Challenges and solutions

July 2007 » Business
Practioners and vendors weigh in on issues effecting the AEC industry and how changing processes can lead to better business.
Shanon Fauerbach, P.E.

Practioners and vendors weigh in on issues effecting the AEC industry and how changing processes can lead to better business.

At the Autodesk World Press Day 2007, a media event that, among other things, discussed factors driving change in the AEC industry and what those changes are, HOK CEO Patrick MacLeamy talked about challenges in our industry—such as organization, information exchange, design, and the way we work—and a move toward an "integrated practice organization." The presentation provoked me to look at how the industry defines challenges, and how it is changing to address them. But rather than focus on the design perspective, I chose to see how practioners and business software vendors perceive these issues.

Below are responses to a series of questions about industry challenges and solutions.

HOK
Headquarters: Firm is organized virtually and has no "headquarters"
Number of offices: 25
Total number of employees: 2,500
Year firm was established: 1955
Areas of practice: Architecture, building engineering, interior design, planning, landscape architecture, and consulting with focus areas in the sports, health care, aviation, justice, corporate, science and technology, and other markets

Participant
CEO Patrick MacLeamy, FAIA, LEED AP
patrick.macleamy@hok.com

Q: What are the greatest challenges facing firms conducting civil engineering services now and in the future?

A: HOK provides mostly architectural—not civil engineering—services, so my remarks should be taken in the spirit of a collaborator with civil engineers. However, I do believe civil engineering faces the same challenges as architects:

  • How to become more efficient at delivering our work.
  • How to be better collaborators with other disciplines.
  • How to partner with those who build our designs.

Q: What do you think is the best course of action for firms to address these challenges?

A: All of the challenges we face require a new way of working more closely with others, which in turn requires us to master new ways of working with interoperable software tools.

Q: How can a focus on developing the best process for accomplishing work be a key to success? What elements of that process are most important (for example, reproducibility and ease of use come to mind as key attributes)?

A: Old ways of working were compartmentalized, with clear divisions between activities. Over time, the processes developed inside each activity became well understood. Today, collaboration with other members of an expanded team eliminates compartmentalization and requires adoption of new processes.

Q: How will firm leaders convince overburdened staff who are very comfortable with their way of doing business to accept change? What are the best practices for process change management?

A: Your question reminds me of the woodsman who was working overtime to cut down a tree. A passerby noticed he was making very little progress in spite of expending great effort, and asked the woodsman, "Why don’t you sharpen your axe?" The woodsman continued working furiously as he replied, "I don’t have time to sharpen my axe; I am too busy cutting down trees."

All of us face a major task of change management, which takes focus, determination, and energy. People do not readily embrace new ways of doing things, and require clear explanations of why change is essential—as well as required. The ability to make change happen is the essential defining characteristic of tomorrow’s successful leaders.

Q: Do you have any other thoughts or opinions about the future of project management, efficiency, or process and its effects on the people doing business in the civil engineering industry?

A: Many people in our industry believe offshoring is the only answer to lowering costs in a tight labor market. I do not agree, and think offshoring is solving yesterday’s problem. Instead, we need to change the design and construction process, while saving unnecessary labor in the bargain.

We seek a future of fewer, better-trained people doing more work using better tools and working collaboratively with consultants, contractors, and suppliers. We at HOK call this approach buildingSMART.


Psomas
Headquarters
: Los Angeles
Number of offices: 18
Total number of employees: 800
Year firm was established: 1946
Total billings for last fiscal year: $116 million
Areas of practice: Civil Engineering, planning, surveying, construction management for land development, water and transportation markets

Participants
CEO Blake Murillo, P.E., LEED AP (left)
bmurillo@psomas.com

President Jacob Lipa, P.E. (right)
jlipa@psomas.com

Q: What are the greatest challenges facing firms conducting civil engineering services now and in the future?

A: The distribution of resources will be both a challenge and opportunity. There are a lot of engineers in the world, but how to access them and build a project team remains a challenge that many are undertaking. The same is true for both natural resources and money. Getting the available natural resources (water for example) to the people who need it is a challenge that civil engineers must help find solutions. Finally, finding and applying the financial resources to implement the solutions are critical.

Q: What do you think is the best course of action for firms to address these challenges?

