“Left of Bang”, the ‘When’ of Indicators
The timing of when you receive information can impact your performance as much as or more than the information itself. Is it better to know that a train is headed right for you before or after the impact? That seems like a fanciful description of a situation, but it really can be a matter of life or death to a person or a company.
Following an increase in the number of casualties and the complexity of fighting an insurgency in Iraq, Marine General Mattis ordered the Marine War Fighting Lab to study and design training to prepare Marines to identify threats before an attack. The insurgents did not look like traditional soldiers, they blended into the rest of the population. Mattis saw that most of the preparation that Marines received was after an attack occurred (“Right of Bang”). What emerged was the Marine Combat Hunter Program. The program is designed to equip Marines with tools that allow them to identify potential threats before an attack. Being “Left of Bang” means being proactive rather than reactive and is designed to give situational awareness to take the initiative to stop bad things before they happen.
Similarly, most construction indicators tell you what HAS happened, not what is headed your way. If they are your only source of information, a major problem on a construction project will not be identified until it is too late to recover; “Right of Bang”. Performance Against Schedule (PAS) looks backward as does Performance Against Budget (PAB). The complexity of systems designed to be forward-looking such as ‘Earned Value’ can result in time lags or bad data. Often these metrics are abandoned even if written into the contract. The nature of current quality control methods is tied to finished products, also leaving little opportunity to identify problems proactively. This isn’t unique to construction. Facebook co-founder Dustin Muskovitz is quoted as saying, “By the time I get information about what the people in my own company are working on it is so outdated it is wrong.” What exacerbates this problem within the construction industry is the culture of hiding problems versus asking for help. While it is human nature to not publicize bad news to the client, it is self-defeating because you cannot use it to improve your project and your bottom line.
We know the Construction Industry is complex, and the bigger and more expensive a project, the greater the complexity. The principals in the Marine Combat Hunter example anticipates this complexity and can be utilized with existing construction indicators to achieve earlier warning signals that a construction project is on the path to trouble. A key process in dealing with complex indicators was the military’s use of the “Rule of Three”. If any three of the indicators/signals below highlight a potential problem, YOU NEED TO TAKE ACTION.
Signal 1: PPC (Percent Plan Complete)
The secret to successful construction projects is to create and maintain a reliable workflow. Currently, the best available method for creating a reliable workflow is the LPS ™ (Last Planner System™). In the LPS™ individual foremen create a Weekly Work Plan (WWP). Each week, the project team scores each weekly work plan. PPC measures the percentage of tasks completed compared to the total number of tasks planned. Our data from reviewing LPS™ on hundreds of different projects suggests that PPC consistently between 70-85% is strongly correlated with on-time major milestones. PPC lower than 70% has proven to be an early indication of a capacity problem. Surprisingly, very high scores can mean a lack of commitment to the process or a falsification of data – especially if the metrics and processes are new to the project team.
Signal 2: A Major Portion of the Project is Late
Starting a project early or portions of a project early is no guarantee a project will finish early. However, if a major deliverable in a project is late, there is a very high probability that this will drive other parts of the project to be late and will cascade into seemingly endless delays. Often the project culture at the start is such that contractors dare not speak up for fear of losing the job. Design, contracts, and funding are big project deadlines that should not just be assumed to “work out in the end.” Other examples could be major equipment deliveries or large program changes during the middle of the project. As a Project Management Team, we identify the critical enabling activities and monitor their progress. It should be noted that this is different than L1 and L2 milestone completions.
Signal 3: A shortage of workers
Construction labor is a major resource challenge. In the US, five workers are leaving the industry for every new person that enters. ‘Turner and Townsend’s 2017 Construction Market Report’ highlighted that 24 of the 43 markets surveyed around the world were suffering from a shortage of skilled labor. If your project does not have enough labor to complete critical ‘constraint’ tasks or a large number of tasks, there will be downstream schedule problems. Projects that are using LPS™ can monitor the “Reasons for Variance” which tracks the reasons why individual tasks were not completed on time. It does not require one large late ‘constraint’ to indicate a problem. If more than 10% of the variance reasons are related to labor, this is enough to become a signal.
Signal 4: The Speed of Issue Resolution (RFI’s, submittals, etc)
We are continually shocked by what is deemed acceptable for issue resolution time in construction. A Request for Information (RFI) represents a question that someone has about how to build something. Our aim on this project is to keep response times to hours not days. Often response times exceed the contracted turn-around SLAs. This is a major signal that a project is trending late. Related to this is the late resolution of constraints. Relevate recommends monitoring both numbers for the signal.
Signal 5: Mood of the workers (5 key people, key people overwhelmed)
You can generally tell how well a project is going by the mood of the project team. This is probably the earliest and most precise signal of a problem. Unfortunately, project teams generally do not monitor mood or use it as an indicator. We utilize two distinct ways to monitor mood. The first is to select experienced members of the project team across all the different partners and survey them monthly. An experienced project manager will be trained by our partners to complete this survey which done face-to-face in an interview format. The score is assigned by our surveyor. The second source of the signal is if the leaders of major partners are overwhelmed. We have seen this happen at many project sites and it always is a precursor to project problems.
