Tuesday, 24 November 2015

Seven tips for dealing with difficult Stakeholders

The seven tips to apply when dealing with difficult stakeholders:

  1. Accept their authority, don’t fight it
  2. Remove negative emotions
  3. Understand their negativity
  4. Ask for advice and listen
  5. Be tactful and honest
  6. Make them feel good
  7. Tailor your communication

It’s a bit different dealing with difficulty when it’s coming from a place of authority rather than dealing with team members who are difficult that are under your command. But it all comes down to mindful understanding and careful communications, which is how you lead a team and even those in authority over you.

Monday, 23 November 2015

How to stop workplace teams from failing

7 Ways To Stop Workplace Teams from Failing

Ever been part of a workplace team that didn’t reach its goals? You’re not alone. Estimates are that 60 percent of teams fail, and that team members are often left with lingering negative feelings as a result.

Yet teams persist, simply because in many cases there’s no alternative. Tackling business problems or doing large-scale strategic planning requires a broad set of skills, and no one employee has this. Thus, companies form groups of experts from different professional areas to examine, analyze and provide a solution to whatever issue they’re tasked to address.

It’s not that teamwork is inherently flawed, or that employees don’t like working in groups. In fact, in a survey by the Center for Creative Leadership (CCL), 70 percent of senior-level professionals said they enjoy being part of a team, and nearly all – 91 percent – agreed that teams are essential to organizational success. The challenge is to structure and lead teams correctly so that they can get the job done. Here are seven ways to do this:

 

1. Provide Good Team Management

A team can only be as good as its leader. That’s because a team manager bears overall responsibility for most of the items on this list. This person needs to have both strong project management and interpersonal acumen, and be comfortable tasking work, following up and dealing with conflicts on the team. A team leader must also be able to leverage relationships outside the team to ensure that it gets the needed resources to succeed.

That being said, each team member also needs to feel accountable for the team’s overall performance (more in number 4).

 

2. Get Support from On High

Many teams fail because they don’t have support out of the gate from company leaders.  But this can be crucial because teams often need to tap into resources to do their work, and it’s higher-ups who approve such expenses.  These could be, for example, a budget for team training, materials, or funds for outsourced administrative support.

Another responsibility of leaders is to ensure that not too many teams are running at the same time.  The CCL study points out that a full 95 percent of professionals currently serve on more than one team. Individual team members mustn’t be stretched so thin that they cannot fully focus on their team tasks. Such overload can easily lead to failed teams.

 

3. Pick the Right Players for the Right Roles

The best teams are ones in which each member brings a different, necessary skill set to the table. Before putting a team together, a company should carefully examine what roles are needed for it to complete its mission. Then, a designated team leader should review the resume, level and background of each person under consideration to put together the right mix.

It’s equally important that each team understands his or her specific role and what is expected as a result. There will often be overlaps in team member skills, and role clarification will help clear up confusion here.

 

4. Prioritize Relationships Over Work

Think getting work done should be a team’s number one focus? Consider this: many teams fail not because the members don’t have the expertise to do the job but because they never learn to work effectively together.  Relationship-building should be the top priority of a team, at least in its early days. Group members need to get to know each other and be comfortable communicating with one another in order to be productive partners. This is especially true if team members are at differing levels of seniority, in which case lower-level staff might not otherwise have the confidence to weigh in at meetings.

When conflicts arise – and they will -- teams will work through the problems better if they’ve learned to trust each other from the outset. Finally, and perhaps most importantly, a strong teams feels collectively accountable for its success, like a sports team that wins only when its players pull together.

It’s a team leader’s job to facilitate team-building exercises during the first meetings. Throughout the duration of the team, too, teams need periodically to take a break from focusing on tasks to have some fun.

 

5. Set a Clear Goal and Timeframe

Every good story has a beginning, a middle and an end. Teams should have that, too. Defining a goal and scope of work along with a timeline for deliverables from the outset will go a long way to making a team successful. Company priorities change, of course, so flexibility in these areas is sometimes necessary. But, as a rule, if a team’s purpose is not agreed upon and communicated to all stakeholders (team members and the greater organization) from the beginning, trouble will follow.  

 

6. Manage Time Well

With so much work to do and so many voices in the room, team meetings often run too long and waste time. At some point, meetings become less productive as attention spans wane. Starting each meeting with a narrow statement of achievement helps keep it focused and briefer. Moreover, it gives the team the sense that they’re making concrete progress, however small, which keeps morale high.  It’s better to meet more often for shorter periods of time than to try to cover a larger agenda less often.