A: There are several courses of action that have short- and long-term impact. First, the long-term course of action is for firms to be involved locally with education and start helping younger people be energized about engineering and the environment. What we do is so important to the quality of life where we live that most people don’t understand the impact. Second, we have to believe in the global marketplace and think innovatively about engaging engineering resources no matter where they may be. In many cases, the effective use of technology will be a foundational element.

Q: How can a focus on developing the best process for accomplishing work be a key to success? What elements of that process are most important (for example, reproducibility and ease of use come to mind as key attributes)?

A: A focus on continual learning and improvement is the key to continued success of any firm. Certainly, one critical area is always to look to improve how work is accomplished and how to streamline it. This would include the use of the best processes and standards to develop some output. The quality of the output needs to be considered throughout the process.

Q: How will firm leaders convince overburdened staff who are very comfortable with their way of doing business to accept change? What are the best practices for process change management?

A: In some ways it is our responsibility to keep some amount of change happening in our firms. Change is, and will always be, uncomfortable. We can’t minimize this, but we can help people understand why a change is important. One of the best ways to get them more comfortable is to involve them early. Explain the issue and the need, and let them help with developing the solution, process, and implementation.

Q: Do you have any other thoughts or opinions about the future of project management, efficiency, or process and its effects on the people doing business in the civil engineering industry?

A: The acceptance and embracing of change will become the norm. Everything in the general civil engineering field will be done faster. Many steps in the planning, designing, and construction stages we perform now will be eliminated, minimized, or improved. Firms that develop services or expertise that clients need and find valuable will continue to be very successful.


Deltek, Inc.
Headquarters: Herndon, Va.
Areas of practice: Provider of enterprise applications software for project-focused organizations

Participant
Product Director Jeffrey D. Eckerle, P.E.
jeffeckerle@deltek.com

Q: What are the greatest challenges facing firms conducting civil engineering services now and in the future?

A: The greatest challenges facing firms conducting civil engineering services are attracting and retaining top talent, and achieving a business-performance-oriented firm culture from a workforce that is typically more focused on practicing engineering.

Q: What do you think is the best course of action for firms to address these challenges?

A: Assuming the proper metrics are used, both challenges can be addressed the same way employee performance is measured and rewarded. Promotions, bonus payments, and salary increases tied specifically to the correct business performance metrics will retain top talent and drive better business performance. Top talent wants to be rewarded based on their contribution. Choosing to base bonuses and promotions on longevity or solely on subjective measurements will proliferate these challenges.

Q: How can a focus on developing the best process for accomplishing work be a key to success? What elements of that process are most important (for example, reproducibility and ease of use come to mind as key attributes)?

A: Standardizing processes can drive efficiencies, eliminate errors, and ensure accurate information for making better business decisions. The most important part of the process is making sure the outcome or output is tied specifically toward achieving goal business metrics that a firm has deemed important.

Q: How will firm leaders convince overburdened staff who are very comfortable with their way of doing business to accept change? What are the best practices for process change management?

A: For starters, firm leadership’s support for the change must be known throughout the organization. But it takes more than an edict from the corner office. Why the upcoming change is important is just as important as what the change is. Ideally, the change ties back to output that will result in better information for making better business decisions, which will result in bigger bonus checks that an employee receives based on their performance. The message also needs to be delivered with sensitivity. In general, human nature is to resist change. So leaders need to expect this and be sympathetic to it.

Q: Do you have any other thoughts or opinions about the future of project management, efficiency, or process and its effects on the people doing business in the civil engineering industry?

A: Using an ERP system involves the need to understand business processes across an organization. Implementing these systems causes the need for change management, but doing this the right way can result in a more business-oriented culture. An ERP system encourages knowledge sharing among groups, eliminates separate silos of information, and provides a uniquely comprehensive view of firm-wide operations. Additionally, these systems can provide outputs on key metrics for which performance can be measured. In other words, an ERP system such as Deltek’s Vision 5 product brings all critical business processes together for successful operation of the project-focused professional services firm.


Newforma, Inc.
Headquarters: Manchester, N.H.
Areas of practice: Newforma is a software company serving architecture, engineering, construction, and owner/operator organizations worldwide. Its mission is to develop and market industry-leading software solutions that significantly improve the productivity of the building project team by streamlining work processes, reducing exposure from errors and omissions, improving coordination and communication, increasing visibility into costs and quantities, and enabling greater repeatability of project success.

