A New Frontier for Information Sharing
With standardization being driven across more levels within construction, contractors are sharing a bit of sage advice with others in the industry as they develop their own initiatives.
There is a bold change occurring in the way construction companies operate these days. Individual projects are no longer considered singular in nature. Instead, the success/failure of each project now becomes a working knowledgebase for which a company can benchmark as it moves forward on to the next project.
As a result, the trend of adopting and applying IT (information technology) solutions on a per-project basis simply will not suffice. Running independent applications for accounting, project management, scheduling, and estimating on a project-by-project basis can create dangerous “silos of information” that can, and will, plague the overall profitability of a company.
The ability to integrate the aforementioned solutions and carry the functionality throughout the company—by division, by department, by job—has created a new frontier in operations for construction companies.
Yet with this new frontier comes a renewed value placed on standardization. As each project has the ability to impact the profitability of a company, a set of standard operating procedures needs to be firmly established in order to achieve consistent success.
It is not uncommon for organizations to work outside of its boundaries at times in order to accomplish the task at hand. This, however, can often lead to the development of bad habits and has the ability to create disparities in workflow.
A common misperception in the industry is the belief that an integrated construction management system will create a standard way of conducting business throughout the organization. However, evidence clearly shows this is not the case.
“Too many construction companies believe information systems will create standardization across their organization,” says Christian Burger, president of Burger Consulting, www.burgerconsulting.com, Wheaton, Ill. He suggests, “Technology can help facilitate standardization within the organization but it will not create it.”
Yet while technology cannot facilitate standards, it does have the ability to significantly impact the way it is enforced. Burger is adamant in his belief that the wrong IT application has the capability to negatively impact a company’s ability to properly standardize.
“If you are not on the right system standardization will be difficult to achieve,” adds Burger, “You need to be operating within the footprint of the right solution. If the solution is too contained and it forces your people to start operating outside of its boundaries in order to get the work done (e.g. spreadsheets) then you are probably running the wrong system.”
Experts agree the proper approach for standardization starts off with identifying the processes and procedures that will make your company most efficient. This includes an evaluation of current workflow methods and the employees in place. Once these processes are mapped out, it becomes a task of aligning technology, establishing training methods, and driving adoption across the company.
Many companies have gone through the battles of testing and implementing standard tools within their organizations. While the methods of execution and the benefits derived may differ, each process holds some value that can act as a nice methodology for other companies to follow.
Expert Development
“What we noticed as our organization grew was that each division started to take on its own identity and there really wasn’t any corporate standardization. Each division, depending on their technical expertise, would have certain types of scheduling, invoicing standards, and just ways they did business in general,” says Mike Santarone, senior vice president of construction with design, engineering, and construction firm The Stellar Group, www.thestellargroup.com, Jacksonville, Fla.
These factors prevented the company from presenting a unified front to customers. As a result, Stellar focused the company’s efforts on standardizing scheduling and project-management processes.
While scheduling software from Primavera Systems, www.primavera.com, Bala Cynwyd, Pa., piqued its interest, company officials wanted to do its proper due diligence prior to implementation. Nicole Padgett, project controls administrator with the company, who was pegged to spearhead the initiative, spent an inordinate amount of time talking to employees within the company about what they liked and didn’t like regarding current processes. She also attended multiple seminars on the Primavera application, which helped her develop a good strategy for obtaining buy-in across the company.
From there implementation began on a group-by-group basis, starting with those considered to be most accepting of new processes.
Padgett says the first couple of training sessions included a Primavera consultant. However, it didn’t take long before she took the reigns, leading the training and developing follow-up sessions, which help identify the responsibilities of each employee. She even modeled training sessions within the scheduling application using actual projects in place at the company.
“We also had a procedures manual put into place, which was developed about 10 years ago,” adds Padgett. “We took that manual and integrated our Primavera training manual so people were semi-familiar with the processes.”
The next phase will involve integrating project standards with financials. The overall goal is to have realtime accounting and project management accessible to those that need it.
Overall, Santarone believes success is the result of Stellar’s ability to obtain corporate buy-in and establish a champion, who helped launch an outline for the process and relate it to employees.
He adds, “Whatever time frame you think it will take (to implement standards), I would add 50% because one group will need more training or more information and training is not rolled out like we thought it would be.”
Time Savings
Tim Malarney, director of IT with Shiel Sexton, www.shielsexton.com, Indianapolis, Ind., says a good measure of the company’s success with standardization is associated with ramp-up time on a project. The typical timeframe of six-to-eight months that it would take for a project manager to get up and running on a job started to become a hindrance as the company experienced growth.
This was the driving point for the company implementing project management/accounting software from Viewpoint Construction Software, www.viewpointcs.com, Portland, Ore. It proceeded to develop standards based on the software. While not the typical formula, it has produced tremendous success for the company.
“Through the process of implementing software, developing standards, developing training processes, and utilizing things like (a collaborative Web portal) in our system, we have shortened the window (for getting users up and running) to about 30-60 days,” says Malarney. “Management of projects is now independent of the person running it.”
Standard practices allow a project manager to move from one job to another without any lag time associated with his ability to get up and running. This is because all projects follow the same process for such things as submittals, cost tracking, recording meeting minutes, etc.
“The new project manager is already understanding the processes and procedures used by the previous project manger,” says Malarney. “Yes, he still needs to understand the mindset of that previous person, but overall this is now a huge risk reduction for us.”
