E-BUSINESS APPLICATIONS IN SAUDI AND UAE CONSTRUCTION INDUSTRIES

Irshad Ahmad, King Fahd University of Petroleum & Minerals, Dhahran, Saudi Arabia
Shakeel Ahmad, Emirates Telecommunication Corporation (Etisalat), Dubai, UAE
Shah Mohammad Shariq, King Fahd University of Petroleum & Minerals, Dhahran, Saudi Arabia

ABSTRACT

With the outburst of internet, e-business applications in construction (EBAICs) have gained substantial
strategic importance considering the augmented strategic benefits thereof. This paper reviews the
perspectives of strategists and decision makers with respect to contemporary status of thirty-one
components of EBAICs through a questionnaire survey instrument and subsequent statistical analysis.
This paper further assesses the comparative status of Saudi and UAE construction industries in terms
thirty-one EBAICs that could prove to be an initial medium for the concerned Saudi and UAE strategists to
frame their future IT strategies. Results show that the Saudi construction industry falls far behind its UAE
counterparts specially in terms of EBAICs such as research and development, constructability/buildability,
management of productivity, daily communication, change order tracking, quantity surveying/estimating,
enterprise resource planning, knowledge acquisitions, information systems, and document management.
Finally, based on what have been concluded, a few recommendations are made.

Keywords: EBAIC, Saudi Arabia, UAE, Construction industry.

1. INTRODUCTION

The construction industry is a people intensive industry where success relies heavily on timely transfer of
information (Yimin et al, 2001). The availability of accurate and timely information forms the basis on
which the decisions are made. Also, the construction industry is generally fragmented in nature. The team
members of a typical construction project both in Saudi Arabia and UAE include multinationals coming
from various parts of the world. With the above-mentioned constraints, managing effective communication
channels among them is a major challenge for construction business in general and that in Saudi Arabia
and UAE in particular. In addition, EBAIC is most likely to act as an important enabler by improving the
effectiveness, revenues, and quality of construction projects on the whole.

Shash and Al-Amir (1997) studied independently the Saudi construction industry in terms of quite a few
EBAIC components through a questionnaire survey, but this study did not consider any benchmark to
compare with. A survey was conducted in the Swedish construction industry to investigate the extent of
EBAICs therein (Samuelson, 1998). In light of the recommendations of previous studies, we believe that
the comparative status of EBAICs in Saudi and UAE construction industries based on the perspectives of
strategists and decision makers would be an important step to address several relevant issues. In order
to make an exhaustive list of EBAIC components, available literature have been thoroughly reviewed to
merge them together. Hence, a list of thirty-one EBAIC components has been considered for this study.
The specific objectives of this paper are (1) to explore several components of EBAICs through literature
review, (2) to analyze the relative status of EBAICs components in Saudi and UAE construction sectors
so as to identify which components of EBAICs need to be addressed in Saudi Arabia and UAE on the
priority basis, (3) to discuss the relevant issues identified, (4) to synthesize the meaningful conclusions,
and (5) to suggest recommendations for the Saudi and UAE construction industries.

2. LITERATURE REVIEW

2.1 Strategic Importance of EBAIC

The strategic importance of EBAICs has widely been discussed in available literature. It reveals that
EBAIC is imperative, for construction industry, to endure and prosper in contemporary hyper-competitive
business environment (De et al, 2005). For instance, Sey et al. (2002) indicate that EBAICs have the
potential to provide competitive advantage for construction and related engineering firms. They further
mentioned that EBAIC is proficient to offer augmented integration, improved interdependence,
interrelatedness, inter-organizational business relationships, coordination, and flexibility in organizational
structures.

