A few years back, McKinsey & Company released The construction productivity imperative, an article focused on productivity and cost-related challenges the construction industry faces, factors as to why, and suggestions on how to improve results. Following the publication of the article, the industry saw a sizable increase in construction tech investment. Many contech firms put forth the assertion that their solutions will solve the problem simply by measuring productivity.
Yes, measuring construction productivity is important for forecasting labor cost and project completion dates, but doing this alone does not solve the problem. Even if you are meeting your estimated production rates, do you really believe your crews are performing at maximum efficiency?
The term “real time data” is often used by tech companies and consultants to sell their products and services. The idea is that if we know there is a problem, we can fix it quickly. History will repeat itself unless we change the course. The question is, with your new technology, are you just getting bad news faster? Unfortunately, when “rear view measures” indicate productivity was below expectations, the money is already lost, your reputation may be damaged, and it will continue unless changes are made. What was that definition of insanity?
We would suggest that if you want to improve field productivity, implement a standard planning and scheduling process, based on industry best practices, that ensures your frontline supervisors and workers have everything they need before the work begins. If you are an owner of a company or someone in your organization that is responsible for results and you do not have the above in place, be prepared to lose money and customers.
A good planning and scheduling standard that includes short interval scheduling will help to identify “leading indicators” of productivity problems to come and upstream processes that are not producing the desired results.
Key components of a construction planning and scheduling standard include:
- A Work Breakdown Structure where estimating, scheduling, planning, and performance reporting align
- Milestone master schedules that are Work Package centric
- Short interval scheduling by Work Package to the task/cost code level with crews assigned
- Constraint removal process
- Safety hazards identified, and mitigation measures put in place
- Daily goals for each crew clearly communicated
- Progress reporting based on quantities installed
- Labor time reported to standard cost codes
- Root cause analysis of poor productivity/schedule slippage which might include:
- Upstream work not completed
- Waiting for drawings, specifications, material, equipment, tools
- Waiting for material
- Wrong material
- Wrong equipment or tools for the job/Equipment or tool failures
- Wrong crew size/mix
- Rework. Why?
- Bureaucratic wasteful paperwork
- Mother Nature
- Client driven changes or other impacts completely out of your control
Of the 10 types of impacts listed, 9 or 90% can be avoided by improving the overall planning/scheduling process and specifically short interval planning/constraint removal.
In support of our assertion is McKinsey & Company's The construction productivity imperative article. The article revealed what a lot of us in the industry already knew, that while other industries have seen dramatic improvements in output over the last 60 -70 years, construction productivity has flatlined. This information combined with Gartner data showing the comparatively low technology spend rate within construction drove many to the conclusion that more, better technology is the solution to the productivity problem.
What seemingly has been missed in the rush to digitize paperwork, buy drones, and implement a variety of other tech tools is that this is not what McKinsey recommended. Their 2015 article put forth the following factors that account for poor productivity and cost outcomes:
- Poor organization. Decision-making and procurement processes do not have the speed and scale required.
- Inadequate communication. Inconsistencies in reporting mean that subcontractors, contractors, and owners do not have a common understanding of how the project is faring at any given time.
- Flawed performance management. Unresolved issues stack up because of lack of communication and accountability.
- Contractual misunderstandings. The procurement team typically negotiates the contract, and this is almost always dense and complicated. When a problem comes up, project managers may not understand how to proceed.
- Missed connections. There are different levels of planning, from high-end preparation to day-by-day programs. If the daily work is not finished, schedulers need to know—but often don’t—so that they can update priorities in real time.
- Poor short-term planning. Companies are generally good at understanding what needs to happen in the next two to three months, but not nearly so much at grasping the next week or two. The result is that necessary equipment may not be in place.
- Insufficient risk management. Long-term risks get considerable consideration; the kinds that crop up on the job not nearly as much.
- Limited talent management. Companies defer to familiar people and teams rather than asking where they can find the best people for each job.
In addressing these issues McKinsey said, “These problems are serious, systemic, and all too common. Still, some companies do manage to succeed. Through our analysis of more than $1 trillion worth of capital projects over the past five years, we have found that improving “basic” project-management skills offers the most potential to improving site performance.” The article discusses 15 practices that can help to improve productivity in the three phases of project delivery—concept and design, contracting and procurement, and execution.
We at Trestles agree and have developed frontline supervisor training and process-driven solutions that address the fundamentals or the “basics” of effective project management. Yes, we sell software, but our software, if fully implemented, will simplify planning and scheduling and institutionalize “best practices” including Last Planner® and Advanced Work Packaging.
To learn more about how our solutions align with McKinsey & Company recommendations on how to improve construction productivity, schedule a free consult.
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