firms are incorporating extranets at an alarming rate. Every graduating civil engineer should be familar with their impact on the workplace.

By Joel Orr, Ph.D.

"It is the next hot Internet application," said W. Bradley Holtz, program director for the A/E/C SYSTEMS 99 in Los Angeles. I observed that the CAD booths were all empty, and booths showing Web-based collaboration and document management tools were packed. "In fact, next year's conference will be revamped to respond to the ground-swell of interest we perceive in the A/E/C community."

So what is this "hot" technology? Extranets! An extranet is a Web technology used for inter-organization communications. (An "intranet" is the same, but within a single organization.) Extranets are most commonly used in architecture/engineering/construction (A/E/C), where, as "project webs," all documents and communications go through their single, Web-based "switchboard." Everything is tracked, nothing gets lost, and you're always working from the most up-to-date information.

In manufacturing—where production is the "project"—extranets are used to share information with vendors and customers. For example, if you are my supplier, I'd like you to see the level of your parts in my inventory, so that you can make sure I never run out.

Law firms—where a case is the project—are now using extranets for communication. In litigation that involves many people and large numbers of documents, such as the U.S. Department of Justice verses Microsoft, an extranet is invaluable. Access to documents can be limited by function or by name, so that only those who are entitled to see particular documents can get to them.

What do extranets mean to you, the civil engineer? You are going to find more and more clients asking you to use their extranets to communicate with them. At The Summit on the Future of Engineering Software (held last November in Chicago), 64 leaders from diverse organizations, such as Ford, Microsoft, Raytheon, Bechtel, Fluor Daniel, GSA, Bentley, Autodesk, and others, met to come up with a list of concerns for the new millennium. Among the remarks preceding their list was the following statement: "Within three years, no new engineering project of any consequence will be initiated without the use of a project Web or extranet."

George Church, president of Workplace Systems (a Bentley System, Inc. strategic affiliate), has compiled a white paper on the potential return-on-investment for an extranet. In the paper, he lists the kinds of information commonly housed in an extranet:

  • Engineering and computer-aided design (CAD) files, such as those created with MicroStation® and AutoCAD® software
  • Project schedules—such as those created with Primavera® Project Scheduling
  • Microsoft Office® and Corel Office® files
  • Corporate standards
  • Design standards
  • Project standards
  • Project correspondence
  • Site photographs.

Church then enumerates the types of activities that the team members who use the extranet can accomplish from any location in which there is a Web connection:

  • Visualize progress through engineering documents and related CAD files
  • Review project schedules to ensure that events are on-track
  • Verify construction materials and costs
  • Evaluate progress with actual site photos and project renderings
  • Review invoices
  • Redline engineering drawings

W. Gary Craig, president of Edgewater Services, Inc., pointed out the power of a discussion database in a paper presented at a recent Harvard University conference:

A discussion database involving threaded discussion can be made even more powerful through the application of process tools. One such use is to capture and verify architecture and engineering space program needs through the use of templates of program criteria. The templates are used to query the building owner and users to surface and quantify their needs. Workflow can be used for the sign-off of program elements. The Internet can be used to advise all of the participants of the ongoing programming discussions as well as status approval and verification of each of those items.

Extranet Products and Services

The Internet has changed everything, especially the way computer-based technologies are delivered. There are now more than 100 companies offering extranet products and services. The two most common ways you can get access to extranets are by buying software products or by contracting for services.

If you acquire an extranet software package, you must install it on your own server. All aspects of the implementation are your responsibility and under your direct control. This arrangement appeals to many organizations who want to ensure that their project data is on a server that is physically secure.

But even here, licensing a software product is not straightforward. If you want to run the software on more than one server, or with a large number of "client" workstations, you will probably incur a higher fee than a single-server user. Remember that software is never actually sold, only licensed and leased—and the owner has something to say about how it is used.

When you contract for extranet services, you typically pay an amount per seat per month, or sometimes an amount per project per month. This makes it particularly easy to expense; there are no capital costs involved.

There may be set-up fees for the system's initial customization. Most of the vendors have found that making screen forms similar to paper forms to which new users are already accustomed is a good strategy for reducing the length of the learning curve. Some systems are easy for users to customize on their own; others require some level of technical assistance.

