Wednesday, July 10, 2019

July 2019 - Volume 7 Issue 2

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


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

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

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

Labor and Labor Productivity Management

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

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

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

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

SIS® 5.1 Release 

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

For more information, contact your Agile Coordinator.

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



Prefabrication Handbook for the Construction Industry (Pre-Order)

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

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

Click here to Pre-order you copy today!


2019 Spring Symposium



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

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

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

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

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


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

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

Our Fall Symposium will focus on...

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

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

Melissa Harper, mharper@mca.net

For more news click on the following links...

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