what the future looks like for the aec industry

A new way of looking at an old problem.

Thursday, February 4, 2010

The Medium is the Message

What is the Real Crisis?

Symbolic

Realistic

Conceptual

Contextual

(Hack/Mod)

Holistic, Circular, Symbolic, Interdependent

Linear, Sequential, Rational, Autonomous

Broadcast

Fluid, Fragmented, Emotional, Isolated

Digital/Interactive

Holistic, Non-linear, Whole-Brain Systems Thinkers, Interconnected

Digital Immigrants Digital Natives

Over 656%

Boomer50%

GenX38%

Millennials6%

Boomers24%

GenX33%

Millennials43%

Different Seas

Different ShipsThursday, February 4, 2010

The Vertigo of Disruptive Change

•Acceleration•Interconnection•Complexity•Intangibility•Convergence•Immediacy•Unpredictability•Scale

•$300-$500 billion annual WASTE(buildingSmartAlliance)

•50%+ Waste in the System(buildingSmartAlliance and Lean Construction Institute)

•70% Over Budget and Late(Egan report)

•48% of Green House Gases (Energy Info Admin Statistics and Pew Climate report)

Results of an Old Hammer

•Labor = 50% @ 30% efficiency = 35% waste

•Materials = 40% @ 70% efficiency = 12% waste

•QTO = up to10% of the cost

•Bidding = 5%+ of the cost of a project

•Change orders between 2-10% of the cost

•Contingencies up to 7%

•Team Learning Curve = 1-2%

•3-7% is lost in project cost reduction by not maximizing Construction Tax Planning

Uncovering the Hidden Waste

2 Camps

Finding the New Normal

Hoping for the Old Normal

Integration

Expanded Horizons

•Value

•Care

•Time

•Relationship

•Thought

New Operating Principles (imperatives)

ParadigmsGoalsTeamsRulesMeta-ToolsProcessesToolsFeedback LoopsBottlenecksPeople

Magnitudes of Change/Impact

System

15 Words for SnowSnowflake

FrostFine particle

Drifting particleClinging particle

Snow on the groundSoft deep snow

Crust on fallen snowFresh fallen snow

Snow floating on waterSnow bankSnow block

Snow corniceBlizzard

Severe BlizzardThursday, February 4, 2010

GreenIPDBIM

Relational ContractingLean

Outcome Based Incentives

Emerging Terms with Few Words

Financial Alignment: Outcome Based

•Trust-based turnkey teams

•Early collaboration

•Built-in sustainability (quality)

•Transformational leadership

•Big BIM (Building Information Modeling)

•Integrated Project Delivery

•Shared risk/Shared reward

•Leverage Offsite Fabrication

•Improve Workplace Performance!

Nine Keys (4 Principles, 4 Tools, 1 Hidden Opportunity)

The ROI of Trust•LogicaCMG study of 1200 contracts: 20% to

40% difference on service, quality & cost

•Profitable Partnering for Lean Construction: strategic partnering delivers up to 30% in cost savings of construction

•Speed of Trust: distrust creates a 50% tax on work

•Edelman Trust Barometer: 20% higher ROI over a 10 year period

•Warren Buffet: Handshake deal for McLean

Trust Tax -80% -60%-60% -40%-40% -20%Environment Hated ToxicToxic StressfulStressful WorryFocus Conflict EscalationEscalation Pre-emptionPre-emption ProcessRelationships Anger HostileHostile DisrespectDisrespect IndifferentProcess Open defeat SabotageSabotage Hidden agendasHidden agendas Chain of commandBehavior Punish MicromanageMicromanage CYACYA Do my jobOutcomes Grievance or Law-suit GotchaGotcha PoliticsPolitics SlowSystems Disintegrated DysfunctionalDysfunctional DistractingDistracting HassleEthics Your ruin Your harmYour harm Self-interestSelf-interest Compliance

Trust Dividends NeutralNeutral 20%20% 40%40%Environment No worriesNo worries PositivePositive UpliftingUpliftingFocus ScopeScope OutcomeOutcome Mutual successMutual successRelationships CordialCordial CooperativeCooperative CollaborativeCollaborativeProcess Task at handTask at hand Keeping promisesKeeping promises Making it easier for othersMaking it easier for othersBehavior RespectRespect PartneringPartnering TransparencyTransparencyOutcomes EfficientEfficient Learn from mistakesLearn from mistakes ImproveImproveSystems Does not get in the wayDoes not get in the way SupportiveSupportive AdaptiveAdaptiveEthics What is expectedWhat is expected What is rightWhat is right What is goodWhat is good

Trust: From Deficit to Dividend

Select Teams not Players

2004 2008

Novartis - Memorandum of Understanding

Guaranteed Price

Guaranteed Move-in Date

No Change Orders

2-Year Warranty

1 Page Contract

The Value of

a Promise

Freemium - free BIM work for gain sharing

Free green retrofit for performance compensation

Cutting original move-in timeline by 70%, with guarantee = big bonus

Achieve under 5 year payback for high performing green retrofits

Guarantee on-time, on budget, no change orders, 2-year warranty and one page contract

Equity stake as part of the compensation

Guarantee 10% less than open bid results

Tie design model through to CAFM and create new role as BIM integrator

Partner with steel fabricator to design a pre-fab rebar frame for shotcreet walls. Cuts 16 weeks and $750k in general conditions

Ideas for Expanding the Value Horizon

What does Better Together look like under the new operating imperatives of integration and extended horizons?

•What is a next step for teaming?

•How do we explore different models for taking on risk and creating value?

•Where can we find and partner with Fed Up or Early Adopter owners for proof of concept?

•How do we engage Millennials to accelerate our learning curve?

•How do we move our organizations out of a 500 old year mindset?

•What do ships look like that can sail digital waters?

•What does the next hammer look like? (hint: ask)

Call To Action

•Speaking

•Training

•IPD Strategies and Implementation

•Designing New Value Propositions

•Market Repositioning

•Creating Integrated Alliances

•Business Development

•Educating Owners

•Change Management

rex@rexmiller.net

214-498-3055

what the future looks like for the aec industry

cost contingencies

cost bidding

project cost reduction

hidden opportunity trust

waste qto

waste materials

hidden waste labor

work edelman trust barometer

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