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  • Writer's pictureJohn Lowry

THE CONSTRUCTION CHALLENGE - TOGETHER WE CAN


Together We Can

FOREWORD

In his new book “How Big Things Get Done”, Bent Flyvberg, explains that the Empire State Building was constructed in 1931 on a very short timeline time and under budget. The owners boasted that, “before any work was done on the site, the architects knew exactly how many beams and of what lengths, even how many rivets and bolts would be needed, They knew how many windows, how many blocks of stone, how much concrete, bricks, mortar would be needed. Even before it began, the Empire State was finished entirely - on paper”

And the Americans did not even have the advantage of Bills of Quantities, a British tradition. Anyone who has seen an Australian Bill of Quantities would know that it was common practice, up to around 1990, to create a detailed data model, including cost and time, with which to realistically predict the outcome and to monitor and manage progress.

This was rules-based, shared data form which projects could be readily managed.

Since then, we have gone backwards. Clients and governments were persuaded that ownership of critical data was a risk they could avoid, by allowing others to create control and own the data. The problem is, the new data was mostly produced at discount prices or by people with little or no skill or experience. It is inaccurate, unstructured, coarse-grained and worst of all, silo’d by the many contractors and subcontractors involved. Cost and time risk has been magnified.


This fragmentation was further exacerbated when “fast-track” contracting became common practice when interest rates were so high it was considered that unplanned speed of construction was more valuable than the cost of money. Clients did not recognise that “fast-track” contracting requires considerably more planning and management than linear planning and construction.


With the sudden upsurge of interest in AI and Data Analytics, we have a much clearer understanding of the value of data. The industry is beginning to understand that, in order to create big data analytics, the industry must collaborate with rules-based, shared, structured (or teachable) data.


Governments and clients are realising the benefit of creating and owning critical data for better cost / time prediction, managing the financial interface, facilities management, tax minimisation and disposal.


They are beginning to understand, observing retailers at every level from boutique stores to Amazon, that mission critical data is amongst their most valuable asset.


Now the Good News

The professions still retain and develop the data structures and the skills to create and analyse critical data to open the data logjam that prevents accurate prediction, does not permit simple, effective management process, and leaves no legacy for whole-of-life building management.


Making these changes will unlock the potential of new and emerging analytic and automation technologies to drive client focussed collaboration, transparency, accuracy, productivity and data analytics and data recycling.


Taking charge of your projects and your business requires no more than an understanding of the value to be gained, some simple advice, and a small mindset change.


“How Big Things Get Done” should be compulsory reading for all owners, politicians, public servants, consultants, builders and decision makers before embarking, over-enthusiastically, on their next project, whether its a country courthouse, a hospital or a shiny new football stadium, where “over budget, over time, over and over” is the expectation.


INTRODUCTION

A construction project is amongst the most distributed, collaborative business ventures to embark upon. There are a myriad of stakeholders, from the public and clients (including government clients), financiers, design and management consultants, contractors, subcontractors and suppliers.


Contract management, supported by processes embedded in contract, are not keeping pace with business process improvement in the world, and are no longer fit for purpose in a fast-moving environment.


Are we, as a nation up to the challenge?



Collaborative Contracting

There is general consensus (ref. Aus. Constructor’s Assn), that the way forward for the construction of major projects is collaborative contracting.


To have any real effect, this must mean more than collaboration at the head contract level.

It is taken as read that design/construction data, in the form of plans and specifications is shared amongst stakeholders in order to undertake the work. However, critical financial and planning data is held in “data silos”, in vain attempts to isolate and package cost risk.

To be effective, we must first separate contract from process, as much as possible. The construction process can, and should become seamless, not constrained in contractual silos. I proposed this to the CII / QUT Research Task Force, Re-engineering the Construction Delivery Process, in 1999. This proposal was not explored in favour of the then fashionable “Partnering” contractual model. Where is Partnering now?


