Sunday, February 27, 2011

BIM and IPD Making Value Engineering Irrelevant

The effective implementation of Building Information Modeling (BIM) and Integrated Project Delivery (IPD) systems and protocols is replacing Value Engineering (VE).  The payoff of this shift is in higher quality, lower budgets and shorter timelines.  Value is increased, not “engineered out” as is often the case with VE.

Value Engineering’s biggest fault is that it was and is typically implemented too late in the project cycle.  It is most often thought of as a tool to bring project costs back in line.  Doing this late in the design process, as is usually the case, means that the cost of the design itself goes up even as the quality turns down.  Compromises made in late stages to fit the design within budget invariably lead to changes that sacrifice aesthetic, functionality and sometimes even programmatic requirements.

BIM and IPD are changing the model.  The design advantages of BIM coupled with communication principles of IPD bring design and budget conflicts to light much earlier in the design process.  As a result, the team is able to search for and select alternatives that meet all project requirements.  Discovering and solving these issues early on saves time, eliminates rework, improves quality, and allows everyone on the project team to be successful. 

But these new tools are not yet common in the marketplace.  At this point I see them being mainly used on very large projects such as new hospitals, research facilities, institutional buildings and the like.  There are too many owners who have not yet gotten the message.  Their “design-bid-build” mentality is meant to ensure minimum cost.  What it really does is force every entity involved in the process to have a parochial mentality, therefore denying the advantages of transparent collaboration to the project, and the owner.  Projects take longer, carry more risk, cost more and deliver less.

BIM and IPD are tools which actively contribute to and improve the value of projects.  As with any new tool, there is a learning process.  New team models and behaviors, increased trust and collaboration, a willingness to be transparent and a “us” mentality are keys to IPD success.  These don’t come easily to everyone, making the selection of team members more important than ever.

In the old model contracts emphasized constraints and penalties.  Guaranteed Maximum Price (GMP) and Lump Sum contracts along with Liquidated Damages clauses and litigation were used to define and enforce project parameters.  In IPD relationships and shared risk take a much more prominent position.  The emphasis is on Design to a Budget principles where project deliverables  and the allowable maximum funding are established.  The profit buffer between the two then becomes an incentive pool.  In the conventional model design and construction were managed to standard of care and warranty requirements.  In the IPD model design and construction are managed by joint decision making and quality adjustments as the project progresses.  In short, the contract becomes a tool, not a threat.

Monday, February 21, 2011

Mission Statements as a Strategy Alignment Tool

One of the ways to align FM strategy with enterprise strategy is by making sure your FM Mission Statement is aligned with the organization’s mission statement and strategies.  As I look at mission statements from various FM groups I often see them focus more on FM operations than they do on the mission and strategies of the entities they serve.  When this is the case FM can become isolated and be perceived as not relevant to the core goals of the enterprise.

The process used to develop mission statements can support or hinder the quality of the end result.  There is no one right answer as each mission statement must be culturally aligned as well as strategically aligned.   Some may choose to develop a mission statement through consensus while others will choose to be more top down.

I recall one instance when an entire department was engaged in developing its mission statement.  Predictably, a lot of time was spent negotiating specific elements and the language of the statement.  Also predictably, we ended up with a statement that embodied a series of compromises needed to reach consensus.  After all the effort the new mission statement was quickly forgotten and became irrelevant.  It had all the right buzz words and met everyone’s needs, but it didn’t do what it was supposed to do – establish our core purpose in concise language and inspire us to that end.

A better model, I believe, is the top down approach.  Defining the organization’s purpose and core values is one of the central roles of leadership.  Leaders are accountable for the outcomes and have a closer perspective of corporate strategy, putting them in position to set the performance agenda.  I have been part of many mission statement development initiatives.  The very best ones I have seen are those which are articulated by strong leaders who have thought strategically about the organization and where it needs to go, and who use the mission statement to define its “True North.”

Monday, February 14, 2011

Assessing Facility Management Performance

Providing workplaces that meet organizational needs and services that support business operations is what FM’s do.  Sometimes, however, it seems like that is the easy part.  Knowing exactly what to do and how to go about it can sometimes be a challenge.  Even more perplexing at times is understanding how well you are doing and what your customers think of your performance.  To help us we have all kinds of performance analysis and management systems, balanced scorecards and the like. 

Sometimes I think we over complicate it.  What we really want to know can be revealed by the answers to a few simple questions.  By properly structuring these questions and aligning them with core principles and tools we open the door to knowledge that improves our processes and increases our value.  These simple questions and their affiliated processes are the heart and soul of performance management and improvement.

Who do you serve and what do they do?  Understanding your customers and stakeholders is the foundation that supports everything you do.  Here is a key fact to always keep in mind:  You cannot understand your stakeholders if you don’t know what they are concerned about, and you can’t know that unless you ask.  So ask.  Be intentional about your relationships with key stakeholders.  Their business is your business.  Learn it.  Start to think and talk in terms of their strategies and goals.  Demonstrate to them that you both know and understand their business.

What services do they need?  Now that you understand their business, ask what services you can provide that will help them be successful.  This is your chance to do the expected well and to surprise with the unexpected.  While everyone needs the basics you will find customers who need something else, maybe even something they haven’t realized yet.  Knowing your customer’s business at a fine level gives you the ability to see their needs from your perspective.  Providing options to improve their value demonstrates FM’s strategic importance and leverage.

What is the best way to provide those services?  Evaluating your workflow process is a critical step in making sure that your processes are aligned to maximize benefit across the enterprise.  Too often we design and evaluate FM processes and workflow from a FM perspective only.  Because of the breadth of our reach our workflow processes touch virtually every nook and cranny of our organizations.  It behooves us then, to assure that our workflow is efficient, thorough, and well-aligned.  Also, FM sometimes needs to be more assertive in driving workflow alignment throughout an organization.  Yes, we serve every nook and cranny; but we also are served by many.  We need information and process outputs from others to do our jobs well.  When we aren’t getting it we have a responsibility to speak up.

How can you know you are doing a great job?  Sustainable metrics are the protein in your FM diet.  Metrics provide data, knowledge and eventually, wisdom.  Metrics tell you what you are doing, how often, how fast, how well, and how efficiently and effectively.  Understanding what is important to your organization, how to measure it accurately, how to analyze the data and glean operating intelligence from the data is a core FM skill set.  Some of this information will come from your customers, as it should, but only a small fraction.  Those who rely on a limited number (usually less than 5%) of survey returns to portray their operational health do themselves and the enterprise a disservice.  You should be tracking and reporting basic numbers and trends for all segments of your FM operation as a minimum.  You should also be using metrics to investigate operational alignment with key organizational goals, to troubleshoot when necessary, and to help make the business case for projects and initiatives. 

What is the best way to organize?  The correct organizational structure is the foundation upon which your strategy and execution capabilities rest.  Depending on your company’s size, services/product, complexity, geographical arrangement and the market sector you are in, you may elect to provide all services in-house, out task discreet elements, or outsource the bulk of the FM effort.  If outsourcing you might elect different providers for different FM elements, or select one provider per region, or even one global provider.  The options here are almost endless and most likely more than one will work for you.  But some will work better than others.  Understanding the service and competitive advantages and disadvantages of the various organizational models and how they relate to your specific requirements and culture are important steps to knowing your best option.  This is truly a foundational issue and getting it right is critical.  Do not make changes to your structure without a strong due diligence effort to identify risks and mitigation strategies.