Sunday, 9 October 2016

A Theory of Construction Management?

Total Construction Service

The links between construction management (CM) and construction economics (CE) and theory have not yet been strongly forged. This may be one of the reasons why they have not gained widespread acceptance as academic disciplines and are not seen as distinct branches of management and economics respectively. Another reason may be that products and production, the focus of management and economic theories respectively, are not the same as projects and project management in general, and construction projects and CM in particular.

Management theories of production tend to be more product-based than process-based. The emphasis is mainly on the range of methods and techniques available to improve the efficiency with which products are delivered, although many of these products are management decisions or plans. Processes are secondary, because they are bundled with the production decision, and despite the appearance of diversity in the range of management theories, the approach taken typically treats the firm as a black box that turns inputs into outputs using a range of capabilities. These then are a product- based set of theories.

There are a number of economic concepts involved in production theory. The important ones include returns to scale, price elasticity of demand, elasticity of substitution between input factors, and technological change. Technological change has the three aspects of rate of technical change, acceleration of technical change over time, and the rate of change of marginal products (of factors). These economic effects come from the underlying production process, or processes, that firms choose between when making production decisions. The economic theory of production focuses on the input demand and output supply functions under a technical constraint that describes a range of production processes available to a firm.

In that case, is production theory relevant to CM? The delivery of a new building or construction project is clearly about producing something. A relationship between CM and the economic theory of production is plausible because both are concerned with technology choices. However, production theory is complex. The economic theory of production developed out of the classical concern with marginal productivities into a production function focused on substitutability of factors under a technological constraint. Can CM be reinterpreted in these terms? Would that improve industry performance? Can a theory be founded on the characteristics of the industry?

A 2012 book by Milan Radosavljevic and John Bennett took on these questions. Their Construction Management Strategies: A Theory of Construction Management proposed a theory of construction management to identify actions which help construction projects and companies be efficient. They created a model of CM, using five clearly differentiated methods for the delivery of building and construction projects.

What they didnt do was draw on the many theories of management or production available rather wanting to base their ideas on construction industry projects and practice. On one hand this seems to be an extreme case of exceptionalism - the construction is different from all other industries school of thought. However, Radosavljevic and Bennett argue that construction actually is different, because it is project-based and complex:

projects have a number of interacting teams where outcomes in the future depend on the number of involved teams, the quality of relationships between interacting teams and their performance variability. In addition there is also unpredictable interference which may arise from numerous external factors (p. 77).

The aim was to provide a rigorous theory based on a tool kit of concepts and relationships” to improve the efficiency and quality of “construction products. The distinction between the conventional approach of CM, where contractors deliver projects, and the idea of companies producing a product is an important element in the thinking behind the theory proposed. The main factors in project performance are seen to be communication, feedback lops, and how well established relationships are, called internal relationships, or not, called boundary relationships. The core concepts used, and tightly defined, were:

  1. Construction products and processes
  2. Organizations
  3. Interactions and relationships, and
  4. Learning and performance.

Radosavljevic and Bennett defined CM as taking responsibility for the performance of a construction organization”, measured by efficiency, which is inversely related to the waste caused by complexity and external interference which prevent organizations achieving their agreed objectives”. Through a series of propositions about CM, CM teams (task groups) and related efficiency conditions they build a detailed description of construction organizations, processes and management. This results in the basic concepts used in the theory of CM in mathematical terms to provide effective measures of features of construction which have a crucial impact on CM decisions”. These are the six inherent difficulty indicators” (IDIs), which are the fundamental variables in their theory of CM and are used to determine the most appropriate CM strategy. These IDIs are:

  1. Established relationships consequential relationships between interacting teams that existed before the project started;
  2. Relationship fluctuation differences between times during the project with and without established relationships between teams;
  3. Relationship quality time teams have spent previously working together;
  4. Relationship configuration the pattern of team interactions over the project (this is a quite complex indicator because it can vary greatly over time, i.e. during a project);
  5. Performance variability team performance may not be consistent between projects;
  6. External interference factors outside the control of the project managers.

Radosavljevic and Bennett discuss the implications of their theory of CM and the IDIs for clients, design companies and construction companies and strategies. There are separate sections for the different types of construction companies and specialist contractors. They describe:

…the practical implications of the theory of construction management for customers and construction companies. The most complete application of the theory which is also the approach that delivers the highest levels of efficiency is a total construction service other approaches should be regarded as significant steps towards the greater efficiency provided by a total construction service (p. 229).

Total construction service is industrialised building, modelled on car manufacturers, with an emphasis on reliability, quality and continuous improvement. Not surprisingly, the Japanese construction industry features in the discussion of this total construction service, with the Big Five contractors and the industrialised home builders given as prime examples of what total service is and how it is delivered.

This view might not find total industry agreement, many firms are quite comfortable with current industry practices. To argue that it is understandable to want to use a familiar approach but it ... is worth considering alternatives” (p. 229) rather glosses over the many issues associated with custom and practice that are deeply embedded in the construction industry. Not everyone will be convinced by Radosavljevic and Bennett’s method and conclusions. Many of their ideas are adventurous in a field where much of the literature is cautious, and in places it is ambitious in its view of how the industry could be rather than harking back to some idea of past glories. The overall framework suggested for organizing CM research with its propositions and delivery strategies was an important and original contribution. There are many statements, declarations, descriptions and indeed propositions that will not get universal agreement, but they made many good points and took a refreshingly different perspective.

Radosavljevic, M. and Bennett, J. 2012. Construction Management Strategies: A Theory of Construction Management, Oxford, Wiley-Blackwell, 2012.