Andrew Spitz and I recently attended an open day, which was meant to be a kind of show and tell. It was an opportunity for us to showcase what we can do as interaction designers. We had a blast, I got to show off with a microphone in hand and Andrew got a chance to wax lyrically about the technical aspects of what we do.
We showed the people present the newest piece of work which was the BMW announcement of their sponsorship of the Sprinboks - complete with virtual stadium experience with the sound of walking down the tunnel and flash bulbs going off when you exit the tunnel. One of the ladies present commented that we should make our Tag Line: 'We're in the business of making goosebumps'. At the time I acted nonchalant but its super (well I think so anyway). If I think about the times I got goosebumps they were for really spectacular events and they always stand out for me as memorable experiences. My list is fairly simple: everytime I sing the national anthem, hearing Chaka Khan sing live, watching the opening and closing ceremony of the 2010 FIFA WC are some examples of what makes those hairs stand up. Its because of the emotional connection that I make with these events that I think Goosebumps are a good measurement tool.
Creative teams in marketing and advertising firms should invest in a goosebumpometer (not a really a word hey but it works). I understand that these guys may have become numb over time but surely above all else their task is to create a memorable interaction with a product and what better way than to create goosebumps. There are other methods to achieve the same effect I suppose but I'm not convinced the effect is as lasting.
That was meant to be the end of my post with some pithy statement or quote but then I thought, do creative companies have a monopoly goosebump manufacture. And my answer anyway is NO, goosebumps are not only related to a product but can be linked to an experience as well. Part of the thing about creating goosebumps is that its an appreciation of beauty and as we have grown to know the beholder has a part to play in that. A maths solution or creative accounting solution could be beautiful to someone who was that way inclined. It takes all sorts or people and these people create all sorts of answers, which will be beautiful to someone.
So whether you're a sales person, a teacher, an ad man, a photographer, a singer or even an accountant...go out there and give goosebumps. Aim to have your own single original thought that could inspire you and others to greatness...and if I have my wish create GOOSEBUMPS.
Oh yes and thanks to Jamie Ingram who made the original Goosebump statement.
Friday, June 24, 2011
Thursday, June 23, 2011
Peer review and sounding boards? - To Eloise Pieterse
'I like the fact that all around, opinions are so different and yet can also be so similar'. This is something that Eloise said to me recently and it got me thinking. The first thing we need to do is to separate the world in Academia and the corporate world. My reason for the separation is that is the world of Academics peer review is process that occurs very often, your peers rate the quality of the work that you do and publish. Their input ranges from full praise to completely rubbishing the work that you've published. In the corporate world however, review by your peers is not really accepted or used. In fact sharing of ideas does not occur freely, yes some teams may claim to have 'war room' sessions where there is a free flow of and ideas and innovation but it is masked by something else.
Let me explain. In a corporate environment real sharing or ideas and knowledge only really happens very high up in the organisation. Its usually between very senior management or executives and that's because they don't (usually) feel threatened by one another. The sharing of ideas is done freely because there is an environment of trust and an unwritten agreement that what we do is for the benefit of the company. No (ok well very little) one up man ship exists. This allows colleagues at these levels to use one another as sounding boards and when it comes to ideas and innovation the more minds the merrier.
In contrast to this the environment for staff levels below this is very cutthroat. Colleagues rarely if ever share ideas for fear of 'idea theft'. They shy away from using one another as sounding boards for fear that a colleague will present the idea as his own and gain recognition from it. This stifles creativity and definitely is bad for business. The question is how to get around this. The work space is inherently competitive and gaining recognition for what you do is very important for gaining credibility and creating that upward movement on the corporate ladder.
A concept I've been toying with is called the 'Ideas Registry'. How it works is that when a staff member has and idea they can log onto a system and have the idea registered. This process then creates some 'ownership' of the intellectual property. Once the idea is assesed it either gets full management support and a task team is established to explore the idea further or it can get partial support and this will mean a basic investigation will be done (a single human resource). Companies have versions of this running through their suggestion box process and many have fully fledged departments that investigate innovative ideas so they're on the right track to creating a truly collaborative environment. Because in my very humble opinion that's a huge gap at the moment in most sectors, truly original though that through collaboration with your peers becomes a truly wonderful business concept or process. Some serious thought needs to be put into developing models that are fair, transparent and allow these ideas to be properly explored.
