Tuesday, February 23, 2021

Feb. 2021 State of the Industry Report (Vol. VIII, Issue I)

Five Steps to Take Control of your Project

As construction projects ramp up and get moving, things change fast and furious, issues accumulate, and things might not go as smooth as expected. As the General Contractor (GC) starts to shift the project schedule, areas you are scheduled to work in are not ready, trade interference is forcing your crew to either work on top of another trade or to come back to the same location multiple times, or other holdups that result in being moved around on-site and not being able to complete your work as scheduled. The common nature of these issues is that they will put you in the passenger seat only reacting to what is coming at you rather than being in control. However, there are five simple steps to take control of your project.


Data from Short Interval Scheduling (SIS®)on daily work obstacles collected by foremen and electricians onsite shows that approx. 40 – 50% of the reported hours that a crew wasn’t able to perform the work as scheduled revolves around the GC schedule. If not managed appropriately, there is a high risk that any trade contractors will be left with the impacts and the additional direct and indirect cost. To not be the victim to this, the question to address is how you and your company manage schedule changes and track obstacles on job sites. You have to have clear responsibilities, a transparent process, and well-defined procedures in place to manage these issues, and don’t leave it up to the foreman and the crew on site to just make it work? 

Contractors should think about creating an internal scheduling process or get support from project scheduling experts who will assist with the responsivities, process, and procedures. Taking control requires an effective scheduling process for your construction project. This process follows a clear set of steps that starts with the GC schedule, and includes additional actions and tools that help you to track, measure, document, respond, and overall manage the schedule impact construction projects. The Work Environment Management (WEM®) concept shown in Figure 1 below illustrates the structure, steps, and tools needed. Gathering job-site intelligence on a regular and frequent basis plays an integral part in taking control of your project, and particularly for the documentation and quantification of the impacts.

Figure 1 – Work Environment Management (WEM®) Concept

Contractors should clarify the following when creating a scheduling process: 

  • Who is responsible for knowing about the contractual details and requirements? 
  • Who knows how much time you have to react and respond? 
  • Who knows if you can send a letter stating that you reserve the right to respond within the next few weeks?
  • Who knows how to quantify and document the impacts?
  • Who manages the process to communicate and report back the impacts from the schedule issue to the GC?

Once these responsibilities are clear, the following five simple steps derived from the WEM® Concept (Figure 1) will help contractors take control and be ahead of managing their projects. 


#1 Break Down the Work, Create a Work Breakdown Structure (WBS)

A Work Breakdown Structure (WBS) is a simple way that can help you “See the Work” and provide a structured way to identify the work to complete for the project. A WBS shows the deliverables and all work to be performed broken down into manageable chunks based on the schedule of values, drawings, specs, and contractual obligations. Have a foreman break down the work using the information and knowledge about the project, such as plans, specs, drawings, schedule of value, bill of material, and BIM model (if there is one). Project requirements and information might not always be complete, but don’t wait! Start with the breakdown into high-level deliverables, refine and break them down into the actual work as the missing information becomes available. A good start is the four main project phases of Planning, Procurement, Installation, and Closeout (see Figure 2). 

If you want to become an expert at WBS and other Agile Construction® Principles join an Agile Construction® 101 Webinar and take also a look at MCA’s publications on Work Breakdown Structure (WBS):


#2 Use WBS to Create Trade-Specific Schedule

Connect the WBS with the GC Schedule (if one is available) and translate your WBS into your trade-specific schedule by adding start and end dates. Begin to structure and schedule the work in your WBS based on the GC’s schedule and identify “What Work to Perform Where, When, and by Whom” using project management software or with the support of a planning and scheduling expert. Next, create a rolling three-week lookahead from your project schedule each week, which will show the areas and work available for the particular crew to complete. 


#3 Use WBS to Create Tracking Mechanism (i.e., JPAC® and SIS®)

Data and information as direct feedback from the field are essential to understand what obstacles the crews run into day in and day-out and how productivity trends and is affected. First, use the three-week lookahead, and have the foreman and field crew do daily task schedules using software tools, such as Short Interval Scheduling (SIS®), that allows reporting, tracking, and documenting any task-specific obstacles on-site along with their impacts, if a scheduled task couldn’t be completed. Second, use the WBS to track labor productivity using an existing software application or via Job Productivity Assurance and Control (JPAC®), which is based on ASTM E2691 Standard Practice for Job Productivity Measurement.


#4 Maintain and Update Your Schedule and Tracking

Maintenance and continuous updating of your schedule with information from multiple sources are important to get a realistic and most current picture of the outstanding work, effort, and time needed for the project. 

  • Include all changes to the project scope that impact the effort and work to complete the project, such as change orders, revisions, or rework caused by other trades.
  • Capture and track all updates and changes to the original GC schedule that affect the time and duration of the project, such as schedule sequence, delays, or compressions.
  • Use the information from the field and the data on labor productivity and work-based %-complete (through JPAC®) together with the feedback from daily scheduling and jobsite obstacle reporting (through SIS®).


#5 Quantify the Impact of Changes and Make them Visible through Communication

Typically, there is not an unlimited amount of time to react, quantify and inform the GC about the impact of schedule-related issues. First, make sure to respond to the GC by the given deadline. It is good practice to send the GC with an acknowledgment letter within the deadline stating that you reserve the right to respond in full until a reasonable deadline (typically within a few weeks). Quantification of schedule issues, such as schedule compressions, schedule changes, or schedule delays caused by trade interference, area not ready, or the recently mandatory health and safety measures for COVID-19, can be time-consuming and complex. Keep in mind that all of these issues do not only affect the direct labor cost on the project but have rather broader implications also impacting indirect costs, such as overhead, insurance payments, etc., which can easily be overlooked. All impacts need to be assessed, quantified, and communicated on time to the GC in an impact letter and supporting documentation from the collected job site intelligence to preserve the right and opportunity for compensation. 



