Understanding Construction Disruption through the 8m's
Construction deserves to be disrupted. We all know it. We all feel it. No one knows it or feels it more, (or feels more passionately) than those who have endured the pain of executing large commercial programs over $1Billion- where confident 'experts' spend their time replicating the disasters of their previous project.
While many debate about how disruption should occur, I'd like to propose some principles and concepts that I hope will excite the imagination of those who are best positioned to make disruptive moves.
In order to gain some clarity about the goals of disruption, some background information regarding what I call 'structural' and 'processing' issues are worth examining first.
Structural Issues The core issue with the current construction methodology is structural-- the way the programs, organizations, and delivery are set up. This is important to know because many of the initiatives that construction diehards point to in their effort to show progress in the construction industry are actually aesthetic, and effect little real change in the outcome of large programs.
This is true because the business model itself is the problem.
The business model for large construction programs usually involves an owner (typically a government entity), a client's representative organization, a group of consultants ranging from design to financial and usually including a PMO and project management consultant (PMC), and then are executed by the contractor(s) with their subs and suppliers.
Inherent issues with this business model are too numerous to document here ranging from delegated authority to contract management, but the top three noteworthies are:
1) design is usually around 35% complete when the project is kicked off, leaving design approvals to bounce around a large and inefficient organization
2) The top layer does not realize that they are only processing information,
3) Few people consider certification requirements (especially for hospitals, railways, and airports- where an operator is likely to be required) until it's too late.
These 'structural' issues are important to understand. This business model is outdated and not needed in an AI and post-disruption world.
Processing Issues: Whether you're building a nice addition to your home or a 100 story skyscraper (or the file cabinets to go inside it) 8 things are required... what I like to call the 8 M's. Understanding how the 8M's are executed and who is responsible for them is a key indicator of how disaster strikes large programs.
Now take a look at the 8M's list. Once the contract is signed the majority of the 8M's are directly controlled by the contractor. If you think management is controlled by the consultants remember that they are actually not producing anything but information-related documents, reports, and analysis. Most of which do nothing to convert materials into a finished product on site.
A combination from Hell Mixing these two major structural factors together we can begin to see that most projects are sideways before they ever start. The titanic doesn't have to hit the iceberg, the titanic already has a big hole in it before it ever leaves port. The proud captains of these behemoth projects have no clue that they are presiding over the creation of disaster.
Even with design and build contracts, the interactions with the information layer slow down and divert meaningful information transactions that cause variations.
Disruption begins by looking at the delivery process for large construction programs. As we examine the value stream, we see that the purpose of a construction program -- and therefore the mandate of the contractor is to:
A) Construct and deliver physical assets that can be certified by the appropriate authority
B) Produce and deliver documentation which provides the certification authority with evidence that all physical assets were constructed according to certification requirements
As previously stated in another of my recent articles, I am a proponent of taking away every M from the contractor except manpower. Technology disruption will make that possible. Additionally, the consultants and all the other 'experts' in the information layer can be flattened with technology enhancements, AI, and simple governance.
Yes, I know all the Project Management Companies out there like collecting cash for having a butt in a seat, but I prefer delivery to chatter.
I've deliberately left my solution in this article somewhat nebulous. Partially because I want people to sit back and look at this mess. It truly is a disaster before anyone ever shows up to the project. And that fact should scare any client. It also points to the likelihood of failure- which actual statistics confirm.
Conclusion: Not every project fails. But every project that doesn't maximize efficiency by capitalizing on the knowledge that is out there fails to make the most of the progress we have already made in this field. The impact to the schedule, cost, and quality are readily apparent.
I look forward to the day when major disruptions in the construction industry become reality, and I intend on playing an active role in facilitating key disruptors. It's one of the reasons I focus on software and business processes in my own career.
I hope you'll see it happen too... and if the predictions are correct, we won't have too long to wait.