Process may not be fashionable, but it is still powerful.
Management fads come and go and, right now, if you’re not pivoting, you’re probably still busy trying to be agile. Yet some management ideas and techniques stand the test of time and continue to add real value to businesses. Process-based analysis is a genuine classic and worthy of reconsideration as everyone tries to adapt to post-Covid competition.
A process-based approach enables the entire business to understand how inputs are converted to deliverables for the customer. It connects every function in the business to the customer, thus enabling employees at all levels to understand their contribution to meeting customers’ requirements.
A process-based approach enables a business to manage customer requirements, as well as its own corporate and regulatory requirements in a standard, systematic and trusted manner. Businesses with a process-based approach are more efficient and have typically enjoyed a good reputation with their customers, largely due to their ability to provide consistent quality. Moreover, I found these companies to have stable leadership.
So, the big question is, how does the construction industry, which is largely project-based, embrace a process-based approach?
When looking at construction companies, the best place to start is by understanding the conversion business to your outputs. For example, look at how design packages are taken from concept to delivery, how the transfer of construction packs to sub-contractors occurs and how payment is made for completed work packages. Each of these activities has inputs, a process and outputs.
Then, start to think of the steps in the conversion process as a production system. Then visualise the input sequentially flowing through all the steps involved, all the way to becoming an output. By doing so you will have mapped the process.
Poor productivity and the skills shortage meet in bottlenecks
You can be forgiven for wondering how a process-based approach can help with more pressing issues like the skills shortage and declining productivity. The answer is bottlenecking.
Bottlenecks slow processes down and in doing so they upset everyone further along the chain, including your customers.
Traditionally, to resolve bottlenecks, organisations will be recruiting additional resources, transferring resources from other parts of the business, bringing on more sub-contractors or, if there is no budget to add people, some poor soul will need to be informing the customer of a delay.
By contrast, let’s consider how bottlenecks are resolved in a process-based approach. The process is first mapped with a quick gap analysis performed: what is the ideal process and level of capability and resource versus what you realistically have. This forms the basis of a review where value-add and non-value-add steps are identified. There are many methods to then review the processes. A recommended measure is to evaluate processes against the eight wastes that were originally identified by Toyota.
This type of analysis is simple and always achieves the desired results. Outcomes from the review typically include:
- elimination of duplicate steps – which businesses are often blissfully unaware of
- a marked reduction in steps that do not add any value
- the minimisation of hand-offs – which is usually the cause of processing delays
- the standardisation of upstream inputs so that the final steps have all the information available to progress the activity, and
- gaining a much clearer view of the contribution each step makes towards the overall delivery to the customer.
Furthermore, in addition to all of the above, wastes that we are unaware of can be identified and removed. The value of this approach is easily demonstrated in the following case study.
More money and resource will not necessarily solve core process problems
In one of the businesses I helped, there were massive issues reporting field activity progress to the client. There was a lot of data to be processed and as the project scaled up, data analysts were onboarded one after another to help manage 4 data streams.
Long story short, about 20% of the way into the project, there were 3 reports for the same project with huge variations between them. It became impossible to reconcile these variations and things were spiralling out of control.
To resolve the dilemma, I used a process-based approach and noticed huge amounts of duplications, manual processing and time spent waiting for verification. After 12 weeks of working with the team, we ended up with a process that consumed only 25% of the resources previously allocated and reported with 100% accuracy all the time.
More than a happy ending, the business went on to automate the process and scaled-up even further without having to recruit any more specialist data analysts.
There are other examples of standards being implemented by organisations to ensure their processes don’t change significantly between projects and benefit from the continuous application of knowledge and experience derived from past projects. Working with more of an ad hoc project-to-project model means you don’t quite capture and deliver the same degree of benefit.
Turning our attention to field application of the process-based approach, there are a couple of variations worth noting.
In the construction of the Sydney Metro Northwest, concrete fabrication was done as a production process. In this case, repeatable elements were identified and grouped for more efficient processing. Reports mention a four-tonne segment being produced every six minutes in a dedicated facility. It is impressive and commendable, but it is also low-hanging fruit and should be more widespread.
There are more examples of firms using repeatable elements in designs and even moving to source more prefabricated components.
In all these examples, productivity is improved and there was no question of skills shortage. But there is more to the process-based approach than these applications.
At the deep end of the pool, a process-based approach first separates tasks that require specialised skills from those that don’t. This means tasks not needing specialist skills are delegated to generalists. But it doesn’t stop there.
Specialist tasks are then dissected even further, identifying the exact points where the specialisation is required. These specific areas are then reassessed and reworked through alternative work methods, resolved through better designs, and/or better documentation, so that more specialists can be trained up regarding the specifics.
Technology is best applied to processes that are already efficiently designed
A process-based approach opens up avenues for automation and the use of digital technologies and this deserves extra attention.
While it is certainly true that the construction sector cannot fall further behind in digitalisation and automation, that doesn’t mean firms should pursue technology for technology sake. Processes need to be streamlined first.
According to Bill Gates, the first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second rule is that automation applied to an inefficient operation will magnify the inefficiency.
So, the starting point is well defined, the process must be designed to be efficient and effective first. And, equally, this should not become an excuse for not adopting technology. The two must be considered in harmony.
Finally, I foresee organisations that are smarter with processes will be the ones that maintain healthy profitability year on year. And they are the ones that will win more work – for one simple reason – their processes will give them the capacity and the reputation to do so. As boring and unfashionable as process may be, it is nonetheless a rich source of competitive advantage, and recessions amplify competition.
By Shivendra Kumar
Shivendra Kumar is a master of business theory. But more than that, he is a master of practical implementation, having earned his stripes developing and managing business improvement programs with some of Australia’s leading engineering firms, including Downer and Siemens. His track record is one of solid, measurable productivity improvements, process innovation and revenue gain. Shivendra has also coached many executives and project teams, in real-world application of best-practice methods, ensuring his insights and know-how are passed on to others. Underpinning his extensive industry experience are qualifications in engineering, and a PhD focused on rapid product cost improvement techniques. He is the author of two books on business improvement techniques, The Competitive Contractor, and From Paper to Profit.