Thursday, May 28, 2020

SOTI Special Issue (May 30th, 2020)


Disaster Plans and Preparation – What did the COVID-19 pandemic reveal for your business?


No doubt that it is an unprecedented and unique time for all of us. We have all been impacted by the recent events of the COVID-19 pandemic in various ways, either personally, professionally, or even both. The uniqueness of the current situation is its global and world-wide impact. It’s not any different than any other significant events that would strike locally, regionally, company- or even project-specific. When such events hit, many businesses suffer not because of the symptom of the event but rather because the root cause has existed long before. The strengths and weaknesses of your business become scarily visible during such events. Perspective is critical during such times and it is important to resist the urge to victimize yourself.

The truth is, the possibility of such extreme events is always there, no matter how unlikely. We deal with uncertainty every day when making decisions. However, unless we deliberately think about these scenarios, our choices tend to be based on experience, leading to underestimating or even ignoring such rare events and their impact. Planning has always been a challenge in the construction industry. While most contractors are great at what they do as a craft, many lack experience and knowledge on how to plan and prepare for disaster events, or how to apply the preparation to the business environment. The ability to plan and prepare to mitigate the risk and impact of such disasters is always under your control. Proper planning is becoming the norm - it requires deliberate thinking and the investment of your time.

Figure 1: Work Breakdown Structure to Minimize the COVID impact

As soon as COVID-19 appeared as a looming impact on construction, MCA, Inc. began working to help contractors prepare to mitigate the impacts on their businesses. For over two months, we have developed plans and collected information from more than 100 companies virtually every week to aid the industry’s recovery. MCA, Inc. developed a ‘Minimize the Impact Breakdown’ for contractors to be able to focus on one phase at the time. Figure 1 shows a high-level breakdown that separates out 4 main phases:

          1. Ramp down                 2. Stay at home                 3. Reopening                 4. Recovery 

Figure 2: Risk Management System (Swiss Cheese Model)
Each phase has a unique focus and requires managing different risks. To mitigate the risk and to prevent adverse impact, it is important to follow a structured approach, like FMEA (Failure Modes and Effects Analysis), to identify potential failures that may exist within your business at different layers (see Figure 2). To address these failure modes, standardized written policies and guidelines, checklists, and How-To’s or work instructions for the current work environment need to be developed and aligned with employee training. Further, a clear communication structure and responsibilities for the field and the office need to be established using existing or new technology to facilitate quick and frequent exchange of information.

For the Reopening Phase after COVID-19, items to consider might for example be:
  • What policies and procedures do we need to keep our employees safe and healthy?
  • What is needed to comply with the new additional regulations?
  • What are the additional direct and indirect costs associated with COVID-19?
  • What additional planning effort is needed to manage the projects and work?
    • Manpower plan (Distancing requirements, Management of absenteeism, etc.)
    • Material plan (Material delays, alternative sourcing, reducing vendor contact)
  • What equipment and technology are needed to ensure efficient project and office operations

This year’s disaster was the COVID-19 pandemic, but what is the next unexpected event that could put your business at risk? Next time it might be regionally or locally like a hurricane or a flood. Taking deliberate actions to put a risk management system for disaster planning and preparation in place will help you sustain and prevent the impact of the next disastrous event for your business. Doing so will provide you a competitive advantage and the opportunity to expand, when others struggle. Be prepared!



Quantifying the Impact of COVID-19

“Measurement is the first step that leads to control and eventually to improvement.” 
~ H. James Harrington

As you start to reopen and bid for new projects to fill your backlog, you should first start to measure and quantify the impact to date and create a solid understanding of the additional costs that your projects and business are facing and need to manage. This requires consistent tracking, documentation, and measurement process that will house and quantify the impacts allowing you to adjust for the “new normal”. Failure to do so can be disastrous for current and upcoming projects.

Knowing the Ins and Outs of your projects and business is important. The importance becomes even more visible when unexpected events like the COVID-19 pandemic hit, which call for quick and informed actions. With obstacle tracking and labor productivity tracking systems like SIS® (Short Interval Scheduling) and JPAC® (Job Productivity Assurance and Control) in place, Agile Construction® Contractors are able to instantaneously track, document, and measure the additional effort needed as well as the immediate impact on productivity. To quantify the impact of COVID-19, MCA, Inc. has also created and published Agile Construction® Measurement Guidelines on MCA’s Agile Construction® Forum to provide all construction companies with best practices in tracking, documenting and measuring the COVID-19 impact.