However, in recent weeks the line between the two forms of delivery of this technology has begun to blur. Software vendors have found ways to offer their products as services; service vendors have packaged their software for use on users' in-house systems.

I believe this trend is good for users, because it allows them to select a vendor without having to first consider whether they desire a service or product provider. Therefore, the relationship with the vendor will be the most important aspect of the extranet selection. Since most offer their technology in both product and service form, you can choose the vendor and then decide whether to go with a product or a service.

Economics of Extranets

When considering the acquisition of new technology, most engineering firms have institutionalized analysis and justification processes. And rightly so—money is the lifeblood of the firm, and it must be wisely employed. Since extranets are a computer-based technology, firms are inclined to initiate some form of cost/benefit analysis or return-on-investment examination—just as they did for their CAD systems or accounting packages.

I submit that such an approach may be inappropriate. A high-level survey of the facts will reveal that the costs of implementation are low; the benefits are great and almost certain. But more importantly, the opportunity cost of delaying may be exorbitant. Here's why:

First of all, an extranet can greatly reduce the amount of money spent on overnight delivery services and travel. How big was your mailing bill on your last project? If documents are posted to a Web server, so that they are securely accessible to any authorized person with a Web connection and a browser, you may be able to cut your courier bill by half or more.

With up-to-date documents and reports instantly accessible, as well as e-mail groups and "chat rooms" providing near-real-time communication with any part of your project team, your travel bill should shrink by at least 20 percent. Those savings alone will probably suffice to justify the cost of an extranet. But there's much more.

Consider that the number of communication paths in any network is roughly proportionate to the square of the number of nodes. (To be precise, for "n" nodes, there are n(n-1)/2 paths.) So if your project involves 10 people, there are 10•9/2 = 45 communication paths among them. It's evident that the number rises quickly with larger project teams: 100 people have 4,950 paths; 1,000 people have 499,500; and so on.

An extranet's most basic function is to serve as a project "switchboard." All communication flows through the switchboard. This has two great benefits:

  • It allows you to establish an audit trail for all project communication. This provides a permanent record to which you can refer later.
  • It reduces the number of communication paths to only one more than the number of nodes. Therefore, every communication path between two project team members consists of two links, from person A to the switchboard, and from the switchboard to person B.

You don't need a degree in operations research to see that reducing the number of communication paths will reduce the number of communication errors, all else being equal.

Think about it: How much would be saved if the number of communication errors in a large project were reduced by 10 percent? 20 percent? 50 percent? That is why I believe an extranet needs no detailed cost-justification any more than a telephone system needs one. You still want to select the best phone system for your needs, at the best price. But there is no question as to whether telephones are needed.

Likewise, there is no question as to the need for an extranet—whatever the project to be managed.

Other Benefits

Those are only the most obvious benefits of employing an extranet in your project work. Additional gains include:

Tracking documents: With a Web-based "vault," and suitable check-in/check-out procedures, you will be able to know the status and location of every document in the project.

Working together: Storing all project information in a globally-accessible extranet means that geographically-dispersed groups can still collaborate. In "No More Teams," Merrill Lynch Fellow Michael Schrage says, "For a group of people to become a team, they must share a common model." The extranet provides the necessary framework.

Project memory: All of the events of the project can be easily recorded for later reflection on the provenance of design and construction decisions. (I say, "can be," because the existence of an extranet does not guarantee it; a policy that all communications must flow through the extranet, and the discipline to enforce it, are also necessary.) The record of events and decisions thus becomes the "corporate memory" of the project. So even if all the personnel who were involved in the project go elsewhere at its conclusion, the organization has the opportunity to retain the results of the learning that took place.

Audit trail: The same policy that produces a viable "project memory" can also yield a valuable audit trail, with very few enhancements. When questions are raised that could, under other circumstances, result in costly litigation, the existence of a reliable record of all communications, which was automatically date- and time-stamped, can dispel the fog of ambiguity that often surrounds the hasty events of a project. What is the value of obviated litigation?

Faster, fewer mistakes: A positive documentary foundation coupled with a clear and recorded communication scheme in a secure and everywhere-accessible framework is sure to result in earlier completion than would otherwise be possible. And since most project mistakes are at the result of failed communication, not errors in analysis or judgement, the switchboard nature of an extranet reduces such errors.