 

7. Monitor and Adjust Regularly

If the timeline is established clearly, it should be easy to monitor if the team is on track to meet its goals or if the schedule needs to be adjusted. And it’s important to do this regularly lest work veer off course. Teams will likely fail when they don’t stick to their plan of action, because it shows they’ve lost their sense of purpose or are mired in conflict, or both.  

Teams aren’t going away any time soon, and why should they? A well-structured team with a good dynamic can produce excellent results for an organization. It’s all about putting the right people together and giving them the tools to get the work done.

10 Kaizen business rules

10 Kaizen rules to grow your business


The word Kaizen in an operation means different to different people. Some define it as lower operating cost or reduced inventory while others describe it in terms of increased efficiency or better quality or being on time & in full. But the ultimate goal remains same i.e. being operationally fit.

However the biggest fear is the misunderstanding of the word Kaizen. Kaizen has been misunderstood as pSMALL CHANGES always.  In fact, kaizen means everyone involved in making improvements everyday and everywhere. While the majority of changes may be small, the greatest impact may be kaizens that are led by senior management as transformational projects, or by cross-functional teams as kaizen workshops. The best way to apply kaizen is to gain top management’s commitment first and then involve them in setting up a goal. Once this is done, employees starts focusing on that goal, making changes in their areas, etc. and then again setting up a new goal. At the same time it is very important to set daily work management practices in order to ensure that the improvements done are sustained else there is always a fear of sliding back.

If everything goes right, the best this cycle will yield is a climb up the staircase of continuous improvement step by step.

During this journey of Kaizen or improvement following 10 Kaizen rules should be kept in mind in order to grow your business:

Rule # 1: Discard conventional, fixed ideas

Rule # 2: Think of how to do it, not why it cannot be done

Rule # 3: Do not make excuses, start by questioning current practices.

Rule # 4: Do not seek perfection. Do it right away, even if only for 50% or target 

Rule # 5: Correct it right away, if you make a mistake.

Rule # 6: Do not spend money for KAIZEN, use your wisdom.

Rule # 7: Wisdom is brought out when faced with hardship.

Rule # 8: Ask WHY five times and seek out root causes.

Rule # 9: Seek the wisdom of ten people rather than the knowledge of one.

Rule # 10: KAIZEN ideas are infinite

Implementing Kaizen

So many middle managers seem to carry the weight of the world on their shoulders as they assess the reasons behind unhappiness in the worksites they manage. I’m often asked how I assess these situations to prepare for Kaizen or continuous improvement. 

My first point is pretty basic… do we even know what the Kaizen aim of “engaged employees” means, beyond the clich├ęs?

When I work with people, I usually pose some questions and guide them to find their own answers. We explore the following, focusing on each question carefully:

  1. What does the behavior of a satisfied and engaged person look like to you? Can you see examples of that behavior? How is the organization contributing to that or not?
  2. Do you see some people you can ask who will tell it to you straight?
  3. What kinds of discussion can you have with people without leading them to what YOU want to hear?

Whether or not this conversation feels fruitful, sometimes I suggest we look at a small life boat that has been vetted by managers and executives around the world. Known as the Q12 survey conducted by Gallup, this simple survey measures the strength of employee engagement in any organization. Over 80,000 interviews and focus groups were conducted to confirm the effectiveness of these 12 questions as an indication of complete satisfaction and engagement of the workplace, when they are all met.

I like it because it’s simple and to the point. We can use it to dig deeper into areas of strength or weakness. The bad news is that organizations are often failing with just the first two questions. The good news is it’s easy to clarify and improve upon both of them. The great news? Once you tackle the first two questions, you’ve already gone a long way to creating a meaningful job for every person in the building.

The questions:

  1. Do you know what is expected of you at work?
  2. Do you have the materials and equipment you need to do your work right?
  3. At work, do you have the opportunity to do what you do best every day?
  4. In the last seven days, have you received recognition or praise for doing good work?
  5. Does your supervisor, or someone at work, seem to care about you as a person?
  6. Is there someone at work who encourages your development?
  7. At work, do your opinions seem to count?
  8. Does the mission/purpose of your company make you feel that your job is important?
  9. Are your co-workers committed to doing quality work?
  10. Do you have a best friend at work?
  11. In the last six months, has someone at work talked to you about your progress?
  12. In the last year, have you had opportunities to learn and grow?

I’d add a final question (which has to do with the number one reason people are satisfied in their job or not): Do you have a good relationship with your supervisor?

Once you have this specific input, you can work together with your team to make a Kaizen Strategy that shows  the "Bullseye target" you’re aiming for, whether it is one improved process or a bigger system-wide initiative designed by the larger enterprise. After answering these questions, without such a heavy load of ambiguity now off their shoulders, middle managers have a much better chance of creating a work site truly filled with satisfied, engaged employees who know they are doing meaningful work.

