Managing with Certainty Through Unprecedented Construction Resource Shortage
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The document discusses the challenges in the construction industry, highlighting that 35% of projects fail due to various reasons such as cost overruns and labor shortages. It emphasizes the importance of thorough front-end planning and early construction input to increase the likelihood of project success, alongside effective human resource management and training initiatives. Additionally, it advocates for a supportive contractual environment and the decentralization of project management to improve outcomes across multiple contractors.
Managing with Certainty Through Unprecedented Construction Resource Shortage
- 3. Current State of Industry (IPA Data) • 35% of projects fail • 65% of all mega projects fail • Failure is defined as one or more of: – 25% cost overrun – 25% schedule overrun – Lost cost competitiveness – Severe and continuing operational problems • All before pressure of lack of skilled labor
- 4. Total Gulf Coast ‐ Composite 0 50000 100000 150000 200000 250000 Announced Projects NOT Included in Labor Data Location Total Value Gulf Coast $202,220,959,001
- 6. Uptick on Gulf Coast Facilities 90 95 102 127 0 20 40 60 80 100 120 140 2012 2013 2014 2015 (Projected) Total Gulf Coast Construction Fatalities (Nontransportation Related)
- 8. What is Lacking with the Skilled Labor Shortage • Adequate flow of newcomers in the industry • That are adequately trained on safety • That are adequately trained on craft skills • We are up to our nose in quicksand
- 9. Project Cost & Schedule Failures • Show up in Construction – As rework – Productivity – Out of sequence work – Extended project schedules – Accompanied by poor safety – Generally not a fault of construction, but of inadequate upstream processes
- 10. Successful Crew
- 13. Clear Scope and Front End Planning • Must have clear scope and excellent front end planning • Front end planning is MORE than flow sheets and plot plans • IT MUST HAVE A WELL THOUGHT OUT CONSTRUCTION PLAN (CONSTRUCTABILITY)
- 14. Early Construction Input • Construction Sequence • Crane placement • Heavy Haul Roads • Laydown area • Parking • Office complex
- 16. Decentralize Project Support • For projects with multiple areas or scope segments • Let each EPC or EP+C Team control their own destiny • MANAGE BY OBJECTIVES
- 17. The Objectives ‐ Five Key Elements • Scope – Strong owner input • Quality – Strong owner input • Cost – Client & Contractor(s) agree to target • Schedule – Client & Contractor(s) agree to target • Safety – Project goal of Zero Injury
- 18. Rules of Engagement • Contractors report in their own format • By‐ weekly or monthly reviews • BAD NEWS EARLY – when there is time to do something about it • Owner/Contractors engage to solve deviations • Owner/Contractors supportive environment
- 19. Everything a Contractor Doesn’t Want in a Contract • Damages for delays • Warranty at our sole cost • Indemnify for everything except their sole negligence • Net 60 payment terms • 10% retention • Payment/ performance bond • We waive consequential damages, they don't. • They provide builders all‐risk, but we pay the first $250k of each loss • Separate hold harmless in which we indemnify them for everything except their sole negligence
- 20. Successful Crew
- 21. Human Resource Management • Crew Focus on “Do it Right the First Time” • Management and Supervision keeps supply of task planning, material, information, equipment, tools • On the job craft skills training, safety training • Fill “green” construction positions and safety and “task” train • Craft mentorship; buddy system, blue dot • Treat people like human beings – Respect – Awards and Recognition – Positive Project Moral • Craft focus on safe daily execution of the work only – Don’t need to know if on CP, LS, schedule, productivity
- 22. Business Case for Owners Supporting Training • Get training in contracts • Train local people – Under‐skilled, military, women – They will be around after the project is complete for maintenance, small caps – Pay for by per diem savings
- 24. Take Aways • Front End Planning • Constructability (EPC Contracting) • Focus at crew level • Constructors allowed to be independent • Trust, honest reporting • Client manages by objective • Take advantage ($7/Hr) and train locals