A few weeks’ backs I was involved in a series of meetings together with my immediate client (EPCM firm representative) in tow with his client representative in the Resource & Energy industry visiting manufacturers & suppliers in the Lower Mainland. The series of meetings were to find out what we could do to improve the flow of information and products in the supply chain. 

What was refreshing in these meetings was the end user – client admitting that they generally due to the nature of the multi-national set up and far reaching processes it can make the life of the supplier difficult in providing timely services or products. It was refreshing as generally in construction projects various stakeholders ram through all issues/problems lower down the food change together with a lot of finger pointing and shouting.

These large AEC / EPCM projects have too many layer of owner/ engineering/ manufacturer / supplier construction management involving innumerable bid cycles & multiple construction silos and subcontractors / suppliers creating multiple silos where risk is transferred down the supply chain where risk/contingency is at premium.  In this entire process the end user client is in the process of meeting their business objectives and meet the ROI of the business objectives and ensure shortest time to market for their product or services.

Supply chain in large projects in the Resource & Energy industry valued at billions of dollars can have thousands or hundreds of supply tags and thousands or hundreds of manufacturers and suppliers strewn all over the global landscape. Our clients from the Resource & Energy industry are thus challenged to keep their project moving and meet deadlines through efficient supply chain system.

A recent study titled: Building Contractor Management Excellence – carried out by Accenture has this to say: “Under relentless pressure to control costs, companies in resources industries ranging from oil and gas to mining, chemicals and utilities are relying more than ever on outside providers to upgrade and maintain their critical production facilities and assets. But the management of contractors is not getting any easier, compelling companies to adopt a more rigorous approach.” Supply chain efficiency is key to improving a company’s financial performance in the Resource & Energy industry together with supply chain resilience to reduce disruptive risk.

A rigorous approach - a shifting of mindset is required in the construction delivery method, especially required in the digital globalized world we live and work where social, mobile, real-time, and other disruptive technologies have aligned necessitating dramatic changes within organizations, forcing them to adapt in order to maintain relevancy. This digital transformation is significantly driving real change within businesses where new models, team structures, and customer-centered philosophies are being developed quickly to stay afloat. The construction delivery model and the design, engineering and construction industry is not immune to this change neither our clients within the Resource & Energy industry.

A recent study carried out by A Weippert & S. L. Kajewski at the Queensland University of Technology, Brisbane, Australia titled: AEC Industry Culture: a need for change highlights some of the issues in the design, engineering and construction industry. "Four decades of international Architectural, Engineering, and Contractor (AEC) industry publications reinforce poor communication and information transmission; coordination; and teamwork issues, are the cause of countless performance problems on numerous AEC projects.” Interestingly, I came across a presentation by one of my LinkedIn Connections – Bill Black-  titled: Is our industry broken- the answer is Yes. The construction delivery model is broken for the following reason:

Design + Engineering team:

Creates a design intent that revolves around the solution – solution is the start and the support systems revolve around it.  

Procurement + Supply Chain team:

Source Procure thousands of items - which are available at different stages at different times not necessarily in the order it has to be constructed

Construction team:

Details and builds the building /structure ground up – building brick by brick at a time to its completion.

The presently industry accepted & practised construction delivery model where each practioners is working in silos with a hope that in the end everything gel together to a solution that meets the clients intent.  The model illustrated above falls short to create a methodology which that resolves the issue of:

Too many layer of owner - construction management

Designing & engineering without the end delivery methodology in mind

Cost Influence lost after design/engineering stage

Innumerable bid cycles & Layer of subcontractors multiple construction silos

Risk/contingency premium when risk is carried by contractor to the construction phase

Inconsistent safety & quality

While meeting through a shifting mindset – a complete remodeled system that encompass:

Greater Accountability & Client Relationship Management

Lowered Capital Cost & Project Timeline and cost influence through project life cycle.

Design with end delivery consultation process in mind

Create efficiencies through Standardization

Maximize labour Productivity & Constructability

Improved predictability of project Execution & Risk

Improved Safety & Quality

Lower Environmental/Socioeconomic Impact

Shifting mindset is required to innovate the construction delivery model in this digital globalized economy where we have to disrupt traditional process, and rebelliously discard old business clichés and remake the construction delivery model and greatly accelerate the way we operate to understanding customer needs and problems to keep pace with a rapidly changing disruptive business environment.

We owe it to the generation that is moving into the boardrooms of the digital globalized economy to fix a system that is broken. Do you agree, I would like to hear from you?

Photo credit : Veer