Identification and Mitigation of Job Risk

Construction is a risky business that involves risk management on several different fronts - from safety to litigation, to business/financial.

Current Risk Statistics

Approximately 13 million hours are lost due to non-fatal injuries and illnesses in the construction industry every year. Electrical construction makes up approx. 9% of the total hours and approx. 45% of all non-fatal injuries and illnesses in Building Construction (see Agile Construction® For the Electrical Contractor, 2nd Edition for a full study of safety risks and impacts by sector between 1992 and 2018).

Along with safety risks, the construction industry tops the lists for insolvency and litigation, often because of an inability to manage costs, avoid overage on project budgets and schedules. The construction industry is often near the top of insolvency lists, and according to the Global Euler Hermes analysis, for the first three quarters of 2018, construction was the industry with the most major insolvencies, approx. 5% higher than the second-worst sector, and 70% higher than the third.

In 2019, dispute values, durations, and volume all increased over the past year in North America. The value of disputes rose to $18.8 million. The average time taken to resolve construction disputes for North America increased from 15.2 months in 2018 to 17.6 months in 2019 (Arcadis, 2020). It was also determined in a 2016 McKinsey analysis, that construction projects typically take 20% longer to finish than scheduled and are up to 80% over budget. Also, the construction industry has one of the highest exposures to daily risk and mitigating those risks related to COVID-19. Without a doubt, risk mitigation must be a priority before, during, and after a project. The constant shifting of priorities on the job site, along with other factors such as safety concerns, schedule delays, and contract disagreements, create a fluid, dynamic, and often risky situation. 

1. Understand the Risks

To be able to mitigate these risks, it is important to understand that the different types of risk should be evaluated throughout the life of the job. Mitigation of risk in any event - at the job, local, regional, national, or international level- has three layers of cadence, which need to be planned for and managed (according to a draft standard for ASTM): 

  • Business Risk – the probability of a difference between the expected and actual financial outcomes of a project.
     
  • Technical Risk – the probability of a physical failure of the built environment to function according to customer requirements or structural requirements. 

  • Integration Risk – the probability of failure at the interface of resources required to complete the project, including manpower, material, money, and information. 

While the business and technical risks are more widely understood, it’s the integration risk that often gets overlooked or not paid much attention to.

Figure 1: The Essence of Project Management 


2. Identify the Risks

For each of these three risk categories, line out how much you know about this risk (Known), what is unknown to you at the moment (Obscure), and what is unknown but not predictable whether or not it happens (Uncontrollable) as shown in Figure 1.

  • Known items can be gathered for specs, drawings, bid information, contract, etc. 

  • Obscure items are those that you don’t know in detail, but you are aware of. You know that you are missing information that you can get (“you know that you don’t know”), such as an upcoming change order that you have heard of, or detailed instructions for the installation of the fixtures. These items can particularly become a risk if not managed and it is worked on getting the missing information completely on time.

  • Uncontrollable items are events or issues that are not known and are unlikely to be predictable. If these things occur, they will likely blind-side us and therefore carry and drive a significant amount of risk.


3. Reduce and Manage the Risks

  • Be aware of the three different types of risk: For each of the three types of risk outlined above, list all known items, obscure items, and uncontrollable items, as described above.

  • Create your Risk Mitigation Plan for each type of risk:

    • Business Risks vary from job to job and it depends on how your business is set up strategically. The EMR (Experience Modification Rate), also called MOD rating or factor, is one of the factors a business needs to consider, especially on risky jobs. To ensure the business will not be impacted by higher MOD rates, the connection between Safety and Productivity needs to be understood. 

    • Technical Risk can be reduced by in-depth investigation and understanding of all involved people for this task, which can be difficult and not always able to cover 100%. To almost eliminate or at least reduce the technical (and integration) risk, the  Operational Model for Modular Construction needs to be considered.

    • Integration Risk constitutes most of the time the biggest risk on a construction project. To manage this risk, ensure structured information exchange and initial planning meetings for each job. You can find more details on the Five Keys to a Successful Project Handoff and Startup. Further, identify and make the work visible using a Work Breakdown Structure (WBS) before the work is started on site. It is essential to understand how to create an effective WBS from the Field and How to Manage your job using WBS.

Keep in mind that this is a process and journey to get there, which might require some time. Remember, just identifying the risks once, maybe at the beginning of the project, is not the full story. The reviews recommended in Step 2 need to be done on a regular and frequent basis throughout the project.


For further reading and other resources on Risk Management:



Research Corner

Update: U.S. Construction Market Trends and Shifts pre and post COVID Outbreak 

For about nine months we have been waiting and looking forward to it… No, not the birth of your newborn. Congratulations though if you have become parents! It has been more than nine months now since the outbreak of COVID-19, and we are referring to the end of the year 2020. We were all waiting for 2021 to come and to leave such an unprecedented, chaotic, and potentially tiring year 2020 behind. The impact of 2020 will leave its impressions and long-lasting marks on economies, societies, and technology around the world. 

Due to the high interest in our last article in the Q3 2020 SOTI on “U.S. Construction Market Trends and Shifts pre and post COVID Outbreak”, we want to pick up the topic again and share more market insights and provide an update to the trends and developments of the U.S. construction market and industry. 

Figure 1: Value of Construction Put in Place
(Annual Seasonally Adjusted Rate)and Unemployment Rate


Figure 1
illustrates the current updated development and trends of the seasonally-adjusted annual value of construction put in place (CPIP) as well as the unemployment rate in the construction industry between April 2019 until November 2020. After a strong and steep dive in construction spending during the first three months after the COVID outbreak in March 2020, the industry continues on its path of slow but steady recovery. By the end of 2020, seasonally-adjusted total CPIP exceed pre-COVID values by about +3.7%. With the improvement in the overall construction market environment, unemployment rates (see Figure 1) dropped after spiking to 16.6% in April 2020, shortly after the outbreak of the pandemic. At the end of Q4 of 2020, unemployment in the construction industry leveled at around 7%, before seeing a slight seasonal-driven increase to about 9.6% in December 2020, according to data from the U.S. Bureau of Labor Statistics. This is overall good news but doesn’t tell the full story. The data further illustrates that there are major differences in impact and trends across the three main market segments, i.e., the Residential, Commercial, and Industrial Market Segment, and the (see Figure 2). 