In closing, I guess I'm saying, be that change and start to openly discuss ideas with you peers and use them as sounding boards. A stolen idea that makes it to implementation is much better than one that never got to see the light of day because you were scared. It will be a bitter pill to swallow but you'll know that truth about where the seed for the idea first began growing.
The blog is written for Eloise Pieterse, who believes that reading and finding out is an important characteristic to have and that curiosity is equally important...but that is for another blog. Later.
Let me explain. In a corporate environment real sharing or ideas and knowledge only really happens very high up in the organisation. Its usually between very senior management or executives and that's because they don't (usually) feel threatened by one another. The sharing of ideas is done freely because there is an environment of trust and an unwritten agreement that what we do is for the benefit of the company. No (ok well very little) one up man ship exists. This allows colleagues at these levels to use one another as sounding boards and when it comes to ideas and innovation the more minds the merrier.
In contrast to this the environment for staff levels below this is very cutthroat. Colleagues rarely if ever share ideas for fear of 'idea theft'. They shy away from using one another as sounding boards for fear that a colleague will present the idea as his own and gain recognition from it. This stifles creativity and definitely is bad for business. The question is how to get around this. The work space is inherently competitive and gaining recognition for what you do is very important for gaining credibility and creating that upward movement on the corporate ladder.
A concept I've been toying with is called the 'Ideas Registry'. How it works is that when a staff member has and idea they can log onto a system and have the idea registered. This process then creates some 'ownership' of the intellectual property. Once the idea is assesed it either gets full management support and a task team is established to explore the idea further or it can get partial support and this will mean a basic investigation will be done (a single human resource). Companies have versions of this running through their suggestion box process and many have fully fledged departments that investigate innovative ideas so they're on the right track to creating a truly collaborative environment. Because in my very humble opinion that's a huge gap at the moment in most sectors, truly original though that through collaboration with your peers becomes a truly wonderful business concept or process. Some serious thought needs to be put into developing models that are fair, transparent and allow these ideas to be properly explored.
In closing, I guess I'm saying, be that change and start to openly discuss ideas with you peers and use them as sounding boards. A stolen idea that makes it to implementation is much better than one that never got to see the light of day because you were scared. It will be a bitter pill to swallow but you'll know that truth about where the seed for the idea first began growing.
The blog is written for Eloise Pieterse, who believes that reading and finding out is an important characteristic to have and that curiosity is equally important...but that is for another blog. Later.
Friday, May 27, 2011
Barca - Why More Companies should do what they do?
Many people will be glued to their TV screens this Saturday to watch the final of the champions league between Barcelona and Manchester United. Both teams are deserving of reaching the final but it's Barcelona that I want to focus on. Weirdly enough, it's from a business management and consulting point of view. Below are some of the reasons why not only football clubs should be interested in what Barcelona are doing.
The club has a philosophy on how they play football. All staff at the club understand what it is and how it works. This philosophy singly guides the club in all the decisions that it makes and covers all aspects of both their professional and development set-ups. It affects the players they buy, the players they welcome into their Academy, the coaches they use in the academy. Everyone, thinks, breathes and then acts this philosophy out. If any actions of elements of the set-up do not further the cause of the philosophy then they/it are removed. Nothing is bigger than the philosophy and by implication the club. As valuable an asset as Samuel Eto was, when he went against the grain of the philosophy he was asked to leave. Companies need to aspire to developing this kind of philosophy or culture.
The philosophy comes first, the style second and everything else is not really important. I recently found out that Barca junior teams don't actually do very well in the leagues that they play in. At first glance this would appear weird but on further inspection it should be obvious. The coaches and the teams are really interested in winning the leagues they play in. They are more interested in honing their skills and living the philosophy so that they can fit seamlessly into the first team and play on the biggest stage in both a world and Spanish football, the Camp Nu. Think about the seamless way that players fit into the first team, if this is not a perfect example of talent management and succession planning then I don't know what is.
