The Project Manager’s MBA: Efficient Operations Management

Project managers and superintendents often find comfort in operations management, the portion of the project life cycle dictated by process and procedure. However, attempts at defining elements of operations management at the project level often yield nebulous collections of tasks with poorly established starting and terminal points. In many organizations, processes are as different as the people who are required to execute them.

High-performing organizations create their own bodies of processes, which become the foundation of the firm’s standard operating procedures. The very term—standard operating procedure—scares most managers, who will say that processes can’t be defined, creativity is needed to operate and everyone’s customers are different. These arguments, however, skirt the issue, which is to determine the ways for the firm to do its work most efficiently, keeping in mind the niche within which it operates. While it is true that every customer and project is different, managers must seek to gain a level of consistency to manage their projects.

Geary Rummler and Alan Brache, authors of “Improving Performance: How to Manage the White Space in the Organization Chart,” examine the concept of process improvement through process mapping. The authors describe a process map as a “value chain,” saying, “By its contribution to the creation of delivery of a product or service, each step in the process should add value to the preceding steps.” They argue that each process begins with an initiation point and has a terminal point or goal. This goal is how the success of each process is judged.

Creating a process map provides a unified understanding of the process for all stakeholders and allows visibility of “white spaces,” or areas of disconnect. Poorly performing managers lack an understanding of how this process comes to fruition. High performers see white spaces as areas of opportunity. They identify both the individual steps within each general part of the process (e.g. “Invoice to resident engineer, 2 days,” “Invoice to district office, 7 days”) and the owner of each step so that corrective action can be made in the event something fails to occur.

Process maps should exist for every process and should be used regularly to evaluate how they do business and to cull out inefficiencies. In their book, “Reengineering the Corporation,” Michael Hammer and James Champy ask firms to routinely ask themselves the following question: “If I were re-creating this company today, given what I know and given current technology, what would it look like?” They tell business owners and managers not to simply tinker with processes but to consider dramatic changes.

The challenge exists in the people who are asked to create this vision. The “It can’t be done here” mentality is rampant throughout the industry. Changing the behavior of management is arduous, but the alternative is stagnancy.

Project schedules provide the backbone of most construction projects. The greatest scheduling flaw of managers lies in their inability to use the document as a tool to manage the project.

At the outset of a project, a baseline schedule is developed. The first mistake in this process often lies in the lack of involvement of the field. Field managers fail to have input on how the schedule will progress and instead create their own schedules. Along with introducing a redundancy into the process, this also means that the schedule that is most likely an exhibit to the general contract and subcontracts is not being used to govern the project. A project manager may create the master schedule, but the superintendent should provide insight long before it becomes the foundation for the project.

Another element that is lacking in most schedules is the updating. Great managers update consistently and consider the following items:

Resource allocation – Managers use this information to evaluate considerations such as workspace constraints, critical path impediments and crew balances.

Cash allocation – Whether examining a cost allocation for the customer’s benefit or a cash-flow distribution for the firm’s benefit, strong managers know where the money is coming from.

Milestone focus – Schedules require milestones to gauge progress and provide “bite-size” elements for managers and crews to manage in increments.

One of the most critical elements of any schedule is its end. Schedules that terminate with landscaping and clean-up activities fail to capture how the project end will be accomplished. By measuring close-out, operationally attuned contractors express the importance of finishing strong. Close-out should consist of numerous activities, including punch-list generation (internal and external), punch-list completion, commissioning, testing, final inspections, owner training and submission of close-out documents

Productivity improvement has taken many shapes over the last 50 years. Six Sigma and lean production concepts have had success in the industry. The Six Sigma initiatives of Jack Welch at General Electric are well documented and the stuff of business lore. Unfortunately, few understand the machinations of Six Sigma. It is the use of facts and data to “drive better solutions” for the benefit of the customer by reducing variability or the number of defects.

Lean production aims to reduce waste. In the construction industry, waste is commonly found in the forms of labor overages, emergency purchases, equipment mismanagement and poor quality.

Efficient operating procedures can be applied to the construction industry, regardless of the nomenclature. Waste reduction and variability are critical attributes of high-performing managers in an industry predicated on low margins.