Your next pay rise: It wasn’t Brunel, it was wages.

 

Don’t need to be a star engineer. #4IR

I’ve been looking back at the history of Industrial Revolutions… (Hi by the way, it’s been a while).

My first tangent is to apologise for the absence:

new born baby + new born organisation (dotBuiltE) + research synthesis + shift in working pattern = less opportunity to write

Plus, i’ve decided to fill my spare time learning the Coursera Machine Learning course from Stanford by Andrew Ng. If you have done it or are currently enrolled, I’d like to hear from you!

Back to the Industrial Revolution, turns out we are on our 4th! This has led me to look at the past to see what there is to learn from these previous phases.

First off, I stumbled across an economic historian called Joel Mokyr, he has written many articles and books on this subject. What caught my eye was a book The British Industrial Revolution, An Economic Perspective where he points out that the revolution wasn’t down to our genus engineers! (Although I’d argue that they has something to do with it), he explained it was our higher level of education and culture of tinkerers.

This led me to a paper called The British Industrial Revolution in Global Perspective: How Commerce Created The Industrial Revolution by Allen (2006). Allen compares 18th century France and Britain and analyses the subtle differences in indsutry that made one of them an economic success.

Focusing on the textile indsutry. Despite operating the in the same competitive environment as Britain against India and Africa , France failed to invent mechanised spinning. Nor did they adopt it once the British invented it and made it freely available!

This was not for a lack of capability and understanding, nor was it a lack of support. The French government  went as far as subsidising the use of the machinery. Whilst 20,000 jennies were in use in England, there was only 900 in operation in France. In the 1780s there were 150 large scale mills compared to only 4 French mills.

Why didn’t mechanisation sweep through France?

A 60 spindle jenny cost 280 livre tournois in 1790, costing nearly a years worth of labour cost (373 days), whilst in England the jenny cost 140 shillings equating to 140 days of labour. In short, the jenny in France was not worth the extra capital cost.

This was further compounded by the introduction of Arkwright’s water frame, which was more capital intensive than a jenny. This saw England’s production take flight as France fell further behind.

Why was this? (the clue was 2 paragraphs ago)

Higher wages generated the incentive to mechanise, England had a high wage economy.

The jobs that higher levels of trade, manufacturing and commerce required skills that agriculture did not need or offer. This generated the growth in urbanisation and the difference of literacy skills between the countryside and cities that we still see today.

Lets also keep in mind that inventions such as the printing press sharply reduced the price books and generated a higher capacity for learning and effective teaching prior to this moment in history. The boost in numeracy had more to do with the navigation tools required to manage the level of trade than the scientific process alone!

The lesson I learnt from this is that if we want to mechanise construction to be safer, more efficient and higher quality we all need to go and ask for 10/20% pay rises!! 

Or at least stop making a race to the bottom on labour rates. At this moment in time, we are not in the same position for the 4th Industrial Revolution as we were for the first. We need to rethink how our indsutry is paid!

There is hope, where the printing press accelerated learning prior to the first industrial revolution. Today we have the internet and via world leading universities sharing their course content online for free. I think our 4th Revolution is going to fly regardless of your geography.

What’s gone wrong?

When was the last time you spoke to someone who is retiring or retired from construction? For me, it’s been an interesting series of events. From funerals to retirement parties, I’ve coincidently been bumping in to old school Balfour Beatty employees all over the place. Serving between 25 to 40 years for the firm.

I sometimes forget the scale of the projects BB has delivered, and I think we call fail to appreciate the benefits of good quality infrastructure!

Two things jumped out at me talking to them.

1. The amount of knowledge and information that is leaving our industry is immense.

2. Why haven’t their skills been transmitted further in the industry?

It’s not a secret that the industry is hemorrhaging talent. It also seems that not many people understand the severity of the situation. 

