An Interesting Parallel to Being Data Driven and Data Actionable

By Gregg M. Schoppman, FMI Corp.

I must have been feeling unloved by the Las Vegas casinos.  In addition to getting the small room facing the parking garage, I paid full price at the restaurants. My cathartic moment came as I lay in my room at 8:30 PM – don’t judge, I live on the east coast – watching reruns of Seinfeld. Maybe it was me thinking about the facility manager of the casino sitting in some control room reminiscent of a scene from the movie Oceans 11 or simply knowing that Las Vegas is pretty smart about who the high rollers are, but suffice it to say, they knew me, better than I knew myself. They have algorithms upon algorithms examining those customers that will extricate themselves from the Seinfeld marathon to the Roulette wheel. More importantly, they read the data.  

Sitting on the flight home counting my winnings – or at least counting the unspent dollars, I opened my laptop to begin the search for a much-needed new vehicle. Call it naivete or simply jet lag, no sooner did I enter my cell phone number allowing me access to pricing in my area, did my phone begin ringing at 35,000’ over the plane’s wifi. Apparently when you click on the “Don’t Contact Me” button, that means, “Call Me Immediately.” Either way, in the span of 15 minutes, I had 15 missed calls from dealers in my area that had offers on the exact model of vehicle I was looking at. Much to my chagrin, those calls persisted for about two weeks. Every so often, I also get a text or email for good measure.

In the span of 24 hours, I was not only reminded of the power of data but more importantly the power of “Actionable Data.” Neither one of these situations was new or breathtaking. In fact, both probably fell to the side of creepy. To me, the interesting thing was not the data collection but the data follow-up and how these industries actually do something with the data and don’t just sit on a mound of bits and bytes.

Now, consider the construction industry, organizations have treasure troves of data, but don’t use it. For instance, consider a firm that is awarded a large construction contract. How much due diligence is applied to awarding various contracts to trade partners to ensure one of those contracts is not given to a trade contractor on the verge of bankruptcy? There are undoubtedly plenty of indicators available – financial reviews, bonding, risk registers, reference checks, site visits, interviews, etc. What about repeatedly working with a client that is a slow payer? How often do we chalk it up to just being “normal” or something we are willing to accept if we want the work? The better question to ask is why can an industry like a casino or car dealership maximize their data’s actionability but the construction industry seems content to simply have the data but fail to use it?

Ask the Question

Construction organizations have the gold, but the challenge is mining that data effectively. When you think about the prevalence of information in the construction industry it is amazing – job cost data, submittals, RFI’s, change orders, productivity rates, production rates, take-offs, purchase orders, safety information, etc. The only thing missing is the person sitting behind the massive stacks of monitors as if they were a mastermind in a Vegas casino (or in my imagination maybe). While that interface may not exist, best of class organization need to ask these questions to ensure their strategy and data create real action:

In the realm of seasonality…

• When working in summer/winter months, what factors do you apply to your productivity rates?
• What about your overall schedules? Float?

In the realm of design/engineering…

• Working with specific designers, what is the propensity for design omissions and errors?
• Of these potential errors/omissions, what is the cost impact or productivity impact?

In the realm of trade partners/vendors/suppliers…

• What metrics are you using to provide balance to the supply chain downstream? Put another way, what adequately creates a balance of risk to the firm?
• Are you measuring partners and vendors religiously and providing critical timely and positive feedback?

In the realm of daily productivity…

• Are you simply looking at profitability and believing all is well?
• Are you using gold standards like earned value to examine daily productivity for all things?
• Are you also measuring the right behavioral triggers to drive the right performance? Put another way, are you enabling the right amount of planning on projects for your crews and teams to be productive?

In the realm of customer management…

• Thinking back to the customer question from earlier, do you “price discriminate” or apply specific metrics to your mark-up to account for late payers? 
• On the opposite perspective, why do you consider a customer “a great customer?” Is it because they give all of their work to you? Is that really a good metric? We’ll come back to this one…

There will naturally be comments about things like seasonality and subcontractor management. What if we price in things like seasonality and adjust our sub numbers but our competition doesn’t? We’ll lose the project.  This is true. On the other hand, there is also the risk that you get the project and put the business at risk.

Ask most organizations about measuring data and you often get the big two – Profit and Safety. There is no doubt that these are two very important measures of performance. But there are arguably many elements that factor into success that must be considered. Additionally, organizations can stumble around trying to find a great customer. Consider a contractor that identifies a great customer simply because they do all of that owner’s work, only to find out they are barely covering their own overhead.  No wonder they are the favorite choice – they are doing it for free!  Think about the casino comping me nice rooms and giving me the super prime rib dinner. We know that isn’t going to happen because they read the tea leaves. They know who their best customers are, and it wasn’t the guy watching Seinfeld!

About the Author

FMI is the largest provider of management consulting, investment banking, and research to the engineering and construction industry. FMI works in all segments of the industry providing clients with value-added business solutions. For more information visit www.fmicorp.com or contact Gregg.Schoppman@fmicorp.com.