Signal 6: Behavioral analysis of the workers
Standard Operating Procedures, Safety Protocols, Housekeeping checklists; these all exist to help manage multiple complex tasks while keeping people safe and the project on schedule. When people are rushed or pressured, they take short cuts. While this behavior is rightly most associated with a safety concern, it is also a precursor to problems with project delivery. We track incidents of procedures not being followed, ignored house-keeping assignments, and other “misses” to develop trends that show when your project could be headed for much larger problems.
Signal 7: Major changes in project leadership and turnover
By itself, a major change in project leadership from a partner causes disruption and gaps in continuity. When accompanied by other signals it represents an emerging problem. We have monitored supplier resource stability on and off for years, and there is a clear correlation between the high-level leadership relationships and the success of a project. There is an old saying about “leaving a sinking ship”- when people and companies vote with their feet, it is indicative of a problem.
We can work with you to differentiate between normal turn over and either use that data or “nominate” critical project leaders and monitor individuals.
Real World Applications
Company A was expanding into a new state for a construction project. They had bid for the job very aggressively to get into this new market. The client had reviewed the proposal package sheet by sheet and had some concerns, but the price was attractive, and Company A won the contract. Very soon after kick-off, the Project Manager declared they were in trouble regarding schedule but then reversed himself a couple of days later without having made significant changes. He then suddenly left the project due to health concerns (First signal). Company A then brought in an experienced Project Manager that previously was replaced one month into a 14-month project (Second signal). Company A then submitted a change order on the project even though none of the parameters had changed (Third signal). These two personnel changes and the compensation event form a clear warning in the “Rule of Three. The client superintendent met with management from Company A and requested a recovery plan, even though they had not yet missed any major milestones (in part because they had not reached them in the schedule yet). Company A agreed and moved a senior manager to the project and the client provided additional superintendents with everyone committed to working the problem together. Company A missed the first few major milestones but showed progress. By the end of the project, they had completely recovered. Impressed by their commitment to make improvements and recover from misses, the client awarded Company A the follow-on contract and that has led to their continued partnership 15 years later.
We were asked to assist on a project when Company B lost their Project Manager on a big equipment installation contract (First signal). The project was already underway and approaching multiple milestones. Within 1 week, one of the principal subcontractors requested a 12-week extension on the day the task completion was scheduled (Second signal). This seemed to surprise everyone on the management team and added to the problem that the schedule was already more than a month late (Third signal). Our initial analysis showed that multiple equipment completion milestones were at risk, but the Management team and trades believed they could catch up.
We continued to find multiple warning signs as the project continued. More than half of the identified constraints were being removed late (Fourth signal). PPC scores were very poor (when they were measured at all) and BIM was late and subject to daily recovery meetings. But the prevailing mood at management level was that the situation was recoverable, and everything would be “OK”.
The client also had a large open commercial issue with the trades (Fifth signal). We put a plan together to intervene and recover. This was July, and the scheduled production start was January. It would have cost ~$500k in additional resources and ~$1M to settle the commercial issues. The client decided not to resolve the issue figuring that other options must exist. The commercial issue continued, and daily alignment meetings were expanded but were focused on updates not fixing problems. The commercial issues were settled in January for ~$10M. The project completion was 12 weeks late, costing the client hundreds of millions of dollars of lost production.
Company C won a fast track equipment installation project with an existing client. Construction got off to a late start due to delays in licensing (First signal). Then issues arose due to delays in procurement buying out the job (Second signal). When procurement started to recover to schedule, the client started falling far being in their committed SLAs in getting POs issued, and design packages reviewed (Third signal). We were called in to help assess the challenges just as construction was starting. We found contractors were not sufficiently staffed (Fourth signal). The project budget increased due to multiple client changes which resulted in a souring relationship with the client (Fifth signal). In February, we communicated with Company C’s management that they had multiple specific issues driving late completion and received assurances that they were aware of the issues. However, the only significant change they made was replacing the Project Manager (Sixth signal). The project was scheduled to be complete in May and in June, we were asked to come back to help resolve multiple outstanding deliverables. The project was completed 5 months late at the cost of a huge financial and reputational hit to Company C and a major revenue hit for the client.
Most of the indicators we point out and their appearances in the examples above are not hidden. In most cases, they are easily seen by anyone willing to look. The challenge is to accept what you are seeing, recognize the implications, and be willing to act. The construction industry is typically slow to change and often suffers from thinking the “best case” scenario will win out.
Because of our years of experience, Relevate can help you analyze your specific situation, identify specific indicators and risk factors, and help you devise and implement recovery plans when things start to go wrong before they impact your bottom line.