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3 Opportunities for Breakthrough Improvements in the U.S. Construction Industry As pointed out in Chapter 1, the commercial, industrial, and heavy construction sectors are stratified and differ from each other in terms of the characteristics of project owners, their sophistication, and their involvement in the construction process; the complexity of the projects; the source and magnitude of financial capital; required labor skills; the use of specialty equipment and materials; design and engineering processes; and knowledge and other factors. Nonetheless, these sectors also share common issues and obstacles to improving construction productivity, including the following: â¢ A diverse and fragmented set of stakeholders: owners, users, designers, builders, suppliers, manufacturers, operators, regulators, manual laborers, and specialty trade contractors, including plumbers, electricians, masons, carpenters, and roofers; â¢ Segmented processes: planning, financing, design, engineering, procurement, construction, operations, and maintenance. Each process is typically performed sequentially and each involves different groups of stakeholders, shifting responsibilities, and shifting levels of financial risk, which in turn often leads to adversarial relationships, disputes, and claims; â¢ The image of the industryâwork that is cyclical, low-tech, physically exhausting, and unsafeâwhich makes it difficult to attract and retain skilled workers and recent graduates; â¢ The one-of-a-kind, built-on-site nature of most construction projects; â¢ Variation in the standards, processes, materials, skills, and technologies required by different types of construction projects; â¢ Variation in the building codes, permitting processes, and construction-related regulations propagated by states and localities; â¢ The lack of an industry-wide strategy to improve construction efficiency; â¢ The lack of effective performance measures for construction-related tasks, projects, and the industry as a whole; and â¢ The lack of an industry-wide research agenda and levels of funding for research that are inadequate. In an industry of thousands of small establishments, an array of stakeholders, dynamic processes, diverse products, and no overall strategy or research agenda, three major issues arise: 1. Identifying the technologies, processes, materials, or other actions that can result in the greatest benefits to the industry as a whole; 2. Determining who should be responsible and accountable for driving change and improving productivity; and 3. Mitigating the risks to owners, clients, contractors, and suppliers from using innovative technologies, materials, and processes. 27
28 ADVANCING THE COMPETITIVENESS AND EFFICIENCY OF THE U.S. CONSTRUCTION INDUSTRY This chapter identifies and discusses the activities that could result in breakthrough improvements in efficiency and competitiveness for the construction industry and activities for mitigating the innovation-related risks to stakeholders. IDENTIFICATION OF ACTIVITIES THAT COULD LEAD TO BREAKTHROUGH IMPROVEMENTS As indicated in Chapter 1, the specific task of the Committee on Advancing the Competitiveness and Productivity of the U. S. Construction Industry was to plan and conduct a workshop to identify and prioritize technologies, processes, and deployment activities which have the greatest potential to significantly advance the productivity and competitiveness of the capital facilities sector of the U.S. construction industry in the next 20 years. Because the concept of productivity can be difficult to define, measure, and communicate, the committee determined that it would focus on ways to improve the efficiency of the capital facilities sector. It defines efficiency improvements as ways to cut waste in time, costs, materials, energy, skills, and labor. Studies focusing on efficiency within the construction industry have documented 25 to 50 percent waste in coordinating labor and in managing, moving, and installing materials (Tulacz and Armistead, 2007); losses of $15.6 billion per year due to the lack of interoperability1 (NIST, 2004); and transactional costs of $4 billion to $12 billion per year for resolving disputes and claims associated with construction projects. The committee believes that improving efficiency will also improve overall productivity and help individual construction firms produce more environmentally sustainable projects and become more competitive. To help determine which activities offer the greatest potential for resulting in breakthrough improvements, the committee first identified the attributes that would characterize an efficient capital facilities sector of the U.S. construction industry: â¢ Production of quality products that meet ownersâ and the nationâs needs; â¢ Competitiveness in the global marketplace; â¢ Well-integrated processes, supply chains, and work flows; â¢ Promotion of sustainability through the efficient use of time, materials, skills, and dollars; â¢ Attractiveness to a diverse, well-trained, knowledgeable, professional, skilled labor force able to work collaboratively to meet ownersâ and clientsâ objectives; â¢ Ability to adapt to new conditions and to deploy new technologies effectively; â¢ Use of best practices to reduce rework and delivery time, and to improve job-site safety and project quality; and â¢ Measurement of performance to enable innovation and improvements in products and processes. The committee and the industry experts who participated in the 2-day workshop conducted by the committee identified many actions that could be taken to move toward an efficient capital facilities sector. The committee narrowed these possibilities down to five interrelated activities that it believes have significant potential to lead to breakthrough improvements in efficiency and competitiveness for capital facilities construction in 2 to 10 years, in contrast to 20 years, as follows: 1 Interoperability is the ability to manage and communicate electronic data among owners, clients, contractors, and suppliers, and across a projectâs design, engineering, operations, project management, construction, financial, and legal units.