The following three items are critical:

  • Quantify the Effort Impact: Detailed reasons and impacted time (with SIS®, Figure 3)
  • Quantify the Work Impact: Track the extra work needed on-site to comply with the new requirements and capture it as part of the actual work in the Work Breakdown Structure (WBS) of your project (with JPAC®)
  • Quantify the Time Impact: Add a summary task and related COVID-19 activities to your schedule, and connect them to your obstacles (SIS®) to capture schedule delays
Figure 3: COVID-19 impact measured through SIS®

Figure 4: COVID-19 Impact Examples
MCA Inc.’s proprietary data collected from COVID-19 impacts on job sites of Contractors across the U.S. using SIS® and JPAC® reveals two interesting findings: First, productivity for the actual planned work on-site has actually been continuously increasing, showing that on-site labor got more efficient in what they were doing. This might sound like a surprise but is fairly easy to explain. Fewer people and trades on-site immediately translate into less crowded job sites with less interference and obstacles, reducing the wasted time, which can otherwise only be accomplished by Externalizing Work® (Prefabrication), and the use of vendor services. Second, despite the increase in productivity, total reported accounting hours actually exceed pre-COVID-19 levels reflecting the additional effort needed on-site to comply with COVID-19- related prevention measures and restrictions (see Figure 4). Overall, jobs are using more labor hours, and projects will ultimately lose money on activities that were not expected when the project was estimated, planned, and the expected work was broken down and visualized in the Work Breakdown Structure (WBS).

MCA Inc.’s data further reveals that each worker spends on average up to one hour per day on additional required tasks to comply with the COVID-19 safety requirements, such as temperature checks, filling out medical screening forms, sanitizing equipment, tools, carts, and work areas, or social distancing requirements that alternate the planned workflow, on-site movement, material delivery, or other logistical tasks. Contractors can’t expect customers to take the cost of additional time, delays, or impaired productivity. Instead, contractors have to improve productivity through the increasing use of prefabrication and vendor services to compensate for the additional hour of COVID-19 impact just to remain at par in the short-term. However, in order to meet future objectives, contractors will have to increase the effective installation time from now 4 hours per worker per day to at least 5 in the long-term. 

To help contractors draw a financial picture for their businesses, MCA, Inc.’s has developed a customizable recovery calculator, which allows contractors to determine their annual financial projection based on the company-specific cost impact due to COVID-19, any granted PPP or other Cares Act loan, as well as various levels of productivity improvement. Once you have quantified the impact and challenges you are facing, and you know what you can control, you can start creating a plan for improvement and to prepare for reopening and recovery.



Successful Reopening and Disaster Recovery 

There is no question: every construction company has taken a hit. The loss is there, now it’s time to pick ourselves up, and plan for effective reopening and recovery! After having quantified the impact and the additional cost, it is important to understand and plan for what needs to be done from a business, medical, and social perspective to master a successful reopening of your company as well as the whole economy that will bring your business back on track.

Figure 5: Reopening Plan Structure
As tempting as it might sound given the current situation, but lowering restrictions and reopening does not simply mean getting back to the job site and continuing as before. Getting back needs planning and adjustment for the “new normal” in construction. The bad news is it doesn’t happen by itself. It requires a structured reopening approach with clearly defined company-wide, job-specific, as well as work-area plans, policies, guidelines, checklists, and procedures in place to successfully manage manpower, money, and material (see Figure 5).



Figure 6: Breakdown of Extra Work due to COVID-19 (exemplary)

The impact that new COVID-19-related restrictions pose on construction sites will carry on and will force contractors to change the traditional workflow, logistics, and material delivery, as well as on-site interaction and project coordination processes. PPE requirements and preventive measures such as health checks, cleaning, and sanitizing tools and equipment, access, and site movement restrictions, as well as spacing requirements, will require and consume additional non-installation time (see Figure 6). 

MCA Inc.’s proprietary data from jobsites of contractors across the U.S. shows that the direct impact of new tasks to comply with the COVID-19 preventive measures, such as health checks, cleaning and sanitizing, as well as completing required paperwork, adds up to almost one hour per person per day. This does not even include the time or productivity loss due to on-site manpower limits, material delays, delivery restrictions, additional site movement, and coordination, etc. This will likely vary across contractor, location, and type of work, so it’s important to track and measure the effort and impact for your specific situation. Not only for the current projects but to know your true cost when estimating and bidding new projects.

