Wednesday, July 10, 2019

July 2019 - Volume 7 Issue 2

Large Projects Disturb Construction Ecosystems…but Agile Construction® Brings Resilience. 


When a large project comes to town, everyone gets excited. There are a lot of reasons that we need to pay careful attention to the large projects, even if we are small contractors, or didn’t have the winning bid for work on that project. Large projects impact everyone in the market, large projects impact market share, they impact everyone’s available labor, they impact material inventory levels locally, and for those contractors that are directly involved with the large project work they represent an extreme level of financial risk that must be mitigated from the start.
Mega projects are what we call these large scale and transformational endeavors that have substantial impact on the construction community, environment and workforce in their surrounding area.  MCA conducted a series of studies to show the impact of mega projects on a region’s signatory electrical contractor market size and market control. In addition, MCA’s experience implementing Agile Construction® Principles on large projects continues to support that agility and project visibility is required to manage the technical, business and integration risks that accompany projects large in size and complexity.  
Let’s take a look at these impacts using a specific mega project. An example of a mega project is the SOO Green Renewable Rail (SGRR), led by developer Direct Connect Development Company (“DC DevCO”).  This innovative underground transmission solution project is expected to cost $2.9 billion and will carry renewable energy from Upper Midwest wind farms to Eastern US Markets through a 349-mile-long electrical transmission line. Construction of the project will begin in 2022, creating 600 temporary jobs in Iowa and Illinois. This project will indirectly create more than 200 permanent jobs to maintain and operate the wind farms and the transmission line post-construction. The overall construction of the project is anticipated to take three years. 
Figure 1.  Market Size & Control Comparison with Mega Project
Market Size and Share Impact

The results of a market study conducted by MCA convey the impact that mega projects, similar to the SOO Green Renewable Rail, have on the surrounding community, Figure 1. From 2010-2015, a mega project within the studied region led to an increase in market control, the amount of work done by signatory contractors, for the area. Market size, or the amount of available work, also increased within the region. Without the project, the area would have experienced a decline in both market size and market control for the signatory contractors.  A concern with projects of this magnitude is that they can have a vacuum effect in the surrounding areas, drawing in the higher skilled workers and creating a skill void to support other projects. This labor drain affects all contractors, not only signatory contractors.  Often the union contractors will bring in traveling labor. While the non-union contractors are dependent on having available labor and training programs that can fill this void on short notice. This difference enables the union contractors an opportunity to grow market share when mega projects enter the market. However, both union and non-union contractors face the unknown and uncertain productivity impacts in the market.

Figure 2. Market Share Example
Figure 2 above shows that from 2010-2013, the example market share from the same study would have dropped nearly 30 percentage points without the mega project. Market share is a measure of the performance of an organization when compared to its competitors in the industry.  With the mega project, the market share for the electrical contractors in this study increased 4 percentage points for this region. While the project may appear to stabilize the market share, it is important to consider long term factors affecting the area. Because of increased labor shortages that can result from mega projects, contractors are often obligated to hire less skilled/experienced people to meet their labor requirements. As contractors try to take advantage of the uptick in the market share, with limited labor availability, projects are often not completed on time or within budget, having a devastating impact on project owners and their business.
A market’s size and its characteristics have been primary indicators of an industry’s health since the early 20th century. It is important to be able to quantify a project and the impact it has on the market because it can be an early indicator of future conditions of the economic environment and workforce. With the size and length of mega projects like the SOO Green Renewable Rail, monitoring the project progress becomes increasingly important in the effort to avoid overage on timing and budget. (For more information on market share studies, visit http://mca.net/resources/research/)