Before we get in to the systemic issue of getting talent in to construction, the first issue is the exit of skill. All my conversations involved 2 general themes, (1) the lack of pace in change, and (2) the amount of ‘paper work’ they destroyed in their final weeks.

A distant relative of my wife worked for BB in Scotland and worked on many large infrastructure schemes as a civil engineer. He was telling me about how he went about his design process on computers. He frequently programmed his own routines and ‘apps’ in today’s speak, and spoke naturally about a BIM world without mentioning the acronym. He was disappointed to hear that we are still working it out!!

The data and documentation that these guys have are rich with information and it is all gone to waste by shreading it all! Large bodies of knowledge gone in almost an instant, with younger generations dismissing them as old fogies with little left to contribute!! It should be a crime!

This throws up an interesting question. Has the ‘de-skilling’ of draftsmanship caused a gap between design and production? Have engineers and architects built an ideological gap between their grand desings and reality?

For me, we won’t see progress until we get our designers designing computationally. 

This does throw up an interesting paradox in terms of the de-skilling tasks, for me the focus is on middle managers. This is a post for another time but I think time is ticking for the flabby middle and it won’t be at detriment to the construction / design process (unlike the the de-skilling of design).

Let’s get our designers designing in an environment that it fit for purpose in the 21st century. Designers please stop thinking ‘if we BIM it we can charge more, ship the production off to India and make some £££’. Develop your resources!!! Outsourcing basically transfers skill and wealth outside of our communities, how are we ever going to service the skill gap if we keep finding excuses to offshore labour?

The announcement of the 8 till 8, 7 days a week NHS has highlighted an important point about training and lack of people to do these jobs. If the health industry can produce enough doctors… What chance have we got to attract and develop our skills gap?

Perhaps a subject for a different post now, I believe construction can take advantage of its already close ties to universities and colleges. Tuition fees are at such a level where construction firms can offer a ‘free’ good quality education, either by partnerships with schools or using the new trailblazer apprenticeship schemes. More on those later!

Now I’ve committed myself to 3 new posts! 

1. Good bye middle management, you won’t be missed.
2. An education partnership.
3. Fire! Trails-a-burning.

Invest in your own death.

Some of the most interesting people I meet always leave nuggets of brain food for me.

My laest a la carte serving was…

“A measure of an innovative business, is one that is investing in its own demise”

One way to look at innovation is constant improvement, making what you do better or using that core compitency to diversify in to another market. 

That type of growth is captured by the Zodiac case study. 

 

 

Their core competency is inflatable materials… This is how they diversified over time. 

Developing core competencies by investing in innovation makes sense for capital intensive business models (producers of goods / manufacturers etc).

Is it the same for ‘people based’ businesses, the businesses that are human capital intensive (where remuneration is far greater than production in the cost of sales)?

This is where that quote makes sense to me, and I wonder how many CEOs of contracting firms have asked… Can we get some people working on how to kill our own business?

I bet, not many… If any at all!

It seems like a sensible hypothesis, but is is practicle? What structure would it need? How much investment? How is the return measured? 

I don’t know yet. To the drawing board!

Is the use of BIM really slowing down?

Stop the press!!! The NBS survey is saying that the implementation of BIM is going backwards!!

Or is it?

The misinterpretation of statistics is a bugbear of mine, the NBS survey is a prime example. This is no criticism of the NBS, they have done a great job in tracking BIM adoption and it must continue!

To get the technicalities out the way, the reason that it has dropped is due to the sample size (number of participants). I presume the sample size of the NBS survey has grown over the years and it’s sudden drop is an interesting phase in the ‘marketisation of BIM’. More of that in a moment.

Let’s look at the numbers first, if there were 100 participants last year and 50 said yes to the implementation of BIM that is a 50% uptake.

In year two, 200 people can participate and 75 say yes to BIM, making a 35.5% uptake rate!

In ‘real terms’ the uptake has risen. It’s also, in my point of view a good thing, it means there is growth in the number of people looking in to BIM.