Tuesday, 17 November 2015

What is BPM


As a process-oholic, process geek, process person, or whatever process aficionado term you identify with, your job is to sell process to your organization. But to do so, you will have to avoid a common process-person pitfall. Don’t try to sell it from the process ivory tower!

A great example is how to answer something like, “What is BPM?”

Unfortunately, this answer sounds a bit like Charlie Brown’s teacher to non-process people. Wah-wah-wah-wwwwahhhh.

After a few years of thinking about it, I have boiled “What is BPM?” down to five words:  Process, People, Context, Actions, and Outcomes. In example, TIBCO ActiveMatrix® BPM coordinates process, people, context, and actions for better business outcomes.  Ok, there is a little more to it than that.

Process

Process may seem like an obvious choice for business process management, but there is one thing to keep in mind. Not all processes are created equal.

There are many process styles. Some are suited for standardizing processes; some are more geared towards innovation or handling unpredictable business situations. Be sure you are using the right ones in the right places, and the right ones when digitalizing your processes.

People

It is very easy to forget that productive people are just as important as effective processes. There are just as many ways to improve and optimize how one is using their operating resources, as there are ways to improve one’s operational efficiency. Even if you have gone through several rounds of process improvement, a predictive operations dashboard can offer entirely new optimizations.

Context

The full business context must be available to make the new complexity of the digital business consumable. So, what is the “full business context?” There are many types of context, and each situation will require a mixture of them.

  • Strategic Context
  • Operational Context
  • Tactical Context
  • Situational Context
  • Visual Context
  • Social Context
  • Organizational Context
  • Physical Context
  • Relational Context

Actions 

Process, people, and context come together for decisions, which determine the right course of actions. Intelligent technologies will automatically take some of these actions, and some will rely on human insight. The new challenge is to surface the right actions being presented out of the sea of potential possibilities the digital business brings.

Outcomes

At the heart of every process should be the desired business outcome. If it’s not, well it’s time that you have begun. You can start out with just the basic three, and work your way up to some of the more fancy-schmancy outcomes.

When you are ready to expand into the fancy-schmancy area, a great resource to check out is Gartner’s Business Value Model. They provide information around several common outcomes (see table above) and provide guidance on what to measure to gauge your success in that area.

Tuesday, 3 November 2015

Business process improvement maturity phases

Having a BPM Maturity Model is Important for Long Lasting BPM Success

Most businesses have a limited, explicit understanding of end-to-end business processes, and if any understanding exists, it is often tucked away within disparate groups across the organization.  It's rare to find an organization that has linked its scattered process competencies together into a comprehensive strategy.  This is changing as business process management (BPM) gains momentum.  Gartner has created a six-phase BPM maturity model that involves understanding the six phases of BPM maturity and where your organization stands on addressing critical success factors defined in a BPM maturity framework.

The Six Phases of BPM Maturity -- Overview

The business process management maturity and adoption model provides guidance for how your organization can more easily navigate the challenges of becoming process managed.
Figure 1.  The six phases of BPM maturity.
Source: Gartner.
The journey toward a fully process-driven organization begins in Phase 0 with acknowledgment that some business improvement opportunities cannot be addressed by conventional approaches.  The need to seek fundamental operational change results in Phase 1, becoming "process aware."  As the organization becomes more process aware, it enters Phase 2 when it begins automating specific processes to gain better control.

Eventually, the boundaries of individual processes expand, and in Phase 3, the organization must integrate these processes with each other, as well as those of trading partners and customers.  Competencies grow around managing the relationships between major business processes and, by Phase 4, the expertise exists to dynamically link strategic goals to process execution.  This, ultimately, leads to the creation of an agile business structure (Phase 5) -- the highest level of maturity.

The curve embedded in the maturity model represents the amount of effort, and subsequent benefit, that will accrue in each phase.  As you approach the more advanced phases, the steepness of the curve shows that more work is required, but more return value is expected.  This is a hallmark of maturity:  wisdom comes from investment, and wisdom begets increased benefit.

The majority of organizations are in the earlier phases of BPM maturity.  Although many organizations will be deep into learning the disciplines of Phase 2 by the end of 2006, few will have mastered the process automation and control competencies.  Therefore, the percentage of enterprises mastering any particular phase will be much smaller than the percentage experiencing or experimenting with the same phase.  Further, mastery of the more advanced phases will remain elusive well beyond 2008.  We set the bar high when we created this maturity model.