Labor and Labor Productivity Management

            Over the past few decades MCA has worked with hundreds of companies to introduce and improve effective tools for monitoring and aiding in the management of labor productivity by providing early identification of the factors that are actually impacting our productivity and the impact these factors are having on our expected profitability.
Managing a project of any size through the phases of development, construction, and operation should be supported by tools that make productivity and obstacles both visible and quantifiable.  This becomes especially important for large projects given the complexity and risk that comes with size.  Work Environment Management (WEM®) is used to manage the integration risk throughout these mega projects. WEM® relies primarily on Job Productivity Assurance and Control (JPAC®) and Short Interval Scheduling (SIS®) which are based on the ASTM Standard E2691, and is the construction industry standard for measuring productivity. JPAC® is used to track productivity on a weekly basis and aids in risk management and tracks change management. SIS® is used to schedule work and track obstacles on the jobs. Both give early warning indicators of issues on the job so project managers can pinpoint and address issues. They also provide real time quantification of the impact of changes enabling the team to manage resources and project plans accordingly. (For more information on WEM®, visit http://mca.net/products/).

MCA has implemented Agile Construction® Principles on several jobs between $25 million and $650 million over the past decade (See Table 1). Other Agile Implementation services for Large Project Support Include:

  • Schedule Management
    • 3 Week Look Ahead Scheduled Planning
    • General Contractors Scheduled Planning
    • Electrical Contractor Scheduled Planning
  • Work Breakdown Structure (WBS)
  • Vendor Managed Inventory (VMI)
  • Contract Status and Financial Review Process
  • Change Management Process and Protocol
  • Procurement Management


Table 1. Large jobs that used Agile Construction® tools and principles
Managing any project requires change management but on mega projects, there is always more risk present. Without change order management, the job is at higher risk for losses due to unrecovered labor costs, labor profitability loss due to losses on productivity, and labor opportunity loss. On these large mega projects even very large contractors have been put out of business due to lingering and unresolved disputes over productivity impacts. The most effective way to avoid, or if needed to combat these types of conflicts is to have SIS® and JPAC® in place from the start of the project. The information provided allows you to know and to document exactly what is happening, when it is happening, and how it is impacting your work. Because the combined JPAC® and SIS® tools provide a picture that is not available by any other software and is the most effective way to project future results based on these impacts, you will be in control of your project and your profitability throughout the project. (For more information on Change Order Management, visit https://mca-soft.com/classes/ for upcoming classes)
Mega projects are exciting ventures that can reshape an area’s infrastructure, workforce, and economy. With all factors considered, the SOO Green Renewable Rail will surely bring changes to the upper Midwest and Eastern US Markets over the next six years. Close monitoring of the market share and job performance will allow contractors to identify and adapt to changes early on in a project where they can have the most impact on project team success.

(For more information on Managing Large Jobs click here.)

SIS® 5.1 Release 

MCA is proud to announce the upcoming release of SIS® 5.1. This release includes the new features of the Reason Code and Detailed Reason Code Dictionaries that companies can integrate and customize for their users. The streamlined codes will provide consistent codification of worksite obstacles across the company leading to better quality data and more accurate reporting.

For more information, contact your Agile Coordinator.



MCA Publishes The Industry’s First and Only Handbook for Prefabrication



Prefabrication Handbook for the Construction Industry (Pre-Order)

Agile Construction® Application through Externalizing Work®
by Dr. Perry Daneshgari and Dr. Heather Moore

This book is a hands-on, practical, and scalable guide to prefabrication. It applies if you are starting from ground zero, or if you are at the 3% mark and trying to get to 50%. The book is not about “benchmarking” or “best practices”; it is grounded in the reality of what other industrialized industries have passed through, which will happen in construction sooner or later. We can learn from history and the science of work (Industrial Engineering), to move faster and with fewer mistakes, rather just comparing to the status quo of “best practices” in today’s construction environment.
Maximum prefab requires a culture of prefab, by understanding the true benefits of prefab which are way beyond saving “hours”. Benefits include risk reduction, increased reliability and predictability of the outcome; reduced uncertainties from the jobsite, an opportunity to train manpower in a controlled environment. Monetarily, the benefits are best quantified as composite rate savings, which reflects a better managed crew ratio and overall productivity improvement.
Purchase of this book includes a three-month complimentary subscription to the MCA Prefab Forum.

