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FMI Quarterly/June 2014/June 1, 2014

The Lamborghini and the Country Road

Tech15_imageBest-of-class firms of today recognize that high performance relies on not only the vehicle but also the environment in which it operates.

In 1963 Ferruccio Lamborghini embarked upon the quest of creating the ultimate luxury sports car and surpassing its ultimate rival —the Ferrari. Almost 50 years later, Lamborghini continues to create handcrafted machines of raw power as iconic as the raging bull emblem adorning the hoods of its vehicles.

The Countach, the Diablo, the Gallardo and the Murcielago represent a family of cars that embodies the traits of some of the world’s most exquisite art, all while pushing the limits of conventional automobile engineering. The latest release was named the Aventador. This model featured a V-12, 700 hp engine enabling the car to go 0-60 mph in 2.9 seconds. The staggering base price tag of $435,000 USD paled in comparison to a limited edition release of the Aventador (one of one) that topped the auction at more than $2 million.

There are few frills in any Lamborghini model in that it is designed for one role — performance. The airfoil design and hand-built engine have been engineered and synchronized to enhance the vehicle’s speed, agility and power. The Aventador as a machine has few rivals. The greatest enemy to any sports car is the surface on which it runs. The top speed of 217 mph assumes optimal conditions. Now consider an old, unpaved, country road complete with potholes, ruts and occasional sandy patches. With the playing field “leveled,” the Aventador’s performance is equalized to that of a midsized sedan, minivan or a utility vehicle, albeit at a slightly higher cost.

The construction industry today has the tool capability of the Lamborghini, but many firms lack the appropriate infrastructure to drive performance commensurate with their contemporaries. Project management exists as the main framework, guiding the smooth delivery of today’s construction projects. Collaboration, on the other hand, is the engine that enables smoother communication and coordination across multiple platforms, leveraging the latest technology. Unfortunately, the lines of project management and project collaboration have become blurred and convoluted. As technology evolves at an exponential rate, firm management infrastructure fails to maintain lockstep. Worse yet, leaders believe that collaboration alone without modification of a firm’s management practices will enable higher performance.

THE ENGINE AND THE ROAD: WHERE MANAGEMENT MEETS COLLABORATION

Whether a best-of-class firm has $1 million or $1 billion in revenue, it has a set of tools that enable higher performance. Best practices are not defined by the tools of one individual, but the amalgamation of tools and processes created by the entire organization with one goal — enable superior project performance. While the framework is easy to illustrate, creating a high-performing organization is limited by the frailty of human behavior. Companies often seek the “one true way” of management, but wrestle to overcome individualistic behavior. For example, it is not uncommon to witness a project manager of an average-size contracting firm create his/her set of forms and logs, suited not only to their tastes and proclivities but also to those of their customers and projects. Now consider a firm with 10 project managers with 10 separate ways of “managing.” Consider then the number of permutations introduced when these 10 managers interact with their field manager counterparts. While one set of superior project management tools may exist, the firm drowns in inefficiency. It is important to note that best practices are not to be confused for the results they achieve. For instance, many firms will deem a best practice anything that achieves high profitability. A true set of project management best practices is defined by consistency, organization adoption and profitability. The main tenets of high-performing organizations and their applicable management dogma are as follows:

  • Management processes must be applied and improved continuously. Examine management processes to ensure they are relevant to today’s business. As clients, markets and delivery methods change, so should the processes.
  • Measurement is necessary to change behavior and validate results. Once the processes are established and employees are trained, measure compliance.
  • Management tools must be examined, sharpened and retooled as the business strategy dictates. In the same vein as the processes, the tools must be evaluated for relevance, much like applications in smart technology, checklists, logs, planning tools, etc., should be honed and recalibrated accordingly.
  • Leadership must identify and implement process improvements continuously. Leadership’s role is to encourage the use of the firm’s practices and the consistent refinements to them.
  • Training is required to give associates the skills needed to use the management processes. Best practices become the core curriculum for training and are introduced in the onboarding process. This reinforces the right way of doing things in the firm.

Three factors have largely limited the role of technology in project management.

  • The industry’s slow adoption rate of said technology
  • High initial expenses and maintenance costs of the technology
  • A reluctance to invest in technology, that, when improperly integrated, yields a low return on investment

n the continuum of technology adoption, only a minority of companies would classify themselves as early embracers. However, technology change for the sake of change is not innovation. It is always important to differentiate between true “game-changing” technology and technology investment fumbles that serve only to distract the firm’s practitioners. Innovation implies change for
the good. Secondly, while hard investment dollars of new technology and the cost of change have largely become less of an issue, stigmas abound about the true return on investments. Lastly, one of the tragic errors in implementing appropriate technological solutions lie in the firm’s belief that the tool will be an appropriate stopgap measure for poor management. Enter the Lamborghini on the country road.

Collaboration tools have evolved at lightning speed. With communication barriers limited merely by bandwidth, firms have the ability to communicate at all levels within an organization and with all stakeholders of a project. Additionally, firms with both internal and external stakeholders have the ability to transmit critical data as well as apply appropriate ownership rights. Put another way, a contractor can share appropriate information with its management team but still provide data to its trade contractor team without compromising itself or sharing confidential business information. Consider Exhibit 1.