OPPORTUNITIES FOR BREAKTHROUGH IMPROVEMENTS 29 1. Widespread deployment and use of interoperable technology applications, also called Building Information Modeling (BIM). 2. Improved job-site efficiency through more effective interfacing of people, processes, materials, equipment, and information. 3. Greater use of prefabrication, preassembly, modularization, and off-site fabrication techniques and processes. 4. Innovative, widespread use of demonstration installations. 5. Effective performance measurement to drive efficiency and support innovation. Discussed individually in the major sections below, the five activities are interrelated, and the implementation of each will enable that of the others. For example, the widespread deployment of interoperable technologies will help to improve the supply chain management that is essential to the improvement of job-site efficiency and the greater use of preassembled components. Similarly, greater use of demonstration installations will help to mitigate the risk associated with new technologies, materials, and processes. Effective performance measures will help document which innovations result in improved efficiency and productivity and will help to build a âbusiness caseâ for using such innovations throughout the industry. It cannot be stressed too strongly that finding ways to attract and retain skilled workers and recent graduates will be essential to achieving success. The committee believes that implementing these five activities for capital facilities and infrastructure will help to achieve the following: â¢ Overcome fragmentation by requiring greater collaboration up front among project stakeholders; â¢ Lead to more efficient use and better integration of people, processes, materials, and equipment through all phases of a construction project; and â¢ Create more useful and more accurate information for the development of performance measures that can facilitate innovation in technologies and materials and improvement in products and processes. WIDESPREAD DEPLOYMENT AND USE OF INTEROPERABLE TECHNOLOGY APPLICATIONS Interoperability is the ability to manage and communicate electronic data among a projectâs owners, clients, contractors, and suppliers, and across a companyâs design, engineering, operations, project management, financial, and legal units. As noted in Chapter 2, a range of modeling, virtual design, and other technologies for construction-related processes are already available and are often referred to as Building Information Modeling. Such models have been used for industrial projects for some years, and they are now being applied to some commercial projects. To support the deployment of interoperable technologies, the consortium named FIATECH2 has developed an industry road map. Similarly, the buildingSMART Alliance of the National Institute of Building Sciences (NIBS)3 is developing open, national standards for data input and analysis. And the 2 FIATECH is a consortium of industries and companies whose objective is to make a step-change improvement in the design, engineering, construction, and maintenance of large capital assets. Additional information is available at http://www.fiatech.org. Accessed February 4, 2009. 3 NIBS was authorized by the U.S. Congress in the Housing and Community Development Act of 1974 (Public Law 93-383). The instituteâs public interest mission is to serve the nation by supporting advances in building science and technology to improve the built environment. Additional information is available at http://www.nibs.org. Accessed February 4, 2009.