The BPM Maturity Model and Its Critical Success Factors

The BPM maturity model is based on the belief that superior process management leads to realizing a truly agile business structure.  The competencies gained along the way to becoming agile create greater visibility into how the organization delivers value, innovates customer service, and gains operational productivity and effectiveness.  Each phase of maturity builds on the previous phases, but also allows for initiatives that grow competencies for later phases to occur during earlier phases.  The object then becomes managing the "weakest link" when balancing the critical success factors of organizational process management.

In addition to the six phases of maturity, the other important dimension is the organizational factors that must be balanced within and between phases.  Figure 2 (adopting concepts developed at the Babson College Process Management Research Center) displays six critical success factors that an organization must evolve during each phase as it becomes process driven.

Figure 2. BPM Maturity Framework
Source: Gartner and Babson College Process Management Research Center (2006)
As the organization ascends through each phase of maturity, the achievement of its critical success factors must also evolve.  Leading organizations take a balanced approach to managing the six critical success factors.  Managed together, they represent the framework from which BPM competencies are built. The six success factors are:
  • Strategic alignment:  The continual tight linkage of organizational priorities and enterprise processes, enabling the achievement of business goals.
  • Culture and leadership:  The collective values and beliefs that shape process-related attitudes and behaviors.
  • People: The individuals and groups who continually enhance and apply their process related expertise and knowledge.
  • Governance:  Relevant and transparent accountability, decision making and reward processes to guide actions.
  • Methods:  The approaches and techniques that support and enable consistent process actions and outcomes.
  • Information technology:  The software, hardware and information management systems that enable and support process activities.

Thursday, 29 October 2015

Leadership scorecard qualities

Check your scorecard today and decide which areas you may need to improve.

21 qualities for your Leadership Scorecard

  1. straightforward and transparent
  2. knowledgeable and experienced
  3. honest and trustworthy
  4. consistent and dependable
  5. ethical and principled
  6. confident and optimistic
  7. authentic
  8. insightful
  9. focused
  10. discerning
  11. passionate
  12. determined
  13. empathetic and selfless
  14. realistic
  15. decisive and action-oriented
  16. flexible
  17. humble
  18. accountable
  19. courageous
  20. fair and open-minded
  21. hardworking

Let us know if you have any qualities on your scorecard that we’ve overlooked.

Change Agent Characteristics

1.  Clear Vision – A “change agent” does not have to be the person in authority, but they do however have to have a clear vision and be able to communicate that clearly with others.  Where people can be frustrated is if they feel that someone is all over the place on what they see as important and tend to change their vision often.  This will scare away others as they are not sure when they are on a sinking ship and start to looking for ways out.  It is essential to note that a clear vision does not mean that there is one way to do things; in fact, it is essential to tap into the strengths of the people you work with and help them see that there are many ways to work toward a common purpose.

2. Patient yet persistent – Change does not happen overnight and most people know that.  To have sustainable change that is meaningful to people, it is something that they will have to embrace and see importance.  Most people need to experience something before they really understand that, and that is especially true in schools.  With that being said, many can get frustrated that change does not happen fast enough and they tend to push people further away from the vision, then closer.  The persistence comes in that you will take opportunities to help people get a step closer often when they are ready, not just giving up on them after the first try.  I have said continuously that schools have to move people from their point ‘A’ to their point ‘B’not have everyone move at the same pace. Every step forward is a step closer to a goal; change agents just help to make sure that people are moving ahead.

3. Asks tough questions – It would be easy for someone to come in and tell you how things should be, but again that is someone else’s solution.  When that solution is someone else’s, there is no accountability to see it through.  It is when people feel an emotional connection to something is when they will truly move ahead.  Asking questions focusing on, “What is best for kids?”, and helping people come to their own conclusions based on their experience is when you will see people have ownership in what they are doing.  Keep asking questions to help people think, don’t alleviate that by telling them what to do.

4.  Knowledgeable and leads by example – Stephen Covey talked about the notion that leaders have “character and credibility”; they are not just seen as good people but that they are also knowledgeable in what they are speaking about.  Too many times, educators feel like their administrators have “lost touch” with what is happening in the classroom, and many times they are right.  Someone who stays active in not necessarily teaching, but active in learning and working with learners and can show by example what learning can look like now will have much more credibility with others.  If you want to create “change”, you have to not only be able to articulate what that looks like, but show it to others. I have sat frustrated often listening to many talk about “how kids learn today” but upon closer look, the same speakers do not put themselves in the situation where they are actually immersing themselves in that type of learning.  How can you really know how “kids learn” or if something works if you have never experienced it?