Figure 7: Dimensions of Work (Who does What, When, Where)
Once you have quantified the impact, MCA, Inc.’s recovery calculator will help contractors to estimate the additional annual financial burden for their business that needs to be covered during and most likely beyond the reopening phase. This is an additional cost and lost labor productivity that contractors should not expect to be compensated for beyond what they bid and are awarded in new contracts. Without change, this will cause significant cash flow problems as well as profitability losses and will put your business even more at risk. The most sustainable solution to get back on track, and at least restore the expected productivity at your projects is to rethink and breakdown your work in a way consistent with the dimensions of MCA’s Work Cube (“Who” does “What”, “When”, “Where”) to visualize and identify improvement opportunities (see Figure 7). 

You don’t have to be overly creative, innovative, or need to invest in expensive software and technology to achieve this – stay on the road to Industrialization of Construction®. Agile Construction® Principles and Tools, such as project visibility, work breakdown and planning, productivity measurement, and tracking using WEM®, Externalizing Work® through prefabrication, as well as vendor support in logistics and services will all help lower your cost, improve productivity and profitability.

We have all taken a hit, but our perseverance is what separates the good form the great companies. Focus on reducing your cost and planning your jobs to improve productivity and profitability. Breakdown, plan, and identify as much work as possible that can be taken away from the jobsite to expand your level of Prefab and VMI. The cost and productivity improvements you will see from these actions will not only help compensate you for the financial and productivity impact you are feeling, but they will turn into a competitive advantage for your company in the long run once they become ingrained in your culture.




Research Corner

MCA Inc. is proud to share the recent publications and industry media coverage:

Release Announcement

MCA, Inc. is proud to announce the release 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

Pre-Order the new edition now at a discount for $79.00/ea. (+ tax & shipping)






Thursday, March 26, 2020

April 2020 - Volume 8 Issue 1


COVID-19: Managing Challenges and Mitigating Risk

Managing risk in construction means managing the three Ms (Manpower, Money, and Material). The current socio-economic situation begs for even tighter management of the 3Ms. The highly fluid and continuously changing conditions due to the COVID-19 have increased the uncertainties of managing projects and companies. As the COVID-19 disease is advancing and spreading across the U.S. at an ever-increasing rate, state-wide lockdowns and quarantines are likely to intensify. Various industries and nearly all aspects of the supply chain will continue to be severely impacted, including the construction industry and its contractors.

Contractors face challenges on a daily basis and are used to managing unscheduled interruptions on the construction site. MCA’s data and more than 25 years of working experience with contractors across the U.S. indicate that interruptions and delays due to absenteeism, weather, or trade interference are common on today’s job sites. However, the challenges contractors will be facing due to this pandemic are multi-faceted and likely larger in scope. Contractors need to plan and prepare for the following challenges and risks the coronavirus will pose on their businesses from shut down, through revival, and all the way to final recovery:


Supply Shortage and Material Delays:
Interruptions and shutdown of national and international manufacturing facilities around the globe will cause sourcing issues and extended delays in product and material fulfillment due to supply shortage and logistics breakdowns.
Intensified Labor Shortage and Limitation to Perform Work:
Contractors will have to consider employees’ health, which might require difficult decisions regarding revenue or performance. The growing fear, number of infections and quarantines will leave employees unable to work, intensify the labor shortage issues for contractors, and ultimately slow down current projects. The expansion of precautionary measures taken by local agencies may even force contractors to shut down construction sites and entire businesses, effectively prohibiting contractors to perform work.
Project Delays, Delayed Payments, and Financial Risks:
Getting paid in the construction business is already a struggle, even without this current situation. As a result, as every party involved is going through this major disruptive event, payments will be delayed as far as possible, and delays will be passed down to the bottom of the chain of payments, where contractors will be squeezed the hardest, facing major cash and liquidity risk.
Legal Concerns and Disputes:
Both contractors and owners will be reviewing contracts to see what contractual rights and duties exist in light of the conditions caused by the virus' spread. While the coronavirus epidemic was unforeseeable, contractors may still be contractually responsible for delays or cost overruns on current projects.
Economic and Market Challenges:
Despite advantageous financing conditions, there is an increasing risk of higher construction prices, as financing opportunities may dry up, and project owners postpone or cancel projects. The current situation has certainly accelerated the expectations of an economic slowdown, and a serious downturn is more than ever a real threat for contractors. Most contractors might not see the immediate impact of an economic recession. Current backlog, especially in non-residential construction, will help them to bridge about 1 to 1.5 years before experiencing economic difficulties.