Click here to Pre-order you copy today!


2019 Spring Symposium



MCA Inc. Presents
Agile Construction®: A Path to Industrialization
Symposium on the Tools & Processes Needed for Success
Friday, May 17, 2019
The Crowne Plaza,
Northbrook, Illinois


MCA’s Agile Construction® Symposium in May was a huge success. There was an impressive, forward-thinking lineup of speakers and panelists for sessions covering Prefabrication, Vendor Relationship Management, Work Breakdown Structure, and Productivity Measurement. MCA also introduced Agile Construction® Chapters, with the purpose of connecting industry leaders and Agile Construction®Practitioners, focusing on designing the future of Agile.

Speakers of the Symposium include:


·       Adam Heon of Applied Software Technology, Inc., introduced symposium guests to eVolve Electrical.  A Revit add-on, designed by contractors, aids in design and fabrication by increasing drawing speed, and providing quick build drawings and schedules as well as easily exportable bills of material.  
·      Tobias Hogan, Director of Agile Construction® from Aldridge, provided his experience of culture shift in Aldridge with the help of MCA and using Agile tools to build credibility and keep the jobs visible.
·       Oscar Koebel, General Foreman from Staff Electric, spoke about managing large jobs and utilizing the Work Breakdown Structure.
·      Tom Bruce, Vice President of Operations for Staff Electric, covered the development of Staff’s organizational structure as a means to identify rank and relationship as well as chain of command which was a key enabler for Staff to focus on Roles and Responsibility and assess team member capability as they work toward full implementation of Agile Construction® Principles.
·       Peter Hardt, Vice President of Hardt Electric Inc., walked the group through Hardt’s transformation of making the work visible so both field and office could see the whole picture.


MCA, Inc. will launch our Inaugural Agile Construction® Chapter very soon. The Chapter will focus on designing for the future of Agile. 

Strategy:
   Establish Agile Construction® Centers of Excellence
  Productivity (WBS, JPAC®, SIS®)
  WEM® as the operational database
  Prefabrication
  Procurement & Logistics
   Focus on Outcomes & Measurement
   Provide a Training & Certification
   Support True Implementation Testing of Principles
   Connect Practitioners and provide a forum to identify and solve problems
   Create an environment for applied research

If interested, please contact: Melissa Harper, Director of Outreach mharper@mca.net


Thank you Applied Software for sponsoring MCA’s 2019 Spring Symposium.  For more information on eVolve Electrical and to request demo, please visit: evolvemep.com

SAVE THE DATE:
Fall Symposium, October 17th, 2019
As our Industry continues its rapid move towards Industrialization the most competitive companies will be those that best have, understand, and use their available data to run work.

Our Fall Symposium will focus on...

•  Using Productivity Measurement to recognize hidden changes on the job
•  Using Productivity Measurement to plan and manage vendor services and prefabrication
•  Increasing and improving the connection between Project Managers and Field Operations
•  Large jobs and difficult relationships; preparing for the worst case

MCA Contact information
MCA Office Phone: (810) 232–9797

Melissa Harper, mharper@mca.net

Monday, January 14, 2019

January 2019 - Volume 7 Issue I

WEM®, the ONLY Recognized method for Implementing the NEW FASB Revenue Recognition Practices 