5. Strong relationships built on trust – All of the above, means nothing if you do not have solid relationships with the people that you serve.  People will not want to grow if they do not trust the person that is pushing the change.  The change agents I have seen are extremely approachable and reliable.  You should never be afraid to approach that individual based on their “authority” and usually  they will go out of their way to connect with you.

What is most important about all of these characteristics, is the last point on relationships.  There is a difference between a “change agent” and a “change advocate”.  If you hold the first four qualities on this list only, you are someone advocating for change, but not necessarily making it happen.  All the vision and knowledge in the world means nothing if we are not able to connect with others; it is the equivalent of shouting into the wind.  Having the fifth quality focused on relationships, is what makes someone a “change agent”.  The only way to help people move forward is by building relationships and understanding where their journey begins, not focusing solely on where you want them to be.

Wednesday, 16 September 2015

Kaizen

Kaizen is not only a method, but also a philosophy regarding the approach of problems that includes total quality control, quality control circles, small group activities and labor relations. The difference between innovation and Kaizen is that innovation is a radical change, while Kaizen is a continuous practice to strive to do better, by making quality become a way of life.

The five founding elements of Kaizen are:

  1. Teamwork
  2. Personal discipline
  3. Improved morale
  4. Quality circles
  5. Suggestions for improvement

From these foundational elements, three key factors arise: the elimination of waste (muda) and inefficiency, the Kaizen 5-s framework for good housekeeping (Seiri - tidiness, Seiton - orderliness, Seiso - cleanliness, Seiketsu - standardized clean-up, Shitsuke - discipline), and standardization. A Kaizen action plan is synonymous with the philosophy of fostering continuous improvement.

So, how is Kaizen implemented in businesses?

One or more sets of Kaizen events take place using a Kaizen blitz or Kaizen event that can be used to rapidly implement work groups, improve setups, or streamline processes. The blitz or events are intense, and include training as well as a mapping of current processes and procedures and a collaborative assessment of how to reduce waste. Business process reengineering is much more difficult (technology-oriented), but is only a short-term solution as it does not address the underlying human behaviors. Kaizen is people-oriented, easier to implement, requires discipline, and becomes a daily practice. The results of conducting Kaizen blitzes or events is immediate and satisfying in that process variations are almost nil, often reaching six sigma performance levels of 6 or 7.

Starting with the team is important to achieve flow, as being able to achieve small changes and then incorporating them enterprise-wide is important to scaling Agile. Team morale continues to improve with each process cycle-time improvement, and flow continues to grow exponentially as team members move through the "zone" in a manner that is more synergistic and fluid. Often these changes can take a few iterations, with cycle-time improvements up to 25%, technical debt is reduced tenfold, defect rate reduced to zero net, and a rate of 90% of greater story acceptance per cycle.

Using a lean enterprise coach to help guide teams through a careful analysis of their existing processes can help ensure that they begin to improve by making incremental changes for the good (Kaizen). Ensuring that each member is engaged in the reduction of waste (muda) and working together to find ways to improve all areas of cycle-time throughput is an essential first step to Kaizen.

Friday, 14 August 2015

Productivity imperative for the Construction Industry


A variety of factors account for poor productivity and cost outcomes. Among them are the following:

  • Poor organization. Decision-making and procurement processes do not have the speed and scale required.
  • Inadequate communication.Inconsistencies in reporting mean that subcontractors, contractors, and owners do not have a common understanding of how the project is faring at any given time.
  • Flawed performance management.Unresolved issues stack up because of lack of communication and accountability.
  • Contractual misunderstandings.The procurement team typically negotiates the contract, and this is almost always dense and complicated. When a problem comes up, project managers may not understand how to proceed.
  • Missed connections. There are different levels of planning, from high-end preparation to day-by-day programs. If the daily work is not finished, schedulers need to know—but often don’t—so that they can update priorities in real time.
  • Poor short-term planning.Companies are generally good at understanding what needs to happen in the next two to three months, but not nearly so much at grasping the next week or two. The result is that necessary equipment may not be in place.
  • Insufficient risk management.Long-term risks get considerable consideration; the kinds that crop up on the job not nearly as much.
  • Limited talent management.Companies defer to familiar people and teams rather than asking where they can find the best people for each job.

These problems are serious, systemic, and all too common. Still, some companies do manage to succeed. Through our analysis of more than $1 trillion worth of capital projects over the past five years, we have found that improving “basic” project-management skills offers the most potential to improving site performance. This article discusses 15 practices that can help to improve productivity in the three phases of project delivery—concept and design, contracting and procurement, and execution.

Concept and design

The concept-and-design phase is where the most project value can be gained (or lost). These seven principles offer the most promising ways to improve performance, and therefore financial returns.

Build only what is needed.