This leads to the ‘Marketisation’ of BIM. 

  
Diffusion of Innovation, Rodgers (1962) 

Behold! The diffusion of innovation curve, an idea that is well established and illustrates the point I want to make well.

There is one more detail to add, Crossing the Chasm by Moore (1991) places a ‘chasm’ between the early adopters and the early majority. Moore writes about the difficulties of crossing that chasm and it seems we are reaching that point.

BIM as a movement of modernising construction is at a critical point and I hope we can pull through. The hard work by the UK Government’s BIM task group has accelerated the journey up the curve, but as it starts to penetrate in the the early majority market… Without the support from industry, it could fall down the chasm.

BIM is just a wall of noise…

BIM is just a wall of noise to me sometimes!

Read a chunk of literature on construction technology improvements recently and there is a central theme… Physical technologies.

Hardly any mention of information technologies!!

Starting with the introduction of lift technology towards the end of the nineteenth century, they made the construction of taller buildings more feasible. In London, following the First World War, steel frame structures were introduced (pioneered in the USA) increasing capacity and flexibility of office spaces.

The dawn of ‘the White Collar Factory’ was upon us!

Following the blitz, large parts of London were cleared bomb sites. Coupled with the introduction of curtain wall systems, together boosted the construction of large office spaces.

Lastly, the introduction of fast-track construction methods where design and production is completed in parallel supported by prefabricated modular systems accelerated production even further.

These physical technological improvements enable firms (the end user firms) to centralise their cost bases and gain an economy of scale in their production. (We will ignore the Internet and planning for now)

The improvement of construction technologies generate an interesting feedback cycle in to the wider economy as the demand of local services and infrastructure is lifted by workers flooding in to the city.

From Barras’s Building Cycles, there is a great illustration.

As described above, construction technology has facilitated a significant increase in city size. This centralisation of people (people brought together to enable firms to reach the scale of economy they desire) intensifies city centre development and in turn extends the development of suburban communities (these people need to live somewhere). These factors induce a building boom, resulting in a need for infrastructure investment.

Infrastructure development increases the speed of production and/or lowers costs for firms and employees, enabling further expansion. The result is the ability to develop wider markets as distribution is improved or achieve larger scales of economy and agglomeration. This boosts the requirement for capacity… And we go back through the loop… And so on.

This makes sense, growing for growths sake has logic… Until the cycle is disrupted. Silicon Valley demonstrated the value generation power of the computer scientists!!!

The more people we could squeeze in to an office, the better!

Is that still the case?

Of course not, Instagram was acquired by Facebook for a cool $19bn… With only 55 employees. That sort of money would buy you a handful of Balfour Beattys!!

Do we need to have high rise white collar factories?

This is a great animation explaining the change in our working culture:

Reimagining Work

Kudos to Tom Bartley of Parsons Brinkerhoff for finding it.

The next generation of technological change will be knowledge based and stuffed with sensors. As more of us discover our idiosyncratic working spaces and communities, the need for office space could diminish!

I wonder if iBeacons will feature in future construction technology literature??

Come on, feel the noise… What do you think?

EDIT:

Another thought, it’s more that we have an effective infrastructure in place over its continuous expansion. Take the energy demand for example. We have the infrastructure, but our demand is peaking. We can either build more power stations or use the infrastructure more efficiently. More for less…

BIM2050 in 2012

BIM2050’s first mapping session.

Note: the dates provided on the time line are projections. You might ask why 2016 for example, is on the right hand side. We feel you have to ‘pass through’ the paradigm in order to define it and then mandate before moving to the next. The owners of the levels at the bottom are no longer relevant.

Above is a rough output from one of the original workshops conducted by the BIM 2050 group. We looked at existing frameworks, mainly the cost ratios from ‘never waste a good crisis‘ by Wolstneholme and THE WEDGE by Bew and Richards.