For the first time in decades, companies across the globe are dealing with a new way of recognizing revenue. The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have issued standard ASC 606 in an attempt to develop better control over revenue recognition, billing practices and income tax obligations. ASC 606 is expected to provide a universal accounting language for revenue recognition, but it relies heavily on each company’s judgement to come up with their own figures, which can differ from company to company. Despite many misnomers in the market, this new change can help contractors recognize activities, which historically they did not get paid for and had to be hidden as part of their cost codes.
Figure 1
The process of recognizing revenue has changed considerably; don’t be fooled into thinking that ASC 606 will not affect you.  According to the core principle of ASC 606, project revenue should be recognized upon transfer of promised goods or services to customers. To comply with the core principle, construction contractors should deploy a five-step model (Figure 1) to recognize their project revenues. Rather than relying on the traditional cost-based method, the new model requires measuring project progress toward “fulfilled performance obligations”. While the new standard does not use the term “percentage of completion,” revenue will continue to be recognized over time for long-term contracts using a single method to measure progress against each performance obligation within the contract. Given most construction contracts by their nature are long-term; their “fulfilled performance obligations” can only be reflected by the percent completion of the actual work. Determination of whether a good or service is distinct and then applying percent complete will require judgment and, most likely, be the most challenging steps in this five-step model.

Traditional calculations of percentage of completion rely on cost-to-cost or units of worked performed, which do not provide reasonably accurate and quantifiable estimate of the progress towards contract completion. This issue has been addressed in The American Society for Testing and Materials (ASTM Standard E2691) and Job Productivity Management (JPM) Standard E2691, developed by MCA Inc., as the only official reference for measuring and tracking percent completion in construction. The standard has been promoted in an applied way with Job Productivity Assurance and Control (JPAC®) software, one of two commercial applications enabling implementation of the JPM Standard. This in combination with the other application, Short Interval Scheduling (SIS®), provides a strong proof of “fulfilled project progress” for both project managers and accounting professionals to determine the most accurate amounts to bill on a regular basis.

For more information on JPM Software Packages (SIS® & JPAC®), Agile classes and/or classes on FASB call (810) 232-9797 or click here

More information on FASB can be found in an article written for EC&M Magazine; click here and in Book 2 of the Industrialization of Construction® Series (Section 2.5.1, page 39); click here.



What to focus on first and how evaluate it to achieve the best outcome for your company:



Do you sometimes feel like there is just so much that needs to get ‘fixed’ or needs your attention that you don’t even know where to begin? You are not alone. Every company in any industry has processes and procedures, which carry a high-risk factor and can add to your stress level if they are not followed or executed correctly. In fact, in 1949 the Military developed a procedure that helps to sort and prioritize all the different items that you have on your list. This procedure will help to identify what you should focus on first to eliminate your highest risk.


This tool is called Failure Mode and Effect Analysis (FMEA).  It is a structured approach on how to identify the risk in terms of how different causes of failure impact your  business and then helps to evaluate which of the items you should focus on first. Let’s say your company’s process on getting the billing out in time is not as good as you want it to be. And therefore your company suffers on under billing and keeps having issues with a stable cash flow. If you want to start working on this process you have a lot of different options on what to focus on first: PM’s understanding of the financial impact, PM’s accuracy of %-complete reporting on their job, PM’s Prioritization on the billing duties, accounting software’s capabilities of reporting, etc. If you try to work on all of these items at once it will feel like you’re not getting anywhere and you are stuck in quicksand. This is true since you are trying to focus on too many things at once while everyone is still trying to accomplish their primary duty of managing projects.


Figure 2


FMEA helps you to break the different elements down and to weigh them on how much impact they will have on the result being studied, underbilling in this example. Therefore, a couple items need to be identified: What is the potential failure, the cause, and what the potential effect will be, and if there are any process controls in place. After each of the items has been identified the expert group, which has been assembled to work on this project ranks how serious this effect can be, how often it potentially will happen, as well as if the controls that are currently in place will properly detect the issue. In Figure 2 you can find an example for the discussed billing issue. The last step includes multiplying the weighted numbers. Multiplying the values in columns’ (Severity), the value in column ‘O’ (Frequency) and column ‘D’ (Detectability) will result in the Risk Priority number (RPN) shown in the adjacent column. The RPN will identify the process steps that we need to focus on first. In our billing example, the accurate %-complete reporting and the PM financial understanding are the first two elements we need to focus on (RPN = 720 and 900).