2014q2_lamborghini_ex1

The concept of Exhibit 1 is simply to provide a summary of some of the elements that true collaboration can achieve. In some cases, true collaboration may be limited to the actual delivery system. For example, a lump-sum, hard-bid evaluation process may offer a less collaborative environment, while a true design-build or integrated project delivery model might facilitate the greatest collaboration at all levels, from designer to trade contractor. Consider the benefit of a tool that provides streamlined coordination during the design phase as well as allowing an end user to conduct virtual feasibility studies regarding a potential interior renovation. While high-performance project management and truly boundless project collaboration are different concepts, the synergy created by a well-orchestrated project management delivery system and a collaborative vehicle driving proactive communication creates the perfect marriage — Innovative Building (see Exhibit 2).

2014q2_lamborghini_ex2The conundrum lies in differentiating the two concepts and understanding that one relies symbiotically on the other, much like the Aventador relies on the smooth test track. No one expects perfect project conditions, but poor performance is often masked and disguised. For instance, a smooth test track does not intimate perfect weather conditions. However, it is easy to visualize how the converse of this argument — a rough, country road — is further exacerbated by inclement weather. The same could be true for weak project management. The items in Exhibit 3 below are examples of “management excuses” and the corollary root cause.

2014q2_lamborghini_ex3

It is important to note that there is merit to certain excuses. For example, many contractors would agree that the quality of design documents is on the decline, particularly on projects that are not design-build or design-assist. In these instances, it would be ill-informed to place most of the blame to the contractor or trade partners for a weak design. The only insinuation made is that if there is a certain “expectation” of weak engineering or poor design, wouldn’t the construction team have a management process in place to develop effective project strategies earlier? This would be the equivalent of driving on the same stretch of road every day for a week, experiencing high traffic every day and then blaming the car for getting into the traffic in the first place. Knowing that certain conditions exist allows management to alter its approach to the work or simply not to engage in the work at all. Additionally, general contractors and construction managers that leverage themselves with a high percentage of trade-performed scope should have processes and tools to cope with weaker-performing subcontractors. In short, these excuses only serve to perpetuate the project-victim mentality that is pervasive in so many firms in the world today.

What is more important, project management or project collaboration? Both are important, and the real question lies in the timing and approach to improving a firm’s management and collaborative approach — the chicken before the egg or the Aventador before the roadway? Arguably, a management infrastructure is the most important component relative to timing. The challenge lies in how firms approach the solution. Knowing the road is flawed is not nearly as attractive as buying the new sports car. Project
management infrastructure is essential to harness the capability of collaboration, but organizational leadership must make a strategic decision to implement best practices and avoid the distraction of the bright, shiny object.

FORM MEETS FUNCTION —THE INTERSECTION OF INNOVATIVE BUILDING

With a codified set of consistent best practices, the collaboration engine is optimized. Collaboration is more than software that manages the drawings or schedules. Collaboration is not just about access to job cost information. The transparency and access to information to make empowered decisions ultimately improves decision-making in the end. Collaboration means working in cooperation to achieve results. This is a rather simple definition for such an all-encompassing process. With appropriately aligned behaviors, true collaboration can exist. Collaborative tools abound and, together with project management best practices, have the ability to revolutionize the construction industry.

Whether a database, the cloud or a software suite, true project collaboration should push the envelope of conventional thinking. Consider the concept of augmented reality. Augmented reality (AR) is simply a “live feed” of the physical world, which has been altered with some element of computer graphic interface (i.e., sound, video, graphics, etc.). What sounds like a world of science fiction is actually as commonplace as Monday Night Football. Every football fan witnesses augmented reality as he or she sits in front of the television and watches his or her team straddle the line of scrimmage (the red line), clawing for the imaginary first down marker (the yellow) that is drawn across the field. Similar technology is currently in use on most smartphone/tablet applications. Whether it is playing an augmented reality board game with a child or looking through the lens of a smartphone at a landscape to find a great restaurant, interactivity in the real and virtual world has become a viable business outlet.

2014q2_lamborghini_ex4Can the construction industry leverage technology enough to facilitate better collaboration among designers, end-users and contractors? It is important to address the advantages of a true collaborative environment. What incentives does an end-user have to participate in such an environment? The illustration in Exhibit 4 is an example of how a concept such as augmented reality would be applied to the various stakeholders on a simple building project.

In this example, the rooftop air-handler units — designated by RTU-XXXX — receive a QR code as shown in the diagram. By using a tablet or smartphone, an end user or contractor can either scan the QR code or use the augmented reality through the device’s lens and quickly receive any important information for said equipment. Life-cycle data, replacement parts, service history, “lessons learned” and productivity data are mere samples of the data that can be stored and accessed in this collaborative setting. Similar applications could be applied to switchgear, fire pumps, generators, elevators, main structural components and other functional building systems. Additionally, the virtual project is constructed simultaneously as the “brick and mortar” version. Each  stakeholder has real-time access to information about the project and provides input at appropriate level and clearance. A  summary of the collaborative data is listed in Exhibit 5, detailing the appropriate data utilization for each group.