He concurs with the fact the chances for standardization success increase with a champion steering the direction for others. He suggests this champion be someone outside of the IT realm—ideally someone at the operations level.
“You will always have a controller from accounting and IT in the mix, but having someone from operations will make all of the difference,” Malarney comments. “We have done that and this person has helped us write the playbook (for its use) and (operates) our (collaborative Web portal)—lending support for users on processes, procedures, systems, forms out in the field—whatever they need in order to effectively run this system.”
Benchmark Analysis
Roebbelen Contracting Inc., www.roebbelen.com, Sacramento, Calif., initially leveraged Prolog from Meridian Systems, www.meridiansystems.com, Folsom, Calif., to standardize change-management processes, control shop drawings, and unify communication, all in compliance with ISO (Intl. Organization for Standardization) 9000 certification being driven by the company. During this process the company quickly realized the technology could also help develop mechanisms for managing parties outside of the company.
Analysis tools for tracking work patterns with various architects throughout a period of time could uncover, for example, that one particular architect has a track record for accumulating a large number of RFIs (requests for information) per million dollars of work. This data presented to owners now provides a unique value, as Roebbelen can help that owner pick an architect that may not drive up the costs and time through multiple RFIs.
“You realize it is important to be customer focused, but what does that really mean?” says John Breidenbach, information systems manager with the company. “Does it mean a quick delivery of a project under budget or is it satisfying customers along way? It’s actually a combination of both. We realized that we may have delivered the project on time but it may not have met the owner’s needs. Did we pay attention to certain requests along the way? Did we have good communication throughout the process to meet those requests?”
The company established a series of criteria through ISO, which helps manage these relationships. This encompasses the adequacy of office personnel, knowledge needs, project costs and supervision, adequacy of training, and overall customer satisfaction. These factors are measured via a series of customer satisfaction surveys, which helps the company implement new measures for rectifying areas that were not met during the course of a project.
“The technology is a big part of it, but it is just the first step,” adds Breidenbach. “We also need to change the way we work. We need to get the planning and communication squared away upfront. We need to have milestones with the owner. The ability to manage all of these commitments helps us better execute on all fronts.”
Mike Kramer, senior director of construction and facilities with Wild Oats, www.wildoats.com, Boulder, Colo., says standardization can help an organization learn from its mistakes, with technology playing a primary role.
“Years ago if a change or a revision was required of a form or documents it was (the construction manager’s) responsibility to ensure all parties had a new form,” says Kramer. “With an online application (it uses technology from USGN, www.usgn.net, Phoenix, Ariz.) all we need to do is add a field to the RFI database, for example, and it populates the new form and we are assured everyone is using the same form.”
Wild Oats has standardized on multiple fronts, including site feasibility forms with architects. The company is continually adding new questions to ask regarding potential construction sites, and updating the forms online ensures the company is doing its proper due diligence with each architect.
“Standardization in and of itself is key for (Wild Oats) and technology makes it much easier; we are no longer following paper trails with our forms,” adds Kramer.
Repeatability
Construction management and design/build firm S.M. Wilson & Co., www.smwilson.com, St. Louis, Mo., is another company that uses customer satisfaction as one form for measuring standardization success.
“In general, when you reach that $100 million level you need to standardize or you will lose control,” says Dale Miller, company vice president. “You now have another layer of management that needs to gather information and we felt having a system that can aid in consistent reporting was critical to this process.”
The company uncovered a disturbing trend a few years back that saw projects beginning to lose profitability about midway through completion—unbeknownst to the project managers. Miller says it would come out of nowhere and leave the company in quite an unappealing position with owners. It was from this point Miller was tabbed to help the company direct a change.
This began with Miller diagramming current processes in place, such as how invoices came in and subcontracts were written. From there he developed a flow chart and brought in a group of employees to establish which methods were indeed most effective.
The process concluded with Miller outlining specifics in terms of deadlines, requirements, reporting methods, and then breaking the benchmarks down into 10 or 12 processes that were critical to how the company operates. Replacing current project management and accounting applications, and the ad-hoc integration, with a more integrated solution from CMiC, www.cmic.ca, Toronto, Ont., eased the process of enforcing these standards.
Profitability with repeat clients is where Miller measures the success of this project. The majority of its work is negotiated and he estimates 80% comes from repeat clients, which has improved tremendously since implementation of standards nearly six years earlier.
“Each job has a fluctuation in profitability; there is an estimated profit and some come in below, some above,” adds Miller. “Where our standardization shows is in the fact (jobs that go greatly below) have gone away. Fluctuations and our ability to project those profits in the future help in our ability to plan from a financial standpoint and know where revenues and profits will be.”
Technology plays a strong role in a company’s ability to enforce the rules of standardization. This is not limited strictly to large general contractors and owners. In fact, midsized contractors have many options to help them enforce standards across the business. Project management and estimating technology from Corecon, www.corecon.com, Huntington Beach, Calif., for example, allows companies to customize such things as RFIs, submittal packages, contracts, and change orders. In essence this allows them to apply technology to enforce project standards they have developed in-house.
However, your success with standardization will ultimately be decided by how employees operate under these guidelines and how management utilizes the derivative data from these procedures.
Standardization establishes a set of guidelines that should become the basis for how your company works on each project. While it may seem to be a large initiative, the results could be what set your organization apart from the pack in this highly competitive market. •