Previous posts have focused on entry level scheduling.

This week's post is for the Senior Scheduler and Beyond Crowd.

Getting from Senior Scheduler to Manager, Director, Vice President will take a massive impact. Whale sized 🐳.

Impact of this size isn’t going to come from a schedule report in PowerBi or writing a new schedule specification.

It will come from fundamentally changing a business.

Sounds complicated.

We’ve made it easy and given you the blueprint below.

TL;DR

Before construction begins a need date is set by the owner. This date is determined based on business demand. But business demand varies, meaning need dates vary. One of the major reasons projects are always late is actual because the need by date isn’t fully understood (crazy idea - it’s not always about construction). If owners spent more time and money understanding demand, they would save over 10x the cost and time of construction.

So, if you want more projects on time, spend more time and money on the need date.

Setting the Scene

Decisions by the owner are one of the main reasons for project delays.

These delays can be caused by changes in design, scope or budget. An owner’s inability to make timely decisions or provide the necessary information can also be the culprit. There are less obvious reasons that relate to the nature of the business that will cause delays. The “why” behind these actions and decisions is rarely discussed. The bulk of information available focuses on after a project has started.

Today we’re peeking behind the curtain.

Components of an Owners Program

Business Demand

Where does the finish date for a project come from? It comes from trying to fulfill a need. For example;

• A sports stadium needs to be completed for the first game of the season.

• Building a new data center, there is a need to serve a number of potential people and businesses accessing information at a given time.

• A fabrication facility will have customers who need a product by a certain time.

These examples have one thing in common: they all fulfill a need and that need is tied to a specific time period. In business land jargon the need is called “Demand”.

If you take anything away from this article, let it be this. Business demand has nothing to do with a project’s duration.

• A die hard fan doesn’t care if it takes 2 years to build a football stadium.

• A person loves watching cat videos on Youtube doesn’t care if it takes 15 months to build the data center.

• A Bitcoin miner doesn’t even think about how long a fabrication facility takes to build when purchasing that next GPU.

By getting the customer what they want and doing it efficiently, the company is able to fulfill the business demand. Fulling demand equals more money.

The timing and duration of a project will always be aligned to meet business demand. In every company there is a team or teams working on what the business demand is.

Adding Value

Throughout many industries, there is a need for technological or process innovation that will add value to the business.

• In a data center, it might be an improved cooling system that shaves .03 $/W off the cost of projects going forward.

• In a fab, it might be adding some new chemical that allows a new process to run.

• A Chipotle could be added next to a Starbucks in a commercial space. In any project it could be improving scheduling progress or how a job is cash flowed.

These changes add value to the project. It is important to remember that sometimes a project’s value lies in stopping it. There are teams in the owners organization that are solely focused on all sorts of value add ideas.

To determine if these value add changes should be implemented, the finance team will evaluate the cost and impact of the change. If deemed worthy, the change will be implemented even if massively disruptive.

Three Different Teams in an Organization

There are three different groups that contribute to changes in an owners organization.

• Business Demand Team - Creates the forecasts of when things are needed.

• Adding Value Team - Makes things better by changing them.

• Delivery Team - Oversee the execution of the projects.

In large companies, these teams are often separate and can be managed by a matrix structure, making incentives complex.

The delivery of large capital projects and programs is undoubtedly complex. Even small misalignments between teams may cause instability, non value add change and dramatic programmatic impact. Organizational alignment is paramount to success.

Causes of Delay

Fragile Culture & Approach

Without the right mindset, constant change leaves people feeling out of control. This lack of control leads to poor decision-making, apathy and even burnout. This is typically most present in the project delivery teams, but can resonate throughout the company. It can be characterized by statements like “If only the demand wouldn’t change” or, “If only they’d let us build without stopping.”

There is one way to correct this phenomenon. Leaders must clearly communicate that the change in demand and added value is part of the business, like the sun rising in the sky. Incorporate it into the missions, values and OKRs etc. When people join the company, have it as a key part of their onboarding training.

To take it to the next level and go even further than acknowledgment. Up the message to one of “anti-fragility.” There is no doubt that waves of demand and added value bring change. But we’ll build surfboards to ride those waves. This reframe will allow people to build and execute in a way that isn’t hindered by a false foundation. People are amazing at finding solutions when pointed in the right direction. A leader who establishes the right culture and makes it permeate throughout the organization will reap great rewards.

Business Demand & Value Add Cycles Don’t Align

If the Business Demand and Value Add are done by two different teams, misalignment shouldn’t come as a shock. Inefficiency in output cycles is one of the most harmful misalignments. This creates a double wave of change that blasts the company at unpredictable times.

Imagine this: At the beginning of one month demand soars, adding loads of new projects. At the end of the month, a new technology is released that has to be incorporated into numerous in-flight projects. There is no strategy between the teams or organizationally for this volume of change. A costly game of Double Dutch begins that will at times resemble pure chaos.