30 ADVANCING THE COMPETITIVENESS AND EFFICIENCY OF THE U.S. CONSTRUCTION INDUSTRY American Institute of Architects (AIA)4 has developed an Integrated Project Delivery Guide to help owners, designers, and builders use interoperable techniques. Thus, the committee believes that many of the pieces needed to deploy interoperable technologies throughout the capital facilities sector of the construction industry already exist or are in development. With a concerted effort, those challenges that remainâfor example, data storage and retrieval, application development, legal constraints, the development of intelligent searching capabilitiesâcan be solved in 2 to 5 years. Interoperability is more than the automation of current work processesâthat is, more than just doing the same things that are done at present only faster. Interoperable technologies and applications change work processes and the relationships among project owners, clients, contractors, and subcontractors. Effective use of these technologies and applications requires collaborative planning up front among owners, designers, and contractors. Collaboration in the early stages of planning, in turn, can improve the integration of what are now fragmented processes, help fix problems in the âvirtualâ phase before significant resources have been invested in physical structures, and lead to less rework in the field and less waste of materials, labor, and time. The linking of virtual models to intelligent databases is especially important because the design and construction of a single capital facility or infrastructure project typically involves hundreds or even thousands of documentsâdrawings, physical models, plans, details of mechanical systems, contracts, budgets, construction specifications, building codes, product descriptions, and others. Digital databases provide a platform for improving design quality, reducing errors and omissions, and reducing costs. Having a common set of real-time information accessible to project owners, contractors, subcontractors, project managers, and other involved parties saves time, improves communication, and reduces errors caused by conflicting information in individual documents or applications. Such databases also provide long-term benefits: The âas-builtâ information related to a completed project can provide valuable data for operating and maintaining it for 30 or more years. Through more collaborative processes and an emphasis on planning up front, interoperable technology applications can help to improve the quality and speed of project-related decision making; integrate processes, supply chains, and work flow sequencing; improve data accuracy and reduce the time spent on data entry; and reduce design and engineering conflicts and the subsequent need for rework. IMPROVED JOB-SITE EFFICIENCY THROUGH MORE EFFECTIVE INTERFACING OF PEOPLE, PROCESSES, MATERIALS, EQUIPMENT, AND INFORMATION The job site for a large construction project is a dynamic place, involving numerous contractors, subcontractors, tradespeople, and laborers, all of whom require equipment, materials, and supplies to complete their tasks. Managing these activities and demands to achieve the maximum efficiency from the required resources is difficult and typically not done well. The difficulty of attracting and retaining experienced project foremen, project managers, engineers, and skilled tradespeople to construction is a well-documented issue that may be exacerbated in the future. Shortages of trained and educated workers could prove to be a significant obstacle not only to improved construction productivity but also to national efforts focused on infrastructure renewal, environmental sustainability, and global climate change. Greater use of automated equipment at the job site offers an opportunity to conduct some construction-related tasks more efficiently, with fewer people, as long as those people are adequately trained. To date, a primary obstacle to more widespread use of automated equipment is the segmentation of planning, design, procurement, and construction processes: The improved productivity benefits that could result from the effective use of automated equipment will be fully realized only through 4 The AIA is the leading professional membership association for licensed architects, emerging professionals, and allied partners. Additional information is available at http://www.aia.org. Accessed February 4, 2009.
OPPORTUNITIES FOR BREAKTHROUGH IMPROVEMENTS 31 FIGURE 3.1 Examples of poorly managed job sites. SOURCE: Thomas (2008). collaborative planning up front that involves the project owner, designers, contractors, and subcontractors. The Construction Industry Institute (CII) has developed a checklist for the use of automated equipment in the design process that would help overcome this obstacle (Purdue University, 2009). Time, money, and resources are wasted on a project in situations such as these: â¢ A project is poorly managed and its workers must wait around for the tools, supplies, materials or equipment, or instructions needed to do their jobs; â¢ Work crewsâ schedules conflict; â¢ Work crews are not on-site at the appropriate time; â¢ Work areas are overcrowded; and â¢ Materials, supplies, and equipment are stored haphazardly, cannot be easily located, and must be moved several times (Figure 3.1). Greater use of information technologies at the job site for supply chain management and other uses could significantly cut waste related to time, materials, and labor and improve the quality of projects. Relevant technologies in widespread use include radio-frequency identification (RFID) tags that can be used for the tracking of materials, and personal digital assistants (PDAs) that project managers and others can use to input data from the field into a common digital database. Technologies are also available to help with more efficient procurement of materials and supplies in order to improve supply management and delivery and to eliminate the need for some on-site storage. Having