Figure 2: Breakdown of Construction Spending (CPIP)

Post-COVID, total residential CPIP in the U.S. grew by +17.5%, while total non-residential construction (commercial and industrial) shows negative growth of -6.0%. While both public and private construction spending dropped immediately following the COVID-19 outbreak in March, both sectors show a very different development. As of December 2020, the total private construction is up by +5.7% relative to Pre-COVID highs in March 2020, which is strongly driven by a major jump in private residential spending (+17.5%) over the past five months and continuing to be fueled by historically-low interest rates. At the end of 2020, CPIP for private residential has grown by +17.5% since the outbreak, which is in particular remarkable as the market segment took a major hit and dropping by -8.2% from March until May 2020.  Data show that private construction spending in the non-residential segments (industrial and commercial), however, is down -6.0% and continues to trend downward as vacancies in project backlog cuts, deferrals, or entire cancellation of projects and investments early after the outbreak in these market segments become visible. 

During the first three months of the pandemic, government and public authorities’ advanced spending in public health care, public safety, as well as water supply and sewage/waste disposal infrastructure. Although public construction is still -2.1% behind pre-COVID levels, positive trends in the largest public construction market categories (highway and street, education, and transportation) at the end of Q3 and the beginning of Q4 of 2020 contributed to a slight recovery in total public construction overall.


What does this mean for you and how does it impact your business? 

Figure 3: Industrial Construction per State

Figure 4: Commercial Construction per State

Over the past two decades, the composition of the national construction market has continued to shift away from the industrial market segment, experiencing a significant increase in the money spent on commercial and residential construction projects. While this national trend is also observed in most states, the extend of this shift and the fraction of overall dollars spent by owners of construction projects in each of the three market segments varies significantly across states (see Figures 3 and 4). As the extent and timing of restrictions and measures put in place for social distancing are state-specific the market impact of this pandemic is likely very different for contractors depending on their geographic location across the U.S., and the proximity of highly affected metropolitan areas. 

MCA has developed a well-established economic and customer-centric market study methodology that allows the investigation of local markets on a state, MSA, county, or even local union level. This granularity of market analysis will provide unique insights into the details of your trade-specific local market, its total size, its segmentation, a breakdown of the main industrial, commercial, and residential market segments into more than 30 different detailed market categories within your geographical area. An analysis of trends and the labor composite rates required to compete in more than 30 different detailed market categories have helped several NECA Chapters, IBEW Local Unions, as well as individual union and non-union contractors across the U.S. to identify the most promising market opportunities and new market trends to position themselves ahead of industry competitors. Contact MCA, Inc. for more information about how a market study will help fill your needs in understanding the implications of this pandemic for your local market, which has initiated and accelerated so much change, innovation, and disruption in the construction industry over the past nine months.


Research Projects

New Research Project: “What’s Next After Prefab?”

We are happy to announce that ELECTRI International has commissioned MCA, Inc. to conduct a focus group research project in 2021 on “What’s next after Prefab? Establishing and Standardizing Quality Control for Prefabrication”. 

The goal of this research is to provide electrical contractors with a current look at the implementation of Prefabrication in the industry, the potential for expansion, the barriers to expansion, and develop guidance for establishing internal standards and quality controls to achieve these increased expectations. The aim is to look at the integration of published NEIS Prefabrication Standards to explore ways of increasing the use and benefit of prefabrication in electrical contracting by establishing practices that include setting goals for measurable improvement in quality, safety, and overall consistency as we expand the use of prefab. 

Industrialization of Construction®: Signal or Noise? Threat or Promise?

The research project “Industrialization of Construction®: Signal or Noise? Threat or Promise?” came to completion during the last quarter of 2020. This research investigated how Industrialization will continue to unfold in construction and provided ELECTRI and its members a means of getting and staying ahead. During the research, MCA, Inc. developed a guidebook and two self-assessments for contractors to use to move the needle forward in their company and worked with three electrical contractors to test the applications, collect their results, learning and feedback. 

The applications developed as an outcome of the research are currently available to complete online at MCA’s website, and are listed below:

  • The Industrialization Index Self Evaluation is a 15-question self-evaluation in which you assess how often different practices, measurements, or models are applied within your group and/or across your projects. 
  • The Industrialization Index Litmus Test is 16 multiple-choice questions asking you to mark the function primarily responsible for decision-making regarding different elements of the job (material, labor, tools and equipment, sub-contractors).


Estimating with and Pricing of Prefabrication

Contractors need a practical way to track and quantify the benefits of prefab. Business owners, estimators, and project managers need both confidence and knowledge about the cost-saving potentials of prefab so they can account for prefabrication when bidding potential work. ELECTRI International commissioned MCA Inc. to conduct a deep-dive study of pre-fab to help the EC industry focus on risk mitigation, higher predictability of cost, quality of work, and profits. In addition to specific recommendations, an Excel-based Prefabrication Calculator was developed to help contractors translate the total savings from Externalizing Work® into an equivalent composite rate as a practical method for “pricing” estimates with prefab.

  • Research Video: Link
  • Get the Research Report: Click here. 
  • Contact us if you are interested in the research project or in MCA’s prefab assessment and implementation services. 



Publications

Read through our five latest published articles on Schedule Change Impact, Waste on Jobsites, Jobsite Intelligence, and Data Usage for Project Management in EC&M and CFMA. 

Recently published articles:


Visit our MCA publication section to view and read all of our latest articles and publications (and more)! 