What makes this challenging to solve is how demand and added value are viewed. They are both on high pedestals. Changing either would severely impact the business even if the return is huge. Furthermore, since these are two massive forces, addressing them simultaneously would typically require intervention from multiple vice presidents. Even with the degree of difficulty, the value proposition is massive.

Standard Value Add Cycles

The iPhone is released at the same time each year no matter what. This means that features and technology that don’t fit into the cycle get bumped to next year’s model.

Could they push the release three months to include a new camera feature? Of course. Did a team of people calculate the total cost to Apple justifying why they won’t accept out of cycle changes? Yes, they did. Standard cycles are the lifeblood of manufacturing, but construction typically fails to grasp the concept.

When design and engineering cycles aren’t set in stone, it creates a fluid environment. Unlike the iPhone example, no cut-off date exists. Any change, if deemed worthy, can be crammed in and made to work. There are two main culprits. First, anything different is completely foreign. People have lived fluid design so long that a different approach is walking on water. Second, a process may exist to weigh the change but a process doesn’t exist to weigh the process. Going back to the Apple example. Inserting the new camera feature and delaying the release has broader implications than just the camera feature itself.

These cycles are very industry and company-specific. What the cycle should look like must be crafted to meet the program’s needs. A hotel chain will have different needs than a water treatment plant, for example. The key is that a robust cost calculation verifies an optimal cycle. When changes are necessary, they should go through an impact assessment based on monetary impact.

All Forecasts are Wrong

That’s right, I said it. All forecasts are wrong. There are few things in business that are as valuable as learning this. Suppose you think all forecasts are wrong, then a useful skill would be to figure out how wrong they could be. Often, when teams create demand curves, value add cut-ins or execution plans for the businesses, they never consider the simple fact that projects could be late. Novel concept, right?

Teams would benefit from finishing their analysis and forecasting various scenarios of delay. This added wrinkle would greatly improve delivery time and stability. At this point in 2023, with all we know about projects being late, it simply makes too much sense. Based on a 20% delay, would this project still meet the business need? If project A misses by 10% and project B misses by 25%, will they overlap and overwhelm the system. By not looking at the possibility of late delivery, the business is setting itself up to fail before they’ve even begun.

Chasing the Demand Curve Dragon

Let’s say that a company can forecast demand with strong confidence within a 12-month window. Outside of 12 months, the forecast is more unpredictable. Someone will then naturally argue that if delivering within the 12-month window could be possible, supply would equal demand, and all would be right with the world. What if it takes 18 months to deliver? Chasing the demand dragon begins. Shaving six months off delivery becomes paramount.

There are numerous ways to build fast. Classic examples include modular, buying the supply chain, buying lots of land, prepositioning, just-in-time everything, stage gates, standard designs, strategic procurement, etc. Most of these approaches cost loads of money to implement at a large scale. The most expensive being buying the supply chain and going modular. The cost ranges from hundreds of millions to billions of dollars.

Another way owners chase the demand dragon is by starting and stopping projects to fulfill demand. Imagine general contractors mobilized, foundations poured, long leads purchased… and then demand pushes out a year. Decision is made to demobilize and wait for the demand to align or pull back in. On the construction delivery side, it looks like wasted money. Why not finish it?

Larger programs are prone to this. Financial calculations will substantiate stopping the project. The calculations will include the money already spent, the money needed to be spent, asset depreciation and a whole bag of other variables. There will be no confusion or ambiguity in the results. Stop the project, spend the millions of dollars and restart it when demand aligns. This will happen so often and be so ingrained in the culture that people will stop asking if there’s a better way.

One way would be to devote as much time and money to studying the dragon as to chasing it. Suppose you are willing to spend hundreds of millions modularizing the design, buying the supply chain plus stopping and starting projects. Why not invest tens of millions in reducing the variability of the demand curve? Take historical demand inputs, future forecasts and apply the latest in AI modeling. Can you get to a place where confidence moves from 12 months to 18 months?

This would save hundreds of millions chasing the dragon. But it doesn’t stop there. With stable demand, you can stabilize the workflow environment. When stabilization is achieved, there will be a tsunami of optimization across the entire delivery program. Taking into account some of the beneficial possibilities.

• Design the building to shop drawings before constructing it.

• Build an inventory of critical long-lead components.

• Build an inventory of smaller components.

• Move to time and material contracts.

• Zero expediting costs.

• Zero overtime costs.

• Smaller teams work together more effectively.

Another way to view this is through the key concepts of Lean. Stabilizing demand optimizes the whole, creating a much easier environment to remove waste, focus on process and flow, generate value and continuously improve.

Closing the Curtains

You're right if you think there is a whole different world on the owners' side of delivery projects. Even this article only scratches the surface. Don’t let this dissuade or discourage. These are ideal opportunities to improve core business components. Huge impact. You typically move up in the world by solving hard problems others can't. Don't hesitate to reach out and ask for help along the way and let this guide you on your journey.