Whitepaper: 03.10.2014

Building the Future

— Mike Bolen, Chairman & Chief Executive Officer

A look ahead, as we mark our 150th year
by Mike Bolen, McCarthy Chairman & CEO

Today, we are one of the oldest and largest American-owned builders. As we reflect on our 150th anniversary and look ahead to the future, we’d like to share the challenges and opportunities we see looking forward and suggest how to address both to help stakeholders succeed in this new and exciting world.

Wanted: Skilled Labor
We are entering the new age of energy independence in America. As energy costs go up around the world, ours are coming down. Manufacturing is being repatriated and our nation, re-industrialized. But there’s a challenge, and how we handle it will be a major factor in our economic recovery: Who will rebuild America? Who will do the work?

When the economy faltered and construction slowed down, many building trade professionals left our industry. Unfortunately, most won’t be coming back. With fewer new people entering the construction trade and as more building projects continue to come on line, the shortage of skilled labor will only grow. We believe this is the single biggest issue in construction today and will potentially affect everything from price and schedule to final quality going forward. Owners planning today for future construction need to be aware of this impending impact.

It’s a seller’s market for qualified, skilled labor, and in a very real sense these workers are a ‘client’ of the construction industry. For builders to attract and keep the best, they have to maintain a culture that nurtures and rewards top talent. More than competitive compensation alone, these individuals want a safe environment where they feel challenged and can collaborate with like-minded professionals who are also at the top of their trade. A focus on culture has always been important. Now it’s absolutely essential as today’s building industry demands new skills, new job titles and a willingness to question everything — even how we work together.

The Rise of Co-Construction
Many decades ago, the architect and builder were one in the same or joined at the hip. These were the days of the ‘master builder.’ Along the way, the functions separated and the design-bid-build process was born, which has led to inefficiencies and waste that the market can no longer sustain. Today, we are seeing a new era of collaboration, with design and building once again occurring at the same time. By taking a step back to what worked in the past, we are making a giant leap forward.

Call it design management or co-construction, this concurrent approach enables builders to have direct input into the design in a virtual environment, where issues can be resolved with the owner and design teams long before they impact the jobsite. Co-construction is the control mechanism that engages and connects all players, clearly defines responsibilities and instantly communicates project details and status. By addressing issues up front — in the virtual vs. real world — field staff can focus more on quality building, not just fixing one problem after another.

The industry as a whole is moving to co-construction, as owners continue to be motivated by the need for quality, speed and cost control. Co-construction is a team effort whose time has come (again), and enabling it are advancements in technology and companies adapting true lean cultures.

Technology: On the Frontline of the Future
In days past, technology was a back-office function in the construction industry, reserved primarily for enterprise resource systems, payroll and other administrative tasks. Today, technology is essential for driving operational excellence and deepening customer engagement. Owners expect builders to use the latest technology to maximize effectiveness, cut waste, optimize efficiency and manage costs.

Imagine looking through your Google Glasses and suddenly, a 2D blueprint becomes 3D augmented reality. Or knowing the exact location of every worker on the jobsite, thanks to wearable technology (in this case, a tiny Bluetooth chip that keeps everyone safer and more productive). How about 3D concrete printing to manufacture entire sub-sections of a building more efficiently. Or cloud computing that puts every project detail instantly and simultaneously in the hands of owners, designers and subcontractors so better decisions are made in minutes, instead of hours, days or weeks.

That’s why a builder’s tool belt today must include not only a hammer, but also a tablet computer, smart phone and video kiosk. In fact, technology is the catalyst for co-construction. Without it, designing and building at the same time wouldn’t be as feasible. Technology tools are changing the way we have built for thousands of years. Now that the industry is fully on board, technology will continue to spur exciting changes going forward.

Building Lean
Another way to recognize and eliminate waste is by applying lean principles, and it starts by asking a simple question: Where does waste come from? Lean building is about process improvement: challenging old paradigms and looking for every opportunity to maximize effectiveness and remove inefficiency.

For example, the jobsite is actually the least effective and efficient place to build many subsystems. The better approach is to prefabricate them off-site, where it is easier to control and continuously improve upon repetitive tasks. Then, install the complete or near-complete systems, ready for finishing. Restrooms are a prime example, but even entire rooms are now prefabricated and in the future we may be prefabricating entire structures.

Another example is improving communications between subcontractors. Pull planning is a proven collaborative lean technique. Modeled after The Toyota Way and adapted for the building industry, pull planning streamlines project planning for the hand-off from one subcontractor to the next. Each is held accountable for communicating and meeting commitments, so there’s less chance of wasted time through poor workflow or rework. And by giving every subcontractor a voice in project execution, pull planning improves collaboration and creates a stronger team. Going forward, the entire building team will be challenged to push the limits of effectiveness and efficiency. Lean principles that are beginning to take hold in the process will be the way we build.

The Tools of the True Builder
Today’s market needs to move faster, resources are more limited and owners need greater certainty. How do we manage risk in this age of rapid change? Rather than stand still, we can move confidently forward with the right approach.

Co-construction is critical. So is the steadfast belief that culture matters now more than ever, as we nurture a new and skilled labor force for the future. At the same time, technology and lean construction will drive efficiency and lower costs. Together, these are the tools of the true builder. In the right hands, they are the tools of future success.

ABOUT THE AUTHOR
Mike Bolen is Chairman and Chief Executive Officer of McCarthy Building Companies, Inc. With over 30 years of experience in the construction industry, Mike joined McCarthy in 1978 as a carpenter, moving his way up through the company to assume the role of CEO in 1999. He earned a bachelor of science in general engineering from the United States Air Force Academy in Colorado Springs, Colo., and completed his graduate degree in guidance and counseling at the University of Northern Colorado in Greely, while on active duty.

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