More than ever we need a set of guiding management principles for capital project execution. Here’s why.
It’s true that we developed T-CON™, our own cloud-based project development platform, launched it just over a year ago, and that industry leaders moved quickly to investigate and pilot our groundbreaking, purpose-built capital project management platform. But deep down, we’re not just about software, cloud computing or big data. We’re management innovators, plain and simple.
T-CON™ is a tool. Like all human tools, it has both a function and a purpose. A hammer drives nails, but its purpose is to help people build homes. An engine combusts fuel, but its purpose is to help people move. T-CON™ facilitates collaboration and harnesses data, but its purpose is to help managers innovate.
We’re constantly thinking about current capital project management systems: what’s wrong with them, how to fix them, and what we need our tool to do to get the job done. Then, we refine the tool. We do this because we believe that management innovation is hands-down the most accessible, powerful and sustainable way to bolster your company’s competitive advantage.
Why? Ask yourself: Where can an EPC company secure a competitive advantage? Hire better engineers and project professionals, and you’ll get an advantage. Buy less expensive equipment and materials, hire cheaper craft labor, or use an Engineering Value Center overseas, and you’ll get a competitive advantage. These are all excellent ways to achieve a competitive advantage, but they’re external sources of advantage, and they can shift at a moment’s notice.
The only enduring competitive advantage that a company can secure for itself is the competitive advantage that comes with improved management proficiencies. Management innovation is owned, and therefore reliable and sustainable.
That’s why it’s worth the investment.
Consider the competitive advantage that Toyota secured by developing and implementing The Toyota Way starting in the late 1940s. General Electric applied a sector-specific management approach to its research and development, and still wins more patents than any other company in the country. The Linux operating system, Wikipedia — they’ve resolved complex problems with unique information management approaches. It has become increasingly difficult to catch up with them.
Today, of course, many organizations have adopted Lean tactics and learned from the success of GE and others. However, the question we should be asking ourselves is not: “How can we apply these learnings to capital projects,” but rather: “What management innovation can uniquely transform capital projects?”
Advanced Work Packaging is one step in the right direction, and I’ve advocated relentlessly for industry-wide adoption, both here in Velocity and elsewhere. But we’re not done yet. AWP is still a nascent approach to capital project management, with countless opportunities for improvement. A key component of management innovation is the ability to see problems and link them to management.
The trouble is that, until now, the industry has looked at AWP primarily as a collection of practices. It’s time we elevated the discussion to one of principles. We’ve got a solid list of AWP practices, but the principles that drive the theory have yet to be fleshed out in a meaningful way. This is our challenge, as we strive to innovate in capital project management: A set of rock-solid principles is the only way for AWP itself to become a self-sharpening tool for innovation.
I’ve got three working principles I think we can start with, and I’m keen to hear what other industry professionals have to add. Here they are:
1| Construction-Driven Project Development
Fundamentally, capital projects are construction projects. Every stakeholder in the project ecosystem needs to understand that the most important “client” is the construction team: the construction manager, the supervisors, and the labor. Construction-driven thinking like this results in construction-driven planning, engineering, and procurement, and ultimately drives sustainable, successful management systems for capital projects. The Advanced Work Packaging methodology is an example of a construction-driven methodology. All decisions — from proposal to turnover — are viewed through the lens of construction-driven development. This is the only well-established and broadly applied principle that we currently have for AWP-driven projects.
2 | Self-Organizing Project Execution
A successful management system for capital projects should be self-organizing. We have experienced that when AWP has been properly applied, the team becomes self-organizing. If the team is not self-organizing around AWP, the implementation is faulty and should be reviewed. Everybody on the project team must be empowered to execute independently or collaboratively in the best interests of the project.
Take, for example, the design and execution of procurement work packages in a well-functioning, self-organizing AWP project team. First, the team undertakes a collaborative effort to define construction work areas, which then form the basis of the procurement work packages set out by the procurement team. Once that initial work is done, the procurement work packages are maintained and updated by the expediting and procurement team members — independently of the rest of the work package formation.
3 | Self-Correcting Along The Path Of Construction
In practice, AWP will look slightly different at every company. Organizational culture and convention mean that each person will have different interpretations of their own role in AWP, as well as their manager’s role and their department’s role, too. The value of the AWP system is that it is infinitely customizable, and the act of customizing is an act of management innovation. As the project moves through the path of construction, this makes the process functionally self-correcting.
There are more principles to add to this list; these are just the ones that I’ve identified myself. What principles do you apply in executing AWP at your company? Please share them in the comments, and we’ll publish an update in the coming months, as principles evolve.