You’re Not the Boss of Me!

The thing that gets me out of bed in the morning is the thought of fixing things. When presented with a problem, there is nothing like that anxious feeling of ‘How am I going to work this out?’ and then, hopefully followed by a great sense of satisfaction when the solution is found. Beyond that, there is an ultimate sense of achievement when the solution turns in to something that others develop in to something better!

We are ‘happiest’ at work when we are at our most productive, and nothing is more annoying than our day-to-day obstacles to getting stuff done. This leads to a question that rattles my skull from time-to-time:

 

“Is it better to solve problems via an independent business model, such as an SME or is it better to be a sandbox in a large organisation?”

 

Let me explain the question, I’ve recently been looking at construction industry data published by the Office of National Statistics [http://www.ons.gov.uk/]. On a slight tangent, the ONS has announced that it will publish monthly seasonally adjusted data for UK construction output from 27th June.

 

The data I was interested in is the distribution of contract value between large companies and small & medium enterprises (by employee size not value, http://webarchive.nationalarchives.gov.uk/+/http://www.dti.gov.uk/sme4/define.htm). Rearranging the data gives the following:

 

Figure 1

 

Figure 1 shows the contact values from 1997 to 2012, in blue is the contract value for large companies and in the red is the value for small and medium companies. 2008 did bring the largest drop in SME contact value but it still is greater than the value of large companies. Although only small, you can see a small rise in contract value.

 

Another way to look at this data is to take the difference between the large companies and SMEs, this produces a different picture.

 

Figure 2

 

This does show a trend downwards in SME contract value, but I hope with the support that government has for SMEs, the picture in figure 1 continues to show growth for SMEs. I believe this is the sector where we will find real progress in how we deliver projects in the future. Although this does not account for what could be the delivery of savings in completing projects. At an academic forum I presented a possible paradigm for project delivery for subcontractor and manufacture engagement and was asked the following question. “I think the concept is very good, and would work well for a large organisation, but I have colleagues that run SME sized companies and they wouldn’t be able to grasp what you presented, how would you make it applicable?”

 

To be honest, it was a great question. The simplest solution or the solution with the least number of assumptions is always the better one [see Occam’s razor]. But the argument I made was that the principles should be driven by the client or principal contractor/consultant, the supply chain should be left to do what it does best, and that is to supply its product or service at a competitive price. What must change are the data requirements and medium it transmits its information. The data cannot be handled as an independent variable; each part that contributes has a set of interdependencies. It will be up to the market to find these and adjust their business models to suit. 

 

This is a tenuous analogy, but F W Taylor in 1947 observed pig-iron handlers and found by providing different sized shovels (instead of one standard size) for different types of ore and setting a maximum target per day. This resulted in a reduction of staff from 600 to 140; in this case the 140 were also paid 60% more. The point I’m trying to make is that the shovel maker would have been required to make a varied size of shovel or maybe lost a proportion to a competitor, if they didn’t readily make alternative sizes. This would have led to a larger supplier base for the refinery and no doubt an operational inefficacy. This illustrates the interdependency between the steel refinery and the shovel manufacturer and how we need agility in our business models.

 

Moving back to 2013, unfortunately all businesses are going to feel the pressure of change. Much like the pig-iron handlers, I’m sure you could imagine the groan of the 460 handlers, possibly remarking that the shovels with never work! In the modern day we will see the same with the efficiencies that technology will bring the ‘delabourisation’ of many aspects of construction. This leads on to the next set of data I looked at from the ONS. Looking at numbers of business in the industry I found this:

 

Figure 3

 

Figure 3 shows the total number of business between 1997 and 2011, and comparing this against contract value demonstrates that it does not correlate and has peaked since 2008 (when the economy collapsed). Furthermore comparing the number employees, that doesn’t reflect the same picture (Figure 4.).

 

Figure 4

Taking a rudimental average of the two, the rate of change for the number of businesses is higher than the number of employees. This tells us that people in the industry are perhaps leaving their larger organisations to join or start their own company. This brings a fresh set of problems to the industry and links back to the paradigm I mentioned, how would the industry unite under a single paradigm? Is it up to the vendors or institutions to harmonise the data flow and the increasing number of interfaces between data exchanges? I haven’t got an answer but it’s important to highlight this as we need to think about it!

 

Lastly, to touch on the removing the manual work out of the construction industry. The welfare bill for this country is very expensive and if we were to reduce this requirement in the construction industry, what are we going to do with the individuals that become redundant? The BIM2050 Education & Skills group are looking at how we can approach this issue. Employment is important to the wellbeing of most people (Prof Lord Layard, Happiness: Lessons from a New Science), although we do need to run our businesses as efficiently as possible; we also need to be mindful of the consequences of that.

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