We used this graphic to summarise a session we had with Mark Bew, and we add our take on what the next steps could be (the sustain part). Mark spoke of the austerity facing the industry since the great financial crisis in 2008 and used levels 1 to 3 to paint a picture of an industry ready to thrive in the first quintile of the 21st century. From austerity, being fit for growth and then growing, the levels tied up nicely.

The sustain part was the basis of our thinking in terms of traditional growth. My next post will discus this in detail. For now, it was our view that the continual reliance on growth (at a higher rate than the long run average) is not sustainable or suitable for the environment. You could say that the first 3 levels are about gaining a mastery over nature and level 4 is about using that mastery to harmonise with nature.

Another point to add, the BIM framework would be (now is) an excellent platform / opportunity for construction innovation and the export of information services to enable developing countries build their infrastructure more efficiently!

…. Construction reports, in briefs.

Guess what all of these construction industry reports say?

Construction Reports
1944–98
Edited by
Mike Murray and David Langford

…. That construction is in desperate need of change… this report will all bring about great innovation and improved productivity… etc

71 years have passed since The placing and management of contracts (Simon Report 1944). Here is what the CIOB have to say about the report:

The report criticised the practice of open tendering (allowing anyone to tender for a construction contract rather than using a pre-qualification process to create a short-list of suitable companies that would then be invited to tender) and suggested that the tendency of clients to simply accept the cheapest price created a situation where tenderers would submit low bids, and then make up their income by reducing quality or making claims. The report also recommended better training of construction managers and a more collaborative approach to design and construction with earlier contractor involvement.

Main issues were:

Collaboration, procurement and the separation of design and production!

Whiz forward 50 years to 1994, in which Sir Michael Latham described the industry as ‘ineffective’, ‘adversarial’, ‘fragmented’ and ‘incapable of delivering for its customers’… The story continues.

4 more years pass and the influence of other industrial sectors come in to play, in the form of Sir John Egan. Originally the chief executive of Jaguar Cars, no doubt his role in the rise of Unipart (British Leyland) had something to do with his rise to a prominent role in the automotive industry. His move to BAA in1990 changed his focus from cars to airports, and ultimately the whole construction industry via Rethinking Construction (Egan 1998). Where the industry criticised Egan’s automotive approach to construction.

In 2008 Sir John Egan stated that:

‘we have to say we’ve got pretty patchy results. And certainly nowhere near the improvement we could have achieved, or that I expected to achieve…..I guess if I were giving marks out of 10 after 10 years I’d probably only give the industry about four out of 10’

4/10, 40% would scrape you a pass in most modes of assessment. For me that is a caricature of the construction industry, whatever it takes to scrape by and not paying much attention to the ‘must try harder next time’ feedback.

In 2009, Andrew Wolstenholme of Balfour Beatty at the time and now CEO of Crossrail, produced Never Waste A Good Crisis – A Challenge to the UK Construction Industry. The report highlighted issues with current business models in construction, due to short sighted business cycles driven by, and to be frank, short sighted clients. The report also highlights that flagship projects in construction were showing significant improvements in quality, vale and collaborative processes (it did suggest whole-life costing, but I disagree completely), but there was little penetration in to the wider supply chain. The report also asserts that the era of client-led change is over… I’ll leave that one for you to decide!

‘… create additional economic social and environmental value through innovation, collaboration and integrated working.’

Let’s unpack that sentence:

• The creation of economic social and environmental value.
• Innovation.
• Collaboration.
• Integrated working.

This gives me a chill down my spine. The BIM2050 report is basically the same in its roots. Please don’t think for a moment that the group went off without checking the history. In a way I hope that this post proves that we did a literature review! We read a wide range of papers and reports, we spoke to many figure heads and young people. In essence the core is still the same, in terms of sentiment around the performance of construction.

A question is why? Why is construction ‘so pants at improvement’…

[pants…. construction report’s, in briefs…. geddit?]

Pants as in pants, not trousers, okay?

