By Mark McKenzie on Oct 1, 2019 12:00:00 PM
Having alignment between engineering deliverables, the construction estimate, the project master schedule and the job cost system, I think most of us would agree, sounds like Project Controls in Heaven.
In the perfect world, quantities and specifications are provided from the engineering firm that follow the path of construction. An accurate construction estimate is efficiently developed using the data provided by the engineer. After being awarded a project, using the estimate we simply hit "Enter" (while working in our fully integrated system) and the control budget is setup in the job cost system and all schedule activities with their attributes are populated into the master schedule tool. The work breakdown structure (wbs) and work packages, being established during the engineering phase, align perfectly with how the work will be managed in the field. As quantities are installed and time is charged, the job cost system can track labor cost and productivity. As the field reports work package progress, the master schedule is updated accordingly, in real-time. In addition, standard cost codes are applied for job costing and job cost forecasting.
Project Controls in heaven supports the requirement that Estimating will be provided accurate historical data, by standard cost code, to use for future estimates. A schedule of values acceptable to the owner is generated as well, ensuring positive cash flow throughout the life cycle of the project. Because the construction work packages were established during the engineering and design phase, construction has available a bill of material, filterable to the work package level, to support procurement, material management, planning & scheduling and progress reporting.
Back to Earth
Although the processes and technology exist to manage this data, and what is described above is certainly achievable, it does create a challenge. Based on my experience, unless it is a pure EPC contract, a universally agreed upon wbs for monitoring and controlling cost and reporting progress being optimized by the various stakeholders on a project is rare. Contractual fragmentation, multiple entities with multiple different systems, varying construction management approaches, protection of proprietary information, and so on, can lead to project controls in Hell vs. the Nirvana we strive for.
The schedule of values either established by the owner or contractor may not align with how the work is being planned and executed. Contractors and subcontractors are going to do everything possible to “front-load” their schedule of values in an attempt to achieve positive cash flow. The whole earned value system is a measure of cost based on billing and typically has nothing to do with actual project progress or productivity.
Project Controls can mean a lot of different things to different people. I am not sure they actually control anything. With all this nerd-wrestling of data going on by all the various entities involved in a project, we can easily lose track of what’s important. We have dedicated people on projects generating various “rear view mirror” measures that do nothing to improve performance. Division 1 or Indirect costs increase but productivity and schedule reliability do not improve. This is not only the case of doing the same thing over and over again expecting different results, we are doing more of the same thing, over and over again.
The Path Forward
To improve safety, quality, productivity and schedule reliability performance, rather than investing so much money, time and energy on digitizing paperwork and reporting bad news, maybe we should plan better? To do so, the right processes and technology are essential, but we also need to develop our peoples’ planning and leadership skills. Let’s break it down…
Processes – Best Practices
Standardize your cost codes! This means to the task level. Without standard cost codes, you lack accurate historical data. Historical data is of course critical for future estimates but also for planning purposes. It’s helpful to know how long it took a certain crew to complete a task. Cost codes can be created in segments to align with how the work is planned, executed and reported. Remember, you cannot improve without standardization.
A well thought out work breakdown structure can eliminate the disconnect between the estimate, how the work is planned and scheduled and cost/progress reporting. Even if these systems are not technically integrated, the information management is greatly simplified.
Pull vs. Push planning: To the greatest extent possible, make your project master schedule milestone based. The 5,000 – 10,000 activity master schedule developed in a vacuum by a technician is an example of push planning and is of little use to those doing the work. The more complex the master schedule gets, the more time we spend maintaining it rather than figuring out how we can do things safer, better and faster.
Pull planning though short interval scheduling, is designed to create continuous flow resulting in improved schedule predictability/reliability. The master schedule may give guidance as to when we need to finish things, short interval scheduling is about how we are going to execute to meet the budget & time frames established. Via constraint removal, field supervisors can ensure the crews have everything they need to successfully execute the work safely and efficiently.
I understand we need to report progress and cost for accounting and financial reasons. To improve field performance, when we don’t hit our marks, reporting should help us determine the root cause of the problem, not just report the bad news. Where performance meets or exceeds expectations, we need to analyze and institutionalize these best practices though process improvement and standardization of these best practices.
The construction technology industry, in general, is convinced that you are laggards when it comes to adopting technology. That may be true to a certain extent, but I would suggest that digitizing paperwork and tools that just produce reports are not the solution. We don’t need more reports generated per day, we need more cubic yards poured, steel hung, walls framed, mechanical installed, welds made and cable pulled per day, done safely and to the requirements. Productivity of home and field office staff is not the problem.
If your goal is to improve field safety, quality, productivity and schedule reliability, technology should be chosen that embeds and institutionalizes the proven best practices such as cost code standardization, work package management, job safety analysis, pull planning via short interval scheduling, constraint removal and root cause analysis.
Yes employee time, progress and cost are important outputs, but once again these are lagging indicators not leading indicators. In “lean” terms, this work is necessary but waste. It needs to be done but does not add value to the customer.
We suggest contractors become knowledgeable of existing and emerging technology and not be afraid to test it. The advancement and practical application of modeling, artificial intelligence, virtual reality, augmented reality, mixed reality, robotics, enterprise content management, etc. is remarkable. But before you go out and buy a fleet of drones you might want to make sure the fundamentals are in place.
Frontline Supervisor Training
The individuals who have the greatest impact the crew’s safety, quality, productivity and schedule compliance are the frontline supervisors, however, they tend to receive the least amount of training. Often times these people are skilled at their craft and demonstrate some leadership potential. As a result they are given “battlefield promotions”. They may not have had any training on how to plan & schedule, manage labor or given “new tools in the tool box” to become an effective leader. If investing in your current frontline supervisors and those “high potentials” is not a key part of your strategy, they will most likely leave and go to work for a company that recognizes their value.
Project Controls are measures and reports that tell us if we are achieving the desired results and more importantly, tell us if we are continuously improving. Project Controls in Heaven is when this information is created as a result of people executing the work. It just happens.
Our message is that if you want this information to be good news vs. bad news, focus on improving your planning and scheduling processes, implementing technology that helps you do that and developing your field supervisors.