By Donna Campbell
I had the opportunity to chat with Adeaca’s vice president of market innovation and project business evangelist, Matt Mong, about productivity challenges in the construction industry, a new category of software solutions driving the future of construction, and why focusing on the business side of construction projects is key. The following is an excerpt of our Q&A.
MCS: Traditional business industries such as retail and manufacturing have seen an increase in productivity. Why has the construction industry remained stagnant or even declined in productivity over the last few decades?
MONG: There’s a number of reasons starting from poor project business management to the lack of technological innovation. But the one fundamental problem that drives this stagnation is failing to recognize project-based industries, such as construction, on the same macro-industry level as retail or manufacturing business.
Failing to recognize your construction company as a project business first and foremost makes it difficult to organize and support your business processes in a way that sets you up for success. For the most part, the business processes are set up in a haphazard and disjointed way. And to top it all off, the problem is made worst by the lack of business systems support for these companies.
MCS: Can you elaborate on how identifying as a project business will help construction companies prioritize and optimize their business activities and investments?
MONG: Project businesses have many traditional industry labels, but they have the same fundamental business practice, they deliver projects for their customers. By identifying as a project business, construction companies will be able to understand how they should structure their business and what systems and solutions are possible.
And the only way to improve the way traditional industries have is for project businesses to govern their business activities the same way traditional industries have. Now I’m not talking about corporate governance. What I mean is these companies need to focus on the business side of projects to optimize business performance.
MCS: After identifying as a project business, how should construction companies think differently about their business systems?
MONG: Well, a business system is any technological system that supports a business’ operations from end-to-end. Most of the time, that’s an ERP solution. The problem is that traditional ERP solutions were designed for industries with high-volume, repeatable processes.
If you think about it, ERPs are effective in business industries where it’s much easier to apply technology to standardized processes and data to automate and accelerate production.
But it’s not so easy for project businesses that have unique products and difficult-to-standardize business processes. It’s clear that traditional ERP components do not support the needs of project businesses by providing the level of automation and visibility they need to be successful.
So, what ends up happening? Project businesses employ 10 to 15 different applications to manage their business processes. The fact is most project businesses manage the majority of their information and business processes in spreadsheets. Sound familiar?
MCS: Yes, it does. And because of that, it makes sense that productivity in the construction industry has seriously lagged behind. What challenges arise as a result of operating in this disjointed fashion?
MONG: There are three major problems. The first is the lack of visibility into the current status of their projects, and their business as a whole. They may be receiving weekly status updates and monthly overviews, but the information is already outdated because of the time it takes to consolidate the data and generate these reports. That means many issues and risks often go unnoticed or they are discovered after they’ve grown into major problems that put the project at risk.
The second problem is the lack of control. Operating in a disparate application landscape means there’s a lack of control over the operations of the company. When work and information flows are not connected and integrated, trying to standardize or take control is almost impossible. What you get is project and company performance hinging on the performance of individuals.
The third problem is poor project performance. When you have lack of visibility and lack of control, ultimately it leads to poor project outcomes and hence, poor business performance.
MCS: So, what’s the solution? How can construction companies structure their business in a way that gives them the visibility and control they need to deliver projects on time and on budget?
MONG: Well now that we’ve established the primary problem of project business is this non-integrated mode of operation, the solution is to integrate. That’s what Project Business Automation does.
Project Business Automation, or PBA, is a new category of solutions designed to help construction and other project-based businesses to integrate all core project business processes into one, end-to-end system.
The point of PBA is to replace the wide range of disparate applications that project businesses normally use and integrate those functionalities, including ERP, project management, enterprise PPM, professional services automation, and more, into one solution.
By integrating all these functions into one system, construction companies can now get real-time data streams and KPIs that help accelerate and automate processes.
MCS: Our next Q&A will take a deep dive into Project Business Automation. For now, what advice would you give construction companies looking to be more productive?
MONG: These companies need to demand more from the business solutions they adopt. Doing more of the same isn’t working. Sticking to the status quo only means technology providers will continue to sell glorified accounting software, which means these companies will continue to manage their business processes through Excel spreadsheets. Now is the time to make a change and seek a Project Business Automation solution for your company.
Look for part two of my conversation with Matt in the next issue of MCS. In the meantime, take a closer look at the business side of your construction projects.
For More Information
Matt Mong is a project business evangelist, leading thought leadership efforts for Adeaca. Matt has worked to define and expose the fundamental issues plaguing project-based companies. He coined the product category term Project Business Automation, now adopted by Forrester, as a new approach to digital transformation for project-driven businesses. For more, visit www.adeaca.com.
Modern Contractor Solutions, June 2021
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