Mr Bean, and his pants.

A bigger question is…. is it actually pants?

In the BIM2050 report said that there will be a slowdown of gross fixed capital formation (GFCF) and an introduction of the ‘non-additive construction cycle‘. GFCF is used as a measure of how much has been built in excess of depreciation, in other words how much ‘extra capacity’ has been constructed / developed. This does include intangible things but in the context of the report we stick to shared assets (roads, railways etc) and fixed assets such as houses, warehouses and factories and of course land.

Before we move on to the non-additivie construction cycle…

Thomas Piketty, French economist and writer of Capital in the 21st century, is kind enough to share the raw data from this book and research. I’ve adapted his data on world output, per capital world output and population growth for ease of comparison / clarity.

Reference: T Piketty – Adapted by Neil Thompson
http://piketty.pse.ens.fr/en/capital21c2

The fastest change in rate of growth (how steep the line is) was in the time all of the reports listed above were published. Im not one to naively apply causation to correlation, but I do wonder how construction (considering the first 1700 years in this data series) would be expected to adapt to changes never seen before, possibly due to its own produce. What I mean is that construction has contributed to this growth via the delivery of infrastructure (fresh water & sanitation, clean hospitals, schools, roads, rail etc…). I guess the attention is drawn to construction because its benefits have broadly been delivered and the growth of output is slowing, people are asking where all that lovely growth has gone?

The graph shows world output growth, output growth divided by capita growth and population growth. It provides the basis of my explanation of non-additive construction cycle. It’s a construction specific term for circular economy. The difference is its origin of the view point.

As we move from building fixed assets from ‘new materials’ to a circular economy model, the composition of how national and business accounts may need to change. It would also provide a platform for market creation and shift the motives and measurement of how we transfer assets to something more meaningful, not just arbitrary accounting profit.

Right now we measure in terms of rent / revenue / production per meter square of asset. We could find that the performance of assets could follow a Du Pont type system of ratios that consist of rents, revenue, emissions, consumption of energy, embedded carbon and wellbeing. Although measurement of these things right now are not possible.

I digress, the question was if construction was actually pants at improving or is it a throw back of lagging behind population growth and productivity? I don’t want to let construction off the hook, because it is slow to innovate (which is an interesting paradox when compared to the benefit construction has brought to global community). You have to admit that the economic pressures that act on the industry are very influential!

A parting thought, the ‘liberation’ of our senses in decision making (industrial application of the internet of things) will probably enable a shift in productivity per capita. If we can strip out the waste in food production and dynamically improve or consumption efficiency, I can’t see why a another population growth burst could be possible. On the other hand we could fail to innovate the population would dramatically reduce as the food supply collapses…

We have the opportunity to be voted the best advance in medicine again!

Let’s own it.

Don’t be so bloody negative all the time. Honestly, I mean it!

If you place your ear against the wall of the construction industry, all you seem to hear is everyone moaning about slowness and problems. Trouble is, the people with their ear against the wall (every other industry) are in exactly the same whirlwind of change and technological confusion.

Instead of moaning about it, why don’t we [people of the construction industry], take stock and reframe. What if our position is an opportunity to make something happen, to do something that can define a generation? It may sound grandiose and many of you might think I am being naive here, but please, hear me out.

Below is a strange flow diagram that featured at the end of the BE2050 report (BIM2050 2014). There are a few bubbles on this and it would take some time to go through all of them. To save time let’s look at the last one “Smart Social Political Process”.

What does that mean? When we stick smart on the front of words it tends to mean that it is connected to the internet somehow. When we connected the world via the internet, it gave birth to social networking (there is the social bit). I’m sure as a reader of blogs you don’t need to know any more about the impact of social networks on our globally connected communities.  The last part is political process.

Wikipedia (I know, I know):

Political opportunity theory, sometimes also known as the political process theory or political opportunity structure, is an approach of social movements heavily influenced by political sociology. It argues that success or failure of social movements is primarily affected by political opportunities.