Their current team at any time features about 11 players from the Academy system, so there is very little need to make big purchases on the transfer scene. If they do, then they go out and buy its the corporate version of head hunting, they see a talent that they know they can't produce or don't have internally and then buy. Even then, the person being bough will fit into the philosophy easily. Zlatan is a rare example of when the system failed.
Accenture employ and up or out policy, where if people are not showing the correct rate of development then the are managed out of the company. Barca do the same thing, look Giovanni Do Santos, his development was slower than Bojan, Messi and even Pedro (a little bit of a late bloomer). Rijkaard promoted him to the first team, maybe a bit prematurely but he was given an opportunity. He's ultimate demise was due to slow development and behavior not in line with the philosophy (he made unrealistic salary demands). Barca also use this very well, because players start young its easier for them to see whether or not they will 'make the grade' so to speak.
The topic holds so much more that I think I will definitely return for Part Two but in closing I want to point out that since there is only one philosophy, set of values and style of play there is never any conflict about how a team should be playing and hardly ever inteference with team selections and decision the coach makes. You can leave people to manage themselves and deliver because they live the philosophy.
Good luck to both teams...
The club has a philosophy on how they play football. All staff at the club understand what it is and how it works. This philosophy singly guides the club in all the decisions that it makes and covers all aspects of both their professional and development set-ups. It affects the players they buy, the players they welcome into their Academy, the coaches they use in the academy. Everyone, thinks, breathes and then acts this philosophy out. If any actions of elements of the set-up do not further the cause of the philosophy then they/it are removed. Nothing is bigger than the philosophy and by implication the club. As valuable an asset as Samuel Eto was, when he went against the grain of the philosophy he was asked to leave. Companies need to aspire to developing this kind of philosophy or culture.
The philosophy comes first, the style second and everything else is not really important. I recently found out that Barca junior teams don't actually do very well in the leagues that they play in. At first glance this would appear weird but on further inspection it should be obvious. The coaches and the teams are really interested in winning the leagues they play in. They are more interested in honing their skills and living the philosophy so that they can fit seamlessly into the first team and play on the biggest stage in both a world and Spanish football, the Camp Nu. Think about the seamless way that players fit into the first team, if this is not a perfect example of talent management and succession planning then I don't know what is.
Their current team at any time features about 11 players from the Academy system, so there is very little need to make big purchases on the transfer scene. If they do, then they go out and buy its the corporate version of head hunting, they see a talent that they know they can't produce or don't have internally and then buy. Even then, the person being bough will fit into the philosophy easily. Zlatan is a rare example of when the system failed.
Accenture employ and up or out policy, where if people are not showing the correct rate of development then the are managed out of the company. Barca do the same thing, look Giovanni Do Santos, his development was slower than Bojan, Messi and even Pedro (a little bit of a late bloomer). Rijkaard promoted him to the first team, maybe a bit prematurely but he was given an opportunity. He's ultimate demise was due to slow development and behavior not in line with the philosophy (he made unrealistic salary demands). Barca also use this very well, because players start young its easier for them to see whether or not they will 'make the grade' so to speak.
The topic holds so much more that I think I will definitely return for Part Two but in closing I want to point out that since there is only one philosophy, set of values and style of play there is never any conflict about how a team should be playing and hardly ever inteference with team selections and decision the coach makes. You can leave people to manage themselves and deliver because they live the philosophy.
Good luck to both teams...
Wednesday, May 11, 2011
When to get Divorced or Changing Tack
I'm reading an old but very interesting book by a business management Guru and the most interesting thing (and the book is full of pearls) he says is that he is not afraid to contradict himself. At first it sounded really strange but the explanation is beautiful in its simplicity. All he is saying is that don't be afraid to say that, with new knowledge at hand and the benefit of hindsight you now disagree with yourself. There is absolutely no shame in that. You don't really find this is academia as the tendency there is to defend your standpoint to the death, camps form and friendships disintegrate. The shortage of grant funding sometimes drives this but whatever the reason its unhealthy.
