Maritime Constructions

www.maritimeconstructions.com.au

Executive Summary

Maritime Constructions is a supplier of marine services including dredging, wharf and jetty construction, marine salvage, survey, demolition and repair and maintenance of a variety of marine structures and equipment. 

The move to online systems, currently managed by Financial Controller, Simon Giessauf, was seen as a way to accommodate the rapid growth being experienced by the company.  Uptake of web-based processes would help improve business efficiency.

A key feature of the e-commerce initiative has been the use of an online tendering process, through the South Australian Government website.  Manual methods of tender retrieval and delivery have been replaced by online searching for potential work opportunities and online submissions.  This has significantly reduced staff time spent in printing and delivery, providing more time for the actual preparation of the tender documents.

Other process improvements include the increasing use of email for correspondence, internet, development of a company website and the management of banking and payroll online.

These initiatives have improved staff productivity and resulted in cost savings of $16,791.  Maritime Constructions invested a total of $3,800 into e-commerce. 

Although the company experienced some problems with connectivity using dial-up Internet access, these issues are likely to be resolved through a planned upgrade to Broadband Internet.

The Business

Maritime Construction is a supplier of marine services including dredging, wharf and jetty construction, marine salvage, survey, demolition and repair and maintenance of a variety of marine structures and equipment.  The company has been in operation for 6 years and obtains most of its work from government and large private organisations.

Maritime Constructions is based in Birkenhead, South Australia (SA) and employs 30 full-time staff.

Getting Started

The e-commerce strategy was initiated more than four years ago by the previous financial controller.  Simon Giessauff, current Financial Controller, has since been responsible for building on the initiative.  Maritime Constructions has experienced rapid growth in the past few years and the move to online systems was seen as a way to accommodate the growth through upgrading and simplifying business processes.

Simon conducted preliminary research into how current business processes could be improved through information provided by banks and the general media.  He was also influenced by other businesses use of e-commerce, who would ring to determine if email was used and if electronic payments were made and accepted.

The company website was developed by an external web developer who also maintains the site on an as-needed basis.  Tools used to market the website include company stationery, letterhead and listing on search engines.

E-Government

Through the Government Online initiative, government agencies have been encouraged to use the Internet for information dissemination and as a platform from which the community and businesses can access public services.   Consistent with this initiative, the South Australian Government has implemented an online tendering process by which details of tenders for work can be downloaded from the SA Government website.  Tenders can also be submitted by service suppliers on the website.

For Maritime Constructions, the online tendering facility has assisted in simplifying the process of retrieving and lodging tenders.  By eliminating the need to print, package and deliver tenders, the company now has more time to prepare the details of the tender.  In addition, retrieval and downloading of tenders from the SA Government website ensures that no potential work opportunities are overlooked and that the company has access to the correct government contact person and work specifications.

E-commerce Strategy

The e-commerce strategy implemented by Maritime Construction involves development of a website, use of the online tendering system, uptake of electronic communication and management of banking and payroll online.

Development of a company website has proven useful in informing customers of the various marine services provided, including equipment capacity and relevant contact details.  However, as marine contracting is a relatively niche market, the company's business volume is not solely dependent on effective marketing.

Maritime Constructions use email communication over phone and fax as much as possible.  This includes correspondence with customers, other contractors, suppliers, and banks.  When obtaining quotes for metal fabrication, drawings are now prepared by Auto CAD (computer aided design) and emailed to suppliers, as are materials lists.  Email is particularly cost-effective when contacting interstate suppliers for quotes such as for pontoon systems.

One of the main areas of business process improvement has been in the use of online tendering systems.  Where previous tender work was obtained by media advertisements, Maritime Constructions' now regularly log onto the SA Government website to monitor and download any suitable work opportunities.  When prepared, these tenders were then manually delivered to the tender box to ensure submission. Now, they are submitted online as an attachment via the SA Government website.

Finance functions within the company have now been upgraded to online procedures including banking and payments to suppliers.  The Bank website is used for Bpay to pay suppliers and review account details.  Payroll is also managed online with files exported from the MYOB software and straight into the online banking facility.

Revenue and Costs

 * Note: Capital Expenditure is amortised over a four-year period

Financial Analysis

As no additional sales channel was created as part of the e-commerce initiative, benefits from e-commerce have come in the form of cost savings.  These have totalled $14,609 in 2001, clearly recouping the initial outlay of $3,800 in one year.

E-commerce has impacted on the tendering process, where costs have been minimised by a total of $1,728.  Where previously tenders were physically retrieved from the relevant government office, being able to download them from the SA government website has saved $1,440 in travelling time (being half an hour each way, with an average of two tenders per month).  Completed tenders can also be submitted online, resulting in courier savings of $288. 

Due to the increasing use of electronic communications, postage costs for mailing of payments to suppliers, requests for quotes and general correspondence has been reduced by $1,611, while telecommunication costs have decreased by $650.  Use of the Internet to manage banking and payroll has reduced the staff time required to perform these tasks by ten hours per month for banking ($3,600) and four hours per week for payroll ($6,240).

Ongoing costs for maintaining the online systems, totalled $3,578 in 2001.  These ongoing costs were mainly associated with supporting the website and include costs for the Internet Service Provider and website hosting of $1,440, rental of the telephone line for modem use of $228 and dial up access charges of $720.  Use of online banking incurred bank fees of $240.  In addition, $950 was allocated to the amortisation of capital expenditure over a four-year period.

Maritime Constructions invested a total of $3,800 in the e-commerce system.  The majority of establishment costs were involved in website development including registration of the domain name ($2,100).  Time spent by Simon in putting ideas to paper and taking photographs of the work area for display on the website amounted to $900.  To enable Internet access, a new phone line and modem was installed for $800.

Non-financial Benefits

Most of the benefits from e-commerce have come from use of online tendering, banking and payroll.

Considering that up to four tenders may be retrieved per month, substantial staff time and printing is saved in being able to search for tenders via the SA Government website and downloading the required information.  Regular online retrieval using key words for marine services, also ensure that business opportunities are not missed, which may occur with manual searching of media advertisements.  Downloading functions from a computer terminal allows the company immediate access to the tender, providing more time for the tender preparation process. 

On completion of tender documents, online submission saves staff time previously spent physically delivering the tender to ensure that it was received.  Online submission also reduces time spent in printing and packaging the tender which also provides the company more time for preparation.  These business process improvements are significant to a company such as Maritime Constructions, where a majority of work is received from Government contracts.

Other process improvements have occurred in the increasing use of email communications to customers, suppliers and other contractors.  When sourcing quotes for particular suppliers, use of email facilitates more prompt responses than phone and fax correspondence, especially when suppliers are interstate.

Challenges

Although Maritime Constructions have experienced some problems in accessing bank websites due to delays in connectivity, these issues are likely to be overcome with the adoption of Broadband Internet.

Future

Maritime Constructions intends to upgrade from dial-up access to Broadband Internet in the near future.  This will provide a more suitable Internet platform for the fast and reliable transmission of large files such as drawings and tender documents.