Participant
CEO Ian Howell
ihowell@newforma.com

Q: What are the greatest challenges facing firms conducting civil engineering services now and in the future?

A: The shortage of professional staff is the issue of greatest immediate concern. The corollary challenges to this issue are how to retain existing staff, be more productive with what you have, and bring new staff up to speed in record time. A number of our customers are taking a strategic approach to staffing needs by acquiring and consolidating independent or geographically dispersed practices. This approach is not without challenges either. Executive management teams struggle with repeatability of best practices across newly acquired teams, consistency and quality of service delivery, risk mitigation across all projects, and the need for a uniform, company-wide technology infrastructure.

Q: What do you think is the best course of action for firms to address these challenges?

A: One course of action, as implied in Patrick MacLeamy’s strategy, is to get the most out of existing staff by improving the building process. New technologies today support changes to existing process in ways that can streamline the work effort, cut costs, and maximize the productivity of existing staff. As an example, one of Newforma’s civil engineering customers, John Watkins, a principal at Jordan, Jones and Goulding (JJG) in Atlanta, tells us that by implementing a project information and process management solution like Newforma Project Center, they are enabling their busy project engineers and project managers to save the time that is unproductively spent every week on low-value tasks such as hunting for critical project information, filing e-mails endlessly, tracking down issues and enforcing accountability, and double-checking that information has been adequately shared with the rest of the project team. Perhaps more important than the time savings is the greater job satisfaction from spending more time on higher-value design and problem-solving tasks.

Q: How can a focus on developing the best process for accomplishing work be a key to success? What elements of that process are most important (for example, reproducibility and ease of use come to mind as key attributes)?

A: A focus on process helps firms identify and remediate the underlying causes of many of our industry ills, with errors and omissions being at the top of the list. Some symptoms that point to the need for more focus on process include the following:

Inconsistent documents—What’s needed is an internal, software-supported quality assurance process that compares a set of drawings to identify unintended errors or omissions before they are issued to other consultants, the client, or regulatory authorities.

Finger pointing—What’s needed is an automatic process for keeping accurate, reliable, and tamper-proof electronic logs—the audit trail of all incoming and outgoing transmittals for every project in your office.

Lost decision trails—What’s needed is a straightforward process for getting project e-mail out of personal inboxes and filed as part of the official project record alongside other official project documents to capture their contribution to the project’s history.

Reinventing the wheel—What’s needed is a reliable process for searching archived projects to recover details or layouts that have already been designed and drafted, preventing new engineers from reinventing the wheel, or worse, recreating past mistakes.

Q: How will firm leaders convince overburdened staff who are very comfortable with their way of doing business to accept change? What are the best practices for process change management?

A: From our experience working with customers to implement Newforma software, we have found that firms typically use one of three approaches when it comes to driving change. The first approach, the "top down mandate," only works if the company culture is such that this is the accepted norm. The second, more common approach is to sponsor "mavericks"—individuals within the organization who will champion a new process or technology, demonstrating to the rest of the company what is possible and the benefits that can be realized. More conservative firms use the third, more passive approach of "natural osmosis," where a test process or a pilot implementation is watched to see if it will expand to other teams on a voluntary adoption basis.

We have seen all three approaches work, albeit 1) on different time scales (with mandate being the fastest), 2) having different overheads (with osmosis requiring patience while maintaining existing parallel processes or systems), and 3) requiring different management styles (with reward structures needed to encourage the mavericks).

Q: Do you have any other thoughts or opinions about the future of project management, efficiency, or process and its effects on the people doing business in the civil engineering industry?

A: Well-defined processes, universally applied and streamlined by supporting technology, are the next frontier of competitive advantage for civil engineers. Good process means better project execution, more productive staff, and ultimately, improved company profitability.


Primavera Systems, Inc.
Headquarters: Bala Cynwyd, Pa.
Areas of practice: Provider of program and project management, scheduling, contract management, cost management, and risk management solutions

Participant
Richard E. Sappé, M.E.M
AEC Industry Market Manager
rsappe@primavera.com

Q: What are the greatest challenges facing firms conducting civil engineering services now and in the future?

Some of the key challenges facing the AEC industry as a whole are:
labor shortages of both experienced, high quality professionals and trade workers;
increased foreign competition and volatile materials costs;
increased regulatory demands that increase the administrative burden and cost of doing business; and
increased project complexity driven by sophisticated owners, LEED requirements, and the call for alternative delivery and financing methods.