The second enabler to collaborative contracting will be the provision of rules-based, shared cost and project controls project management data. without which deep collaboration can not occur. This is a fundamental requirement for open collaboration and simple, seamless contractual processes that do not inhibit progress, that should be the number one priority once a project is underway.


To maintain transparency and trust for all stakeholders, these critical resources should be independently provided, owned and managed by clients, through their project management resources.


The provision of rules-based shared cost and project controls data will open new doors to risk minimisation and productivity, with the ability to include real-time, productivity gains throughout the management cycle.


SMART CONTRACT

One of the biggest inhibitors to progress is lack of trust in tendering and contract management processes.


The development of smart contract applications, using Web3/blockchain technologies has the potential to transform large parts of the contract management process, while restoring trust through the entire construction supply network.


The Queensland Government has just announced a further deferment of the next phase of the project trust account regime. One of the reasons given by the minister is the lack of fit for purpose software.


Smart contract applications, already in the first phase of development, will provide for the seamless transfer of moneys, based on pre-defined rules (contract and legislation). It will eliminate or minimise onerous reporting and auditing requirements built into the legislation.


Business Process Automation

Current manual contract management processes, now at least forty years old, are not fit for purpose in fast moving construction, if they ever were. Many contract management processes inhibit progress on site, causing conflict, delay and cost and time blowouts, and disputes partly because people can not comply with the conflicting priorities of cost and time.


Simple changes to contractual process can prevent “virtual” management processes from inhibiting progress. Once again, this is proven process; simple and easy to implement.

Existing and emerging automations will generate significant productivity gains through real-time reporting and process management.


Where to start

Sometimes big change can feel so daunting that we don’t know where, or how, to start. The Big Bang method is too destructive and too hard to wrap our minds around. There are many who are happy with the status quo, as long as it doesn’t disrupt or complicate their lives.


As with all today’s business, with the advent of new technologies, including BIM, CD/laser manufacturing and the myriad of site improvements, construction processes are (or should be) performed faster and better than ever before. But contract management processes are not keeping pace, inhibiting progress, technology uptake and innovation.


The starting point of any change process is to ensure that all stakeholders understand the issues, the benefits that will accrue, and the risks if we do nothing; then prepare to move.

Visualisation of complex processes is a relatively new area of work, spearheaded by Manuel Lima (visualcomplexity.com). Construction contract management involves a complex and continual network of interactions within processes that we don’t generally consider; but failure in these tiny connections is one of the major causes of delay, unexpected cost blowouts and unproductive disputes. Visualising these complex processes will help us to see where and why failures and logjams occur, so that we can start to address them.

From there, mapping and activating new and better systems, processes and contract is not so daunting.


Conclusion

A healthy, productive construction industry is not a dream. We can implement significant change now.

However it does require:

  • A shift in culture from combative to collaborative;

  • Improved management skills;

  • Improved contract management competencies;

  • Changes in contract management process with supporting changes in contract.

It is not the first time that the industry has veered off course, and it can be corrected. Achieving this shift will require commitment and leadership from all stakeholders, especially governments, financiers and clients.


As Louis XlV’s department of works was recommended in 1683, as a result of what may have been the first government enquiry into the financial control of construction contracts: 'In the name of God: re-establish good faith, give the quantities of the work and do not refuse a reasonable extra payment to the contractor who will fulfil his obligations.’ (Martin Barnes)

We have the knowledge and the tools to successfully achieve change. All that is now required is understanding, commitment and energy to plan and implement meaningful change.


PS: Lowry Consulting /Proplan developed logistics software and deployed the first laptop computer on Everest to assist the 1988 Bicentennial Everest Expedition. ( Willby, Sorrel (1989). Beyond The Icefall. The first laptop computer used at basecamp to manage team / climber logistics. National Library of Australia: Child & Associates Publishing Pty Ltd. pp. all. ISBN 0-86777-318-9.)

Gabby Kanizay, 19, the youngest Australian woman to climb the summit of Mount Everest




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