real-time project information available to owners, contractors and subcontractors, and tradespeople at the job site could expedite and improve on-site decision making and work sequencing and foster collaborative partnerships. Technologies such as shareware sites (e.g., file transfer protocol shareware), PDAs, and others can be used to collect data developed during construction in order to manage tasks, capture changes, and meet reporting requirements. When organized and used correctly, such technologies can significantly improve job-site efficiency and execution in the field and expedite problem resolution so that projects can continue to progress. Improved project and job-site management through the effective use of technologies requires well-trained, educated workers who can work collaboratively and communicate effectively and who possess technical knowledge. Traditionally, construction firms have recruited engineering graduates for design and project management positions. As described in Appendix E (see the section entitled âEducational Preparation for the Engineering Professional of Tomorrowâ), the National Academy of Engineering, the American Society of Civil Engineers (ASCE), and other organizations have called for major changes in engineering curriculums to provide engineers with the opportunity to develop the skills required to work effectively in the 21st-century operating environment. However, engineers with communication and collaboration skills will likely be in demand by many industries in addition to
32 ADVANCING THE COMPETITIVENESS AND EFFICIENCY OF THE U.S. CONSTRUCTION INDUSTRY construction. Construction firms will thus need to compete with other employers and industries whose images and opportunities may be perceived to be superior. To meet the needs of the construction industry better, some colleges and universities have established programs in construction management and related issues. The ASCE has established a task force to define, recognize, and incorporate engineering paraprofessionals as an important part of civil engineering.5 And a number of professional societies and construction firms have established mentoring, internship, and awards programs to stimulate the interest of high school students in pursuing a career in construction (in Appendix E, see the section entitled âRecruiting Tomorrowâs Workforceâ). All of these initiatives hold promise for creating a professional workforce with the skills to use effectively information technologies and automated equipment that can improve job-site efficiency. GREATER USE OF PREFABRICATION, PREASSEMBLY, MODULARIZATION, AND OFF-SITE FABRICATION TECHNIQUES AND PROCESSES Construction workers typically are exposed to high levels of noise, dust and airborne particles, adverse weather conditions, and other factors that can cause fatigue and injuries and thereby reduce efficiency and productivity. New types of equipment can make an activity physically easier to perform, easier to control, more precise, and safer for construction workers. Similarly, changes in materials can reduce the weight of construction components, which in turn can make them easier to handle, move, and install. Manufacturing building components off-site provides for more controlled conditions and allows for improved quality and precision in the fabrication of the component. Prefabrication, preassembly, modularization, and off-site fabrication involve the assembly or fabrication of building systems and/or components at off-site locations and plants. Once completed, the systems or components are shipped to a construction job site for installation at the appropriate time. One study that examined the relationship between changes in material technology and construction productivity based on 100 construction-related tasks found the following: â¢ Labor productivity for the same activity increased by 30 percent where lighter materials were used; and â¢ Labor productivity also improved when construction activities were performed using materials that were easier to install or were pre-fabricated (Goodrum et al., 2009). Prefabrication and related techniques allow for the following: â¢ More controlled conditions for weather, quality control, improved supervision of labor, easier access to tools, and fewer material deliveries (CII, 2002). â¢ Fewer job-site environmental impacts because of reductions in material waste, air and water pollution, dust and noise, and overall energy costs, although prefabrication and related technologies may also entail higher transportation costs and energy costs at off-site locations; â¢ Compressed project schedules that result from changing the sequencing of work flow (e.g., allowing for the assembly of components off-site while foundations are being poured on-site; allowing for the assembly of components off-site while permits are being processed); â¢ Fewer conflicts in work crew scheduling and better sequencing of craftspersons; 5 ASCE defines engineering paraprofessional (EPP) as a position supporting a licensed engineer (LE). The EPP works under the responsible charge of an LE but may exert a high level of judgment in the performance of his or her work. EPPs comprehend and can apply knowledge of engineering principles in the solution of broadly defined problems. EPPs are generally engineering technologists, but engineers, engineer interns, and professional engineers can also provide engineering paraprofessional services. Additional information is contained in Appendix E, in the section entitled âA Greater Role for Paraprofessionals.â
