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Case Studies and Project Briefs - July/August 2005

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Implementation of P2M for Public Construction and Analysis of the Result by Yuji Kishira and Shigenobu Ohara

-Managing critical chain and human factor for mission achievement-

Introduction

With the recent drastic reduction in public construction projects due to the fiscal conditions of the national and local governments, the order volume of small and medium-sized construction companies, especially in local construction industry, shrunk to less than half of that in the past and their business environment is getting more and more severe. On the other hand, a series of large scale disasters are still fresh in our memory and the importance of public works is being actively discussed widely. This paper details the finding of a case study carried out by implementation of P2M (Project & Program Management) framework at a local construction company in Hokkaido, Sunagogumi.

P2M framework

P2M is the standard guidebook of project and program management in Japan, which provides a framework of broader knowledge for practitioners with mindset of mission achievement. In the arena of public works, “value for money” is a key mission today. The mission reflects that the best quality of service value is demanded, but the smallest lifecycle cost is budgeted for asking capability of constructors to manage project risk. In long years, the goals of cost, time, and quality has been decided in advance without knowledge and wisdom of members, who likely think them to be mutually trade off. Given the mission, the approach is initiated to debate the essence and subsequently to find hurdles for solutions by all team members. This process is hard, but indispensable to challenge the mission by identifying reality for targeting ideality. P2M framework focuses the human aspects to identify the hurdles and solutions by management of multiple angles.

Analysis of Current Situation

In P2M methodology, the gap analysis is stressed by describing reality and ideality in comparative form. To comply with this thinking approach, “Questioning Session” was conducted by the initiative of the writer for consulting a public work project with members of Sunagogumi team. In a questionnaire, foremen were asked to write three responses to a question, “What is preventing you from making profits?” The session leader repeated “Why? Why? Why?” to each problem given, until the problems noted were drilled down to the root-cause issue to be solved.

The “Questioning Session” is usually conducted in two days. In this session, attendees can share their problems, realize that what he or she feels is strange is similar to what the others feel is strange, or find that other foremen have solutions to the problems. Attendees can structure the “current situation”, the “ideal situation”, and the gap between them. For the results of the “Questioning Session”, all the attendees decided the priority order of problems and summarized them. By the discussion, almost 80% of critical problems are related to project management. Since a session leader does not impose any opinions, and only attendees’ words are written and summarized with consensus, the participants are generally motivated to solve their own problems immediately after the session. In Sunagogumi’s case, the outcome of the session was posted everywhere in the company voluntarily under the slogan of “Let’s solve the problems this year!” when we visited them the following week. (Picture)

Setting Goals

After the session, the attendees set their goals using a positioning map. By using it, we could discuss current Sunagogumi differentiators compared with competitors, and what we could do to get closer to the ideal situation. It became clear what we had to do to work toward the objectives. The positioning map is a popular method in marketing and is used as a base for discussion in defining the concepts or goals of product development. But it was also found very effective in setting goals to discuss the “ideal situation” in this program. Goals were set in the positioning map (Chart1) and agreed among attendees:

- To make profits even in the limited construction projects
- To make profits even in low price projects
- Collaboration with sales persons
- Collaboration with Government officials
- Communication with the local community

Implementation of Critical Chain Project Management

Critical Chain Project Management (CCPM), a methodology of TOC (Theory of Constraints), was used to implement the project management. This methodology focuses on human problematic behaviors in performing tasks in a project and implements schedule planning and schedule management based on the idea of correcting such behaviors naturally. In CCPM, human problematic behaviors are:

- Parkinson’s Law (use all the time and budget given)
- Murphy (anticipate unexpected problems and estimate longer schedules for tasks)
- Student Syndrome (start slowly and work overnight before the due date)
- Unreported Early Finishes (finish early but use all the time for elaboration)
- Multi-tasking (give top priority to all tasks and start them earlier)

CCPM confirms these human problematic behaviors hidden in each task and to implements schedule planning and schedule management to eliminate such behaviors naturally. To minimize these problems, CCPM recommends schedule planning considering the following:

• Aggressive task duration estimates (eliminate buffer in each task and schedule the due date with 50% probability of success)
• Reporting early finishes (guarantee that the next schedule would not be shortened)
• Relay-runner work ethic (start immediately after receiving the baton. Once started, finish as soon as possible and pass the baton to the next process)
• No penalty for delay (half of the tasks are expected to be delayed) -> Manage the whole process of the project, not individual tasks
• Aggregating safety (manage how many more days are required) -> Manage the whole process of the project, not individual tasks, and share the aggregated safety
• No multi-tasking (focus on one task at a time)

At first there was some hesitation to use this method because there were not many implementation cases in Japan. However, Sunagogumi’s foremen found this method was almost the same as the way of thinking of their most excellent foremen. In the construction industry, people stress “DANDORI HACHIBU” (preparation plan is 80% of the work), and attendees agreed that the logic behind “DANDORI HACHIBU” is the same as that of CCPM. They said, “Let’s do it. There is no point if we do not practice it,” and they actually started the test project. The river bank reinforcement construction for flood protection (Tonebetsu River) was chosen for the implementation of CCPM. A young foreman with little experience was selected as a leader to see the effect of CCPM. We made a schedule and set an aggressive but possible schedule by removing safety from each task. We realized that the excellent foremen are doing exactly same manner to make a profitable project planning: they understood that in each task, people tend to have safety which they call it as “SABA” in Japanese. By removing “SABA”, they are making an aggressive but possible schedule to limit undesired human resource behaviors. For easier understanding for all foremen, we decided to call it “Scientific SABA Removing Preparation Plan” (in Japanese, “Kagakuteki SABA TORI DANDORI”). They loved this expression and it was quickly spreading among all foremen to implement it: We learned that sometimes an easy expression can be powerful tool to drive people to desired management direction. Finally, we placed a time buffer in the project plan called a “project buffer”. The project buffer is 50% of the duration for each aggressive task duration estimate, aggregated and added to the end of the project as a buffer, which can be used to protect the due date from variations in the project.

In TOC, if progress is managed by each task, people become so sensitive to local delay that unnecessary intervention confuses the project, which causes a longer estimate and a hidden safety in each task. CCPM eliminates human problematic behaviors such as Student Syndrome and Parkinson’s Law as much as possible by removing a safety in each task, and enables simple and easy-to-understand progress management by monitoring the penetration of “project buffer.”

We decided to call the “project buffer” the “OYAKATA BUFFER”, or chief foreman buffer” because we found that an excellent site foreman (generally called ‘OYAKATA’) was doing exactly the same as project buffer: removing safety from contractors in charge of each task but on the other hand, devising ways to protect the due date from unexpected troubles or events by having a buffer for the overall project. The foreman can judge the health of project progress by checking the consumption of OYAKATA buffer. This prevents confusion of the process by unnecessary intervention. As previously stated, while CCPM plans an aggressive schedule by removing safety from each task, the relay-runner ethic enables sharing and utilizing of the common project buffer without worrying about each task-based process.

Though this construction was originally scheduled to finish on October 17, it turned out to complete in mid-August using this method. It became clear that we could dramatically increase profits if we complete the construction before the OBon holiday (in mid-August Japanese traditional summer holiday season) because after Obon holiday, the weather in Hokkaido becomes unstable, which causes a delay in construction and an increase in costs. In addition, if we complete the construction by the middle of August before the typhoon season, we could reduce damage from natural disasters, which would make local residents very happy. Members made a new construction schedule after this discussion and named it a “profit-making schedule with their will”. Also, we aimed to receive payments earlier and improve cash flows by showing this schedule to the local government constantly and asking them to conduct the completion inspection earlier. By sharing the progress with supervising officer with project management software and they could conduct the completion inspection earlier by two months. As this method greatly appealed to the local government, we could receive high marks for construction management and ingenuity, which resulted in a very high construction evaluation mark of 89.425. Also, we could shorten the schedule by 30% and of course dramatically increase profits.