What is in the press? Here is a sneak preview of the topics of our upcoming articles to be released in the June SOTI Report:   

  • Taking Care of Business
  • Invisible Decisions
  • Cost of Minor Distractions
  • Pitfalls of Owner-Supplied Material 
  • What Business is the Contractor in? Logistics or building? 
  • Construction Technology and the Silver Bullet Syndrome 
  • Measuring and Improving Underbilling

Other publications you might also be interested in:

  • Agile Construction® Books:


  • New Book Announcement: Agile Methods for Continual Improvement

We are excited to announce that our team is working on a new addition to the series of MCA’s Agile Construction® Books.

The new book titled “Agile Methods for Continual Improvement” build on the Agile Construction® Principles and provide insights into the required supporting structure for Agile Companies and guide through the fundamentals and How-To’s of process design and process improvements.
 

  • Industrialization of Construction® Books




 




Outreach Corner 

MCA wrapped up 2020 with a record number of classes and participants being taught. One of those successful webinars that we offered at the end of the year was for ECA – Electrical Contractors Association – City of Chicago. The class taught fundamentals of process design, to help managers or potential managers learn how to map flowchart, and design or redesign processes and supporting procedures. Specific flowcharting technique was covered, including how to create them, read and analyze them, and use them to design or improve process outcomes. 

As we start the new year we pick up where we left off and continue to expand our online workshops & seminar offerings. All courses and workshops can be found on the MCA-soft.com website’s  Course Catalog. MCA looks to offer several courses due to the high demand with Agile Construction® 201 & 301 courses that dive deeper into the topics and strengthens the practices we teach.

If you are interested in an interactive classroom setting that discusses the industry topics, trends, and practices that affect your bottom line then check out our upcoming events:

Visit our website to see our future Workshops and Seminars


MCA Symposium 2021 – Data-Driven Installation

When the construction industry's leaders and experts meet this year, don't be on the outside looking in. Secure your opportunity to join the conversation as we tackle the issues that affect your bottom line and provide guidance and insight for navigating topics like:

  • Effective communication with General Contractors & getting change orders paid  

  • Leveraging existing and new technology to your advantage  

  • Improving project management approach (PM 2.0) to tackle labor workforce shortage, increase job profitability, scheduling, procurement etc. using the industry accepted and recognized ASTM E2691Standard Practice for Job Productivity Measurement  

  • Improved communication for change orders  

  • Save 10-40% on labor cost and Increase job profits by leveraging existing vendor relationships & creating effective partnerships through Agile Procurement®

If you are interested in our next 2021 Spring/Summer Symposium on Data-Driven Installation Phase, make sure to reserve your spot and sign up here: MCA Symposium.



Customer Corner 

MCA, Inc is thrilled to announce its agreement with Work Environment Management, LLC

Work Environment Management (WEM), LLC is a female majority-owned business that is authorized to promote and distribute MCA, Inc’s Agile Construction® Software to expand its reach and have packages for businesses of every shape and size. WEM, LLC customers can use the Buy-Track-SaveTM model and see results quickly. Buy JPAC® and SIS®, Track your productivity and be on your way to Save. WEM, LLC has a proprietary onboarding that is unique for software sales. They are with you every step of the way on launching the software, and therefore savings, for your company. Then when you’re ready, WEM, LLC can also provide scheduling services to help with your business transition and support your communication with your GCs/customers. For more information, please contact info@wemsoftware.com.



WEM LLC. is excited to provide an update on the progress of some of our clients with representation on the East Coast, West Coast, and the South!


In-West Electric out of Goodyear, Arizona is entering the second of their Agile Construction® implementation and is tracking 15 projects using JPAC®.  They have also sent multiple members of their team to attend Agile Construction® 101 to further their knowledge and increase productivity across all levels of their organization.

 - “Things at In-West Electric have been good as we had our most profitable year ever thanks to you guys. We almost doubled our gross profit margin this past year. Your systems work well!” -  (Mike Wallis, Owner of In-West Electric, Inc., February 2021)


Frischhertz Electric out of New Orleans has begun their journey toward Agile Construction®.   Frischhertz has just added their 19th user and is currently tracking five projects in JPAC®.  They have also just begun conducting bi-weekly job review meetings with their entire project team to review the data in JPAC® to make vital improvements to their process of project management and their bottom line!


All-Brite Electric out of West Haven, Connecticut is also entering the second year of their Agile Construction® journey.  They have learned much in the past year and in addition to tracking their Job Productivity in JPAC®, they are utilizing Short Interval Scheduling (SIS®) to capture jobsite distractions and make improvements to the setup of their jobs by reviewing that critical feedback from the field.  





MCA, Inc. is excited to provide a snapshot of the great achievements of the customers we have the privilege to work with.
 


Aldridge: After seven years of Agile Construction® process and tool implementation, the company’s ownership and executive team led a two-day Strategic Session to communicate why the program started at Aldridge, shared success stories over the past several years, and reiterated its importance in the company’s operations going forward. Alex Aldridge and Mark Carani asked MCA to analyze the company’s reduction in volatility, despite growth and expansion over the past few years. The results showed clear evidence that usage of Agile processes and tools have led to improved profitability and predictability. With full support of the 65 key managers, executives, and field superintendents, the company plans to refocus its education and implementation efforts in 2021 and beyond to use Agile Construction® as a potential Franchising Model. 

We also wanted to highlight a project that Aldridge completed in 2020, which made use of Agile Construction® processes and tools.  Application of Agile on large projects is not new to MCA, Inc. but something that may companies need to learn and adapt to. This project was a success both in its outcome (see here: https://www.ecmag.com/section/your-business/underground-improvement-aldridge-electric-renovates-chicago-subway-stations) and its results for Aldridge.


