As a project manager, your schedule and budget never look better than at the start of the project; but from day one, the only thing you can count on is change, particularly driven by owners, architects and trade coordination. Of course, where there is change, there is risk. A contractor’s ability to effectively manage change is key to their ability to profitably deliver superior project outcomes.
There are a number of market trends in our industry that are combining to make it both more difficult and more important to effectively manage change and risk.
First is the staffing pressure driven by the continuing labor shortage. According to a recent study by the Associated General Contractors of America, the construction industry has lost over 600,000 people since the last recession that never returned. 79% of construction companies want to hire more employees, but the industry is only estimated to grow the workforce by .5%. The combination of understaffing and lack of experienced workers creates a critical need for better cost controls. In addition, increased complexity, competition and higher owner expectations have combined to increase margin pressures on already low-margin businesses. Plus, documentation and auditing requirements have exploded. Finally, subcontractors – many of whom are beginning to deploy new technologies – are becoming savvier and better prepared to protect their interests.
If today’s contractors are to deal with these challenges, technology will need to play a major role. Unfortunately, many contractors today rely on traditional SaaS point solutions that assist with RFIs, submittals and field observations, but the software remains disconnected from the change management process. As a result, contractors lack the visibility, flexibility and efficiency they need to effectively mitigate project risks.
A new integrated, collaborative approach to construction project management technology has the potential to dramatically reshape the way that our industry thinks about and manages change. While an exhaustive analysis of this approach would fill several pages, below are three broken down core concepts of collaborative change management for review.
INTEGRATION WITH DOCUMENT MANAGEMENT
During the construction process, project managers need real-time visibility to the potential impact of change. The earlier you understand the impact of a change, the more options you have to mitigate the risk. When any construction document gets created or modified, you need to immediately understand the risk to schedule and budget. Similarly, on the back end of the change management process, documentation and audit trails to justify change can be the key to getting paid in a timely fashion.
FLEXIBLE CHANGE MANAGEMENT WORKFLOW
The processes and workflows you have developed to manage change are part of your competitive advantage. How you manage the transition from a document such as an RFI, to a potential issue through the RFQ process, to a change request and finally to a change order, can have an enormous impact on margin. Traditional technologies force you to conform your processes to that which is defined in the software. To truly be agile in today’s environment, you need the ability for the software to conform to your current best practices and have the flexibility to continuously evolve in response to customer demand and changing market conditions. In addition, change management is inherently a collaborative process. Your technology should give you the ability to effectively and efficiently manage down to your subs, and up to the owner, sharing data where appropriate and eliminating the inefficiency of any duplicate data entry.
INTEGRATION WITH COST MANAGEMENT
The final core concept of collaborative change management is the need for integration of change management to cost management and company financials. The difference between good and poor change management can be the difference between being in business or not. As changes are identified and resolved, you need to provide a complete view of your project finances to everyone in your organization. Your project team can benefit from financial data in change management, and the finance team needs real-time visibility into the financial impact of project activity to effectively run the business.
It is well understood how critical effective change management is in the construction industry, and market trends are creating even more challenges for project managers. Given that we can assume the pace of change will only continue to accelerate, it’s important for contractors to effectively leverage technology to help manage the complexity of change. Emerging technologies designed to provide integrated collaborative change management provide a powerful opportunity for contractors to create competitive advantage through more effective change management. By integrating change management with both document and cost management, and enabling flexible, collaborative workflows in the change management process, these technologies are enabling contractors to deliver superior project outcomes at higher margin.
about the author
Christine Corelli is a conference speaker, workshop facilitator, and business columnist. She has worked with an abundance of construction contractor companies and been a featured speaker at industry associations. To contact her for an upcoming meeting, conference, or special event, call 847.477.7376. For more, visit www.christinespeaks.com.
Modern Contractor Solutions, October 2019
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