Risk Management

In order to avoid possible risks during the execution phase of the project, we developed, “Mirai Yochi Kunren (MYK)”, Future prediction training as a means to minimize the risk of possible feature trouble. Generally project managers usually check the progress of the project asking “Is there any problem?” Then, foremen tend to respond, “There is no problem.” If the project manager changes the question and asks, “What kind of possible problems might occur in this task?”, then foremen would consider possible future problems and concerns one after another. In this test project, foremen were asked these questions then they could predict seven potential risks in the future but .their solutions were immediately discussed and implemented, and those problems were prevented.

Integrated Marketing Communication

In the nature of public works, we must be more sensitive to stakeholders of the project than in private businesses. Especially a local community-based construction company like Sunagogumi has various stakeholders such as residents, local organizations with specific purposes, local governments, subcontractors, employees, and management. We decided to use the integrated marketing communication (IMC) method in communicating with these stakeholders. This method is often used for market development for new products to clearly show time-series actions of who will communicate what to each stakeholder with an integrated communication strategy. Table 1 shows the action sheet summarized in the discussion with members of Sunagogumi, which was put in everyone’s notebook with a solid determination.

For local residents, we set up a home page called “Site Information Center” to provide information about the construction project’s objectives and progress , and it received more than 4,000 accesses. We also posted “Construction News” five times during construction period to inform the progress to the public and asked the site supervising official to post it in local restaurants and other places. Furthermore, we distributed “Site Calendars” to local residents to share the progress of the construction. It received a favorable reception and 30 additional copies were requested by the president of neighborhood association, which pleased the site foremen very much.

Human Resource Development

The foreman selected in this test project was Mr. Naoyasu Endo, a young foreman with little experience. This was his second construction experience as the main contractor. His first project was graded at 71 points, which although was considered as average, it was way below that of the Sunagogumi standard, and needed improvement. According to President Sunago, Endo was selected because “he sings out very loud in Karaoke.” At first, President Sunago did not give the details, but later he said that Mr. Endo was rather quiet at the site compared to his loud voice in Karaoke. Therefore the President thought that if Mr. Endo got results, this method could prove to be effective and would highly motivate other foremen. In this project, we intended to conduct “thinking training” and human resource development by thoroughly implementing program & project management. After the project started, the progress was “visualized” to everybody and Mr. Endo had many opportunities to receive advice from senior experienced foremen, by sharing information in the project planning and execution stages using the project management software, Being Project. Far more interesting was that by sharing the progress among all the members, he could discover internal unspoken knowledge and skills in the company in timely manner during project progress. Mr. Endo remarked, “By sharing the progress of the construction using project management software, the progress was visualized to many people, and I could receive appropriate advice in a timely manner and prepare better plan during the project progress.” Every company has unspoken knowledge with years of experience. It is sometimes documented and sometimes is not. Even with documented knowledge, there is small chance to utilize it in the real project because project managers are busy in facing ever-changing problems day to day. In order to utilize information, its quality is important, but providing the right information with the right timing is more important. Project management software “visualizes” the progress of construction and enables other people to give the right information at the right time. In this test project, several skilled foremen’s unspoken knowledge and internal knowledge were shared with Mr. Endo in a timely manner, enabling him to achieve one of the highest quality construction works to date. This means that “Just-In-Time (JIT) information” was achieved by project management software, and IT (Information Technology) is a very effective tool in “creating a mechanism” to share the right information at the right time throughout project management.

At the completion inspection by the local government officials, Mr. Endo gave a presentation on this project , and received unexpected applause after the presentation which is a very rare case. Also, this presentation surprised other members of Sunagogumi and some said, “We did not know he could do such a great job!” To recount his achievements, it is best to quote the following words of Sunagogumi’s general manager, Kazuo Kumagai, who was a main supporter of this project. By his permission, here is a quotation from e-mail exchanges with him:

“Endo certainly made great profits in this test project, but far more important is his growth. Endo definitely changed after he met Mr. Kishira. He became a really dependable foreman. The Tonebetsu River project is already a past project which achieved a great result. For Endo, the real challenge is to see achievement in the next project given. (I believe he will make it.)