Design-to-value (that is, design based on understanding and minimizing the elements that drive up costs) and the minimal technical solution (MTS, design to deliver only the necessary value-added requirements) are two concepts that can be used to reduce capital investments to what is required—no more, no less. Consider the example of two utility companies who needed to build a similar substation building. One spent substantial time and money building a full shell, including floors, walls, a roof, and so on; this required many approvals, followed by a long and difficult construction schedule. The other utility defined the MTS to be “protection against the weather, while retaining ease of access during maintenance;” on that basis, it built a retractable roofing structure with pillars. This latter option required much less time and money to build.

Maintain a life-cycle perspective.

Companies typically observe a certain rigor in managing up-front capital costs; less often, however, do they consider the full life-cycle costs of construction and operations. Ensuring that design engineers and project managers are familiar with life-cycle metrics, such as net present value (NPV), could help. So could linking incentive structures to NPV improvement. One approach that is gaining traction is competitive front-end engineering and design, where companies invite multiple engineering, procurement, and construction companies to apply. Bidders win by coming up with designs to optimize overall project costs. It’s important for procurement specialists (see next section) to keep life-cycle costs in mind as well, evaluating not only the acquisition price but also efficiency, maintenance, and disposal.

Strengthen scenario planning.

Developing options under various scenarios reduces risk and enhances predictability of project returns. The plans for many infrastructure, real estate, and energy projects are based on estimated capacity, such as airport passenger loads, or on production profiles, such as those for oil-and-gas developments. Companies pay a great deal of attention to developing this base case. Less often, however, do they put in the same effort in evaluating alternative scenarios that could affect the success of the asset or require expensive modifications. If developers thought harder about the worst-case scenarios, they would do a better job ensuring that they had the flexibility to cope with the unexpected.

Optimize around site constraints.

This seems obvious, but unfortunately it is not practiced consistently enough. Too many companies work out the design in the office and therefore do not take into consideration actual site conditions, such as climate conditions, soil characteristics, terrain, and weather. It’s usually easier (and cheaper) to tweak a building design than a landscape. One example of good practice would be the Olympic Stadium in London; the designers planned the structure around a natural slope to minimize the need for excavations.

Think modular design and standardization.

Standardizing and modularizing components can save costs and time. Nevertheless, a significant number of companies do not apply this principle; exploration-and-production companies, for example, often use different specifications for their wellhead platforms. India’s Reliance Industries shows what can be achieved through standardization. When Reliance built a second refinery in Jamnagar, it was almost an exact replica of the first one, with some updates to accommodate new technologies. The decision to replicate shaved six months off the engineering schedule. On a smaller scale, utility companies are increasingly using standard design for new substations. This also improves life-cycle costs, because spare parts can be used across assets. The use of standard designs should be considered on a case-by-case basis, taking into account local conditions or the latest technologies, to avoid using suboptimal design. However, it is typically more efficient to start with the last design and adjust, rather than to start from scratch.

Consult construction and procurement teams, beginning in the design phase.

Construction and procurement teams bring different expertise to the table; it makes sense to bring them in from the start to evaluate concepts and designs. A construction expert, for example, might notice that a design choice will have costly ripple effects down the line; procurement managers can suggest new ways to minimize costs. In short, sometimes great design ideas can come from outside the design team. T-REX, a highway/light-rail project in Denver, Colorado, finished almost two years ahead of schedule, in part because contractors developed a way to do certain tasks at the same time, rather than sequentially. That would not have happened if they had not been in the room from the beginning.

Optimize engineering processes and choices.

Companies are usually stringent about managing time lines during construction. But often they do not pay the same attention during the preconstruction phases, even though the work done during this period can have a disproportionate effect on the project value. There is substantial room for improvement in engineering productivity, with respect to time and quality of output, to prevent rework in the construction phase. For example, during a recent refinery project, the owner ordered the engineering firm to set up a 24-hour global “engineering factory.” This enabled the company to save several months in the engineering phase. In another example, a company with an engineering team based in a number of different places analyzed the data analytics associated with its e-mail traffic. This helped the company optimize locations, team sizes, and work flows, and resulted in productivity improvements of up to 25 percent.

The use of Building Information Modeling (BIM) helps improve productivity as projects progress, because all information is contained in a single location. BIM tools are based on 3-D models, and they help planners avoid design clashes. Some companies are exploring adding dimensions, such as cost, time, and resources, in order to smooth project management in the execution phase and facilitate maintenance during operations.

The use of aerial, laser, and radar technology can rapidly improve surveying productivity. For example, in the design of transmission lines, the ground survey can be conducted with helicopter-mounted radars rather than having ground crews do manual surveys.