2.2 Recently Completed Studies on EBAIC

Betts et al (1999) indicated several relevant areas of future research including the importance of EBAICs.
An e-business model to sustain supply chain dealings in construction is proposed by Cheng et al. (2001).
A recent benchmarking study has been conducted by Shen et al (2003) through a questionnaire survey
among fifteen major Quantity Surveying (QS) companies in Hong Kong. Ruikar et al (2003) addressed
the inadequate use of IT in construction industry in general by developing a business process
reengineering model. They exemplified various benefits of innovative EBAICs. Chan et al (2004)
proposed a conceptual model of web-based information system for construction project management to
facilitate data exchange among concerned project members during different phases of construction.
EBAIC in terms of online construction negotiations and advantages thereof are widely discussed by
Cheung et al (2004). They also propose a software program using internet based simulated negotiation
support system, called construction negotiation online (CoNegO). However, this system is limited by the
fact that it can not be used simultaneously by more than two parties. A systematic framework for gap
analysis specific to e-commerce is proposed by Shelburn et al. (2004). El-Ghandour and Al-Hussein
(2005) provide an impressive synopsis of possible EBAIC. Nevertheless, this study did not take into
consideration the relative importance of EBAIC components that is required to set priorities before
addressing these issues. An in-depth search through relevant literature including papers published in
journals and conference proceedings suggest that little has been done on a significant scale to
investigate the status of various EBAIC components both in Saudi and UAE construction industries. Only
few case studies on IT implementation, barriers thereof (De et al, 2004), surveys including the status of
EBAIC in terms of IT usage and knowledge acquisitions in general (Ahmad and Ahmad, 2004), and a gap
analysis considering the contemporary gaps in terms of importance, contemporary status, and hence,
gaps in IT applications have separately been carried out in UAE (De, et al 2005). However all these
abovementioned studies lack a benchmark to compare with.

3. RESEARCH METHODOLOGY

A questionnaire instrument prepared for data collection mainly asked respondents about the current status
of Saudi and UAE construction industries in terms of thirty-one EBAIC components. The intention behind
this question was to make an assessment of Saudi and UAE construction industry concerning how
frequently it makes use of EBAIC. The respondents were provided with five choices to select one:
frequency is very frequent, frequent, fairly frequent, less frequent, and not frequent. All thirty-one
components of EBAIC are briefly explained in the questionnaire to make the meaning as clear as possible.

Sixty potential respondents each from Saudi Arabia and UAE were shortlisted in consultation with
strategists and IT specialists involved in Saudi and UAE construction industries respectively. A pilot study
involving five respondents was conducted to ascertain the adequacy of the questionnaire and elimination
of possible confusing items. The pilot study resulted in the incorporation of few minor changes in the
questionnaire. The respondents are highly experienced holding senior positions in their respective
organizations. Care has been taken to ensure that the respondents have global background vis-à-vis
EBAIC and their strategic consequences.