OPPORTUNITIES FOR BREAKTHROUGH IMPROVEMENTS 33 FIGURE 3.2 Example of a prefabricated exterior paneling system. SOURCE: Thomas (2008). â¢ Reduced requirements for on-site materials storage, and fewer losses or misplacements of materials; and â¢ Increased worker safety through reduced exposures to inclement weather, temperature extremes, and ongoing or hazardous operations; better working conditions (e.g., components traditionally constructed on-site at heights or in confined spaces can be fabricated off-site and then hoisted into place using cranes) (CURT, 2007). Prefabrication and related techniques are commonly used in the construction of industrial projects, but they are also used, if less frequently, for commercial and infrastructure projects. Best practices for the use of these technologies have been developed by CII. The committee believes that greater use and deployment of these techniques (if used appropriately) can result in lower project costs, shorter schedules, improved quality, more efficient use of labor and materials, and improved worker safety (Figure 3.2). INNOVATIVE, WIDESPREAD USE OF DEMONSTRATION INSTALLATIONS Although automated equipment, prefabricated components, virtual models, information technologies, and other innovations are available, deploying them throughout the capital facilities sector is difficult. Until such innovations have been proven to be âmature,â their use entails new risks that many project owners and contractors are not willing to accept.6 Demonstration installations can be an effective approach for mitigating the risks related to using innovative processes, technologies, or products. Demonstration installations provide an environment for testing and verifying the effectiveness and the maturity of new processes, technologies, and materials. Such installations can take a variety of forms: field testing on a job site; construction-related seminars, training, conferences; and scientific laboratories with sophisticated equipment and standardized testing and reporting protocols. In a broad sense, a demonstration installation is a research and development (R&D) tool that represents one way for the construction industry to address particular problems. For example, an owner or 6 A forthcoming report titled Enhancing Innovation of the EPC Industry: A White Paper focuses on the mind- set, resources, processes, and operating environments of engineering-procurement-construction (EPC) organizations and their effect on attitudes toward innovation. The report describes two elements required to assist EPC organizations in advancing innovation: (1) an innovation maturity index aimed at the readiness of companies to adopt innovations, and (2) an economic model demonstrating the value of innovation investment (CII, forthcoming).
34 ADVANCING THE COMPETITIVENESS AND EFFICIENCY OF THE U.S. CONSTRUCTION INDUSTRY a contractor who has developed a more efficient way to complete a task could stage a field demonstration for other contractors at the job site. If the demonstration proved effective, other contractors could immediately adopt that method or process (e.g., on-site, vendor-managed supplies). More elaborate demonstrations may be necessary for the adoption of high-cost, high-risk technologies. For example, robotic devices from different manufacturers could be evaluated in a laboratory where they are required to perform the same operation. Construction processes or equipment could be evaluated in a testbed in which the same operators use different tools to ascertain their efficiency, reliability, and ease of use for a given task. Federal entities such as the National Aeronautics and Space Administration, the Department of Defense, and scientific laboratories have developed âtechnology readiness indexesâ to evaluate the maturity of high-risk, high-cost, untested technologies for deployment. Technology readiness indexes are systematic measurement systems to support the assessment of the maturity of a particular technology and the consistent comparison of maturity among different types of technology (Mankins, 1995). Typically, for a technology to be considered mature it must have been applied in a prototype, tested in a relevant or operational environment, and found to have performed adequately for the intended application. This sequence implies the need for a way to measure maturity and for a process to ensure that only sufficiently mature technologies are employed. It also provides a basis for an independent, objective evaluation of a new technology. Box 3.1 provides an example of the definitions for technology readiness levels for one technology readiness index. The committee believes that the development of a similar type of tool for evaluating high-risk, high-cost, or high-impact construction-related technologies could also expedite the deployment of innovations by verifying their maturity and readiness for use by construction firms. EFFECTIVE PERFORMANCE MEASUREMENT TO DRIVE EFFICIENCY AND SUPPORT INNOVATION Performance measures are enablers of innovation and of corrective actions throughout a projectâs life cycle. They can help companies and organizations understand how processes or practices led to success or failure, improvements or inefficiencies, and how to use that knowledge to improve products, processes, and the outcomes of active projects. The nature of construction projects and the industry itself calls for lagging, current, and leading performance indicators at the industry, project, and task levels, respectively, as described below. Factors in determining how and by whom performance measures should be developed include (1) the availability, time-sensitivity, and accuracy of the data required for developing effective measures; (2) the purposes for which the measures are to be used; and (3) the beneficiaries of their use. â¢ Industry-level measures are needed to determine whether the productivity of the construction industry as a whole is improving or declining over time. Lagging indicators can be used to track industry trends for several years to help identify the root causes of improvement or decline. Information related to root causes in turn can be used to develop industry-wide strategies for improvement, including the improvement of policies, procedures, practices, and research. Industry-level measures can also be used to track the impact of innovations, such as the greater use of prefabricated components, interoperable technologies, and automated equipment.
