Question. How many people wake up in the morning and say, I can t wait to hire an electrical contractor today?

Transcription

1 By Ted Garrison

2 Question 2 How many people wake up in the morning and say, I can t wait to hire an electrical contractor today?

3 Where Are We? AIA and others report: the construction industry is the only significant industry that hasn t increased productivity in the last 60 years Difficulty attracting enough qualified workers and managers Peter Drucker: The first sign of decline of an industry is loss of appeal to qualified, able, and ambitious people Profit margins have declined for years Industry ROI in %; average of U.S. industries 16.9% - in the middle of a construction boom Highest turnover except for restaurant industry 40% of U.S. contractors didn t make a profit in

4 The Most Successful Are Realistic 4 If a top management team cannot clearly articulate the five or six fundamental trends that most threaten its firm s continued success, it is not in control of the firm s destiny. Gary Hamel & C.K. Prahalad Competing for the Future

5 Too Many Electrical Contractors Are Insane 5 Albert Einstein defines insanity as: Doing the same thing over and over and expecting to get different results. In fact, the best advice is to get out of the electrical contracting business!

6 Daniel Pink 6 For business, it s no longer enough to create a product that s reasonably priced and adequately functional.

7 A New Perspective Is Needed 7

8 New Paradigm 8 Paradigm Shift: A fundamental transformation of thought arising from revolutionary new information on a given subject, often refuting previously held truths. Need to rethink what everyone in the industry knows is true but may not be How many of you want a satisfied customer? 86% of satisfied customers will go to your competitor on the next project Need to convert them to clients What s the definition of a client? Someone under the protection of Need to rethink your customer s needs and solutions

9 Drastic Change Is Needed Reduce total project cost by 30% Reduce design/ construction time by 50% Reduce operating expense by 50% How many think those figures are crazy? It can be done: (Toll Brothers, UK schools, NREL) 9

10 Requires a Superior Strategy Sun Tzu The Art of War Those skilled in war subdue the enemy without fighting. Their aim must be to take all under heaven intact through strategic superiority. Must out-think the competition strategically, instead of trying to outmuscle them operationally. So how do you out-think your competition?

11 Construction 3.0 Strategies Industry Practices Blue Ocean Contracting Integrated Project Delivery Lean Construction Best Value Procurement 10 Business Principles Effective leadership Strategic thinking Value-based contruction Increased innovation Increased collaboration Systems based Effective risk management Lean operations Better use of technology Measurement

12 What Is Blue Ocean Contracting? 12 It s about redefining your business to minimize competition by getting away from being a commodity What are you selling? Who are your clients? How do you differentiate your services from your competitors? It s about out-thinking the competition, instead trying to out-muscle the competition (price wars) It s about creating new demand, instead of fighting over existing demand It s about maximizing opportunity & minimizing risk

13 What Is Blue Ocean Contracting? 13 Key Factors Innovation avoid the trap that creativity is inherited Tom Peters: Tomorrow s victories will go to the masters of innovation! Period! Value-based construction compete on value instead of price Strategic thinking look at the big picture Get creative because it works! 14% of business launches are in the blue ocean businesses 38% of the revenue comes from the blue ocean businesses 61% of the profits come from the blue ocean businesses

14 Integrated Project Delivery 14 Integrated project delivery (IPD) is a powerful concept because it unleashes innovation and collaboration Increase value for client Mechanical contractor increased profit margin by 4% by better defining client value Reduce costs through greater efficiency & less waste Most waste is between the tasks need collaboration to eliminate IPD concepts can be used in both a design-build & design-bid-build environment to improve performance For IPD to maximize it s value it must embrace Lean & best- value concepts & include the entire construction process

15 Integrated Project Delivery 15 Contractors can deliver the greatest value before construction starts IPD maximizes that opportunity Key Factors Effective leadership the ability to perceive the existing conditions and then align the resources (the opposite of command and control) Collaboration Encouraging innovation

16 Lean Construction It s about eliminating waste Most waste occurs between the tasks not in the task itself (need greater collaboration & reliability) Lean focuses on the entire supply chain one of the key ingredients of IPD Pre-planning is critical One electrical contractor client reduced its labor costs by 30% IPD allows everyone pre-plan together 18

17 Performance Information Procurement System (PIPS) Jim Collins: Get the right people on the bus in the right seats PIPS understands that performance dictates cost not the bid price Reliability more important than bid price Performance based selection results in better control over price, schedule and performance Critical factors Past performance Leadership Risk Analysis Price 17

18 Initial conditions Avoid Making Decisions Event - Project Final conditions Time The more info we have before the event, the easier it is to predict the final outcome The less info we have before the event, the harder it is to predict the final outcome However, the lack of info will never change the final outcome Probability occurs when people don t understand Must think proactively not reactively 18

19 What Do You Think? 19

20 Final Thoughts It was not my role today to tell you what to do my role was to challenge the way you think Throw away the box! Think big not small! Don t be afraid to ask for input from all your stakeholders Challenge each other! Challenge conventional wisdom! You are no longer in the electrical contracting business! Today s discussion was designed to make you uncomfortable about the status quo 20

21 Ayn Rand 21 You can avoid reality, but you cannot avoid the consequences of avoiding reality.