Large Construction Projects are all about execution and managing risk. Ultimately, risk boils down to Schedule and Cost. Both translate into Project margin. All the other intangibles like reputation, brand, employee satisfaction etc. can be quantified into longer term profits. Inability to manage risk, leads to loss of margin. In mathematical terms, risk is variability or the inability to predict behaviour. Also, none of us are smart enough to predict behaviour of all projects consistently. However, we may be able to better understand and manage projects if we can see patterns in larger population of our performance data. This is the gist of closed projects analysis. We are certain that very few companies systematically analyse closed projects performance. Like everyone else we just move on to the next new project.
Fortunately, with SIS and Microsoft Dynamics 365 and Power BI we can do this with a lot less effort.
So, what exactly do we need to understand?
Most seasoned Construction Professionals can very quickly identify the causes of variability in Projects. It is just everything. The Weather, The Owner, The Project manager, The Estimator, The Foreman, The Superintendent, The Suppliers, The Subcontractor, The Workers, and the list can go on. So, we may need, to deep dive into our projects, that have done well and those that have not done well. We need to try to dissect the data and try to identify patterns in them. As we learn patterns, we then can start capturing data to include them in the analysis and then incorporating lessons learnt into improving business processes.
The result is improved profitability, competitive advantage, and less stress in the business. For example, if we could improve execution to reduce the number of Projects that are performing below Budgeted Margin, we may be able to increase our margin without chasing new business. On a Billion Dollar business a 2% increase in margin can even pay for a world class ERP system.