In this research, data were collected by sending the questionnaire through e-mail, or fax. With close
follow up, responses were received from thirty (response rate = 50%) and thirty-two (response rate =
53%) respondents respectively from Saudi and UAE construction industries. In order to maintain the
same number of responses from Saudi and UAE construction industries, only thirty responses (randomly
chosen) from UAE were considered for comparative analysis. Thereafter, each response was coded
appropriately to make them suitable for statistical analysis. The statistical analysis was directed towards
assessing the relative status of EBAIC in Saudi and UAE construction industries.
 Table 1: Status of EBAIC Components in Saudi and UAE Construction Industries.
COMPONENTS OF EBAIC CODE SAUDI RESPONSES (N=30) UAE RESPONSES (N=30)
_ S.I1 _ S.I2 S.I1 - S.I2
X S X S
1. Planning & Scheduling P&S 4.63 0.49 77.08 4.74 0.46 90.80 -13.72
2. Time & Cost Control T&CC 4.26 0.61 43.40 4.53 0.48 71.89 -28.49
3. Inventory Control IC 4.23 0.41 72.02 4.36 0.47 83.70 -11.68
4. Management of Productivity MOP 4.10 0.66 33.42 4.56 0.58 76.93 -42.51
5. Risk Management RM 4.52 0.43 72.08 4.72 0.40 95.78 -18.70
6. Change Order Tracking COT 3.52 0.49 52.08 3.94 0.42 89.74 -37.69
7. Safety Management SM 4.45 0.44 62.08 4.69 0.43 90.68 -28.60
8. Quantity Surveying/Estimating QS/E 4.35 0.66 47.92 4.49 0.60 83.81 -35.89
9. Equipment Management EM 3.23 0.58 55.42 2.97 0.50 48.17 7.25
10. Procurement Management MRP 4.51 0.50 59.38 4.68 0.58 87.86 -28.48
11. Value Engineering CE 4.40 0.42 52.08 4.64 0.39 81.47 -29.39
12. Constructability/Buildability C/B 3.81 0.63 15.63 3.98 0.67 70.21 -54.58
13. Dispute Resolution DR 3.98 0.58 35.62 4.03 0.60 60.20 -24.58
14. Geophysical Surveying MT 3.41 0.65 52.08 3.64 0.60 60.28 -8.20
15. Computer Aided Design of Structures CADS 4.44 0.56 67.71 4.69 0.51 86.02 -18.31
16. Computer Aided Drafting CAD 4.16 0.68 60.42 4.33 0.60 79.03 -18.61
17. Claim Management CM 3.82 0.65 37.5 3.97 0.68 70.59 -33.09
18. Maintenance Management MM 3.50 0.70 35.42 3.59 0.77 62.50 -27.08
19. Document Management DM 3.37 0.57 29.17 3.48 0.50 59.18 -30.01
20. Daily Communication DC 4.12 0.68 35.42 4.33 0.61 77.93 -42.51
21. Knowledge Acquisitions KA 2.56 0.53 4.17 2.63 0.48 38.96 -34.79
22. Information Sharing IS 3.52 0.61 21.01 3.63 0.51 54.21 -33.20
23. Client Satisfaction CS 4.06 0.64 47.92 4.16 0.57 76.46 -28.54
24. Enterprise Resource Planning ERP 3.13 0.69 17.71 3.38 0.71 53.30 -35.59
25. Research and Development R&D 3.31 0.67 1.04 3.43 0.57 57.71 -56.67
26. Accounting and Financial Management AFM 3.57 0.72 70.83 3.47 0.78 64.35 6.50
27. Strategic Planning SP 3.46 0.68 32.29 3.56 0.60 61.39 -29.10
28. Business Marketing BM 2.44 0.72 10.42 2.53 0.78 36.02 -25.60
29. Human Resource Management HRM 2.63 0.57 37.5 2.74 0.57 40.80 -3.30
30. Project Budgeting PB 3.62 0.62 42.29 3.68 0.60 51.39 -9.10
31. Project Selection/Feasibility Study PS/FS 3.41 0.65 28.21 3.53 0.56 52.37 -24.16
4. ANALYSIS AND DISCUSSION OF RESULTS

Severity Indices [S.I = (4X1+3X2+2X3+1X4+0X5)*100/4*(X1+X2+X3+X4+X5), where, X1, X2, X3, X4, and X5
respectively are frequency of use of respective EBAIC components categorized as very frequent,
frequent, fairly frequent, less frequent, and not frequent)] and the differences thereof were calculated as
summarized in Table 1 to identify the technology gaps between Saudi and UAE construction industries in
terms of thirty-one EBAIC components. From Table 1, it can be observed that Saudi construction industry
is behind its UAE counterpart in terms of all the EBAIC except AFM and EM. Significant gaps exist in
Saudi and UAE construction industries when considering most components of EBAIC. For instance, the
difference of severity index for research and development, constructability/buildability, management of
productivity, daily communication, change order tracking, quantity surveying/estimating, enterprise
resource planning, knowledge acquisitions, information systems, and document management are as high
as thirty-percent or more. These gaps may be due to relatively better strides taken by UAE in terms of: (i)
Economic reforms and liberalization- making the presence of major multinational construction firms in
UAE and (ii) Provision of IT Infrastructure- resulting in successful implementation of 3G mobile
technologies, a respectably high penetration of mobile communication system and internet, an early
implementation of broad-band, fiber-optic and Internet Protocol (IP) based telecom network, commercial
launch of Al-Thuraya satellite are symbolic of the vision of UAE’s dynamic leadership, and its commitment
towards the diffusion and exploitation of modern technology. Besides, UAE has been making excellent
moves to become a technology hub for the Middle East region with major successful milestones already
being attributed to ventures like Dubai Internet City (a free-trade-zone developed to accommodate
enterprises involved in IT), tejari.com (a rapidly rising major e-business enterprise), and e-government
projects that have automated most of government transactions with internal as well as external
customers.