Contractors can expect significant project delays, schedule compressions, labor and material shortage, price fluctuations, as well as order and supply chain issues that will ultimately lead to higher project cost and lower profit margins. In a thin margin business like the construction industry, any kind of payment delays and project budget overruns can decide about staying in business and closing up shop. Contractors are urged to take action now and to begin planning and preparing for the challenges and risks in the aftermath of this epidemic. Contractors should evaluate their entire supply chain, identify its strengths as well as weaknesses, and look for alternative supply sources. Furthermore, should review their contractual rights and duties to protect themselves from the increased costs and supply chain delays and interruptions that are threatening the construction industry.

We are about you®, and we care about your business. MCA, Inc. offers a variety of online classes and webinars targeted to support you to mitigate the impact of the COVID-19 pandemic on your business. We will discuss and brainstorm what you should focus on, what you should look for, and which actions you should take now as a business to successfully make it through this tough time. We will prepare you for the entire journey from shut down, through revival, and all the way to final recovery. 

Visit www.mca-soft.com to learn more about the online classes and webinars to mitigate the impact of COVID-19 on your business.


Effective Labor Management and Profitability with JPAC®

If you ask most project managers how to maximize profits on a construction project, you might receive answers such as reducing overhead or leveraging vendor relationships to drive material costs down, etc.  They aren’t wrong, but why not start with the biggest cost driver: labor cost.  Smart contractors realize this and have started to shift their focus toward effectively managing their skilled labor.  This realization is important not only because of the labor shortage in the construction industry, but because labor still represents the single largest source of profit wasted on a construction site, and therefore represents the quickest source for improvement!
Figure 1: Correlation between Job Profitability and Change 

The fact is that the labor shortage, coupled with increasing competition and other driving factors has driven the need for contractors to not only pay close attention to labor productivity, they also have to manage how efficiently their labor is used as well.   Contractors simply can’t afford to have their highest skilled labor moving material, searching for tools or cleaning up job sites. The most important aspect of the project manager’s responsibility is to manage the job’s labor cost and to provide the right labor force mix for the job to allow for the most efficient labor utilization. In order to stay competitive, contractors must actively manage the overall composite rate and develop a deeper understanding of the effects of prefabrication and the use of lower-skilled labor for unskilled tasks such as material handling and other non-productive tasks.

A recent analysis conducted for a large size electrical contractor highlights the importance and immediate positive financial impact of managing a job’s composite rate on a project’s profitability. An analysis of 53 projects between 2017 and 2019 (see Figure 1) illustrates that reductions in the crew composite rates (relative to the estimated labor rate) immediately translate into higher project profitability. On the other hand, jobs that end up with higher than estimated composite rates are more likely to experience significant losses for the business. The data analysis suggests that, on average, for every $1 a company is able to save on its crew composite rate for a job, it can realize up to 1 percentage point increase in the project’s profit margin. The results demonstrate the large financial impact that effective labor cost management and management of skilled labor can have for contractors on maximizing profits on their construction projects and to mitigate restrictions imposed by the ongoing labor shortage! 


Recuperating Retainage using JPAC® Percent Complete

“Time is Money” and managing cash flow is a well-known struggle for all contractors. It is common in the industry for retainage to not be released on time or, in some cases, not released at all. Subcontractors are particularly prone to significant cash flow challenges and financial pressure because of their adverse position along the chain of payment, which in extreme cases can cause subcontractors to fall significantly behind on their debts. As a subcontractor, you should be thinking about how to have as little cash as possible tied up on a job for as short as possible. 

Figure 2: Retainage Law for Public Projects
(Data as of November 2019) (Click to enlarge)
Federal and state governments started passing laws regulating the maximum percentage of retainage allowed as well as the types of contractual provisions that subcontractors and general contractors can agree to. While most states limit the retainage percentage allowed on public projects to 5% or 10% (see Figure 2), retainage on private construction projects is widely unregulated across the U.S. (see Figure 3). As private projects represent more than 75% of the total annual value of construction put in place in the U.S. (U.S. Census Bureau), it is of utmost importance to pay close attention to the negotiated contractual requirements and rules.

Figure 3: Retainage Law for Private Projects
(Data as of November 2019) (Click to enlarge)
Retainage is typically released upon substantial completion of the work. However, some states like Alabama, Arizona or Georgia, for example, put rules in place that prevent GCs from withholding any additional retainage from future payments after the work is 50% complete. This is why using a proper percent-complete method of job tracking is so vitally important. The earlier you can prove that you are 50% complete on the project, the quicker you can stop having retainage withheld on your project. JPAC® is specifically designed to help you accurately document percent complete through immediate field-based feedback on the actual effort and work performed on the construction site. With the use of JPAC®, you will be able to prove the completion of your project’s percent faster, and start billing for your retainage earlier, thus, reducing the risk exposure of your cash flows and financial pressure for your business.

