Recent Wall Street Journal Headline: "Companies More Prone to Go ‘Vertical.”
This front-page article notes that many of our nation's largest firms are now scrambling to “repurchase companies they only recently shed” in order to regain the control lost in divestiture. Examples include GM and Boeing “to assure quantity and quality of vital parts from troubled suppliers.”
But why have these industry titans failed at control of independent subcontractors and vendors while such is second nature to construction firms, ranging in size from Fluor and Bechtel to Dan’s Construction (with total assets of a lease on a pickup)?
The difference may be that of the management styles of command versus persuasion, and management’s view of scheduling.
There are really two completely different forms of scheduling. For most industries what is meant is resource allocation, wresting the highest return on investment from the limited resources owned or otherwise controlled in a repetitive process. For construction what is meant is CPM planning and scheduling, leveraging the much larger pool of resources beyond immediate control to complete a one-time project using the least time and lowest cost. Although there may be limits within a market of available resources, these resources also may be many times greater than any one company may control.
The successful project manager must learn and apply the art of persuading independent subcontractors and vendors to provide necessary quantity and quality in a timely manner. How? By giving the project manager both authority and responsibility.
In most construction firms, the PM is God, and if the firm’s quarry cannot provide stone, or facilities department cannot field a crane, the PM has authority to buy or rent from other sources, even from a competitor.The initial choice to use in-house or outside sources is also given to the PM in most instances.This also forces the in-house operations to be competitive.
Complacency is the enemy of profitability. The facilities manager cannot depend on a captive market.The project manager must constantly assess the marketplace for the best products and services.The PM does not use a small dozer where a larger one may be used to better effect simply because the facilities department has one – it is more profitable to rent the larger dozer and let the smaller sit idle.
Resource allocation scheduling is all about not allowing assets to sit idle. CPM scheduling is all about selecting resources to make the project happen in the least time at the least cost. Maybe the titans of industry can learn from the construction model.
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This front-page article notes that many of our nation's largest firms are now scrambling to “repurchase companies they only recently shed” in order to regain the control lost in divestiture. Examples include GM and Boeing “to assure quantity and quality of vital parts from troubled suppliers.”
But why have these industry titans failed at control of independent subcontractors and vendors while such is second nature to construction firms, ranging in size from Fluor and Bechtel to Dan’s Construction (with total assets of a lease on a pickup)?
The difference may be that of the management styles of command versus persuasion, and management’s view of scheduling.
There are really two completely different forms of scheduling. For most industries what is meant is resource allocation, wresting the highest return on investment from the limited resources owned or otherwise controlled in a repetitive process. For construction what is meant is CPM planning and scheduling, leveraging the much larger pool of resources beyond immediate control to complete a one-time project using the least time and lowest cost. Although there may be limits within a market of available resources, these resources also may be many times greater than any one company may control.
The successful project manager must learn and apply the art of persuading independent subcontractors and vendors to provide necessary quantity and quality in a timely manner. How? By giving the project manager both authority and responsibility.
In most construction firms, the PM is God, and if the firm’s quarry cannot provide stone, or facilities department cannot field a crane, the PM has authority to buy or rent from other sources, even from a competitor.The initial choice to use in-house or outside sources is also given to the PM in most instances.This also forces the in-house operations to be competitive.
Complacency is the enemy of profitability. The facilities manager cannot depend on a captive market.The project manager must constantly assess the marketplace for the best products and services.The PM does not use a small dozer where a larger one may be used to better effect simply because the facilities department has one – it is more profitable to rent the larger dozer and let the smaller sit idle.
Resource allocation scheduling is all about not allowing assets to sit idle. CPM scheduling is all about selecting resources to make the project happen in the least time at the least cost. Maybe the titans of industry can learn from the construction model.
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