The best outcome of the Tonebetsu River project is that Mr. Endo became one of our best foreman, whose development was aided by Being Project. I think this is the best achievement. We can expect more profits from Endo’s projects now and in the future, which is far more important of this single project success. That is because Endo has overcome a barrier and changed. It’s really amazing.”

Analysis and Summary of Effects of Shortened Project Duration

Table 2 shows the result of this test project analyzed and summarized by the discussion with members of Sunagogumi. It is easy to understand that shortened project durations enable increased profits in the case of leases or periodical contracts in which payments occur according to project progress. There are other costs that do not depend on duration, such as material costs, and it was considered that shortened duration could not improve those costs. However, conducting the completion inspection earlier in collaboration with the local government supervising officials enabled earlier receipt of payments and improved cash flows in business. Also, we confirmed that if the inspection was finished earlier, we had more free foremen that could obtain more subcontracts for them to make more profits (Mr. Endo actually started a new project to make more profit within the same project duration originally planned). This means that the implementation of P2M framework project management, increasing the number of skilled site foremen and shortening duration for each construction project, has another effect: increasing the number of possible projects in the same duration which has the same effect of hiring more site foremen. To everyone’s surprise, Sunagogumi started activities to win a contract armed with precise and concrete construction preparation plan and profit estimates , simulated by Being Project. This is especially effective to get subcontract projects, because they can take advantage for winning contracts by demonstrating a highly accurate preparation plan simulated in project management software before the contract. The project management software, which was originally introduced as a tool of “thinking training” for human resource development, has eventually become the “weapon of winning contracts.” In addition, this year we had successive typhoon damages. Though this construction was scheduled to finish in mid-October, it completed in August before the typhoon season and prevented local disasters. Other effects such as reduced burden on local residents from construction noise and detours, lower anxiety about disasters, and reduced environmental loads are side effect of shorted project duration.

Future Challenges

As summarized above, this test project confirmed that we could have a dramatic effect beyond our expectation from P2M within the short period of four months. In Sunagogumi, this method is now spread across the company and delivers results in multiple projects. Also, Government showed positive attitudes to welcome and support a series of such movements, and key people in Governments remarked, “We must change to respond to this kind of movement.” In the future, we would like to work on reducing social costs while creating social value, and improving recognition for public construction from the perspective of local residents by accelerating the collaboration among local residents, contractors and Government.

Conclusion

This success story is described to transfer experience in a form of practical messages and lessons as if readers could join in the team to share feeling of participation rather than academic paper. It is significant to learn that the implementation is highlighted as a prototype model of public works in a context of value for money for all stakeholders. Key success factors are underlined in debating process at initiation, sharing essential problems in planning, and managing human psychological factors in execution. Needless to reiterate, a unique software tool conforming to critical chain thinking and P2M framework for visual guiding to members supports to performance undoubtedly. In brief, the human centric project management is the core proven in this case lessons, which represent the essence of P2M.

Acknowledgment

I can never thank enough the members of Sunagogumi including Mr. Naoyasu Endo, who was the hero in this test project, for teaching me many things. I would like to thank Mr. Tomoyuki Saruwatari, General Manager of administration, Kyoto Prefecture for giving me many suggestive comments and direction. I received suggestions and guidance from Mr. Kazuo Yamane, Executive Director of Research Institute of Construction and Economy, Professor Kazuyoshi Endo of Kogakuin University, Professor Kazumasa Ozawa of Tokyo University, and Professor Yasunaga Wakabayashi of Kyoto University. I also appreciate the stimulating discussion and guidance from Mr. Shinji Yamaguchi, Head of Construction Management Division, Research Center for Land and Construction Management, National Institute for Land and Infrastructure Management, Ministry of Land, Infrastructure and Transport. I received much valuable advice and guidance on Critical Chain Project Management from Mr. David Updegrove, a principal of the Afinitus Group and from Satoru Murakami, president of Goal System Consulting Inc. I also appreciate valuable advice from a logical standpoint of TOC from Mr. Ichigoro Kuroki Development Manager of Being Corporation. I would like to take this opportunity to thank all of you.

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