Fragmentation of the AEC industry underpins and exacerbates these challenges. The vast majority of companies within the AEC industry are small- to medium-sized businesses, and many of them family owned and multi-generational. While these small to mid-sized organizations form the backbone of the industry, this structure is also one of the reasons that the industry is so fragmented and by and large still operates on a business model that originated during the guild-driven Middle Ages.

In addition, the preponderance of a low-bid mentality, rather than a true low-cost mentality, puts us in the unfortunate Catch-22 where firms face incredibly low margins in the single digits because they constantly engage in a race-to-the-bottom to remain competitive. Naturally this means the industry as a whole lacks the breathing space to truly innovate, whether internally or externally.

Other industries have gone through supply chain integration revolutions; AEC has yet to accomplish this. From beginning to end, the supply chain of vendors that completes a project in AEC is not fully integrated. Technology has not yet had the unifying effect that it has had for other industries.

Q: What do you think is the best course of action for firms to address these challenges?

A: In a market as volatile as AEC, executives must remain on the look out for new ways of increasing project delivery efficiency and improving their operating margins.

Forward-looking enterprises are adopting a progressive, company-wide approach that calls for standardized business processes and operating procedures that are supported by adoption of uniform technology. According to a recent survey of more than 100 construction management executives, the percentage who say their firms’ IT systems are already "extremely homogeneous" rose from 36 percent in 1999 to 45 percent today, with 58 percent saying they hope to move toward an even more standardized environment in the near future. ("CIRT Opinion Poll Results," Construction Industry Roundtable, March 2005).

However, technology can only provide a standard framework in which to operate. Firms must take the next step and determine what processes they already have in place, which processes are missing, and then adopt and capture all the appropriate processes upon which they will standardize. With processes in place, technology can support these processes and further support their refinement.

Technology solution providers must support this expansion of process development between organizations through an interoperability paradigm that enables multiple parties to coordinate and collaborate on projects regardless of their respective technology platforms.

Q: How can a focus on developing the best process for accomplishing work be a key to success? What elements of that process are most important (for example, reproducibility and ease of use come to mind as key attributes)?

A: The AEC industry is entirely project driven. Project delivery is entirely process driven. As such, the ability to apply a best process for any part of the project delivery will be a distinct competitive advantage and a key to continued success for any AEC organization.

However, the key is to define a process for project delivery, and capture it in a way that enables project professionals and stakeholders to supply their greatest assets—their ability to handle and overcome the challenges as they happen in the field. That means processes must be rigorous enough to eliminate or simplify "waste-work," but flexible enough to enable value-work and proactive decision making and management at all levels.

In addition, a firm must not only be able to define and capture its workflows and processes, but also to enforce them at every level. This ensures accountability for every task in the process, and ensures that efficiency gaining measures are followed.

And all processes must be based on a common set of data to maintain direct visibility into the project tasks. Metric-driven processes are easier to review for their efficacy.

Q: How will firm leaders convince overburdened staff who are very comfortable with their way of doing business to accept change? What are the best practices for process change management?

The issue is not so much one of convincing, but rather of driving and supporting change. The overburdened staff will ultimately welcome any change that will make their lives easier. However, many have heard the tune before only to see nothing come of it; they must be convinced that this time around, they will see results. Also, in every organization there are "princes" of local fiefdoms who see change as a threat to their current standing. These princes must also be brought around to the new way of doing things.

There are a few basic rules to keep in mind, including the following:

Provide consistent leadership and vision from the top—In most cases, the change will be as much cultural as technical. It is the cultural change that is the most difficult, and where executives must consistently focus their greatest effort through communication and, most important, through example.

Small steps lead to great leaps—It is important to start with the low-hanging fruit and to involve the largest number of people within an organization. Even with the simplest processes or workflows, a small measure of success early on can go a long way toward easing future change. It aids executives and the process change team to develop the best internal process for change. By starting with simpler, low-level processes, project delivery work is not critically impacted as an organization becomes accustomed and attuned to the process definition and refinement.

Bring the nay-sayers on board—Invite the people in the organization most likely to resist change to join the process development team and gain their buy-in. If brought on board with responsibilities, these people can quickly become the greatest champions in driving new processes throughout your organization.


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