Even though I don't follow NFL football and every time I see it I have to go over the rules, it becomes an entertaining sport because of how highly tactical and systematic it is. A film that delves into the bowels of this sport is Oliver Stone's "Any Given Sunday", which shows us the dark side of the NFL, manages to convey the intensity with which this sport is played on and off the court, with fast and aggressive camera handling.
The film follows the Miami Sharks, directed by Tony D'Amato (Al Pacino), who along with his team goes through a losing streak and where his veteran quarterback faces retirement. Overcoming the conflicts, the complication of a new quarterback, D’Amato gives his team an inspiring and motivating speech in the dressing rooms, with 3 minutes to go until the end of the game. I quote the climax of it:
“You’ve got to look at the guy next to you, look into his eyes. Now I think you're going to see a guy who will go that inch with you. You're gonna see a guy who will sacrifice himself for this team, because he knows when it comes down to it you're gonna do the same for him. That’s a team, gentlemen, and either, we heal, now, as a team, or we will die as individuals.”
As a team, how relevant is collaborative teamwork, seeking not only your own benefit but that of all parties? A team that has been playing as individuals today is the construction industry, which has been automatically defeated by other industries. Proof of this is that around 90% of projects are delivered over budget and late .
A survey of 20 CEOs and Owners of construction companies answering the question: “What do you attribute mainly to the construction industry being the most inefficient of all?”
1. 57% indicated that construction is the only industry that separates the design process from the production process, commonly using the Design-Build-Bid (DBB) methodology as a project delivery system.
2. 43% indicated that the contracting modality (Low Bid) and the type of transactional contract are responsible for the little or no evolution of the industry.
From a historical perspective, the traditional contracting system (DBB) is actually a relatively recent concept, used in the last 150 years. In contrast, there are documents that report that the Design/Build (DB) concept has been used for more than 4 millennia . What happened? Why did the processes become separated?
There is not much information about why this happened. Some papers attribute it to the fact that the accelerated growth of infrastructure generated an urgent need for speed and design professionals, as well as cost efficiencies. This caused the projects to be designed in a cabinet and were sent to the field for construction. However, this alleged search for cost efficiencies achieved the completely opposite effect. Since, by separating processes and responsibilities, in addition to the lack of information, construction costs began to skyrocket in order to mitigate risks.
What did governments do to get competitive prices?
More than a century ago and in order to obtain better prices for the construction of public works and fight corruption, the “Low Bid” contracting model was created. What was the result over the years? The paper "Historical Background - Low Bid Concept" summarizes that while "The Low Bid Concept has served the public for many years, it does not necessarily ensure the best way for governments of getting the best product for every dollar spent, ” (and I love this analogy).
“ How far would IBM and others have gone, who have used innovative practices to become giants of American industry and commerce if they had typecast to contract with the lowest responsible offer for the corporate interest? Price is important, but it has become an increasing burden as we consider the other necessary product requirements, such as timeliness, durability, and quality.”
In other words, it also played against us, making our industry also the laggard in innovations The use of inadequate management methodology, extensive flow of payments, and the lack of collaboration have made us continue to build in a very similar way as we did 100 years ago . Today the lack of efficiency of our industry costs the world economy US $ 1.60 Trillion annually .
The mistake of the traditional industry lies in its focus solely on the transformation process. Lean Construction, in contrast, views it as production systems based on three complementary objectives: Transformation (T), Flow (F) and Value Generation (V) .
How can we improve our industry?
The first thing we must be clear about is that the application of the Lean Construction philosophy covers the entire industry, and not only the construction stage. It applies to clients, architects, designers, engineers, builders, suppliers and end users.
Here are some suggestions that could serve as a starting point:
1. It is essential that the Project / Infrastructure Managers of the “Owners” clearly establish the product they want to buy within their organization. This is not an easy task since much of this definition falls on internal customers (operations, marketing, commercial, finance, etc.), which are not linked exclusively to the project, but to the operation of their business and its respective agenda. If the product required by clients is not clear enough, the best way to obtain one that meets expectations is through an integrated project system.
2. Promote innovation and implementation of technological tools (BIM, AI, Big data, Blockchain, IoT, Machine Learning) and management practices (LPS, TVD, VDC), as well as new materials and automation, which are fundamental and absolutely necessary to move forward.
3. Just as we have a concern to promote improvements at a technical level, we also require a “Cultural Change”, which is more closely linked to “Soft Skills”. 78% of the CEO of Construction Companies indicate that a Project Manager needs to have at least 50% of soft skills and the other 50% of technical skills. Ironically, 90% of training in the industry is technical, leaving only 10% for training in HR, leadership, etc. Project leaders need to be experts in effective communication, crisis management, professional ethics, etc.
4. Remember that the project does not belong to the engineers, architects, designers or builders. The project belongs to our clients, and we owe it to them. Our main objective must be to add VALUE.
5. If we believe in the Lean Culture, we must be ambassadors of it. We must transmit this to our clients. Make them part of the problem and the solution. We must promote collaborative contracts with a win-win philosophy.
6. Let's define what we want to be. If we decide to be a BMW, Mercedes, Honda or TOYOTA and a client is looking for a Chinese car, that is not our client. There is a market for everyone and we must position ourselves where we want to be.
7. Be responsible towards our clients. If a project is estimated at 100, we do not promise the client that it is feasible to do it at 80 just to satisfy them in the short term and leading to financial problems later on. Remember that our clients run a business and need to be financially responsible.
8. Do not force deadlines. In Peru, we are one of the fastest to build. I worked at a regional company, where similar projects were carried out in 30 months in Colombia, 18 months in Chile and only 14 months in Peru. All of them were for the same client, who accepted the deadlines and evaluated the projects with these considerations. It is good that we are efficient, and as a consequence fast. However, this should not affect the quality of our product. Personally I was very envious to see a project in Colombia with impeccable in finishesin a service corridor. In Peru, I have never seen similar finishes in areas that are not intended for the general public.
How can these approaches become reality if they are not driven by something that has enough force to change current conditions?
It is up to industry leaders to strengthen associations and involve entities such as CAPECO, ASEI, LCI Peru, BIM Committee of Peru, to define standards and meet them.
After COVID19, many of our clients' businesses will have to reinvent themselves and become more efficient. This will have a direct impact on our industry, where they will demand an even better product at a lower price ... Today, collaborative models are the only ones that have demonstrated that substantial efficiencies can be obtained in projects, in addition to being a promoter of innovation. The change depends on each of us who work in this industry. Collaborative contracts are based on transparency and trust. The first depends on our actions, the second is the result of them...
"Whoever sows truth, reaps confidence"
1. Efficiency Eludes Construction Industry, The Economist, August 2017
2. Design-Build Contracting Handbook, Cushman-Loulakis, 2001
3. Construction is Broken, Alan Mossman, 2017
4. Reinventing Construction through a productivity revolution, Mckinsey, February 2017
5. An Exploration towards a production theory and its application to construction, Koskela, 2000