Monday, January 14, 2019

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

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.




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.

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.