Optimizing performance and increasing productivity: Lessons from manufacturing

Lagging productivity within the construction industry is nothing new.

For the past several decades, manufacturing has led the way by adopting technology and digitizing work processes to increase productivity. Meanwhile, over the past twenty years, the global average value added per hour in the E&C industry has grown roughly a quarter of the rate of manufacturing.

McKinsey recently published an article co-authored by myself and our Aconex Founder and CEO Leigh Jasper discussing project performance optimization in the E&C industry. We explore ways to reduce variability, or better yet-capitalize on variability to yield better results. Our article explains how to follow DMAIC (Define, Measure, Analyze, Improve, Control) as a useful data-driven improvement technique to increase productivity- something that manufacturing has been leveraging for a long time. Now it's the E&C industry's turn to shine.

With pre-fabrication, modular design, BIM, and mass production, construction is beginning to resemble manufacturing more closely than ever before. Some might argue that construction is really a manufacturing process; providing ample reasons to apply manufacturing best practices to an industry that's flat-lined in terms of productivity.

Business Process Reengineering (BPR) is a business management strategy focused on the analysis and design of workflows and processes within an organization. BPR-with a focus on standardization and optimization-is a smart approach towards boosting E&C productivity because reengineering is the easiest place to earn some quick wins.

Most large owners, contractors, EPCs, and consultants we work with are undertaking some form of process standardization initiative. Standardization can help launch large scale business transformation programs once organizations grasp the value of this approach.

Below are four questions that are typically asked before adopting BPR:

1. What processes are typically executed and how long do they take on average?
2. Which systems are used and how does information flow across organizational boundaries?
3. Are there obvious areas of efficiency improvements?
4. How do we move the dial, how long will it take, and what competitive advantage can we gain?

We've worked on thousands of projects across the world at Aconex. In our analysis, there's a stark contrast between what's documented as 'the process' (including design, cycle times, and quality) versus what happens in the field. Understanding this difference between expected and actual outcomes and crafting ways to manage this variability could be a game changer. With nearly $50 trillion in capital investment projected over the next 15 years, managing variability will be paramount as the need for global infrastructure projects continues to expand. Read more here.

General Manager, Data Strategy and Operations
at Aconex

Karthik Venkatasubramanian is the General Manager of Data Strategy and Operations at Aconex, the world's leading collaborative construction and engineering management software.