Construction clients are demanding greater value from project management professionals
Providing clients with a valuable service is getting much tougher as the construction industry supply chain is disrupted by technology and new business models.
With better transparency project management firms who don’t add exceptional value at every interaction point will become less relevant to increasingly sophisticated clients and will go out of business. This will result in the disintermediation of many players in the industry supply chain, which is long overdue and inevitable in construction. Some will thrive, many will die off.
Why client’s use project management consultants: For high-value work
The core value provided by project management firms to their clients is to advise and manage, strategically and operationally, and to protect the client’s risk exposure and time, insulating them to focus on their core business.
Project managers are engaged to ensure their client’s vision and intent is captured in the employer’s requirements and project information, that the right procurement strategy with an appropriate risk allocation that is distilled in good contracts is established, and that the project proceeds to completion in a predictable manner. This will involve the client being kept up to date as the risk profile evolves and project change occurs so they can take important decisions in a timely manner.
Why client’s use project management consultants: Not for low-value work
Executing this set of responsibilities is greatly compromised by how much time project managers have historically spent on low-value work. This work has included low-value but historically complicated tasks like keeping track of project information, manually updating and aggregating it, and duplicating information between contractor-owned systems, internal systems, and client systems. A survey of London-based project management firms undertaken by Keepsite puts the allocation of time spent on no- to low-value adding activities (or activities required due to unnecessary inefficiency) at greater than 50% of total time billed to a project.
This time-allocation is represented in monthly invoicing to clients, meaning a significant portion of any bill is for low-value work. But the real cost is that it takes project managers attention and time away from high-value tasks like keeping the project team aligned around client objectives, creating space for project collaboration, anticipating problems, and identifying and managing risks so they don’t become issues.
Creating space for more high-value project work has numerous benefits
Billing for low-value work doesn’t bring any joy to the best project managers and project management firms. It is frustrating and unacceptable. Top-tier firms know that if they can reduce the time they need to spend on low-value, duplicative work, they will be able to grow through taking on additional clients and adding additional revenue streams to offer ever-greater value to their clients. Where the total proportion of time spent on low-value work can be dramatically reduced, project management firms will have choices;
- Provide client’s with the same level of service at lower cost (less time, less cost), and therefore;
- Take on more clients with the time saved, or;
- Provide a higher level of service either by spending more time (the time saved) on higher value-adding activities or by selling additional services (adding new revenue streams) to their clients who, for the same overall price, are happy to subscribe.
This is nothing new. Xero achieved this for the accounting industry through partnering with accountancy firms who were then able to offer the Xero platform to all their own clients. Their clients loved this because it made accounting less painful. The accounting firms loved it because it standardised accounting across their client companies and automated a lot of the previously manual reconciliation and account production process. Construction project management firms deserve the same improvement.
Why haven’t we been able to do away with this low-value work?
Despite significant investment in digital technologies to date, we’ve not yet seen the great disruption that is inevitable in the construction sector. The industry still lags other industries in adopting modern digital tools and forms of organisation that could cut waste, ensure higher performing project teams and built-assets, and dramatically improve industry labour productivity.
At a high-level this has not happened because of entrenched business models and supply chain complexity, which has meant easy-wins have been difficult to achieve. But as the industry grapples with how to best adopt technology, reconfigure industry supply chains, and how to better serve construction clients, leading project management firms are already out there experimenting with next generation approaches. In doing so, they are figuring out how they can ensure their future success by staying abreast of, and defining, the direction of the industry.
At a finer level, the missing piece of the puzzle is a more useful, common platform upon which project teams can connect and interact around project information, for collaboration and contract administration. A common platform that enables low-friction collaboration and contract management, that helps reduce the administration burden on project managers, while ensuring they do not need to duplicate information and effort across multiple system-types, will greatly reduce the time needed to be spent on low-value work. In turn it will mean project managers can provider the same service at lower cost, take on more clients, and offer more services to their clients.
The inevitability of change and ensuring your own success
It is inevitable that transformation of the supply chain and broad-scale digital adoption will occur in construction. When critical mass is achieved, the industry, coming from behind, will catch up fast and revolutionise how individuals, firms, and assets interact around projects, to create and improve our built environment.
At the core of this challenge is figuring out how project managers can more effectively manage, report, analyse, and learn at scale, across their portfolio of projects, to focus on high value adding work for client’s who will increasingly demand more from their partners.
The only question is, will your firm be made redundant or will it blaze a new path and never look back?