Thoughts leaders need to be just that, thinking and speaking and postulating on the fringes and boundaries. If you're operating there then, there are bound to be instances when you change you mind about something, be it a principle, model or equation. The most important thing is to say:'Yes that's the way that I was thinking but I have now changed tack and this makes more sense for me now'
That's about embracing the knowledge that's out there and not blindly defending theory or modelling that no longer makes sense to you. So don't be afraid to get divorced from an idea and change tack. The aim, or point of your involvement is to provide a solution that best suits the situation and you can't do that if you're blindly faithful.
I believe they were a 60's rock band, Blind faith, they were very successful but that is for another blog..
Thoughts leaders need to be just that, thinking and speaking and postulating on the fringes and boundaries. If you're operating there then, there are bound to be instances when you change you mind about something, be it a principle, model or equation. The most important thing is to say:'Yes that's the way that I was thinking but I have now changed tack and this makes more sense for me now'
That's about embracing the knowledge that's out there and not blindly defending theory or modelling that no longer makes sense to you. So don't be afraid to get divorced from an idea and change tack. The aim, or point of your involvement is to provide a solution that best suits the situation and you can't do that if you're blindly faithful.
I believe they were a 60's rock band, Blind faith, they were very successful but that is for another blog..
Friday, May 6, 2011
Multi-tasking: Breaking it down
Ok so I'm going to try and avoid the debate about whether or not men can do it and focus rather on how it can be done and why its easier than you think. Follow me on this one, everything that you do is a process which is made up of steps and each step in the process takes a designated time to complete. The problem that non-multi-taskers (hey is that a word?) have is that they assume that while a step is being completed that they must remain 'faithful' to that process and make sure that it happens on time and the way that it should. Let me explain. Using the example from a previous blog of making tea, when you put the kettle on, you can stand there and wait for it to boil or you can fetch the cup, put the tea bag in and maybe grab the milk. Hey presto you are now multi-tasking. Granted it is within a single process but you have now moved from only boiling the water to completing other meaningful tasks related to the process of making coffee.
The trick now is how to then extend this to cover more than one process. So, you could, if you really wanted to, do the following:
- Switch the kettle on
- Put a tea bag in cup
- Go and auto tune the rugby, and
- Fetch a jersey to put on
An individual who has trained themselves properly would be able return a phone call as part of this list. Congratulations your multi-tasking now covers more than one process.
You will however notice that there are some key requirement for any of this to work. One of the requirements is that some of the tasks you complete must be self managing (i.e. they take care of themselves, when the kettle has finished boiling it switches itself off), and one or more of the tasks must be a non-thinking exercise. In order for something to be a non-thinking exercise it needs to be a strong part of your routine, routine removes all elements of concentration, it allows you and the body to complete an exercise without really thinking. Things like kicking a ball, swinging a club, putting the washing machine on. All of these, if they form a strong part of your routine will become automatic and allow you to focus on other things that you can do at the same time, where you would need to concentrate more. The last and probably most difficult type of multi-tasking and this if for black-belts only, is the use of two senses. An example of this is to talk on the phone and auto-tune the rugby. This is because it requires you to process to different types of information, visual and auditory. The key to this is to remain focused, or keep your eye on the ball so to speak. While auto-tuning don't get distracted by anything else that you see on the schedule, just go where you want to and auto-tune the show. If yourself to be distracted you will transfer some of the attention or concentration from the phone call to the tuning and then you're lost.
Ok so I said I would avoid the gender discussion but I lied. The majority of women have very strict schedules that they follow which you could set you clock by (except choosing what to wear in the morning that's a life mystery), they have to because they have so many things to do. But they're unconsciously training themselves to multi-task. While your wife is putting stuff in the washing machine or dish washer she is making a call and deciding on what to have for lunch while she waits for the person to pick up. She is using her automation levels as well as the time it takes to complete steps to get things done and use her time optimally.
I managed to type this and drink a cup of coffee at the same time, does that count?
The trick now is how to then extend this to cover more than one process. So, you could, if you really wanted to, do the following:
- Switch the kettle on
- Put a tea bag in cup
- Go and auto tune the rugby, and
- Fetch a jersey to put on
An individual who has trained themselves properly would be able return a phone call as part of this list. Congratulations your multi-tasking now covers more than one process.
