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 didn’t 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.

Two or Three Scenarios

Near Versus Far Future Thinking

In The Making of a New Industry David Hawk envisaged a widening separation between the traditional, local industry of small firms and small to medium sized projects and a technologically driven, increasingly oligopolistic global industry. In identifying the key trends driving this change of industry structure, Hawk was clearly correct in his view that the new industry would be far more product focused than the traditional industry.

In the three scenarios outlined previously, the traditional industry more or less fits into the business as usual approach of scenario one, and the global industry rather looks like it’s been following the upgraded and modified path in scenario two. These two scenarios cover the likely outcomes of near future developments, and they are both firmly based on well-established fundamental characteristics and trends that we observe today. The two scenario argument is that the near future should be sufficient for our strategic thinking and planning, and the challenges the industry faces will be resolved at both of these two levels, local and global.

Why then have the third scenario? The sort of advanced buildings and structures scenario three envisages will not be technically feasible for some time, it could take several decades before the experimental work being done today becomes the standard technology of the future. Nevertheless, this experimental work is the basis of the industry tomorrow. For example, there is a lot of work being done in labs around the world on molecular engineering of materials and new forms of production processes, and some of this new tech is starting to appear on site.

Energy is a particular focus. Solar facades and various forms of embedded collectors and sensors are, if not common, no longer outlandish. Since 2015 new buildings in France must have either a solar roof or a green roof, and the new HQs Google, Apple, Amazon and Facebook are building in 2016 take building design and energy efficiency to new levels. They are also installing very sophisticated building management systems. Elsewhere, sensors are being placed in structures to monitor their condition, scanning is replacing visual inspections for cracks and fatigue, and remote sensing is well underway. The scientific and technological base of the new industry today will be one driver of the development of the transformed industry of tomorrow.

The other driver of scenario three is IT and increasing digitisation. The rapid pace of development in machine learning and the rollout of the Internet of Things (IoT) will create many currently unthought of possibilities in their application to construction and the built environment. The IoT will produce a network of billions of connected objects, appliances and systems, most of which will be in buildings that will act as the nodes in the network. With major players like Cisco, Microsoft, Esri, IBM and a multitude of others pushing smart and connected cities as the big new thing, there is no shortage of ideas or possibilities. Then there is big data, with the release of huge data sets by some cities and the opportunities analytics offer.

It’s not just in the university and corporate labs and R&D facilities that new thinking is taking place. We are also seeing proposals for adventurous new buildings and structures that are at the limit of what we are currently capable, some of which may turn out to be test beds for transformational technology. Examples are the various biospheres that have been attempted, the sea-steading movement associated with Peter Theil, and Bruce Bigelow’s inflatable space modules.

It was at the first public demonstration of virtual reality (VR) headsets in 1990 that William Gibson made his now famous observation that the future is unevenly distributed¹. Those early, primitive, nausea-inducing systems were clunky and expensive, but after a couple of decades of development the costs of the key components, particularly small high-res screens and sensors, had fallen to the point where consumer products were possible. The big gadget releases in 2016 are the VR headsets from Oculus, Microsoft and Samsung, and everyone from architects to zookeepers have started thinking about how this ‘new’ technology could be used.

This trajectory, where it takes two or three decades for a technology to move from the periphery to widespread adoption and use is very common. American industry did not fully switch from steam to electric power till the 1930s, the internet had been around for over 20 years before Netscape made it accessible in 1994 by allowing graphics (it had been text based). At that time, globally, there were about 600 websites and a couple of million connected computers. Amazon and Ebay launched in 1995. There are many examples, technology proceeds a step at a time as the necessary system components come together and get improved. The question is ‘What early, primitive systems around today might be the foundations of the transformed construction industry of tomorrow?’.

¹ As told by Kevin Kelly in The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future, p.215.