The Power of Process and the New World Order
“The power of a well-defined process is the creation of order amidst chaos. When it works, it can be like a fine-tuned machine, and our work is better for it.” Erin Malone, 2003.
A casual conversation with an experienced, large, well organised trade contractor reminded me of a thought-provoking paper delivered by Prof. Koji Ota at an international cost management conference in the mid 2000’s. More of that later.
The conversation ran like this.
"Working for all major and mid-tier contractors is hit and miss. If a job has a good site team, the job runs well, but where there is a bad team, the job often turns to disaster.
Mismanaged scheduling and uncontrolled variations are typical symptoms of a bad job. Morale falls and the subbies can’t wait to see the end of it, hoping to keep their shirts. A typical “bad” team includes young, inexperienced, but aggressive contract and site management staff working with little or no supervision, whose job it is to keep rising costs under control, mostly at the expense of subcontractors".
He could not name a contractor who was exempt from this criticism.
The second concern raised was that construction documentation is getting worse. Architects are often engaged for preliminary design and sales brochures, after which documentation is passed off to drafting companies. Document coordination is poor, detailing errors are common and variations due to documentation errors and omissions are inevitable.
Having given many hours over 40 years to industry documentation improvement boards and initiatives, this comment was dispiriting, to say the least. The advantages of BIM and modern document management systems will never be realised while these short-term penny-pinching attitudes persist.
Back to Dr. Ota. He qualified in London with Masters of Science and Architecture, followed by a PhD in Engineering. His interest has been in management and organisation of construction. During his studies in the UK, he looked at the differences in management of construction sites between Britain and Japan.
He concluded that British construction sites (and I add, Australian construction sites) are “personality” managed. Companies hire who they perceive as “gun project managers” to run their jobs. They are, to varying degrees autonomous, with their performance judged on the profit or loss at the end of the job. Companies may have systems and processes, but they are often not strictly audited or enforced on site. There is little or no ongoing training, coaching or insistence on in corporate process and culture.
This method of devolving management fits the Aussie mythology, where our fighting forces were seen as irreverent and suspicious of authority, but imbued with a larrikin independence where any man could step forward into the leadership role in a crises.
However, this “independence” on construction sites can lead to inconsistent performance and results, as noted by my long-suffering trade contractor.
A major problem with this management approach is resistance to adopting a systems approach to management, using more productive systems and technologies as they emerge.
This resistance is reinforced by increasingly aggressive, risk-averse contracts that impose more and more impossible conditions on the downstream supply chain in the hope that, by building an impenetrable contractual wall, they can avoid claims and reduce management responsibility and costs. Of course this short-sighted approach does not solve problems. Rather, it allows small issues to grow into unmanageable problems.
Whilst companies like to “sell” their high-tech credentials, my experience, both as a consultant and productivity software developer is that the use of cost-control techniques is mostly elementary, construction programming is used as a hammer rather than a management tool and technology adoption and use is slow, low and selective. Contractors avoid and even actively discourage new technologies that may advantage subcontractors and suppliers in their supply chain, in the belief that making contract compliance more difficult is an advantage. Streamlined payment management and mobile contract compliance systems are actively discouraged, in my experience.
A simple illustration of this failure is the number of contracts that utilise information management systems selectively, insisting that certain procedures, particularly payment claims, are processed by hand, in hard copy. A recent contract that I reviewed required all electronic communications to be copied in paper within 24 hours of the original communication. This requires subcontractors to establish systems to capture and duplicate all electronic communications, every day or risk losing important entitlements.
The risk of “systems abuse” is also greater where there is more independence over inputs. I have witnessed spectacular litigation failures where site managers “massaged” potential revenue to cover operational losses.
The PROCESS alternative
The Japanese construction process is, by contract, highly procedural and strictly governed by corporate systems and processes.
The first and most obvious advantage of this system is that it brings consistent results. Construction projects are not isolated islands with varying degrees of independence. The company’s reputation, direction, philosophy and culture are more likely to be maintained intact with a consistent approach that produces consistent results.
New technologies can be evaluated and tested before being implemented across a company with relative certainty.
A possible downside may be a lack of personal incentive to perform at a high level, for greater reward. The natural tension between the corporate and project objectives, namely evolution v revolution, must be more carefully managed.
Who will be competitive in an international construction industry?
It is, or should be, taken for granted that the corporate role of construction companies is to provide the resources for construction teams to do their job efficiently and effectively. These resources include finance, corporate administration, systems, training and plant and equipment where required.
Improved productivity in the management of construction projects lies in the separation of contract from process. The need for fast accurate information and data transfer will continue to force this change, driven by the acceleration of technological capability. New understandings of complex communications networks and changes in the ability and desire of people to communicate proactively, driven by the advent of social media, will drive open, transparent, communications.
The outcomes will be spectacular, but they will require the industry to let go of the straitjacket of hierarchical, vertical integration in favour of flat, transparent, cooperative processes and contracts that provide for deep, meaningful communication.
Right now, our industry is not well positioned to respond to the rapid and profound changes that communications technology is bringing to construction management methodology.
Productivity in the management of projects will only be improved with the adoption of seamless, transparent systems implemented with current and emerging technologies. To achieve this will require significant cultural shifts and strict corporate discipline.
Rigidly implemented corporate processes and systems, backed by continuous training, mentoring and auditing will be required to shift a reluctant, ingrained culture to a much more competitive position.
My experience of the Japanese construction is limited, but their “corporate first” system will definitely have an edge in a faster moving, competitive world.
Time will tell if our construction industry has the will and ability to step up to the plate.