You will however notice that there are some key requirement for any of this to work. One of the requirements is that some of the tasks you complete must be self managing (i.e. they take care of themselves, when the kettle has finished boiling it switches itself off), and one or more of the tasks must be a non-thinking exercise. In order for something to be a non-thinking exercise it needs to be a strong part of your routine, routine removes all elements of concentration, it allows you and the body to complete an exercise without really thinking. Things like kicking a ball, swinging a club, putting the washing machine on. All of these, if they form a strong part of your routine will become automatic and allow you to focus on other things that you can do at the same time, where you would need to concentrate more. The last and probably most difficult type of multi-tasking and this if for black-belts only, is the use of two senses. An example of this is to talk on the phone and auto-tune the rugby. This is because it requires you to process to different types of information, visual and auditory. The key to this is to remain focused, or keep your eye on the ball so to speak. While auto-tuning don't get distracted by anything else that you see on the schedule, just go where you want to and auto-tune the show. If yourself to be distracted you will transfer some of the attention or concentration from the phone call to the tuning and then you're lost.
Ok so I said I would avoid the gender discussion but I lied. The majority of women have very strict schedules that they follow which you could set you clock by (except choosing what to wear in the morning that's a life mystery), they have to because they have so many things to do. But they're unconsciously training themselves to multi-task. While your wife is putting stuff in the washing machine or dish washer she is making a call and deciding on what to have for lunch while she waits for the person to pick up. She is using her automation levels as well as the time it takes to complete steps to get things done and use her time optimally.
I managed to type this and drink a cup of coffee at the same time, does that count?
Wednesday, April 20, 2011
Demystifying Knowledge - Business Process Reengineering - Cup of Tea Anyone?
I've worked on a few business process re-engineering (BPR) projects and they have the ability to be spectacularly brilliant and completely turn the business around. In my very humble opinion, they're well worth the money that is spent on them, but the question that has been bugging me is, why are they needed at all. The most common answer I've received when I posed this question was:'people don't know how to operate in a continuous improvement environment' and this bugged me even more. This is why.
People use continuous improvement principles all the time in their day-to-day lives. Take the very basic process of making a cup of tea. Think about the steps you follow. What do you do? Do you put the kettle on and then wait for it to boil before you put the tea bag in the cup? Or do you put the tea bag in the cup with the sugar while you wait for the water to boil? It does not matter what route you follow but there is a very high probability that the process that you follow has been tweaked by you to be quicker and more efficient. Congratulations, you have just re-engineered your process for making tea and until you have got it down to an art form you will continue to improve it.
Part of the reason that BPR projects work so spectacularly is because they're based on leaps of improvement. A consulting firm comes in and changes the process from what it is (as-is) to the future state (to-be) in a short period of time and yield spectacular results. The reason for this is that they're addressing large periods where the business was stagnant and did not improve their processes at all so it stands to reason that the improvements will be marked. None of this would be needed however if staff internal to the company were constantly looking to improve how they do things. If they constantly looked to improve processes then there would be incremental improvements in the business. Adding the increments up would give yo similar if not the same results to those realised by the consultants.
My BPR skills come from a place that I'm not very proud of but hey they works. By nature I'm very lazy and I'm constantly thinking...surely there is an easier way to do this. This is another reason why I can't understand why more employees are not employing BPR principles, why are they not looking for 'short cuts' or an easier way to do things? Is it because there managers are not willing to listen or is it because they're not using a skill that they so readily use in other aspects of their lives?
So part of what I'm saying, is comon folks be lazier and look for those short cuts (don't break the law though) and who knows you may save your company a few bob and put me out of work (god forbid).
People use continuous improvement principles all the time in their day-to-day lives. Take the very basic process of making a cup of tea. Think about the steps you follow. What do you do? Do you put the kettle on and then wait for it to boil before you put the tea bag in the cup? Or do you put the tea bag in the cup with the sugar while you wait for the water to boil? It does not matter what route you follow but there is a very high probability that the process that you follow has been tweaked by you to be quicker and more efficient. Congratulations, you have just re-engineered your process for making tea and until you have got it down to an art form you will continue to improve it.