In the Economist Jan 10th – 16th 2015 (Volume 414 No. 8920, page 8) there is a good article about microeconomics and its impact on macroeconomics. To cut a long story short, micro is bossing macro in a big way. [another mico article from 2012]

To grossly simplify, macroeconomics is like the BSRIA rule of thumb (not a very good way to design air conditioning systems), its a high level view of the economy and it’s how many governments view the world, interest rates, monetary and fiscal policy, aggregate demand (as in supply and demand, See also). The level of information used is generic and doesn’t reflect reality very well.

Micro on the other hand is looking at individual decisions and their economic impact a good analogy is how big data is helping tech firms (see the articles above).

Therefore:

Smart + Social + Political Process =

The macro application of micro economic tools to inform and govern the political process.

More specifically with less jargon:

A socially, thus truly democratic political process that is driven by digitally connected networks and realtime information.

… it’s a work in progress. (resisting a BS1192 joke)

That is my vision, a political process that is welfare focused (as defined by Lord Richard Layard), is governed by ‘the people’ in realtime, removed from the lens of media (as we currently experience it) and is open.

This is why we shouldn’t be moaning. The construction industry will deliver the backbone of this information network and new political system. The cables, roads, schools, hospitals… all those political things are key, and connecting them will give rise to ‘smart cities’. These connected cities can inform local governance and make decisions that maximise the happiness of its community…. Imagine what can happen when you connect up these smart cities, a smart country…? a… smart government…. a Smart Social Political Process perhaps?

When you go to vote in May, think about what our digital future can look like and ask who is going to support our industry to deliver it if they are in government.

 

Citation of BE2050

There are many ways to structure references. Even using the Harvard system it can differ.

Here are the 3 versions of the Harvard system that Word generates:

Thompson, NJ, Philp, D, Barker, C, Rebecca, H-J, DeCicco, R, Beaumont, W & Atkinson, 2014, ‘Built Environment 2050: A report on the digital future of our industry’, Construction Industry Council, Construction Industry Council UK, London.

THOMPSON, Neil J, David PHILP, Chris BARKER et al. 2014. Built Environment 2050: A report on the digital future of our industry. London: Construction Industry Council UK.

Thompson, N.J. et al., 2014. Built Environment 2050: A report on the digital future of our industry. London: Construction Industry Council UK Construction Industry Council.

The last one is one that I wouldn’t recommend using.

Is success in construction a cognitive illusion?

I have been scratching the surface of behavioural economics for a while now. It’s a fascinating subject, and at first seems counter intuitive, but as I adapt my thinking to become more statistical… I’m starting to wonder about the criteria of success in construction.

An example is from Daniel Kahneman and Amos Tversky. They were a great duo, their research is a key link between psychology and economics. Kahneman writes a brilliant summary of his work in a book called Thinking, fast and slow.

Kahneman gives a range of examples, supporting the inability for our minds to consider statistics effectively in our faster modes of thinking.

A slight tangent, Kahneman talks about his relationship with Tversky and tells a story about his effectiveness in Tversky’s presence. He describes how his thinking was more complete when he was working with Tversky and that their whole was grater than the sum of their individual efforts.

I too feel the same about my close colleagues and friends in the industry. We should take note of this and help others realise that we are far better off working as a unit over personal gain and points of view!

Back on subject… My question to you is:

Is success in construction beyond randomness?

Many clients will only have enough time in their life time to design and build a hospital from start to finish, and the same goes for some of those who will deliver it.

A step deeper, the selection of supply chain members. Consider the winners curse and the distribution of tenders for a project. Could we consider the aggregate result to be arbitrary?

If so, how can project managers and directors, CEOs and MDs attribute success to their frameworks / firms?

I don’t know the answer, nor do I have a preference! For me there seems to be a possibility for success to be randomly distributed and I hope someone, somewhere is looking in to it!