Ah- Good old productivity! After having built thousands of plants, the industry keeps struggling with the seemingly simple concept of earnings. Meeting the schedule to make your goals and earn your hours. Simple ? Yes. Easy? No! I am not trying to advertise a silver bullet but rubbing salt into an age old wound in reality.
Food for thought-
- Are short term gains with achieving productivity in the construction world hurting our chances of project delivery?
- Is a “Finishing” culture absent in the industry? Why are we all so good with Starting somethings and we get caught with our inabilities to Finish?
The Finishing culture is something that will always have a bearing directly on our abilities to deliver something to a downstream customer and also to earn the right hours. Of you think of this as a fishbone with the end game being “Finish” the roadblocks and show stoppers must be identified as soon as they are discovered and this doesn’t involve any fancy software but a basic process of being able to know the decision making chain. Each person in this chain is critical.
3. What drives the worker? Are a good percentage of them just here for a paycheck?
4. Does Data really help? Is Data going to a huge driver and can we actually see this improving productivity?
A simple footnote- Its always good to earn more than you spend. As simple as that
When the project is in its infancy there seems to be plenty of optimism around; there is time and the budget looks healthy. The team feels upbeat about progress and there is a general belief they will be able to meet deadlines and make a decent profit. If this sounds like a great position to be in, what makes it more promising is how much of an influence the team can have on project costs at this stage. What factors can the team influence-
- Ability to optimize design to affect raw material – Early on, the design team has flexibility to evaluate several options on design and how design could specify low cost raw material by way of both labor and freight
- Ability to optimize design for capital cost reduction- Design optimization plays a significant role with constructability options thereby leading to reduced labor cost. This becomes a key cost driver especially for projects in locations where labor costs form a high percentage of project costs
- Ability to optimize the schedule by managing project float- The early part of the project is always the ideal phase at which time the execution team have the ability to look at options in terms of constructability, sequencing, heavy equipment usage, temporary facility sizing
You got the timing, you got it right. If you now plan to make changes when you are close to half way done, you may be too late! That’s right, its all about timing!
The mantra to Project Setup:
Know your Contract (Scope and T’s & C’s)
Budget and time ownership and accountability
Execution plan- Clear vision and strategy
Prescribe project goals and the “food chain”
PLANNING DEFINITELY HAPPENS BETWEEN THE EARS! DONT LET ANYONE TELL YOU DIFFERENT!
Cost vs Benefit? What gives?
It’s a project and yes changes are inevitable and to a large extent, so are delays. On a construction project, a delay could mean a critical path delay which for most part is instantly discoverable when it occurs. A cumulative delay is more of a cancer that continues to eat the project and is usually not discoverable until sometimes its too late. Do not be fooled into a false sense of security; if your end dates are holding just because your schedule says so, that’s only part of the news. Continue looking into how your project is going, are you making physical progress, is your SPI decent?
Back to the main story, when delays happen, project management reacts and most likely they will get all hands on deck and scream “Recover!” Yes, I know panic stations set in and all that but after the shouting, slow down and get down to doing something that will lend some sanity to the situation.
Ok, there is a delay and you have to recover, but here is the catch do you really need to recover? Remember all said and done, recovery costs $$!
A few points to consider-
- What do you achieve by recovery? If your project was ahead of schedule and even after the delay you can still deliver when the customer wants it, do you still want to recover.
- What do you gain by recovering? Is there a substantial bonus at stake?
- If recovery is going to cost you $ X and end results do not matter to the customer as long as product is delivered when the customer needs it, why spend the $$!
- If delays are translated into lost revenue for you in terms of liquidated damages amounting to $ X, but if the recovery costs you $x + $y, do you still want to recover?
- If the recovery helps gaining net revenue for you and protect your reputation by timely delivery, yes it may be worth it.
If you can truly slow down and assess the real cost-benefit of recovery, you are on the right track. Do not be wildebeest and go with the herd, learn to stand out and think on your own, a lone wolf perhaps?
Not an opinion but an open forum for anyone contractually savvy to provide their “two cents”. For Prime contract that is either Cost reimbursable, Unit Prices or Time & Material, how true is the notion that risks from the Prime are flowed down to the sub-contracts? Are all costs being eventually paid up by the Customer?
May be you don’t get profits and Overhead on specific overruns, but all sub-contract costs are certainly included. Now how about Prime contracts that are Lumpsum; a different ball game here.These are contracts where risks and opportunities would be borne in its entirety by the contractor.
Project Management almost sounds like a cliche doesn’t it? We get myriads of literature, wannabe project managers, management gurus making fast bucks while stating the obvious! At the risk of stating another well work cliché, I will say this- Stick to the basics and that’s the mantra for success.
It is NOT rocket science and it is not that hard. Yet when you see, read and hear all these esoteric folks make it sound like they just invented the wheel, it could potentially cast doubts in one’s mind. I am not claiming to know it all for even a moment, but as I see it, there are a few elements of a project in any industry that are common themes which play a major role in the project’s ability to make it or break it.
WHAT YOU NEED TO KNOW?
- Contract Terms & Conditions
- Contract types
- Role of lower tier contractors
- Other services
- Project baselining
- Setting up the execution plan
- Setting up realistic achievable schedules
- Setting up costs
- Team buy in
- The Cost of Time
- Burden & overheads
- Dealing with Change
- Change to Project capital costs
- Change to project completion date
- Creeping delays
- Dealing with Project performance
- What happens?
- Causes and ongoing issues
- Performance management
This is not an exhaustive list and I have left some sections out on purpose. But what you see is part of a special book I will be working on with an esteemed Professor at GW University, Washington DC.