Ted Garrison's January 2014 Report

Ted Garrison's January 2014 Report

How to Measure Performance for Success

The construction industry measures many things, but often the right things aren’t measured.


How much time do you spend chasing people to make sure they are doing what they are supposed to be doing? How much time do you spend responding to your bosses checking up on you? Do these seem like unimportant questions? Not really. When you consider when my colleague Ed Anderson asks his audiences how much time they spend on these two activities, he consistently gets totals greater than 50 percent. When your managers are spending more than half their time checking up to make sure people are doing what they are supposed to be doing, something is wrong. This is a tremendous waste of management resources.


Anderson refers to this waste as Chase-up™. While managers certainly need to follow up to ensure things are being done, spending more than 50 percent of their time is not an effective use of their time. Just think, if the average manager’s salary is $75,000 a year, then reducing that individual’s Chase-up™ by 10 percent would result in $7,500 savings per manager.


The real question is why do managers spend so much time chasing people? The answer is a lack of reliability. Who would you spend more time chasing, a reliable person or an unreliable person? The answer is obvious, but who are your unreliable people and/or subcontractors? That’s a more difficult question because virtually no one measures reliability. Typically contractors measure productivity. The problem is measuring productivity can provide misleading conclusions.


Reliability is the measurement of people’s ability to make and keep promises, while productivity is a measurement of the amount of work performed. The problem is that simply measuring productivity doesn’t tell you if the right work is being performed, which can lead to the wrong conclusions. For example, a steel erector may appear to be very reliable because the steel tonnage it has erected exceeds that required by the schedule. Since steel erectors are often paid by tonnage installed, erectors are often inclined to erect the heaviest pieces to maximize tonnage. The problem occurs if the erector is not installing the lighter pieces that allow the follow-up trades to do their work. If the erector is doing this, he is unreliable despite the fact he is ahead of schedule based on tonnage alone. It’s about not only the amount of tonnage but the right tonnage.


Let’s assume we are scheduled to place 10 concrete slabs on Friday morning. This means the electrical contractor should be committed to installing all embedded items in the slab by the close of business on Thursday. If the electrical contractor has six slabs 100 percent complete and four slabs at only 95 percent complete, what is the contractor’s Commitment Reliability Index (CRI)? The answer is 60 percent compared to 98 percent as based on measuring productivity.


If we pay the contractor based on productivity, it would receive 98 percent of the budget for the work and probably wouldn’t be too upset over the 2 percent hold back for incomplete work. However, if the contractor was paid on only reliability and received only a 60 percent payment for the completed work this would send an important message about being reliable. Reliability is necessary because without it, it’s impossible to plan. Without effective planning, it’s almost impossible to improve performance and make true gains in productivity for the entire project. When reliability is not measured, people tend to do what’s in their best interest and not what’s in the project’s best interest.


However, measuring reliability is not about beating up on people—in essence, another tool to make people work harder. Instead it’s about creating a process to identify and remove problems. In many cases when someone doesn’t meet a commitment, it’s not the fault of the person, but a fault of the system. Therefore, when a commitment isn’t met, the first question should be why? By tracking the causes for people not making their commitments, we are able to identify the barriers to productivity. As Pareto’s principle points out, 20 percent of the problems cause about 80 percent of the delays. Therefore, if we can identify the common barriers to people’s meeting their commitments, we can work to eliminate the problems and increase productivity. The challenge is that without measuring reliability, no one attempts to identify the causes of the missed commitments.


In summary, there are several distinct benefits from measuring reliability. First, once you identifying who is reliable, you can adjust how much time you spend chasing various people, which enables you to identify people or subcontractors who are not committed to being reliable. These people should be removed from the project. Second, if crews’ and subcontractors’ CRIs are posted, you will immediately see improvement. It’s just like playing sports. Most of us have played a pick-up game of basketball where no one was keeping score, but as soon as someone suggests we keep score, there is an immediate improvement in the quality of the game. We have all heard “what gets measured improves.”


Finally, and potentially the most important benefit, it allows for elimination of the problems. Most people are trying to do a good job, but unless they are accurately measuring what they are doing and identifying the problems, they are often frustrated when problems occur. Measuring reliability provides the basis for identifying the problems and eliminating them. This makes everyone’s life easier. At the same time, it enables increased productivity. This is the perfect win-win situation.


However, it all starts with the commitment to measure reliability.


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"Ted Garrison; president of Garrison Associates, is a catalyst for change. As a consultant, author and speaker; delivers his Construction 3.0 Strategies that offer breakthrough solutions for the construction industry by focusing on critical issues in leadership, project management, strategic thinking, strategic alliances and marketing. Contact Ted at 800-861-0874 or Ted@TedGarrison.com. Further information can be found at www.TedGarrison.com."