Part of the reason that BPR projects work so spectacularly is because they're based on leaps of improvement. A consulting firm comes in and changes the process from what it is (as-is) to the future state (to-be) in a short period of time and yield spectacular results. The reason for this is that they're addressing large periods where the business was stagnant and did not improve their processes at all so it stands to reason that the improvements will be marked. None of this would be needed however if staff internal to the company were constantly looking to improve how they do things. If they constantly looked to improve processes then there would be incremental improvements in the business. Adding the increments up would give yo similar if not the same results to those realised by the consultants.
My BPR skills come from a place that I'm not very proud of but hey they works. By nature I'm very lazy and I'm constantly thinking...surely there is an easier way to do this. This is another reason why I can't understand why more employees are not employing BPR principles, why are they not looking for 'short cuts' or an easier way to do things? Is it because there managers are not willing to listen or is it because they're not using a skill that they so readily use in other aspects of their lives?
So part of what I'm saying, is comon folks be lazier and look for those short cuts (don't break the law though) and who knows you may save your company a few bob and put me out of work (god forbid).
Tuesday, April 19, 2011
Starting a Construction Business (a bit long but I think a good read)
There are many requirements for starting and running a successful business, but two of the key ingredients are that you have a good quality service offering and that you have some business management sense. That’s not to say that you need to have all of this yourself, if you don’t, you always have the option to enter into business with someone who has a wider or different skills set to yours. What is inescapable is that these two must be present in the business for it to be successful. You can’t only offer a great service/product without having some level of business management sense. If you do you’ll have a business that will run inefficiently and may even fail. The flip side of this is to have a super-efficient and effective business, but the quality of your service offering or product may not meet clients’ expectations. In either of these two scenarios, you could find yourself on a path to self-destruction.
While all of the above will seem obvious to most of you reading this article, it isn’t to the majority of people who are taking that first, brave step to becoming a building contractor. Prior to the economic meltdown, the South African construction sector held lots of promise and, as a result, many South Africans considered getting involved in the industry. Some of the parastatals and state-owned entities had large capital development programmes planned, and this, coupled with the spend planned for the 2010 World Cup ,led many people to believe that the construction industry was alive with possibilities. The problem with all of this was this situation only holds true for a very small percentage of contractors. A large majority of contractors would not benefit at all from the spend that was planned for the periods that I mentioned earlier.
The Construction Industry Development Board (CIDB) currently has approximately 100,000[1] registered contractors in all building categories, with a CIDB grading of 1 (all regions of the country). The grading allows you to competitively tender for work to the value of R200,000.00 (two hundred thousand rand) across all trades or categories. Some of the categories listed include civil engineering, electrical work, general building work, mechanical engineering, bulk excavation etc.
The term, ‘Bakkie Builder’, was a very disparaging term used in the construction industry when I first started there. It was used, by the professionals, to describe a contractor whose primary asset was a bakkie. He had very little else in terms of equipment and may also have had very limited business management skills. The one thing that he did usually have was good technical ability. So, if he was a bricklayer or plasterer, he was usually very good at it. There were other less than favourable connotations attached to the term, but I will not go into those, as they will detract from the true purpose of this article. The ‘bakkie builder’, I will have you know is still alive and kicking within the South African Construction Industry (see the CIDB statistics mentioned above), but some of the elements or characteristics of the builder have changed. One of the changes has been that the term ‘bakkie builder’ has been replaced by the more politically correct ‘emerging contractor’, but the nature of the contractor has not changed substantially. The other more significant change is that the new entry-level contractors seem to be missing critical skills that are required to run a successful construction business, while their predecessors had what it took to make a go of it
The new entrants to the market seem to lack skills, either in the capacity to execute the work required to complete the project, or in the areas of business management. The third element which may be missing, but that I will not touch on here, is entrepreneurial flare. Many of them have left careers, in other industries, to try and start a construction company. This, I feel, was the first mistake they made. Current literature[2] will suggest or recommend that if you are thinking about starting a business, you should do it in an area where you already have some of the requisite skills to make the business successful. All this having been said, if Construction Company hopefuls are to make their start-up companies a success, there is still hope. Noteworthy consideration is that some of the concerns I am raising are not only limited to contractors that have a CIDB rating of 1; their counterparts who have higher ratings of 2, 3, 4 and 5 will face similar problems. In some instances the contractor is technically sound and able to execute the project wonderfully, but his cash-flow management will be of such a poor quality that he will end up placing his business at risk. There are nuances to the construction industry that will make it slightly more difficult to enter the market and make a success of it. People entering it need to make themselves aware of what these nuances are before they enter it.