Visit www.wemsoftware.com to learn more about JPAC® and our services.


Using Labor Codes to Manage Work and Profitability

Figure 4: Industry Common Labor Codes
The terms ‘cost code’ and ‘labor code’ are used interchangeably, and both methods of grouping individual costs based on their nature, function or type of work.

In most accounting software, cost codes define types of costs, such as material, labor, subcontractor, or equipment. In construction, cost codes are broken down into further detail by creating, for example, individual labor codes for the overall labor cost code. An electrical contractor may use labor code “100” to assign and track any time spent and work done related to fixtures on a job. MCA’s research shows that there are between 7 and 15 common labor codes. Figure 4 depicts the frequently used labor codes in the electrical construction industry.
Figure 5: Reasons for using Labor Codes

Contractors use cost codes and labor codes for a number of reasons. A survey conducted by MCA (see Figure 5), asking where company labor codes originated, why they are used, and who in the company uses them revealed that the top reason for labor codes is to “Track hours spent”, followed by “Seeing if the estimate was accurate”, and to “See how much costs go to different tasks”. For more MCA research, click here

What many contractors don’t know, however, is that labor codes can be used not only to monitor hours after the fact but to get a real-time view of labor code performance throughout the job, so project managers and business owners can predict profitability more accurately.  JPAC® is the only software that follows the industry standard, ASTM E2691, and can monitor labor codes’ productivity and completion status. Project Managers using JPAC® are able to closely monitor critical individual labor codes and pinpoint issues faster on the job. The traditional method of percent complete relies on cost-to-cost or units of work performed, which might not provide an accurate picture of the progress towards the contract completion. For example, a project manager who sees in the accounting system that 15% of the budgeted hours have been spent, might assume that the project is 15% complete, and therefore bill for 15% of the contract volume, on a cost-to-cost basis. Proper use of JPAC® might uncover instead that the project is actually 30% complete, and the PM should have billed for 30% of the project revenue. Simple math tells us which method would leave us in a more advantageous position!

If you are interested in more information on JPAC®, click here.


Research Corner

New Research Projects

This past January, MCA had the honor to present two winning research proposals at the ELECTRI International Council Meeting. The research topics funded were:
  1. Industrialization of Construction: Signal or Noise? Threat or Promise?(Dr. Heather Moore)
  2. Estimating with and Pricing of Prefabrication for Electrical Contractors(Dr. Meik Daneshgari)
To get some impression about the session at the ELECTRI Council Meeting, and to see some of our members in action, please click here for a short recap video. 
  
The winning projects are just the next steps in shaping the industry through and towards the Industrialization of Construction®. In previous years, MCA has published four books for ELECTRI International on the following topics:
For more information on MCA’s research, click here
If you are interested in our most recent as well as past publications, please click here
Visit also ELECTRI International for additional industry-related research.

U.S. Market Development and Market Studies

The recent update of the U.S. Census Bureau on the U.S. construction market data indicates that the construction market has likely reached its peak. In 2019, the U.S. construction market experienced its first drop after a 9 year-long streak of impressive growth and recovery, surpassing pre-crisis market levels in 2007 and 2008. The value of total construction put in place (CPIP) in 2019 amounted to $1.306 trillion, and 0.1% below the amount spent in construction in 2018. 

The recent slow-down in the construction market is the result of two opposing trends in private and public construction. Lower spending in private residential construction (-4.7%, $514.3 billion) and stagnation of nonresidential private CPIP at $460.5 billion led to a decline in overall private CPIP in 2019.

Figure 6: U.S. Electrical Market Size
In addition to the impacts of the COVID-19 pandemic and the increasing risk of an economic recession, contractors will keep facing the challenges of an ongoing labor shortage, increasing pressure on cost and profitability, and trends toward fixed-bid projects. In 2020, the construction industry will have to focus on mitigating these challenges through improved operations and to identify the individual advantages within specific markets. Identifying and understanding your competitive advantages and disadvantages requires a profound knowledge of the characteristics of your local market. 

