Top General Contractors deliver world-class facilities by hiring top talent, building effective project teams and improving productivity which, in return, drives increased construction productivity and competitive advantage.Yet, the steps to achieve and maintain a thriving organization are a little more complex. What are the key components that make for successful projects and thriving organizations? After 20 years of studying the industry, Trimble has compiled the 7 most common ‘habits’ that highly successful, best-in-class organizations deploy to boost organizational performance and yield impressive direct and soft benefits.
Before we outline the seven common habits in depth, it’s important to understand the general definition of a habit within the construction environment. To paraphrase, famed leadership guru Stephen R. Covey, ‘a habit is the intersection of knowing what to do with the skills to do it and the desire to get it done’. In essence, a habit combines inspirational leadership with standard operating procedures and effective training.
1. Create AccountabilityBest-in-Class firms manage accountability on every project, and their PMs are the business managers for their projects. The best PMs personally feel that if their project is losing money, they are losing money. If a project has problems, they don’t make excuses by blaming the estimator, the architect, or the owner. Companies can create accountability by having senior management actively involved in the periodic, rigorous examination of job status. This does not mean just a cursory review of project costs; it also includes a narrative of the following:
- Current project status
- Project cost projections compared to budget
- Change order issues and management
- Customer concerns
- Subcontractor performance
- Cash flow status
- Profit projections
Senior management must create the proper atmosphere during these reviews by creating a forum for open and honest communication, rather than recrimination and punishment.
Only then will project personnel feel comfortable enough to share both the good and bad news so that corrective action can be initiated before it’s too late.
In our experience, this culture of “no excuses” is one of the best competitive advantages a contractor can possess.
2. Be ProactiveOne of the most valuable habits of best-in-class organizations is the ability to establish and measure key performance ‘leading’ indicators. Simply put, they take a proactive leadership problem-solving approach, not a reactive approach.
If you’re unsure whether you’re a proactive or reactive leader, ask yourself:
- Are my projects consistently over budget and/or late?
- Does my unofficial job description include “Fire Fighter” or “Problem Solver”?
- Do I regularly get e-mails marked “urgent” or written with CAPITAL LETTERS?
- Do I start the day with great intentions only to get derailed by 10 AM?
- Do most of my project performance reports focus on last month’s data?
- Are there high volumes of RFIs?
- Do I get surprised by change orders?
- Do I use contingency funds early and often?
Typical ‘reactive’ lagging indicators include:
Of course, to get to the promised land of working on important, but not urgent items, you have to first complete those tasks activities. Once best-in-class contractors have completed as many of urgent tasks as possible, they can begin to plan ahead for future action items.
- Actual cost versus budget costs
- Actual schedule milestones accomplished
- Quantities installed
- Cash flow to date
For example, proactive contractors often track and review the following forward-looking leading indicators:
- Estimate to complete (ETC)
- Estimate at completion (EAC)
- Potential Change Orders
- Project risks
- Contingency utilization
- 2-week look ahead
- Cash flow forecast
- Workflow aging & cycle time
They create time “above the project” in areas including:
- Capital program vision & strategy communication
- Training and development
- Talent management
- New talent recruiting
- New employee on-boarding
3. Forecast CompletionMuch of project performance management is focused on what has already happened. In fact, historical data used to be the only way contractors could gain insight into project performance. Anyone who has been in the engineering and construction industry for a while can quickly recall the painful process of waiting for an accounting period to close in order to see how much money was spent on a project. In most cases, managers were looking at data from one to two months prior. The inability to obtain project status in a timely manner allows issues in the field to become urgent problems that could have a cost impact or delay a project. The demand for real-time project information is what gave rise to cost management or project accounting.
The best cost management software does something no accounting system can do—it tracks and controls risks that could impact project cost as soon as those risks become known.
For example, an RFI can be flagged as having a potential cost impact and correlated to a potential change order or a contingency fund. When this information is shared in real-time, project stakeholders can see what is happening now and look ahead to make better decisions.
If there is only one ‘habit’ you leverage from seven habits outlined in this paper, consider utilizing a project management solution that empowers users to easily identify and capture change the moment it happens, manage those changes in cost and time all the way through the approval process, and provide real time reporting metrics into project risk.
4. Automate to OperateBest-in-class contractors invest their time in high value activities. Automate to operate reinforces the age-old truth that no one has enough time in their day to get everything done. The habit that best-in-class contractors have figured out is to automate as much of the things that steal their time as possible so that they can reapply their time to the things that directly improve program performance. In today’s environment, there are two dirty little secrets that tend to steal much more of our time than we care to admit. Project managers spend:
- Too much time crunching numbers: According to several studies including ones conducted by the Project Management Institute, as much as 80% of a project manager’s time is spent communicating project status. When speaking with the design team, a project manager needs to discuss the latest design changes. The subcontractors wants to discuss payment status. The internal management team wants to hear the latest overall status. It’s all related but each conversation requires different information. Project managers often spend a lot of time crunching numbers to enable a productive meeting. The data is shared in a variety of formats from Excel spreadsheets to PowerPoint slides.
- Too much time chasing people down: How many times have you personally walked an emergency change order request all around the owner’s office even climbing flights of stairs to get everyone to sign it and approve it? How about a late invoice that a subcontractor desperately needs today or they will walk off the job site?
5. Empathize, Adapt & OvercomeIn the military, soldiers are taught to improvise, adapt and overcome because, as German military strategist Helmuth von Moltke once said, “No battle plan survives contact with the enemy.” Essentially, military leaders know that no plan is perfect. Since project plans are not a life safety issue, the fifth ‘habit’ borrows from military expertise. Essentially, best-in-class contractors empathize, adapt and overcome, especially when it comes to technology-driven process implementation. A best-in-class contractor realizes that the best solution to improve productivity, streamline processes and drive efficiency is going to require some adjustment once it makes it into the field. Therefore, these leaders listen; they ask stakeholders what they need to make their jobs easier and where are the bottlenecks that slow processes. They talk to adjacent stakeholders, including those in accounting and finance, as well as architects, engineers, subcontractors, and owners.
In summary, best-in-class owners seek first to understand before being understood—a fundamental tenet of active listening.
6. Collaborate to Accelerate
Habit #6 builds on #5. Contractors must lead the strategic implementation of a project management software. They must collaborate and engage all stakeholders inside and outside the organization.
Consider that one of the biggest risks to any project is change orders. Change orders can wreak havoc on a construction schedule and raise project costs beyond the allocated budget.
Change orders occur from a lack of communication. Too often in the design of a hospital wing or a university facility, the capital project team forgets to communicate with the end users.
Best-in-class contractors are using technology such as building information modeling tools to engage internal stakeholders and end users. Remember, if a picture is worth a thousand words, a model is worth a million. Top contractors find a way to make complex models as easy to use as Google Earth so that someone with no design or construction background can engage in the process and contribute—thereby reducing the chance of change orders during construction.
7. Relentlessly Improve
Continuous improvement is vital to every company’s success, regardless of size or market segment.
Stephen Covey calls, it ‘sharpening the saw’.
Once they’ve automated processes to improve collaboration, efficiency and productivity, top contractors use all the data to continually improve and identify bottlenecks.
One of the most reliable ways to make sure your company is continuously improving is to apply Six Sigma’s DMAIC approach. DMAIC, which stands for Define, Measure, Analyze, Improve and Control, is a data-driven improvement cycle used for improving, optimizing and stabilizing business processes and designs.