The race to the bottom of the construction market during the economic downturn has been fierce and bloody. The current perception of the marketplace revolves around being the low-priced provider with little room for value propositions. Electrical contractors routinely lament that their general contractor customers care only about the bid, with the continual downward pressure on price further fueling this belief. There are plenty of contractors that are manipulating the market and “buying work.”
As long as there is one bidder willing to work for cost — or even less in some cases — the paradigm of low-cost providers wins. A less popular phenomenon, but one that bears contemplation, is that some of these “buying” contractors are, in fact, more efficient and productive than their peers. “There is no way the competition can do it for that,” is a fairly bold proclamation heard throughout contractor bidding war rooms daily. But what if even 50% of the competition is able to not only to do the job for that price, but also make money in the process?
Many contractors fail to envision how the competition could possibly vary its construction practices enough to have such a dramatic effect on price. Considering the fact that contractors have such variation in the ways they individually track direct and indirect costs, it’s not so hard to see how so much variability could exist. It is also common for an estimator to envision a project from one perspective while a superintendent interprets it completely differently. Estimated and actual costs are rarely equal in the same company; therefore, costs across firms are less likely to be equivalent. Simply put, electrical firms that fail to recognize the differences in construction — however small or large they may be — live in a myopic and limiting vacuum.
Efficiency is quickly becoming the mantra across construction organizations. Whether you examine its foundation in Total Quality Management (TQM) or its younger relative, Lean Six Sigma, firms recognize the reduction of waste as an essential strategic imperative. Maintaining pace with the competition is no longer good enough. Production assets leveraging technology with seamless integration and a consistent, standardized approach provide not only short-term gains, but also a demonstrable platform for long-term sustainability. Lean construction, prefabrication/modularization, and building information modeling (BIM) represent the current concepts available to electrical contractors as well as a glimpse into the future of construction (Fig. 1). Although construction technologies vary, there is no question that the construction contractor of tomorrow will resemble a manufacturing firm rather than a traditional electrical contracting firm. Controlling the assemblies, mitigating the many risks, and reducing inefficiencies all converge in the “perfect storm” of productivity improvement.
One misconception is the belief that adoption of one or all of the aforementioned systems will immediately provide a return. There are no “silver bullets” or panaceas in any business — and the construction industry is no exception. For instance, once people discover the benefits of lean construction, they might soon become enamored with grandiose expectations of waste reduction. The value is clearly there, but the largest hurdles to overcome lie in changing behaviors and a general reluctance to adopt a new paradigm by a firm’s associates. Incorporation of a lean culture is not unlike dieting and getting healthy — on the surface, it is the right thing to do, but battling the behavioral inertia associated with a sedentary lifestyle becomes the greatest barrier to change. All productivity drivers carry benefits, but it is important to recognize the pitfalls associated with each one.