Staff Electric has entered their fourth year of Agile Construction® application.  As one of the few practitioners to take on the full scope of Agile Construction®, Staff Electric is embarking on a company-wide pilot of key processes, designed and tested by their Process Design Teams, such as a Job Start-Up Process, a WBS, and Prefab Identification Process, a Procurement and Purchasing Process, Executive Quarterly Reviews (Audits), and a Closeout Process, just to name a few. Staff Electric has also taken advantage of the scheduling support from MCA, Inc., as well as quantifying the COVID-19 impacts with data from JPAC® and SIS®, helping their customers and end-users understand the impact on time, cost, and quality (see the article “Five Steps to Take Control over your Project” in this SOTI). Staff is also in the process of developing their service department and also have created a productivity checklist that they are currently testing on one of their biggest cost codes, the branch rough code, to help improve the productivity on this code.  


Crescent Electric Supply Company welcomed Scott Teerlinck as their new CEO and President, replacing Marty Burbridge, in April 2020. Scott has focused on delivering the message that Transformation is Real at Crescent. They’ve recently announced their Crescent 2.0 initiative that MCA is proud to be a significant part of. Led by Scott and Chief Transformation Officer, Seth Erickson,  Crescent will move to be the ultimate provider for their customers, focusing on Customer Point of Entry. Scott has also joined MCA’s CEO Forum as a member intent in disrupting the status quo. 2021 is off to a strong start with the Crescent team.


Lemberg Electric had a busy and productive year 2020. Over the last half year, the Lemberg Board of Directors engaged Dr. Perry Daneshgari and MCA to assist Lemberg with the search for the next President of the company.  Effective November 2, 2020, the Board of Directors appointed Mr. Mark Chappel as the President of Lemberg Electric Company, Inc and Tim Scheid as the Chief Executive Officer (CEO), with Dave Washebek continuing to serve in the executive positions of Trustee, Chairman of the Board and Secretary of the Corporation. Leadership at Lemberg Electric also took the next steps of non-linear growth and improvement in profitability and performance, and in October of 2020, held a two-day Strategic Planning Session with MCA, where the leadership of Lemberg Electric assessed their short-, mid-, and long-term goals and established a list of strategic initiatives that carve the pathway to get there. David M. Washebek was elected by the National Electrical Contractors Association (NECA) Board of Governors to be Vice President of its fourth district, covering WI, MI, IL, IN and parts of KY. 

Lemberg’s leadership team discussed and determined the company’s new strategy and plan for a successful future of the business. An integral part of the company strategy moving forward will be the commitment and dedication to Agile Construction®, which has been recently announced on the company’s website. Project teams are also continuing to practice Agile Construction® across Construction and Data jobs, and have recently engaged and completed a SIS® Next Level training. This training has helped project teams use SIS® for planning ahead, and more accurately capturing obstacles on job sites, allowing stronger feedback to the company that will allow pro-active response to job-site obstacles and improvement of labor productivity on the job site.


Dixie Electric, Plumbing and Air (Dixie) stayed focused and dedicated to their work on improving company processes- on both Construction and Service sides of the company- and continued to roll out Agile Construction® tools across their construction jobs. Process Implementation Teams have made major strides in improving both Construction and Service operations. Dixie’s construction team saw improvements especially on Prefab, Manpower Planning, Procurement, Job Start-up, and Work Breakdown Structure utilization. Dixie’s service team has worked on data-driven improvements in areas of the truck stock, technician service process, and structural roles between customer care, dispatcher, and procurement that have allowed the service department to end with a good year and significant growth. 

Dixie has undoubtedly made major strides in 2020 thanks to the leadership of individuals within and across the company. John Yelverton, President of Dixie, has not only been a driver of progress within his company but in his town as well. Starting 2021, John will share his leadership, passion, and energy with all of Montgomery in his new role as Chairman of the Montgomery Area Chamber of Commerce. Read about his plan, focus, and strategy to develop his hometown and community, and his philosophy to shape a more successful and better Montgomery of tomorrow in the Montgomery Business Journal.

 

Electric Company of Omaha (ECO) is almost through their 2nd year of the implementation of Agile Construction® on their jobs. Within one and a half years, ECO went from four pilot jobs to 47 jobs in JPAC® in 2020.   Electric Company of Omaha focused on implementing the usage of a WBS and JPAC® to all large jobs in 2020, and the results are very positive. Very great results are proven in the reduction of variation of the job results in JPAC® over the last two years. In 2021 there will be a bigger focus on the SIS® usage in the Field as well as the Office. WBS and JPAC® principles will be applied to smaller jobs as well. Design teams have made great progress in designing and implementing several processes throughout this last year and building a training curriculum for the company. ECO’s special attention will continue to be on working with the field to increase prefab usage on all company projects. 


Graybar finished 2020 with a positive reflection on their internal and external accomplishments relating to the implementation and support of Agile Construction® within the industry. Graybar is currently undertaking an extensive investigation into ways to better position themselves with their current contractor partners, specifically in Wisconsin and in support of Staff Electric. Enhancements to service offerings, pricing performance, and support team strength are top priorities. Graybar has already committed to supporting Agile Construction® Training and the upcoming Symposium as a means to better position their partnership programs. 





Friday, October 23, 2020

October 2020

A Tale of Two Jobs – Case Studies of Agile Construction® Usage

“Every construction project is different and you can’t compare one to another” – but are they? While every project is somehow unique in terms of contractual obligations and requirements, project characteristics, material requests, and sometimes equipment needs, they might not be as much when it comes to the management of the actual electrical work as it appears at first glance. How work is laid out and planned, and how a project is supported during and after the construction phase can make a huge difference for the success of a project. 

We examined two comparable size construction projects performed by two different mid-size electrical contractors in the Midwest (see project descriptions in Table 1) regarding their commonalities as well as the differences from both an operational and financial performance perspective. In particular, we investigated the impact of the depth of pre-construction planning and the degree of implementation and usage of Agile Construction® Principles and Tools, such as Job Productivity Assurance and Control (JPAC®), Short Interval Scheduling (SIS®), job reviews, and continuous improvement strategies.