OPPORTUNITIES FOR BREAKTHROUGH IMPROVEMENTS 35 BOX 3.1 Example of Definitions of Technology Readiness Levels (TRLs) for a Technology Readiness Index TRL 1â¯Basic principles observed and reported: Transition from scientific research to applied research. Essential characteristics and behaviors of systems and architectures. Descriptive tools are mathematical formulations or algorithms. TRL 2â¯Technology concept and/or application formulated: Applied research. Theory and scientific principles are focused on specific application area to define the concept. Characteristics of the application are described. Analytical tools are developed for simulation or analysis of the application. TRL 3â¯Analytical and experimental critical function and/or characteristic proof-of concept: Proof-of- concept validation. Active Research and Development (R&D) is initiated with analytical and laboratory studies. Demonstration of technical feasibility using breadboard or brassboard implementations that are exercised with representative data. TRL 4â¯Component/subsystem validation in laboratory environment: Stand-alone prototyping implementation and test. Integration of technology elements. Experiments with full-scale problems or data sets. TRL 5â¯System/subsystem/component validation in relevant environment: Thorough testing of prototyping in representative environment. Basic technology elements integrated with reasonably realistic supporting elements. Prototyping implementations conform to target environment and interfaces. TRL 6â¯System/subsystem model or prototyping demonstration in a relevant end-to-end environment (ground or space): Prototyping implementations on full-scale realistic problems. Partially integrated with existing systems. Limited documentation available. Engineering feasibility fully demonstrated in actual system application. TRL 7â¯System prototyping demonstration in an operational environment (ground or space): System prototyping demonstration in operational environment. System is at or near scale of the operational system, with most functions available for demonstration and test. Well integrated with collateral and ancillary systems. Limited documentation available. TRL 8â¯Actual system completed and âmission qualifiedâ through test and demonstration in an operational environment (ground or space): End of system development. Fully integrated with operational hardware and software systems. Most user documentation, training documentation, and maintenance documentation completed. All functionality tested in simulated and operational scenarios. Verification and Validation (V&V) completed. TRL 9â¯Actual system âmission provenâ through successful mission operations (ground or space): Fully integrated with operational hardware/software systems. Actual system has been thoroughly demonstrated and tested in its operational environment. All documentation completed. Successful operational experience. Sustaining engineering support in place. SOURCE: Los Alamos National Laboratory (2009).
36 ADVANCING THE COMPETITIVENESS AND EFFICIENCY OF THE U.S. CONSTRUCTION INDUSTRY Industry-level statistics and measures are of greatest interest and value to federal and other government agencies (e.g., the Department of Commerce, the Department of Labor), to policy makers, and to research-oriented organizations in government, academia, and the private sector. Because these are lagging indicators that are not highly time sensitive, their value to individual project owners and contractors is limited. At the international level, industry-wide measures could be important in determining the competitiveness of the U.S. construction industry with those in the United Kingdom, Canada, South Korea, or other developed countries. Information about international benchmarking programs and issues related to the development of effective industry-level metrics for different countries are outlined in Appendix C. â¢ Project-level measures are needed to contribute to the understanding of how an individual project compares with other similar projects (e.g., other school buildings, other oil refineries) in terms of total cost, schedule, cost changes, labor hours, and other factors. Such current measures are of greatest interest to owners of multiple projects and to large contractors who are seeking to reduce the costs and delivery time of projects, to improve worker safety, or to initiate some other change in construction- related processes and practices. Project-level data are a function of individual components (e.g., materials, systems), processes (e.g., type of contract, type of project delivery system), and tasks. Developing effective project-level data is challenging because no two projects are exactly the same, if only because they are located at different sites. Significant variations among project types are the rule. School buildings, for example, differ by the type of school (e.g., elementary, secondary, or high school), by the number of students and teachers, and by the type of the amenities (e.g., gymnasiums, kitchens). For some types of projects, metrics based on total facility cost per square foot or on total installed cost are used. Nonetheless, care must be taken in determining which project parameters should be measured so as to provide the greatest value to individual firms and the industry as a whole. â¢ Task-level measures are leading indicators that are commonly used by contractors and subcontractors that need to evaluate the efficiency of their workforces on a daily or weekly basis so that problems on active projects can be detected and corrected quickly. As noted in Chapter 2, task-level data are collected by contractors, by CII, and by the R.S. Means Company.