Contracting and procurement

It is important to define a contracting-and procurement approach that minimizes cost and risks—and to think this through for each project. It’s awkward but true: practices that worked well on one project may not be suited to another. Companies cannot always do things the same way. Here are some best practices that can help companies avoid delays and save money.

Integrate risk allocation into the contract.

It is tempting for those paying for construction to try to transfer all risks to the contractors—even when the latter lacks the required financial capacity. A more balanced approach that assigns contractors only those risks that they can influence may be preferable, not only for good relations but also for economic reasons. When contractors are forced to assume risks that aren’t naturally theirs, then they wind up paying higher insurance premiums; these costs, of course, are passed on to the customer. T-REX again provides an example of better practice. During the bidding period, the different government agencies involved allowed the contractors to indicate which risks they would assume, and at what cost. This allowed for a clear demarcation of risk and a better understanding of associated costs.

Set up an efficient process for claims and change-order management.

During construction, substantial time can be lost in claims and change-order management, particularly if processes and contracts are ill defined. Creating a stringent process for change-order management and an efficient one for claims management can minimize time lost in disputes during construction. Delay in decisions on claims leads to delays in construction—and could also lead to a breakdown of trust between the owner and contractor. One successful company installed a board for change-order and claims management as part of leadership’s “war room”—the place where everything is monitored and major decisions are made.

Align the interests of owners and contractors.

It is important to see contractors as partners in the effort to complete a megaproject, not hirelings who just execute the terms. Most contracts penalize contractors for delays; these penalties can be draconian, even punitive. The better approach is to base contracts on a set of common interests, with a well-defined payment structure and a balanced mix of incentives and penalties.

Incentives for early completion, or for benefit sharing (when the contractor suggests ways to improve project NPV), can help ensure that the owner and contractor are working with each other as allies. Some companies create a contingency budget and will pay a bonus if the project comes in on time and on budget. The design of the payment structure can also help to align incentives—in the form of mobilization fees paid when the site office is ready, main equipment quotes/contracts are in place, and a workforce is present—versus the more traditional approach of paying when the contract is signed. A payment system based on completing milestones rather than end-of-month payments also motivates teams to finish early.

Develop the owner’s perspective on costs.

Too often, owners rely on third parties or the engineering department for cost estimates. Strong performers maintain an in-house cost database that incorporates quotes from new construction and existing facilities. In addition, these owners have a clear understanding of what factors affect costs, and they use this information to their advantage in design and negotiations. For example, they scrutinize the factors behind equipment costs, such as steel prices, and constantly update their databases accordingly; they also perform bottom-up cost estimates for core equipment.

Project execution

There are four practices that set the strong performers apart from the weaker ones during the execution phase.

Overinvest in planning.

Unforeseen events are inevitable; creating a continuous work flow means construction workers need to be able to anticipate and react quickly. Many companies use 30-, 60-, and 90-day plans, but they overlook the importance of microplans that look at what needs to happen the next day or the next week. Strong performers know what is happening day by day at the work site and adjust their microplans accordingly. They assess whether drawings, equipment, materials, and people are available and troubleshoot before the actual due date. Companies are exploring how to incorporate these elements into planning software and to make this a routine step in the planning process. This reduces idle time and is the most promising way to improve site productivity.

Companies are also beginning to manage multiple critical paths. To put it simply, some activities have to happen in a specific sequence—no putting up a wall until the foundation is done. Strong performers go a step further. They plan what to do if the foundation is running late and get other activities going on a parallel critical path.

Use prefabrication and preassembly methods.

Strong performers design a specific supply chain for prefabrication and assembly. In one case, this translated into building a 30-story structure in just 360 hours; on-site construction work amounted to only 7 percent of the construction work. Substantial prefabrication also helps to minimize waste.

Although it is early days yet, universities and companies are exploring the use of additive manufacturing techniques, such as 3-D printing, as a next stage of innovation in building. The use of select design elements and fixtures could pick up rapidly, as 3-D technology allows for new shapes and forms to be efficiently constructed.

Build structures to cooperate on project performance.

To encourage an environment in which problems are addressed head-on, it’s important to have timely and consistent feedback. All too often, though, the area supervisor, the project manager, the planner, and the owner have different views on what is going on and where the problems are. Usually, this is because they are not getting the right information in a timely manner; sometimes, they are not getting the same information. In effect, they are operating from different versions of the truth. The better approach is to agree on a standard reporting system and then to devise ways to ensure timely feedback, such as daily discussions with on-site staff and weekly reviews on project status, pace of progress, and risk management. The underlying purpose is not to create more paperwork but to create a transparent environment that fosters quick issue resolution. Some companies are exploring how to track performance using handheld devices that report completion levels on a daily basis to planners.