In my experience these are five of the more common mistakes that emerging or start-up contractors make:
· Not learning how to price using first principles (rate build ups)
· Cash-flow management
· Stores or materials management
· General business management
· New Business Development
Learning pricing through first principles
Most quantity surveyors and estimators will remember this part of their curriculum as a very painful experience. This is because there is huge attention to detail and lots of time is spent on understanding what actually goes into a rate build-up. There are a number of IT packages and textbooks, out there, that can make this process easier, but they’re meant to be short-cuts for people who already understand first principles. So, while on the surface they may go a small way to helping emerging and start-up contractors, they’re actually going to confuse them. It is critical that all contractors get a good understanding of how the work will be executed, as this will affect the pricing. Let me illustrate this with a small example. A bill of quantities requires a price for concrete. To take this price and simply add on a mark-up would not only be incorrect but also dangerous. While most professional QS’s will ask you to clarify a rate that seems low, if the tender is accepted with the incorrect price, you will be forced to deliver at that price. What you should also be considering when you price the concrete is:
· Will the mixer be able to ‘place’ it where it is required? If not, then you need to price for placing.
· Are the height differentials involved? If “yes” you may need a pump or front-end-loader to assist with placing the concrete.
· Are you allowing for waste, if the concrete is being placed by hand.
If you have not considered all of the above, then the price that you present in your BOQ will be too low, and you will be placing the concrete at a loss to your business. Some of what I have mentioned above shows where a business decision needs to be taken about using an external resource to price tenders. In the beginning this may be necessary, as the skill may not be present internally. However, this should only be when you’re starting out; the skill of pricing a tender needs to be developed internally. Estimators make or break tender submissions, because they ultimately decide how individual BOQ items are priced. As with the previous shortcoming, I suggest that emerging contractors engage the services of a consultant who can help them through the teething phase and assist with understanding the principles, so that they can use them later on when the consultant is not required.
Cash-flow management
This used to be the number one reason why small construction firms failed. The nature of the industry meant that they would spend money to build and they would then carry that debt till the end of the month, when they were paid by the client. The problem always arose when there was a difference between what the contractor claimed and what the QS approved. That difference would have to be covered by the contractor, for another month, at least, and if the difference was significant enough it could lead to excessively bad cash-flow management. It is for this reason that I suggest that contractors set up a projected cash-flow for the project, before the project starts. If you do this you can then track actual cash flow versus what you projected and then make the necessary adjustments. Also, unless you are allocating all staff to projects, you will have to run project cash-flows separate from your business cash-flow. Cash-flow management, especially in construction, is a critical skill. Either learn it very quickly or outsource it till you have it. Within this problem is cross-subsidizing. This is where a contractor will use money from one project to ‘finance’ shortfalls from another. This borders on the criminal! If you have to do this then it means that one of your projects is not profitable, running at a loss and messing with your liquidity.
Stores or materials management
The complexity of this task is directly proportional to the size and value of the project. Knowing when and how much to order is critical to not only the delivery of the project, but it has the potential to negatively affect your cash-flow. There are a number of variables that must be considered when doing this. A common mistake is assuming that all items can be purchased off-the-shelf and that there are no lead times. Buying materials that are not needed in a specific month ties up cash that would otherwise be used in improving your liquidity. Purchases should be timed to match when materials are required for actual build activities.
