How much better can construction projects get?

...and why 30% improvement might not be good enough.

What is Good?

One problem with internally-focused improvement initiatives is that usual the benchmark is the recent past. And whilst ‘any improvement is an improvement’, that doesn’t guarantee great performance.

If I go running, sure I can measure my improvement by tracking times relative to past performance. So this looks like I am getting better.

Not bad eh? Over 20% performance improvement in under 12 months. And if I am only interested in my performance and fitness, this is fine.

But something is missing, because this is relative improvement. If I am serious about athletics, I need to know where I am relative to World-class standards. I need some absolute measures.

For my 100 metres time, maybe this is a better comparison.

I’ve closed the gap between me and Usain Bolt, but I am still way off the mark. I don't need to buy a new cabinet for my trophies quite yet.

And this is the issue that I see in the construction sector. But unlike my 100m improvement project, where closing the gap on Usain Bolt is an impossibility, the sector has some significant improvements that it can make. This is widely accepted, and I fully agree. But how to set the target? Just what is the potential improvement?

And if is not going to be relative improvement on the recent past, what might make a good benchmark for construction?

Construction Benchmarks.

Walking round New York is fascinating. To think that many of these tall towers were built before the days of computers, CAD, or even Critical Path scheduling - the Chrysler Building, The Empire State and Rockerfeller Centre were built in the1920-30's.

Before I researched project management, I was amazed at how they built them without today’s technology. Stress calculations without a computer programme. No battery-powered tools. Drawings and schedules on paper. Communication by post or face-face meetings…

Which made what I found when I compared three tall building projects, so much more amazing.

The only number that might be suspect is the 2015 build cost for the Empire State Building, where I have inflated the actual cost by a factor of 14 – based on indexes for both the US GDP, and CPI between the dates. 

The per-metre build cost (in 2015$) of the Empire State Building, is less than the expected cost of a 11-20 storey building today (based on https://www.buildingjournal.com/construction-estimating.html).

Given the more recent buildings had the benefit of technology and almost a century of institutional learning, why did they take much longer, and cost more than back in 1930?

Sure, there was a recession in the 1920’s, but that doesn’t explain it - I don't remember building costs falling by 75% after 2008. And you could say that safety and environmental standards are higher today than then, but again the impact is marginal, and should have been offset by improvement due to modernisation and continuous improvement.

Set the Standard: 

So if you are planning to make an improvement on your next project, don’t just try and make a 20% improvement on last time. Find some better benchmarks. Try a few from the Empire State Building

• 104 floors in 410 days
• 18 months from first sketches to completion
• Builder selected 2 weeks after the architect
• Builder selection process took 2 weeks.

If your specialist field doesn’t have an Empire State Building to set the standard, then set your team what Jim Collins termed a BHAG – a Big Hairy Audacious Goal, not just 15% better. As yourself

If the New Yorkers could build the Empire State Building in just over a year, how long should your next project take?

But what about the Cost?

Faster execution only really costs more when it is a contractual variation.

If you plan and manage for speed from the start, then a faster project will in general cost less. So long as you don't get close to workplace saturation, a shorter project should be a cheaper one. It is the delays and holdups that cost you more money that you need to, and speed reduces overhead and hire costs.

The Empire State Building cost less than today’s tall buildings mainly because the project was managed to complete as quickly as possible.

Significant Improvement is Possible Without Technology

As I have frequently written elsewhere, I believe a significant amount of the time and money used on major projects today is unnecessary, in that it doesn’t lead to the ultimate project client getting more of what they really want.

One reason that I like the Empire State Building benchmark, is it shows us what is possible without technology. It was built without 'big data' analytics, and without BIM, drones, or computerised planning tools. 

It was by no means a simple project, and IT hadn't been invented. It was thoughtware, not software that they used to deliver the project. People designed and implemented methods and processes that ensured time wasn't wasted, and that the whole project flowed.

That thoughtware is just as relevant today, and works just as well. It is just been forgotten or overlooked. Even worse, it hasn't been embedded into the software, systems, and procedures used to manage projects today, making it much harder to use it that it was back in the 1920’s. Today if you want to use the approaches that worked so well on the Empire State Building you would be deemed a ‘maverick’, at best. Or at worst, you would be unemployed.

What about ‘Modern Methods of Construction’?

Well if you mean things like standardisation, off-site construction, and pre-assembly, the Empire State Building used many of these methods. Meaning that they are actually, not that 'modern'! They also designed-for-construction, -for-lifecycle-cost, and to maximise rentability of the floor space.

What about the various technology-driven tools that are now available, like 3D modelling, real-time connectivity, 3D printing, and massive data-handling capabilities? These offer great potential to improve the performance of projects. But trying them on a project using today’s ‘good practice’ is like me buying new running shoes, and expecting they will help me catch up with Usain Bolt.

Lack of technology isn't the root cause of today's relatively poor project performance, and so new technology isn't going to suddenly make a massive difference by itself.

So what can the construction sector do?

Construction is a great industry to work in, and is vital to the development of national economies. But it has become dysfunctional and seems to have lost its mojo. Too much time, effort, and money is used trying to control the interfaces between the different companies involved in the project, leaving far too little to get the job done well.

Most of the published suggestions for improving the industry’s performance seem to be ignoring the elephant in the room. It doesn’t need 21st century innovation to make massive improvement. 

It needs to get back to basics. Focus on making the project flow smoothly. Use speed to reduce costs. 

Which means turn the tables, and spend most of the time and effort in doing the project, and as little as possible administering the commercial interfaces between the various organisations working on the project.

Procure the project team like you would recruit your leadership team or get a sports team together. Choose them on capability and compatibility, get them together early, and align their interests with a common goal. They are far too critical to treat it as though you are shopping on Amazon or Expedia, with next-day delivery.

And to make this happen has to be driven by project clients. They are the ones making the decisions on how the project will be executed today. They set the rules of the game, and almost without exception, they would not allow the Empire State Building project to be repeated today.

Main/General contractors, or Project Management Consultants could also lead this change, but only for clients who give them the freedom to choose the method of execution.

If you are interested in how construction can deliver faster and more cost-effective projects, you can read more in my book, The Executive Guide to Breakthrough Project Management, and the book’s website. Or get in touch if you don’t want to wait.