Although winning those two projects may seem like a great position to be in but it also came with significant downside risk for both contractors. Both projects were considered large and both carried a significant amount of risk, however, the inherent business and bankruptcy risk for each contractor was quite different: Project 1 was about 40% of the contractor’s annual revenue, while Project 2 represents about 140% of the contractor’s past annual revenue. By taking on these large projects, both contractors faced obstacles with their supporting infrastructure and their ability to service their existing customer base, which the second contractor is now exposing their future revenue stream to the risk of a mega project – a potential killer job!
 
Table 2 provides an overview and comparison of the Agile Construction Principals and Tools used on both projects. After the buyout of the project, material costs for the project are essentially fixed, leaving the work and labor as the competing edge for every project. The main focus of Agile Construction® is managing the work and labor of a project. First, the work needs to become visible before it can be managed. Managing work also involves efficient labor usage, and to define Who does What, When, and Where!

Both contractors started implementing Agile Construction® when both projects were already in the construction phase.  Contractor 1 started about 4 months into the project, while Project 2 had been under construction for almost one year. While Agile Construction® was a completely new concept to company 1, some executives and project managers at company 2 had already experience with Agile Construction® from prior companies they had worked for. Both companies held individual training and workshops with the general foremen and foremen on Agile Tool usage and to develop Agile Construction® Power Users for not only for these specific projects but to continue implementing Agile Construction® Principles across the company and future projects.

Planning on Project 1 started with developing a partial Work Breakdown Structure™ for a few cost codes while estimates were used for the remaining cost codes. Creating the WBS™ helped significantly with making the work visible, which also led to better labor management and higher labor productivity. During the construction phase, the project team conducted weekly job review meetings to get continuous feedback from the field and to review the tracked on-site obstacles in SIS® as well as overall job and individual labor code productivity. In addition to the weekly job review meetings, strategic planning sessions were held to review, discuss, and plan money, manpower, and material related topics for both parts of the project. Collected data in JPAC® and SIS® brought issues with misplaced material as well as problems with lighting and fixtures to the attention of the project team. Collaborative actions were to improve the material process and to develop a fixture release schedule along with specialty carts for safe and damage-free fixture transportation to the job site.

On Project 2, the on-site foremen started with developing a complete WBS™ for all cost codes and project phases to break the project down into how they see the work with no reference to the estimates. The field leads kept improving and adjusting the WBS™ to accurately capture the status of the project (% complete) and to reflect the work and effort needed for completion. In addition to weekly job review meetings, the project team held regular project schedule reviews to identify scheduling conflicts, to discuss a 5-week look ahead, to address labor loading, resource allocation, crew mix, and material needs with the objective to define a clear path for the crews on site. While absenteeism has been a major issue just like on every other project, the issue exacerbated significantly with the outbreak of COVID-19. Once COVID-19 hit and the progress of other trades got impacted, the project schedule meeting’s focus shifted from a 5-week to a 2-week look ahead.

SIS® data immediately revealed that field personnel was spending an additional 1.5 hours/man/day to comply with the new health and safety requirements, totaling approx. 700 hours per week on the project. Quarantine requirements and closed work areas due to deep cleaning after positive test cases further impacted scheduled work and job productivity. It took about 5 months to recover and stabilize pre-COVID productivity levels due to the size of the project. Regular strategic planning sessions are used to develop clear action items that focus on what is at hand and what is coming at the project team next. Active crew and composite rate management together with monthly financial project updates helped to proactively manage the money side of the project.

Figure 1 and Figure 2 show the monthly productivity trend since the first month of Agile usage on the project. Despite absenteeism being a primary obstacle during the entire lifetime of the projects, the application of Agile Construction® Principles helped turn around the negative productivity trend with improvement becoming visible shortly after starting Agile usage. The achieved improvements and changes led to a financial recovery on the projects to avoid significant losses and financial risk and stress for the company.
Figure 1: Labor Productivity Trend - Project 1

Figure 2: Labor Productivity Trend - Project 2
By using WBS™ for planning, SIS® and JPAC® for tracking on-site obstacles and labor productivity, weekly review meetings, continuous feedback from the field, as well as strategic planning sessions and regular financial reviews, project teams can proactively manage their projects and can immediately address any issues at hand. Agile Construction® enables project teams to effectively and efficiently manage large projects, through early detection and correction for successful and profitable project completion. See also MCA Inc.’s publication “Managing Large Jobs” for more information on how to successfully run a megaproject.



COVID-19 – Impacts on U.S. Construction Market and Electrical Contractors Reactions


COVID-19 has developed into a global crisis affecting all countries and industry sectors worldwide. Evolving at high speed and large scale around the world, no industry is immune, and construction is for sure no exception. As one of the most cyclical industry sectors, the construction industry is highly sensitive to economic expansion and contraction, although for most subcontractors the impact from regular economic cycles typically materializes 3 – 6 months later. The COVID impact was different as the effect was rather immediate leaving construction companies and contractors little to almost no time to react and adapt to the changing construction market and the operational environment.

Figure 3: Pre- and Post-COVID Outbreak Market Developments



Figure 3 shows the time trend of the annual value of construction put in place (CPIP) from March 2019 until July 2020. Looking back one year from the time of the COVID-19 outbreak in March 2020 and before the consequences for the society and economy started to fully unfold in the U.S., the forecast for the annual construction industry spending was approx. +7.4% higher than it was at the same time in March 2019. However, since the outbreak, CPIP forecasts have dropped significantly within the first three months, despite government and public authorities’ effort to advance spending in infrastructure and public safety projects. While both public and private construction spending show declines, private residential and particular non-residential (commercial and industrial) construction spending have both dropped below 2019 levels.