5. CONCLUSIONS

Based on the results of survey data, it has been observed that gaps of varying degrees exist while
considering the difference between severity indices in terms of thirty-one EBAICs of Saudi and UAE
construction industries. But, according to the assessment by experts in the two countries, the study finds
that Saudi construction industry falls far behind its UAE counterparts. EBAIC in terms of research and
development, constructability/buildability, management of productivity, daily communication, change order
tracking, quantity surveying/estimating, enterprise resource planning, knowledge acquisitions, information
systems, and document management raise serious concerns for the Saudi construction industry. The
results of this study can provide an initial medium for developing national strategic agenda to the Saudi
and UAE construction industries and the authorities therein. Gap analysis in terms of difference between
respective severity indices for each component of EBAIC provides vital clues to the Saudi and UAE
construction industries for taking necessary measures to reduce the gaps. In the current era when e-
business has revolutionized many sectors, and provide important competitive advantage to every
industry, the construction sector of Saudi Arabia in particular need to take immediate measures in order
to reduce the gaps highlighted in this study.

Based on what have been concluded, it is imperative that the Saudi construction industry must strive
harder towards enhancing the status of research and development, constructability/buildability,
management of productivity, daily communication, change order tracking, quantity surveying/estimating,
enterprise resource planning, knowledge acquisitions, information systems, and document management
predominantly. In order to achieve the abovementioned, the Saudi construction industry may consider
exploiting the EBAIC tools that include, but are not limited to 3-D rendering, simulation/fuzzy set theory,
neural networks, expert systems, database systems, data modeling, geographic information systems, and
virtual reality systems. Stemming from the findings of this research, we believe that there needs to be a
forum of communication (technical meetings, workshops, conferences, etc.) among the reputed
universities such as King Fahd University of Petroleum & Minerals, King Saud University, King Faisal
University, and King Abdulaziz University of Saudi Arabia, UAE University, Ajman University of Science
and Technology, Zayed University, and Abu-Dhabi Petroleum University of UAE. Besides, the concerned
Government authorities must encourage the abovementioned activities to ensure the effective
implementation of e-business in their respective construction sectors.
The results of this study are vital for the IT and e-business vendors having some stake in this region.
They can use the outcomes for devising their own systems development strategies to fill the gaps, in a
phased manner.

Acknowledgment

We acknowledge the support of King Fahd University of Petroleum & Minerals, Saudi Arabia and Etisalat,
UAE. We would also like to express our appreciation to all the participants in the two concurrent surveys.

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About the Authors:

1. Mr. Irshad Ahmad has completed his MS in Construction Engineering and Management Department at
KFUPM, Dhahran, Saudi Arabia in December 2004. He is about to start his PhD. He can be reached at
airshad@kfupm.edu.sa/irshadatoz@yahoo.co.in.
2. Mr. Shakeel Ahmad received his MBA from Xavier Labour Research Institute (XLRI), in March 2004.
He has shown keen interest in research work and has contributed to the body knowledge by publishing
many papers. His E-mail address is shakeeluae@gmail.com.
3. Mr. Shah Mohammad Shariq is a senior MBA student at KFUPM, Dhahran, Saudi Arabia. He can be
contacted at smshariq@kfupm.edu.sa.