MCA has conducted hundreds of unique market studies for Chapters and IBEW locals of different trades over the past 15 years. Most recently, MCA has analyzed local markets for:
  • Electrical Contractors’ Association of City of Chicago (ECA Chicago)
  • Northern New Jersey Chapter NECA
  • Northern California Chapter NECA
  • Western Pennsylvania Chapter NECA


Spring Symposium 2020

Agile Construction® - A Path to Industrialization
A Symposium on Applied Project Management Concepts
May 15th, 2020, Omaha, NE

Mark your calendars! MCA will be in Omaha, Nebraska, May 15th, 2020 for our second part of the Project Management Symposium series as our industry continues its journey toward industrialization. The most competitive companies will be those applying Agile Construction® that support Project Managers through the project life cycle. The upcoming Symposium will offer a live Prefabrication tour. The topics for this session on data-based project planning will focus on:
  • How to set up your jobs for success through successful planning
  • Project planning, including identifying segmented work packages
  • Project Work Breakdown Structure
  • Financial planning and layout for your jobs including cash flow projections
  • Project scheduling, time and resources
  • Project integrated safety plan
  • Increasing profits

To register for MCA's Spring Symposium, please click here.

Looking forward:
  • 2020 Fall Symposium “Procurement and Logistics Management” (October 2020)

Customers On The Move
MCA and Customer involvement. What are they up to, goals and celebrations...Read more, here

Tuesday, November 19, 2019

November 2019 - Volume 7 Issue 3


JPAC® - Early Warning Signal, Lead Indicator and End-Of-Job Performance Predictor

When do you find out whether a project is a “winner” or a “loser”?  If you’re like most contractors, that answer varies widely, but through years of research, MCA has found that most construction companies cannot predict profitability reliably until close to 90% complete.  This is when the scrambling begins.  So what went wrong?  More importantly, when did these problems occur?  What if these issues were uncovered much earlier?  What would that mean for every project moving forward?  Agile Construction® Practitioners are using Job Productivity Assurance and Control (JPAC®), based on the ASTM Standard E2691, the only standard for measuring productivity in the construction industry, to accurately predict profitability as early as 20% complete. JPAC® is used to track productivity on a weekly basis and aids in risk management. This is the only tool that provides early warning indicators of issues on the job, allowing the project team to act immediately to get the project back on track. 

Figure 1: JPAC® Labor Productivity and Trend Monitoring 

Figure 1 shows JPAC®’s weekly productivity trend monitoring that provides immediate feedback on how your job is doing. It even allows you to track labor productivity for individual jobsite activities (cost codes) to identify, discuss and resolve the root causes of productivity deterioration with the field, which will help make your projects and labor management visible and better manageable. Agile Construction® Practitioners use JPAC®'s early warning signals and lead indicators to uncover and correct profit killing causes for a job as early as possible. No more waiting until the job is almost complete to know where profits stand. 

Figure 2: JPAC® Productivity Differential vs. Final Gross Profit @ 25% complete  
Figure 3: JPAC® Productivity Differential vs. Final Gross Profit @ 75% complete
Figure 2 and Figure 3 show that there is a direct correlation between labor productivity and a job's final financial performance (solid line). Figure 2 shows the relationship at 25% complete while Figure 3 shows the relationship at 75% compete.  At 25% project completion, JPAC® reported that the current labor productivity is more than two times less productive than estimated. With each red dot representing a real job, all jobs below the dashed line ended up earning less than expected profit, while jobs above the dashed line made more. With the information that JPAC® provides, project teams can utilize these early warning signals to prevent issues and improve job performance, and therefore increase profits. 

Both figures illustrate the direct relationship between labor productivity and a job’s final financial performance, i.e., the more productive the labor, the better the financial performance of the project. As projects make progress and most of the work has been completed, the financial impact of labor productivity, whether it be better or worse, becomes clearer and more direct, Figure 3. As the only industry standard for measuring productivity, JPAC® is able to predict how good or bad your job will do at the end in early project stages. It will help you manage your jobs more effectively and more efficient by providing early warning signals and reliable lead indicators for jobsite issues at early project stages that were previously not visible. On larger jobs, this may add months or even years to your opportunity to regain losses, improve cash flow and earn your estimated profits. Having your jobs using Agile Tools and following Agile Construction® Principles helps you predict and mitigate your business risk and push the financial success of your company. 


How do you know how Agile your projects are? 