Despite strong pre-COVID growth (+11.9), persistently low-interest rates and direct government support, high unemployment rates, and unchanged economic outlook have caused annual private residential construction forecasts to drop by more than -7% since March 2020. Similarly, the data shows that the non-residential construction market aggregate estimates (commercial and industrial) dropped by nearly – 4.5%, as most businesses in these sectors, will continue to cut, defer, or cancel investments, weakening prospects until the end of 2020, and likely into Q1 and Q2 of 2021. Although the industry saw considerable contraction and is still facing a less favorable market outlook, there is light at the end of the tunnel! Positive signals for the industry come from annual construction spending during July 2020 to be flattening out the annual forecasts along with the reduction of unemployment rates in the industry from 16.6% in April 2020 to 7.1% in September 2020.

Figure 4: Risk Management System

Contractors have taken efforts to react and adapt to the “New Normal” by developing policies and procedures to mitigate the risks and impacts of COVID-19 for their labor, their operations, and their business.   Contractors managed to adjust their way of operation, how to manage their job sites, and to perform their work. To help contractors to plan, mitigate, and manage the business, operational, and health risks associated with COVID-19, MCA, Inc. has started to offer COVID-19 Webinars shortly after the outbreak and as the second wave continues to unfold to help contractors share and build best-practices at both the business and operational level.

A critical immediate action in response to a disaster event like this pandemic is to quickly assess and quantify the risks, as well as the impacts on construction work along the three dimensions: Effort, Work, and Time. Contractors using Short Interval Scheduling (SIS®) and Job Productivity Assurance and Control (JPAC®) were able to categorize and quantify the impacts on scheduled work, additional effort, and labor productivity in a matter of few days. National data on over 290 active construction projects and roughly 13.2 million man-hours reveal the following impacts (Data from March to September 2020):

  •   EffortAbsenteeism more than doubled, 49% of scheduled work is not completed, 52% of  reported impacted hours due to COVID
  •    Work: 30-60 minutes per day per labor to comply with CDC and company-specific guidelines
  •    Time: Significant delays, schedule compression, leading to higher peak manpower loading

These impacts also affected productivity. Figure 5 displays the aggregate productivity trend of jobs tracking COVID-19 impacts between February 2020 and September 2020. Industry-wide measurements show that after an initial loss of productivity immediately following the COVID outbreak, on-site labor productivity has increased by approx. 7% until September 2020.  These overall trends appear reasonable given the changes in the way contractors have adapted their operations in both the office and on the job sites.


Figure 5: Productivity Impact for Projects Tracking COVID Impact

Additional supporting data
[1] shows that nearly all contractors have made changes to how they operate their business in response to COVID-19:

  • 92% have changed work procedures to increase social distancing
  • 39% have asked project owners to adjust work/delivery schedules
  • 34% adjusted employee salaries furloughed or laid-off employees
  • 8% have adopted more automation to enhance social distancing

Further, many contractors believe some changes to their business are here permanently, such as:

  • Adjustments to safety procedures and work processes
  • More remote meetings/use of collaboration tools
  • Force Majeure Clause to avoid liability for extraordinary events and circumstances
  • Increased attention to site/office sanitation

To reduce the risk for further impacts and business disruptions, contractors recognize the importance of taking steps to build their backlog, diversify types of work, and build relationships with customers. By understanding their market, and available types of work around them as the industry evolves, contractors are better able to get ahead and make data-driven decisions on where and how to diversify. MCA, Inc.’s unique market study methodology can help to allow contractors of any trade to understand and evaluate the overall available market size in any geographic area of interest as well as a breakdown into residential, commercial, and industrial segments, and further trade-specific detailed market categories. Contractors must stay aware of the changes happening in the industry and their specific markets, as well as how the changes they are making in their business and on their job sites are impacting their project labor productivity.


Research Corner

MCA, Inc. was established as a research company in 1990. For more than 20 years, MCA, Inc. has been involved with ELECTRI International, providing innovative research and expertise to the construction industry, and financial investment to the Foundation. Dr. Perry Daneshgari and Dr. Heather Moore were interviewed on the interaction of research and financial investment by ELECTRI.

Read the full interview onResearch and Investment can go Hand-In-Hand”! 

  • Industrialization of Construction®: Signal or Noise? Threat or Promise?

The three-phase research project is currently underway. This research project investigated how Industrialization will continue to unfold in the construction industry and provided ELECTRI and its members a means of getting and staying ahead. The first phase of the research, completed this summer, focused on understanding the current state of the industry and providing a means for contractors to evaluate themselves in terms of how industrialized their company is and assess the gap between their current state and the industry. During the 2nd phase of the research, MCA, Inc. developed a guidebook for contractors to use to move the needle forward in their company, working with three electrical contractors to test the applications, collect their results, learning, and feedback. The 3rd and final phase of the research is currently underway, as MCA, Inc. develops a full framework for the future of Industrialization of Construction® across the industry, including collaboration among associations and standards-setting regulatory bodies.

  • Estimating with and Pricing of Prefabrication

This ELECTRI research project was targeted to identify electrical contractors’ current prefab usage as well as the practices in pricing with prefab, and to help electrical contractors move forward and to accelerate the industry-wide usage of prefabrication by developing a practical calculator tool to quantify the aggregate labor savings potential and composite rate (crew mix) impacts from Externalizing Work®, including Prefabrication and Vendor Services, and a method for “pricing” their estimates with prefabrication.

  • Publications

In addition to completing two ELECTRI research projects, we have put a special focus on MCA’s publications. Over the past five months, we have published 7 brand-new articles in EC&M Magazine and Construction Financial Management Association (CFMA) on Industrialization of Construction®, Externalizing Work®, Prefabrication, and Modular Construction, Integrated Project Delivery (IPD), and Jobsite Intelligence Gathering. We are proud to share the latest experience, insights, and trends on these topics to help you and the industry advance and progress. Progress and change might be even more important and needed than ever, particularly during or because of these difficult and uncertain times.

 

Visit www.mca.net/resources/publications/ to view and read all of our latest articles and publications (and more)! 

  •  Recently published articles

§  The Operational Model for Modular Construction 

§  From Jobsite to Garage: Changing the Mindset of Prefabrication & Modular Construction 

§  Industrialization: Is Construction Next? 

