Many industries - energy, petrochemical, information technology, pharmaceuticals, defense, aerospace and manufacturing - spend trillions of dollars to accomplish their business goals and objectives through multiple layers of globally dispersed companies, utilizing a number of contractors, vendors and partners to deliver products and services to their customers.

Project leaders intuitively acknowledge a McKinsey & Co. finding that more than 70 percent of labor costs in the energy business (up- and downstream, power) are "interaction costs" - the cost associated with looking for and finding information, time spent in meetings, and on the phone, e-mails and faxes, all before a single iota of goods and services is produced. Interaction costs peak at nearly 80 percent for managers and supervisors.

Technology has the potential to cut interaction costs significantly but, so far, it has focused on peer-to-peer collaboration only. In an environment of multi-layered vendors and suppliers, this type of collaboration, without context, becomes a burden, reducing productivity.

John Lennon once sang, "How can I go forward when I don't know which way it is that I'm facing?" He was singing about the impact, the inability to progress, due to a lack of context. Collaboration without context is like setting out in a well-rigged schooner in an ocean, but without a compass or stars as guidance. Without context, we may as well be lost at sea.

So, what are the contexts for the effective accomplishment of a project? They are what an owner/operator set out to accomplish, its direction, goals and objectives. Normal collaboration is simply restricted to people sharing data and information. However, in a multi-company environment, project owners need to execute by "objective-driven contextual collaboration."

Project objective-driven contextual collaboration is needed when business processes are not fully owned and controlled by one enterprise. These situations require networked organizations driven by iterative knowledge exchange to eliminate ambiguity and ensure perfect clarity, so that decision-making can be distributed, and outcomes managed.

In today's work environment, the bulk of the created knowledge assets stay trapped in the globally dispersed, "people network" instead of the owner/operator's "business network." Contextual collaboration is critical to modern businesses because it abstracts people from the grind and minutiae of information handling.

What are needed are cross-enterprise interactions for the delivery of safe, timely, quality projects, which continually build all corporate knowledge assets in the project.

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Challenge: a project manager of a $300 million deepwater gas pipeline project (with an aggressive schedule) has to manage interactions between major oil company partners distributed between Continental Europe, U.K. and North America. Add to this smoldering gruel of numerous deepwater technical challenges, ten major contractors and suppliers from Italy, Norway, Scotland, Czech Republic, Germany, Mexico and USA, and you have a recipe for yet another project that could be late, over budget, with exposures to liabilities during both project and production phases.

A project team also works with limited resources - time, budgets and people. It is also guided by its priorities: health, safety & environment, quality, schedule and cost. Most of the people resources and time are spent on resolving surprises that, if not immediately addressed, turn into major crises that have to be resolved through serially linked contractors and suppliers, with an avalanche of disconnected e-mails, documents, faxes and phone calls that are impossible to manage.

PointCross has gone "live" on a small part of a deepwater pipeline project and, early in the game, some significant benefits are already visible in speed, quality and costs.

Some benefits include: fast verification of compliance to owner/operator specifications; accurate verification of compliance by vendors; continuous capture of learning during the project process (rather than at "project close-out", where less than 30 percent of "lessons-learned" may be captured) and others. PointCross has the ability to reduce project-elapsed time by about 8 percent and the total project-spend by a similar amount.

Over 70 percent of capital expenditures by petroleum and petrochemical companies are for complex products and services. But current Web-enabled marketplaces are hopelessly inadequate to handle the cross-company interactions and transactions for complex goods and services. Most marketplaces have focused on low-hanging fruit in this industry, not the major source of waste: interaction costs. Caught in the euphoria and exuberance of the moment, the industry has focused on eeking out improvements in transaction costs. "It's Interaction Costs, Stupid!" could be a provocative bumper sticker for this industry.

Meanwhile, data and information is often mistaken for knowledge, and tens of millions of dollars are being spent on solutions to capture data and information, with the hope that they are knowledge assets and can be "magically" reused.

These are useless unless there is a context associated with each bit and byte that recreates the taxonomy of the previously created capital or knowledge asset. Knowledge management starts when knowledge is generated, in all its subtleties and nuances, across all companies that bring capital assets to market.

Trying to structure it later is like shutting the stable door after the horse has bolted. With technology's promise being realized by a few innovative people and companies, the floodgates of applications and benefits are slowly opening. If early results are any indication, it will be a gusher.

Pradeep Anand is a co-founder and president/COO of PointCross, Inc., based in Sugar Land, Texas.

PointCross' solution, Orchestra, is being used on engineering projects by global energy companies to manage contractors, vendors and suppliers, to reduce project cycle-times, costs, and exposures to risks, and to enhance the knowledge assets of participating firms.

Anand can be reached at Pradeep@pointcross.com.