MCA is happy to announce that its upcoming Agile Construction® Project Rating will help you answer this question. In becoming Agile Certified, your projects will continuously undergo a standardized and rigorous screening and assessment of the processes and procedures in place - from job setup to project closure, from procurement to installation, cost reporting, billing, etc. Being Agile Certified will give you the opportunity to not only benchmark jobs and identify hidden Agile Champions within your company, it will also allow you to benchmark and compete with your industry peers. Stay ahead of the industry and prepare for the Industrialization of Construction® in becoming Agile Certified, which will be your competitive advantage to succeed in this industry of increasing competition, challenges and risks for contractors.


Impacts of IPD in Subcontracting and Utilizing WBS as a tool

Integrated Project Delivery Construction (IPD) is becoming more apparent in this industry. If managed properly, these projects can offer a very high reward. What differentiates IPD Construction from the typical construction? IPD projects require a collaborative alliance of people, systems, and business structures to work together throughout the entire process. With all parties collaborating, the project will have optimal results, increase value to the owner, reduce waste, maximize efficiency through all phases of design, fabrication, and construction, and solve problems of low productivity and quality issues. Although IPD offers high reward, it also poses challenges for subcontractors. If any single stakeholder is unwilling to fully embrace IPD, doesn’t understand what IPD requires, or has a negative performance, the entire team will be disrupted and the project can suffer. IPD requires subcontractors to be involved in the early stages of conceptualization, design, and construction. 

Subcontractors should utilize Work Breakdown Structure (WBS) as a tool for connecting between subcontractor and General Contractor IPD requirements. Once the trades have defined their scopes of work and the effort required, they can work collaboratively to translate the WBS into an integrated project schedule. The WBS is built on a sequence of WORK and therefore is a ‘forward pass’ of the work that will happen onsite from our perspective as the skilled trade. The GC schedule will only provide a sequence of TIME for when certain activities need to happen, as a ‘backward pass’. Both schedules need to be taken into account and once integrated, that will yield a very useful schedule because it can be used for communicating the conflicts and ensuring proper coordination. MCA offers WBS services in person and through webinars, in addition to other scheduling services:
  • 3 Week Look Ahead Scheduled Planning
  • General Contractors Scheduled Planning
  • Electrical Contractors Scheduled Planning
The 3 Week Look Ahead Scheduled Planning provides insight on labor needs, material & equipment needs, tool needs, and takes into account the schedule of values. MCA offers additional tools that provide real time data directly from the field, Short Interval Schedule (SIS®) and Job Productivity Assurance and Control (JPAC®). Subcontractors can use data from SIS® and JPAC® to prove common causes and direct feedback of jobsite conditions so the GC can take action to avoid schedule delays. 

(For more information on MCA services, click here.)


A Perfect Time and Place for Agile Construction® Collaboration


Staff Electric and their subcontractor have teamed up to work on one of the largest construction sites in Wisconsin. They are bringing their individual company and jobsite talents to the table to lay groundwork for this $10 billion project, with the temporary power infrastructure.  Figure 4 shows images of the jobsite.

Figure 4: Images of the very large jobsite in Wisconsin
Both companies are using and collaborating on this project with Agile Construction® tools including JPAC®, SIS®, and prefabrication.  Figure 5 shows the results to-date which are better-than-expected productivity rates for both companies and the job overall.

Staff  Electric and their subcontractor project teams worked together early on to provide critical input to an aggressive project schedule, both coming up with means and methods of supporting the pace, and at the same time using their field’s input through Work Breakdown Structure (WBS) to identify what work was truly feasible in the timeframes.

With this very large project and the overall construction footprint still in its infancy, we hope to see more results like this for our practitioners, which can translate to on-time, on-budget and high quality outcomes for the Taiwanese company’s investment in our country’s construction.


Figure 5: Productivity Trend of Staff Electric and their subcontractor, and combined companies as measured with JPAC®


Staff Electric is also taking the additional step of using Agile Procurement® to optimize material and logistics planning.  Figure 6 shows a sample of how wire was delivered and offloaded for large feeder pulls by Staff’s vendor partner – Werner Electric.  Werner themselves has worked hard on improving their understanding of Agile principles and their applications to better support reducing overall project delivery costs.
Figure 6: Werner Electric support of Agile Procurement®, with a 15-feed pull conducted in 15% of the planned time, due to the planning efforts of Staff's project team


MCA’s Market Study Method to quantify Data Center Market Size


The change in IT infrastructure usage and the growth in cloud-based solutions across major industries have led to high investments into green and brownfield data center construction across the U.S. Together with the increasing demand for Green Data Center facilities, the U.S. data center construction market is projected to witness significant growth, which will provide higher revenue and market share opportunities for construction contractors and sub-contractors. 