Achieving projects on time and within budget: On large projects, these goals can be ulcer-generators. But a properly implemented extranet can provide the much-sought-after control, and consequently reduce the stress on all the project managers.


In spite of all these benefits, the enthusiastic extranet implementer must not ignore the risks, but they must take precautions against them becoming realities:

Security: It's not that information stored on computers is inherently any more accessible to security breaches than information kept on paper in offices; rather, the challenge is that computer security is new to most project engineers. The possibility of confidential information being disclosed is very real, and demands the full attention of the extranet manager.

Dependence on computers: What if the power goes out for an extended period? What mechanisms are in place for work to continue and for the events of the blackout period to be captured and subsequently recorded? Powered by electricity, the computer is more vulnerable, in some ways, than older systems.

Time lost to learning new tools and methods: However great the benefits of a new system, it causes some disruption. People have to learn how to do things differently, and they must transition from one system to the other, probably running both in parallel for a time. There is an expense associated with this period, and confusion that can lead to costly mistakes.

Documents lost in transition: You know how to keep track of things now and the new system has a place for everything. But the change-over is a one-time event, and there are risks associated with it.

Personal power lost: People have built their careers on the details and rhythms of "the old way." Computers change things, and many older workers are threatened by them. They fear a loss of status because of a perceived loss of competence. They see young people who are comfortable with computers usurping their roles, and they don't like it.

And worst of all change, per se! The familiar gives way to the unfamiliar, and suddenly everything is strange for everyone. This increases stress all around.

Not one of these risks is insurmountable. Sensible, careful planning will enable you to avoid the major pitfalls so that you too can reap the benefits of extranets.

Extranet Users

Bob Buckley, a project manager with Anderson, Rowe & Buckley, a $20-million mechanical subcontractor, reported, "We have been using Bidcom's [extranet] service on a large project for the past two years, because the prime, Swinerton, required us to." He added, "We like it a lot. It is improving communications, speeding up requests for information, and leaves a great trail. We're sold on it!" Swinerton absorbed the entire cost; Buckley's firm didn't have to pay anything to use the extranet.

For Dave Lagan, purchasing manager of $250-million Metric Constructors, the challenge was to avoid litigation, " and when we can't avoid it, to minimize its cost," he said. ConstructWare, an application service provider with an extranet, enabled them to do just that. "Our attorneys told us that if we'd keep all our documents in one logical location, we could save $75,000 on paralegal fees during the discovery process, in the event of a lawsuit. That alone would have justified a[n extranet] system for us!"

Even in a small, local firm, the benefits of extranets outweigh their costs—since many extranets are free! Projects involving local firms have communication problems as well. You know this familiar dialogue, "Did you get my fax?" "No, when did you send it?" Extranets can eliminate such conversations and help everyone know what is going on without having to call meetings or write reports.

Additionally, regulators are beginning to use extranets to help coordinate their activities with the people they regulate, at all levels of the government.

The Future

Extranets are an emerging technology, already providing enormous gains in productivity and reduction in errors on engineering projects - but they are far from mature. In their recent article in Facility Management magazine, Stephen Hagan, a GSA Fellow, and consultant Eric Teicholz listed the following issues that remain to be resolved:

  • Data versus document-centric systems (most access to information is through documents that are "threaded" together rather than the data itself);
  • Pricing models that encourage all team members to utilize the system (the software is still fairly expensive);
  • Improved security and encryption;
  • Technology adoption by all members of the project team, from owner down to subcontractors and even vendors;
  • Reliability;
  • Bandwidth (the Internet is still slow when using a modem);
  • Vendor-accepted standards so that data can be shared by different systems.

Most observers see extranets as the primary channel for business-to-business e-commerce, and there is no doubt that such will be their role. But I believe that the ultimate power of extranets will be revealed within the next three years when they begin to shine as vehicles for knowledge management. The opportunity for capturing presently-discarded knowledge is enormous.

I am confident that recognition of this hidden treasure will suddenly dawn on the engineering community, and that extranets will be there to help in its mining.

Reprinted from CE News, 2000, with permission. Copyright 2000 by Civil Engineering News, Inc. (telephone 770/664/2812). All rights reserved.

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