§  COVID-19: Another Tectonic Shift in Business Operation Models

§  The Ins and Outs of Integrated Project Delivery

§  Make Data Work for You 

§  The Key to Gathering Job-Site Intelligence 



Release Announcement

MCA, Inc. is proud to announce the release of the 2nd Edition of our best-selling book “Agile Construction® for the Electrical Contractor”.
What is new?
 -  Work Breakdown Structure (WBS) Deep Dive
 -  Additions on Project Planning & Project Management 
 -  More Details on Externalizing Work®
    through Prefabrication 
 -  Agile Construction Tools® updates and new features 
 -  Updated Safety Study for the Construction Industry


Outreach Corner

MCA Symposium 2020 Highlights

2020 was the first year ever that MCA’s symposiums went virtual and with great success! In our Spring as well as Fall Symposiums, MCA was able to provide the connection between several contractors across the United States to exchange on the great benefits of Agile Construction® usage, in particular during this unprecedented time. In 2020, we held two out of our series of four symposiums on Agile Construction® – A Path to Industrialization:  Data-Based Project Management. In our 2020 Spring Symposium, we focused on the Planning phase of a project while the 2020 Fall Symposium dealt with the issue of Data-Based Agile Procurement®.

If you are interested in our next 2021 Spring/Summer Symposium on Data-Driven Installation Phase, make sure to reserve your spot and sign up here: MCA Symposium

Agile Classes Highlights and Upcoming Events

We have been successfully expanding our online workshop and seminar offerings during 2020 with great success. With travel limitation in place and social distancing, we were facing this year, MCA successfully expanded the virtual workshops into three to four-hour seminars as well as one-hour webinars. Besides, MCA has worked hard to simplify registration for our online seminars as well as workshops! We offer a large number of classes regularly multiple times each year as well as individual company workshops. All courses and workshops can be found in our new addition to our MCA-soft website – our Course Catalog. Make sure to visit our Course Catalog and check out all MCA’s course offerings - ranging from Agile Construction®, Procurement, and Prefabrication to Project Management and Business Development!

Hundreds of contractors have already participated in our Agile Construction® Events in 2020. While most of our offerings have been virtual, breakout sessions, active involvement of participants, and discussions among contractors are still a focal point in all training and educational classes. Information about the latest ways on how to deal with the increasing time crunch on job sites, how to ensure you get paid for your change orders, as well as how to continuously improve your communication with the General Contractor are just a few of the long list of discussed topics. Our next upcoming events are:

·    And many more:
Link to future Workshops and Seminars

New Website

MCA has been working hard to develop an easier way for you to interact with us and benefit from our products. We are proud to announce that our redesigned website www.mca-soft.com is finally live! You will find our latest books, publication, create your shopping cart for complimentary reading material, and for purchasing MCA’s books, as well as an all-new sign-up process for our workshops, classes, and online seminars. Visit MCA-Soft.com, and take a look!

Customer Corner

Dixie Electric has devoted 2020 to fully emerging itself into Agile Construction®. The company is implementing Agile Construction® throughout the entire company with the help of Process Implementation Teams. Focusing on increasing usage of Agile Construction® Tools, increasing application of prefabrication, and improving processes through their Design Teams, Dixie is prepared to repeat and build upon their success from 2019 along with setting a foundation for years to come. 

Electric Company of Omaha (ECO) recently conducted a project audit/review session on their largest project to date, with the project reporting continued gains in productivity for 11 weeks straight, despite the significant impacts of COVID-19 on the job.  By implementing Agile Construction® on this project and across the company, the project team can make visible the obstacles they are encountering daily and proactively allocate the resources to address them.   Besides, ECO has added about 20 new projects to Agile and continues to learn and expand on the processes to support Agile through their two Design Teams led by Kelsey Ahl and Glenn Biehl.  Year-to-date, ECO have had 10 graduates from Agile 101 Class and additional 6 participants attending each three Agile Basics Training Sessions.

Lemberg Electric has made great headway this year in expanding Agile Construction® throughout their company. This summer, Lemberg completed successfully several fast-paced projects, and despite impacts from COVID-19 that left no job untouched, Lemberg completed these projects with high productivity. As Lemberg takes on new work, project teams are practicing Agile Construction® across Construction and Data jobs, allowing project teams to pro-actively respond to job-site obstacles and improve labor productivity on the job site. Effective November 2nd, 2020, the Board of Directors has appointed Mark Chappel as the new President and Tim Scheid as the Chief Executive Officer (CEO) of Lemberg Electric.

Staff Electric has been taking full advantage of the opportunities provided by the pandemic to focus on internal development as well as positioning themselves financially to make 2020 a benchmarking year.  Design teams held Kaizen events to address productivity struggles with some high project impact labor activities and developing checklists to help push labor productivity up by 5% to 15%.  Project managers began incorporating the WEM® process from project schedules to do an accurate 3-week look ahead to allocate manpower on the job, which became essential as COVID-19 was impacting not only productivity but the overall availability of labor. Committed to Agile Construction®, to-date Staff has had a total of 95 graduates from Agile 201 Classes. Besides, Staff became the first customer to use Agile Construction® Tools to visually track their annual departmental budget and expenditures.

Aldridge has crossed the mark of 400 active users and over 60 active jobs tracked in the Agile Construction® Tools. Aldridge is continuing to embrace and benefit from the Agile Principles. Aldridge is taking the Agile use to the next level. With MCA’s help, Aldridge has been focusing on expanding and improving its Prefabrication Process, as well as expanding the focus of WBS in its Drilling business operations to improve mobilization and overall job planning and visibility from the field. Looking into 2021 MCA and Aldridge will focus even more on developing a Strategy for company-wide utilization of Agile Construction® principles and tools, including Externalizing Work® through prefabrication and a company-wide Procurement and Logistics strategy.