2014q2_lamborghini_ex5

Once again, it is important to note that true collaboration as illustrated above is also predicated on the delivery system utilized by the team. Even in settings that are more restrictive — say design-bid-build versus design-build or integrated project delivery — business units can apply elements of a collaborative system to serve their own internal needs. For instance, if a contractor were to use an AR virtual setting, it would be able to provide fully integrated as-built documents while also creating a viable educational tool for its organization. Furthermore, the team could use this system to enhance the management of specific trade partners. For example, the illustration detailed in Exhibit 6 below provides a different perspective on collaboration.

2014q2_lamborghini_ex6

The purpose of this diagram is to map the collaborative process from design through construction. The use of radio frequency identification, or RFID, is another element that is being used throughout the industry. In this example, the tags are used to track a wide flange steel member from production at a foundry to its final resting place as a beam on the third floor. The data is then uploaded, which feeds the following items:

  • Critical Path Schedule — Each uploaded element provides crew-size data, production data and sequencing.
  • Building Information Model Documents — Similar to that of the CPM schedule, component parts can be uploaded with structural information, which can support future renovation/retrofit, building loading and possible forensic data in the event of failure or disaster events.
  • Document Control Software — Product data that supports operations and maintenance can be uploaded with critical attic stock and replacement part features.
  • Financial Dashboards— In addition to providing real-time productivity data, information gathered from RFIDs can be tied to labor statistics to drive true-earned-value reports real time and as historical unit cost information.

Ultimately, the one detractor to a completely collaborative environment is cost. Assuming the controls and infrastructure are in place and coordinated appropriately, there is still the need for human interaction to track these parts, pieces and systems. It is difficult to argue the initial upfront expense of any collaborative tool. However, it would be myopic not to see the long-term value in such information. If one were simply to examine the benefit of calculating historical production costs or the value of a real-time teaching tool for a future generation of managers, it becomes apparent how collaboration can support a best-of-class firm. Additionally, as the data is collected and used in the management of day-to-day operations, it is assumed that it will provide savings through higher productivity and efficiencies in the enhancements to the firm’s project management model.

It is also important to note that the items capable of examination are almost infinite. A firm entering this collaborative workspace would probably begin with the subjects of highest risk/return. For instance, a mechanical contractor might choose to utilize some semblance of the tools described to track industrial piping or simply follow the example featured in Figure 3 concerning rooftop air handlers. This data may assist its service department’s efforts in growing that component of its business. A general contractor that exclusively builds utilizing the integrated project delivery methodology would undoubtedly seek to explore the outer bounds of an AR setting to drive higher customer satisfaction. As with any investment, the level of project collaboration should be closely coordinated to the firm’s overarching strategy. Much as the Lamborghini thrives on the open road, it is hardly a utilitarian vehicle that benefits everyone.

THE TEST TRACK —IMPLEMENTING SUPERIOR PROJECT MANAGEMENT AND PROJECT COLLABORATION

The single greatest hurdle to overcoming the inertia most organizations experience is found in the human element. Challenging the status quo requires unwavering resolve and persistence in the face of equally persistent contrarian organizational behavior. It is easy to understand why organizations prefer implementing collaborative tools instead of attempting to change individual  behaviors. Implementing software and management best practices faces an uphill battle when employees dig their heels in and spout the trite rhetoric of, “We’ve never done it that way before,” or “I have my own system for handling that.” Furthermore, project management implementation requires an investment of time and energy that few firms feel they can dedicate, especially as businesses wrestle with project challenges and volatile futures. In the spirit of the Aventador analogy, this would be similar to the driver failing to maintain the car because pulling over to change the oil will take time away from the enjoyment of driving. To keep a machine of this magnitude operating efficiently and effectively, it must be serviced as needed. Construction organizations should be maintained in the same light.

Exhibit 7 briefly examines the steps of project management and project collaboration.

2014q2_lamborghini_ex7

With a steady underpinning of project management processes, an organization can undertake the installation of collaborative tools. Both steps are similar in that they require a holistic and all-hands approach to implementing successfully. Both require a strong connection to the firm’s overarching strategy. Lastly, both require a strong element of education and training to reinforce the main tenets. Many organizations utilize training to drive change in their business. However, without a codified body of knowledge in the firm, training alone has the ability to undermine and frustrate managers and field leaders. In the absence of process, a vacuum is created and there is ultimately a reversion back to individualistic behaviors. This is not to say training is not important, but rather to say that the timing of said training should come at the end to bolster the management practices and collaborative tools more effectively.

More than 50 years ago, Lamborghini strived to create a driving experience unlike any other. Best-of-class firms of today recognize that high performance relies on not only the vehicle but also the environment in which it operates. In another 50 years, will firms manage and collaborate like the Aventador of its day or like the Pinto of yesteryear?


Gregg Schoppman is a principal with FMI Corporation. He can be reached at 813.636.1259 or via email at gschoppman@fminet.com.

 

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