What in the world does project management have to do with solving the shortage of skilled construction labor?
Fair question. If your mental model is to do “more-for-more”, the answer is, better project management has nothing to do with solving the skilled construction labor shortage. The only solution available for “more-for-more” thinking is to find more of whatever is in short supply.
Good luck with that.
If, however, the task you have been charged with is to exploit (to optimize, to find productive ways to get more out of) what is in short supply–i.e., do “more-for-the-same”, or even better, do “more-with-less”, then finding better approaches to project management can become critically important.
That’s because the nature of the workflow in home building production is project portfolio management, managing what can be large amounts of work-in-process, managing what can be a large number of construction jobs. Yes, there is workflow performed in processes, but those processes are generally embedded, enabling, and supporting the bigger scheme of primary work; and, process workflow is different than project workflow.
The process of building a home–what we call Start-to-Completion–is actually the management of multiple projects that share resources. It is the structuring and the management of a portfolio of job schedules, with interdependencies and interactions of tasks and resources.
At its core, home building is multi-project management.
The current method–the current algorithm–of project scheduling is known as the Critical Path Method (CPM), which evolved from the Program Evaluation and Review Technique (PERT) in the 1950s; it has been in existence for more than sixty years; it is the method used in every ERP for home builders.
PERT and CPM were designed for programs with large, complex structures (Polaris weapons system, the Manhattan Project), but the Critical Path Method has become the de facto standard for scheduling all types of projects: aerospace/defense, software development, product development, research, and–yes–construction.
The problem with CPM is that it was not designed for managing a portfolio of projects, and it was not designed to function in environments where velocity is important, where faster cycle time and higher inventory turns are critical drivers of business outcomes.
Think about those functional flaws for a moment.
Where it must contend with variation and uncertainty, CPM offers only a buffer of additional time–individual task durations lengthened to protect the completion date of each task, but not necessarily the completion date of the project.
And–what is the cost of that safety?
Statistically, it lengthens the job schedule by a factor of 1.64. Which is how 90 day job schedules become 150 day job schedules. Built-in safety that three well-known, yet un-checked, types of human behavior then conspire to waste.
For the most part, builders are oblivious to the effects of variation on their production system. Yet, the cost of that variation is quite apparent: it is the Gross Income lost from all of the closings that never occurred, from houses that were never built with the capacity that was available.
The picture gets worse.
For a profitable builder, it is Gross Income that clearly would have passed through to Net Income, and ultimately, Net Profit.
It’s a lot of money.
Moreover, CPM considers task dependency (the predecessor-successor relationships of tasks) in its work breakdown structure, but it does nothing to resolve resource contention; it does not consider situations in which tasks of different projects/jobs depend on the availability of resources that do not have sufficient capacity to meet the demand being placed upon them.
Sound familiar?
These two factors–dealing with variation and resolving resource conflict–should be anathema to builders.
CPM was never designed to contend with the production environment home building presents. It is not the problem (the problem is variation and resource conflict), but CPM is benign to the solution. ProChain Solutions’ Rob Newbold (Project Management in the Fast Lane) told me that he would go further, saying: “CPM supports values that perpetuate the problems of home builders.”
Which brings us to Critical Chain Project Management.
Developed in 1997, Critical Chain addresses both task dependency and resource contention, and it replaces padded durations intended to protect task completion dates with a buffer that protects the completion date of the project/job; CCPM is much more aware of system constraints. Most importantly, Critical Chain substantially reduces the duration of projects–the cycle time of houses under construction.
Critical Chain Project Management does more than reduce the length of construction schedules. It also specifies a set of rules preventing behaviors that consume (and waste) the safety CPM builds into task durations. It installs a release mechanism that “pulls” starts into the system and keeps work-in-process at the levels required to produce faster cycle times.
It implements simple, visual tools to manage production.
Builders can put a number of these practices into place without changing the scheduling algorithms from Critical Path to Critical Chain. They can use add-on applications that convert existing scheduling applications from CPM to CCPM. They can implement standalone CCPM software applications. But–Critical Chain will not be a complete, integrated solution for the home building industry until its management technology providers wake up–wake up–and address it.
But–it all starts with obtaining the knowledge necessary to insist on that change. It is one of the areas we discuss in a Pipeline workshop™.
This was the seventh installment of a nine-part series on getting home builders to address–to deal with–the skilled labor shortage in residential building, by changing the way they do business.
- Part I looked at building the internal understanding, desire, and resolve to deal with what is an external problem; it looked at Open-Book Management and Team-Based Performance Compensation, and how to build the type of savvy, motivated, mutually-accountable home building team required to address the skilled construction labor shortage.
- Part II looked at restoring elegance and allusion to architectural design, in order to make homes faster, easier, and less expensive to build, while making them more livable, more distinctive, more storied, and more desirable; it looked at what happens to productivity when builders waste time, energy, and money building senseless, overdone, exaggerated illusions of architectural style.Part III looked at how costs behave in relationship to what caused them to be incurred, and how to manage those costs in a way that diminishes the conflict that exacerbates the shortage of skilled construction labor.
- Part III looked at how costs behave in relationship to what caused them to be incurred, and how to manage those costs in a way that diminishes the conflict that exacerbates the shortage of skilled construction labor.Part IV looked--through the eyes, and in the words, of six industry experts – at how the process of planning, designing, fabricating, and assembling components at a location other than their final assembly-installation point partially answers the shortage of skilled construction labor.
- Part IV looked--through the eyes, and in the words, of six industry experts – at how the process of planning, designing, fabricating, and assembling components at a location other than their final assembly-installation point partially answers the shortage of skilled construction labor.
- Part V was skipped, because Jennifer Castenson's builderonline.com article about Building Information Modeling (BIM) said everything that needed to be said.
- Part VI looked at why Business Process Improvement is central to how builders create more value – benefit in excess of cost – for their stakeholders, first among which are their buyers.
- Part VII looked at Epic Partnering™, the program and process of creating and building strong trade partnerships.
- This installment (Part VIII) looked at the ability of Critical Chain Project Management to reduce cycle time, ensure on-time completions, and make schedules more manageable and dependable.
Next: Part IX: Vertical Integration: Reducing the Scope of the Home Building Strip-Mining Operation