If you are interested on how the FMEA tool can help you and your company to focus on the most critical items first please call (810) 232-9797


2019 Spring Symposium






MCA Inc. Presents

Agile Construction®: A Path to Industrialization

Symposium on the Tools & Processes Needed for Success

8:00am – 3:00pm
Friday, May 17, 2019

The Crowne Plaza,
Northbrook, Illinois

The market is hot, the workforce shortage is real, and the industry is transforming. Be part of the Revolution and hear how it can be done from experts and practitioners of Agile Construction®, in both union and non-union environments.

Network with other practitioners who want to stay ahead of the curve, improve productivity, safety, prefabrication, reduce risk, and stay competitive. Whether you’re a prefab leader or just getting started, join us May 17th to innovate the way your team delivers maximum value to your clients.

This spring's Symposium will focus on...

  1. Prefabrication in an Industrialized environment
  2. Vendor Relationships and Integrated Logistics
  3. Managing Work and Labor through Work Breakdown Structure (WBS)
  4. Productivity Measurement

We look forward to seeing you!

For more information click here.
To register click here.




Saturday, September 1, 2018

September 2018 - Volume 6 Issue II :

A Proven Method to Avoid Killer Jobs:

Everyone has heard of a “Killer Job”, which is the one that can single-handedly wipe out an entire company’s profit in one fell swoop. They are born to companies who have large variation in job profitability, with no systematic understanding of what causes the ups and downs, and no visibility to where a job will finish until it is beyond 80% complete. These systems breed “Killer Jobs” because the system itself is unpredictable, and then an exciting large project is won and the invisible, unpredictable system wreaks havoc.

MCA has had the honor to be involved with several mega-projects (shown in Figure 1), using the Agile Construction® principles and tools to avoid them turning into Killer Jobs. Below is a list of guidelines:

A large job is simply multiple small projects put together. Break it down into smaller projects by area, or level, or type of work, and then break that down even further – use Work Breakdown Structure.

Make plans for organizational structure, reporting structure, information flow, and other elements.

Use data. Large jobs are a matter of managing a large number of numbers. It is humanly impossible to manage with traditional, “seat-of-the-pants” techniques. JPAC® and SIS® (explained more below) have proven very effective and necessary to knowing where large jobs stand at any given time.

Conduct project audits, every 25% complete of the project (or more frequently). The project team plus outsiders need to review the project status, data about the project, and collective knowledge of the project, to reduce risk for the next 25%. (see page 23 of Book 4; Efficiency and Continuous Improvement: Survival of the Unfits
Figure 


Be aware of the issues that require unique, or additional management, such as: 
  1. Resources
  2. Schedules 
  3. Purchases 
  4. Billing and cash flow 
  5. Productivity 
  6. Subcontractors 
  7. General contractors 
  8. Turnover 
  9. Personnel issues 
  10. Cost 
  11. Lack of visibility at the task level 
  12. Coordination with other trades 
  13. Material price escalations 
  14. Jobsite logistics, including tool and material movement 
There are very few tools in this industry that can help you manage your large job. JPAC® measures the productivity on your job and aids in risk management. There is typically more risk present for large jobs. It has been proven to be much more beneficial to update daily the percent complete. This allows for the Project Managers to pinpoint areas where they need to respond to problems that occurred during the day. Using SIS® to manage the tasks allows the Project managers to determine the largest obstacles that happen on the large job. Project managers can determine common repeatable issues that needed to be addressed. MCA’s own research (http://mca.net/resources/state-of-industry-report/) indicates that absenteeism is one of the top three reasons for not completing work according to the schedule.

With all of the risks taken into account, it is critical to plan and predict. Use the tools available to your advantage. Set up a JPAC® and SIS® account as your first step to reducing the risk and increasing the success on your job.