General business management
Just having a skill or service offering is no longer good enough. You need to marry that skill with good business management skills. Gone are the days when those aspects of your business will ‘just take care of themselves’. In some instances, where skills levels are the same between two companies, how you run your business could be the differentiator that gives you the edge over competitors. Your system and processes need to be in place. I know its sounds like a cliché, but its true now more than ever before. Many of the contractors only develop good business management documents because it is a tendering requirement. They have policies that they don’t follow, and organizational structures that are badly designed, and job descriptions that are vague, to say the least. They submit these as part of compliance for projects, but don’t really properly engage with them. Besides the human resource aspects of the business, owners need to focus on getting their systems up and running early and should focus energy on monitoring them regularly. Your back office, which would be site administration and support, must be running smoothly to properly support your site teams. The correct systems for ordering materials, payment of suppliers, and petty cash disbursements, are just a few examples of where contractors need to get it right. Then they also need to allocate some time and effort to staff management through what would be human resource processes. This would mean having good job descriptions in place, good performance management systems and well-designed rewards and recognition practices.
New Business Development
Or to use terminology that is better understood in the sector, tendering for work. The majority of the government tenders will state, upfront, what gradings are required in order for contractors to participate. In this way they are forcing contractors to focus on the segment of the market in which they have capability. So, for instance, only contractors with a CIDB grading of 5 will be able to tender on a specific project. The system does allow for joint ventures, which means that you can add two (or three) lower gradings to get a higher one. But I digress. What I want to speak about, in this section, is understanding what segment of the market you want to play in and then start to develop a skills set that works (and is required) in that market. I worked with a contractor once, who only did civil engineering work (mass concretes and structural steel). When they tried to operate in the general building class they came unstuck. Once you have identified which segment or area of construction you want to focus on, you then need to set up the correct processes to help you operate. Have a dedicated resource look at the possible options for sourcing tenders. Once the sources have been identified, choose a day in the week when these tenders will be discussed, by senior management, so a decision can be made on which tenders will be submitted. Resources then need to be allocated to price the tender. Some time must be set aside to check the tender for arithmetical errors and to confirm that prices being submitted are realistic.
The silver lining
And now, to the hope I spoke about earlier on. Even though contractors may find that they may not have the full basket of skills internal to the business, it may be possible to still source these skills and use them optimally, to assist with running an efficient and effective construction company. First prize would be to engage with a business consultant who understands the construction industry. That way, besides providing advice on the technical, administrative and governance matters, he will also be able to look at the company through a ‘construction industry’ tinted lens and ensure that all solutions that are designed are customized to suit the industry.
Cost management is essential to the emerging contractor. It means that you’re controlling one part of your income statement (the other side is a bit more difficult to control). This process needs to be done tactically though. Spending money that will improve the quality of your offering should be seen as an investment rather than purely as a cost. Construction professionals have a wealth of knowledge on how the industry works, including the fluctuations of the construction economy and are in a position to provide you with sound advice on issues that you are facing. They would therefore be in a position to save you a lot of time money and effort.
Arctic Consulting has formed a network of partnerships that will allow the team to provide end-to-end construction consulting services, from concept all the way up to delivery. The nature of the skills, in the team, as well as their wealth of experience will allow them to provide a customized solution to the emerging builder.
The skills-set present cuts across all professional disciplines. Because all our professionals have operated at all levels in the construction industry, we feel that we can comfortably offer our services to almost all the contractors registered with the CIDB. Both the nature of the solution and the fee structure are always custom designed, which means that not only do we provide superior technical services, but they are affordable as well.
The important skills mix comes from three key areas:
· All the team members are qualified construction professionals
· We have introduced management consulting elements to the construction industry, and, finally,
· All our team members either are running or once ran a small- to medium-sized construction related business
Our team is constantly growing in size and we continue to look for new ideas and fresh skills. At the moment we have access to Architects, Civil Engineers, Quantity Surveyors, Project Managers and many other professionals in the broader design environment.
This means that not only will you benefit from their professional capabilities, but also from the experience that they have gathered over the years. Winning a tender is not the end of the road for a successful project. What comes after is even more important. Successful projects help build your CV and track-record. Focus on doing things right, as well as doing the right things, and you’ll be fine. If you go in pursuit of excellence you will achieve success.
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