While most calculation methods provide estimates for the overall U.S. market volume, MCA’s unique market study methodology has the ability to capture and quantify the available market size in the data center market segment in your specific geographical area. This methodology has been recently applied in a market study conducted for the Chicago area to estimate the data center work available for electrical contractors.


Agile Classes Highlights

MCA is known in the industry for its research as well as Agile Construction® classes and workshops. Since January of 2019, MCA has conducted more than 35 official trainings and educational events. Over the last year, MCA has expanded the Course and Workshop offerings and is excited to announce that 2019 has been the first year MCA’s Agile Construction® Workshops went online, taught remotely, and accessible from everywhere via the internet.
Online modularized Workshops, Figure 7, are now available and are being held on a regular basis, which makes it possible for companies all over the world to benefit from the MCA deliverables in their own facilities without the costs of travel. MCA has also expanded the Agile Construction® Series. In addition to the 101 Workshops, Figure 8, MCA now offers Agile Construction® 201 classes for basic Agile Users to extend their knowledge and usage of the Agile Principles.
 
Figure 7: Agile Construction® 101 Webinar Series

Figure 8: Agile Construction® 101, Omaha, NE
In 2020, MCA will be offering multiple newly developed classes and workshops on Change Order Management, Prefabrication and Externalizing Work® and Agile Procurement® and many more.  MCA is happy to announce that Agile 301 Classes will be offered to the public in 2020. We are looking forward to welcoming you to our classes and workshops all across the U.S.: New York, Portland, Atlanta, San Jose, Seattle and many more.

One of the most valuable aspects of training with MCA is that we not only own the product development, we are the originators of the methodology.  It is this expertise that makes such a difference for our clients.  Many companies can train on the “How” to use a product.  MCA makes it our mission to help our clients understand the “Why” behind tracking labor productivity and how to actually interpret the data.  The results are clear, proper use of JPAC® and SIS® will put more money in our customers’ pockets on every project as long as they understand what is being measured and what to do about it. For more on classes and workshops, click here


Nick Alosio and WEM®

WEM® is proud to announce Nick Aloisio as its Director of Sales. In an effort to bring the revolutionary productivity boosting software JPAC® and SIS® to the masses and further the Industrialization of Construction® happening in the Construction Industry, WEM® has officially launched its sales division. Nick brings with him close to 20 years of experience in the software and construction industries. He is, first and foremost, a problem solver and will stop at nothing to understand and satisfy his clients’ needs. Nick fully understands the issues within construction industry and he believes in hard work, accountability and will stop at nothing to solve his clients’ problems. WEM® is fully committed to Making Productivity Visible to Everyone® and we are excited to help our clients in their mission to gain visibility and boost profitability on their projects!

Please follow us on LinkedIn and visit us at www.wemsoftware.com .
For information on the latest release of JPAC® and SIS®, please email us at info@wemsoftware.com 


Fall Symposium 2019 Update

Agile Construction®: A Path to Industrialization
Tools for Successful Project Management – Data is King
Chicago, Illinois
October 17, 2019

MCA’s Fall 2019 Agile Construction® Symposium in October was a great session. This Symposium was the first of a five-fold Symposium series on Customer Needs and Value Transfer to the Customer. This series will be based on the four major project phases, i.e., planning, procurement, installation and closure, discuss the three main dimensions of a job, i.e., work, effort, and time, and explain why it is important to distinguish and manage them separately. 
Speakers of the Symposium included:
  • Kevin Lytle, Vice President of Pre-Construction at Electric Company of Omaha spoke of how he uses data from Agile tools, such as JPAC® and SIS®, to predict and reduce the business risk on his jobs. He also emphasized the importance of planning and gave additional insights on challenges to establish a culture of prefabrication through Externalizing Work® 
  • Jeff Rechlicz, Vice President of Operations at Staff Electric, pointed out the power of the Agile tools and the available data and information for managing projects. He discussed how the data and information in MCA’s Agile Report helps him document and make visible how obstacles and delays in process, caused by the General Contractor, and the resulting schedule compression impact the overall job productivity. 

SAVE THE DATE:

  • 2020 Spring Symposium “Project Start-Up and Holistic Planning”
    (April 30, 2020 Omaha, NE)
  • 2020 Fall Symposium “Procurement and Logistics Management”
    (October 15th, 2020, TBD)
Register for the 2020 Spring Symposium here!
For sponsorship opportunities, click here

Back issues of The State of the Industry Reports are available to read online at…
http://mca.net/resources/state-of-industry-report/