Please visit a longer and more detailed version of this article at: http://www.ecmweb.com/business-management/mastering-electrical-work-mega-project

CEO Forum:


We have created this CEO Forum to understand how these changes and the pace of the changes can be managed.

On Friday, November 30th, 2018 MCA Inc. held their second annual CEO Forum at the Crowne Plaza in Northbrook Illinois. It was well attended by leaders across the country in varies fields ranging from medical, inovative software to distribution and electrical contracting. Dr. Firouz Daneshgari of Bowtie Medical discussed Disruption in the Health Care industry, while Marty Rozmanith of Dessault touched on Product Configuration. Other topics for discussion included Megacenters, Diversity and Scaleability, Data and Crowd Sourcing, and Gemba.

This elite group of CEO’s meet in person twice a year, and collaborate through a user forum across the net. Their mission is to lay out immediate, mid-term, and long-term needs for the industry, considering business, technical, and integration risks. This group will identify and characterize these trends and topics, then lead or spin off groups of practitioners that will test and optimize practical approaches for managing this futuristic view.

We are looking for forward-looking and forward-thinking CEO’s, who can connect the dots and address key topics that are and will be dramatically changing our industry as a whole. If you would like to be a part of this elite group of leaders please contact MCA, Inc.

NEW! IEC Convention + Expo 2018:

IEC will hold their annual Convention this year at the Indianapolis Convention Center September 19th—22nd. Come visit MCA’s booth (#224) for a quick demonstration of Agile tools and principles. We look forward to meeting with you . For more information visit https://www.ieci.org/iecconvention

NEW! Agile Tools User’s Forum:

MCA is excited to announce that the NEW Agile Tools User’s Forum is now online and is in use. This forum functions as a portal, designed to help Agile Construction® Practitioners conveniently help one another in open communication. Users are encouraged to discuss issues, and problem solve through open discussion on this forum with their own peers. This is a web based forum which can be accessed on any device with internet access and will be moderated by MCA to help the field and/or expedite any unanswered questions that may occur. This first Agile Tools Forum is currently in pilot stages with Staff Electric. With its success, MCA has plans to roll-out this forum, or one like it to all clients to help their pursuit in becoming a more agile company. Look for more information in the next SOTI.

NEW! MCA Turns Platinum:


MCA recently upgraded their Bronze Partnership status with IEC to Platinum level in hopes to reach more people in the industry to train and share decades of knowledge in the field of Agile Construction® and Industrialization of Construction®. Visit www.mca.net or call (810) 232-9797 for more information.

Testimonial & Customer Results:


Culliton “We are still learning, but I can’t imagine our projects today without Agile component, in the way we look at it. MCA has spent 3 years peeling the onion back and leading us there. We have a quicker turn-around for “learning” on the estimating side. We can’t say enough how much I appreciate what you guys did for us.” ~ Ted Lange, Culliton


MCA Spring Symposium:


MCA Inc. Presents
Agile Construction®: A Path to Industrialization
Symposium on the Tools & Processes Needed for Success
8:00am – 3:00pmFriday,
May 17, 2019
The Crowne Plaza,
Northbrook, Illinois

The market is hot, the workforce shortage is real, and the industry is transforming. Be part of the Revolution and hear how it can be done, from experts and practitioners of Agile Construction®, in both union and non-union environments.

Network with other practitioners who want to stay ahead of the curve, improve productivity, safety, prefabrication, reduce risk, and stay competitive. Whether you’re a prefab leader or just getting started, join us May 17th to innovate the way your team delivers maximum value to your clients.

This springs Symposium will focus on...

  1. Prefabrication in Industrialized environment
  2. Vendor relationships and integrated logistics
  3. Managing Work and Labor through Work Breakdown Structure (WBS)
  4. Productivity Measurement
We look forward to seeing you!

For more information click here.

To register click here.