Minimize waste.

The same lean principles that apply in manufacturing could work for construction. Actively seeking opportunities to reduce inventories, overproduction, rework, transportation, and waiting times can substantially improve productivity. For example, one company reviewed the placement of a boiler; in the original plan, this would have required more than 1,000 serpentine tubes and ten full-time workers to install. Instead, through preassembly (attaching the serpentines during the fabrication process), parallel processing, and setting up a flexible team, the firm cut labor costs in half and completed installation 43 percent faster than estimated.

Organizational skills

These practices apply to specific moments in project delivery. There are also ways to set up the entire organization for success. Again, the analogy to manufacturing is pertinent. Manufacturers have learned to keep value creation and efficiency in mind all the time, which is one reason that the sector has seen sustained productivity gains. When it comes to megaprojects, though, it is common to concentrate on just finishing the job—and not to consider how value can be enhanced along the way and how to transfer knowledge between project teams. High-performing megaproject teams, on the other hand, review project NPV every three to six months and think through the most important risks and how to mitigate them. Once a project is done, they have structured meetings to discuss what lessons to learn.

These kinds of issues, related to governance and processes, are rife. For example, in operations, the site manager might have a signing limit of $100,000; that could be far too low for a megaproject and could end up wasting management time as people run after signatures. The same can apply to decision making. The key is to look at the scale of the job and assign responsibility to suit.

One way to devise and institute these capabilities on a company-wide scale is to set up an in-house project management academy, as a number of companies with large project portfolios are doing. Good project managers are a rare breed. It is no easy task to manage the contractors, engineers, lawyers, procurement specialists, and public relations experts any big project needs. The best approach is to combine structured training, including certification in specific modules, with on-the-job coaching, so that people can apply the skills they learn.

As with every other economic sector, technology will also play a role in improving construction productivity. Specifically, there are innovations in areas as diverse as 3-D printing, computer-aided design, laser and radar technology, and pipe laying that could make for faster, less mistake-ridden construction. But technology is only a tool. The bigger priority—and opportunity—is in improved project management from design to execution.

The best practices and innovations outlined in this paper are only a starting point for discussion. The larger point is that these conversations are worth having. A healthy, productive construction industry benefits the whole world.

Saturday, 1 August 2015

The most important thing

If you were to ask me “What is the single most important Lean tool or method,” my answer would immediately be “genba kaizen” – with the understanding that no employee loses their job as a result of kaizen; i.e. “Respect for People” is operational in this and in many other ways.

Why? It is because classic industrial engineering-based kaizen is how you:

  • Learn the application of the two Lean principles, “Continuous Improvement” and “Respect for People”
  • Learn to use all the tools and methods in combination
  • Learn the ways in which the tools and methods are interconnected
  • Learn the meaning and significance of the tools and methods
  • Learn to see and eliminate waste, unevenness, and unreasonableness
  • Develop human capaility
  • Survive and prosper in competitive buyers’ markets

Genba kaizen is fundamental. It also:

  • Humanizes the workplace
  • Reduces barriers to interacting with other people and departments
  • Improves people’s understanding of the work
  • Improves information flow among workers and managers
  • Changes people’s beliefs
  • Makes managers smarter (we need that!)
  • Helps identify future leaders
  • Creates a culture that asks “Why?”
  • Helps people overcome illogical thinking and decision-making traps
  • Drives innovation and human creativity
  • And makes work more fulfilling

atomized_kaizen

For the last 20 years or more, people have thought it wise to take apart kaizen and use the various tools and methods independently of one another, as shown in the image at right. I call this “atomized kaizen.” This is an enormous mistakebecause people learn far less from atomized kaizen than they can learn from genba kaizen. And the business result from atomized kaizen is next to nothing.

Process improvement tools and methods used in isolation do not have the same impact that genba kaizen has. And, only genba kaizen can re-wire your brain from the current state (batch-and-queue way of thinking) to the future state (flow way of thinking).

The great majority of authors of influential Lean books never got their hands dirty on the shop floor. They do not understand genba kaizen or its significance, and therefore paid little attention to it in their writings and speeches. As a result, many Lean practitioners today think they are doing kaizen when, in fact, they are not. And, they are certainly not achieving the individual development, organizational capability-building, and business results that comes with classic industrial engineering-based kaizen genba kaizen.

The one method that leaders of the Lean community should have emphasized the most, genba kaizen, is what they emphasized the least. The result is widespread Fake Lean and failed Lean transformations.

However, it is not too late to re-connect with genba kaizen and make the kind of progress that you had hoped to make.


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