The New Transparency: Your Key To Reducing Risk and Ensuring Capital Project Success

Ronna Dubro:  

Well, hello again. I’m Ronna Dubro. I am the current director of membership, and I’d like to welcome you to our webinar, The New Transparency, Your Key to Reducing Risk and Ensuring Capital Project Success. We ask that you place yourself on mute during the webinar. This webinar is being recorded and a link to the recording of the webinar will be sent to you all early next week. Please feel free to enter your questions in the chat box, and they will be addressed at the end. Our host today is AJ Waters with InEight, and our panelists are Dr. Gretchen Gagel with Greatness Consulting and Eddie Clayton with Southern Company. And now I’d like to turn the mic over to AJ Waters. AJ.

 

AJ Waters: 

Thank you very much, Ronna. And welcome everyone to The New Transparency, Your Key to Reducing Risks and Insurance Capital Project Success. What we’re going to do today is, we’re going to walk through with our astute panelists some questions around what transparency might be in the industry, and what can maybe change your view of transparency do to help with your capital projects. So that’s kind of our goal today. My name’s AJ Waters, I’m the Vice President of industry solutions at InEight. And InEight is an integrated project controls platform that is built to ensure that success for capital projects, but also to provide that visibility or that transparency for both contractors and owners alike. And so I’ll be the host today in walking you through the session, but before we go too far here, I’m going to go ahead and stop my sharing and we’re going to introduce our panelists. So first off, Dr. Gretchen Gagel. Would you please introduce yourself and then tell us what does transparency mean to you?

 

Dr. Gretchen Ga…:  

Hi everyone. Greetings from Melbourne Australia. I am in the Southern Hemisphere this morning. I am president of Greatness Consulting, chair of the board of Brinkman Construction in the United States and a member of the National Academy of Construction. Project transparency for me is really about trust fundamentally, and after almost four decades of working in this industry, it’s one shared set of information. It’s really being transparent about issues. When I see projects that aren’t being transparent about issues, that never works. We think we can sweep them under the rug, and rarely does it ever work. And it’s really everybody collaborating to mitigate risk and achieve the results we want to achieve on the project.

 

AJ Waters:  

I like it. And Mr. Edward Clayton, would you please introduce yourself and what transparency means to you?

 

Eddie Clayton: 

Sure, AJ. Please call me Eddie. I’m with Southern Company, and actually have 41 years now with the company. I’m the contracting and workforce strategies manager. I’ve spent most of my career supporting and involved in projects and operation maintenance of power plants predominantly. Transparency means to me is where, I agree with the stretch, trust, but also working together to identify what your key objectives are jointly, and those metrics to make sure that you’re achieving success, and let’s be clear and forthright about what our objectives are for each side too.

 

AJ Waters: 

Yep, clear objectives is a big part of it. So one of the things that we’re going to start off with here is maybe kind of historically how has the relationship between owners and contractors been looked at and maybe what that feel is, but as we do that, I’m actually going to launch that as a poll question for everyone. So for those of you on the webinar, you should be seeing a poll question come up that says, what is your current assessment of the owner/contractor relationship? And as we start to get some results in on that… Well, we’re getting a lot in pretty quick here. There’s a strong leaning toward okay and adversarial. Great. Got one response out of all the responses that came in. So oftentimes it’s been that us versus them, or that you versus me type mentality. Gretchen, do you think that’s a fair assessment of the typical capital project?

 

Dr. Gretchen Ga…: 

Yeah. You know talk about the us versus them, but we have a systemic issue with trust in our industry, and it’s been there. As I said, I’ve been in the industry a really long time, and I don’t quite understand where that came from. When I did the Construction User Roundtable owner study last year, it was interesting because six themes came out, and technology being one of them, our need to be more adept at adopting technology, but there was one that was really around power, and I want to read a couple of quotes that came out of the study. It said trust issues… This is an owner speaking. Trust issues remain. It’s in our culture, our contractual norms, our ways of working. People are protective of transparency, worried about liabilities and potential claims. And another quote here, why do we think the contractor is out to get us? Perhaps volume of money, fragmented supply chain, false sense of cost from the get-go.

So it was really identified. So when I presented the study at the Construction User Roundtable, they were having their joint conference last year with CII, I asked the owners only in the audience, just the owners to respond to this, not the contractors and suppliers and engineering firms, and I made this statement and I asked them how they felt about it, contractors are out to make as much money as they can and cannot be trusted. And sadly, 19% of the owners agreed with that, and 23% were neutral. That’s 42% of the people that responded that were either neutral or agreed that contractors are out to get us. And I think it’s imperative in our industry to start to really address this systemic trust issue we have in the industry, because the cost of conflict, the cost of lack of trust in our industry is enormous.

 

AJ Waters: 

Yeah, that’s an excellent point on bringing the cost of trust into the conversation, because if you think about the amount of money that goes into the contract negotiations or the litigations, that all stems from that lack of trust. Eddie, what about for you? What do you think? Is that a fair assessment, that adversarial or that us versus them when you’re dealing with your contractors?

 

Eddie Clayton:

It depends on the business unit, the type of contractor, the type of project it is. We have pretty standard name plate Ts and Cs to admit to risk mitigation from our perspective, but as we’ve gotten experienced through the years and developed our relationship with a lot of our key contractors or partners we refer to them, how we apply those terms and conditions, particularly when it comes to indemnification and things of that nature, we take a little softer stance. Some of the business units within Southern Company aren’t quite there yet, and so it depends on really the business unit. I would say that our contractors who’ve been with us for the longer term understand how we do business. We work things out better. So I wouldn’t think it’s us versus them for all contractors.

 

AJ Waters: 

Yeah, not at all-

 

Dr. Gretchen Ga…: 

I think Eddie’s… I think Eddie’s-

 

AJ Waters:

Go ahead. Yeah.

 

Dr. Gretchen Ga…: 

… Making a really great point. There’s another quote from the study that emphasizes this. What helps us? Really good long-term strategic relationships with vendors that improve everyone and provide greater transparency. It’s not standard practice, but it’s getting better. So that’s one thing I have seen, Eddie, that you mentioned, those longer term relationships allow everyone to build up the trust and have a really effective impact.

 

Eddie Clayton:   

And also at the project level, I’ve seen through my years of experience that it depends a lot on the personalities of the project management at the site itself. I have seen time and time again where one project will not have the success that they wanted, and both sides will blame each other, but then that project management say for the contractor will go to another project and they just get along great, be a real successful project, just laud their accomplishments. So personalities meant a lot.

 

AJ Waters:

So let me ask you this too, Eddie, and Gretchen maybe you have an opinion on this as well, but does the contracting methodology lean into that a bit? If we’re doing a low bid rip them and read them, it’s a different story from negotiated work or those long-term strategic partnerships, right?

 

Dr. Gretchen Ga…:   

Yeah, I’ll jump in here. In the ’90s when I was at FMI, I started out consulting on the contractor side doing strategic planning for construction and engineering firms, and I ended up starting the Owner Services Group probably about 1998 because I looked at the way a large owner that I won’t mention was buying engineering and construction services, and the procurement people were getting bonuses and raises and accolades for squeezing every dollar out of their… Taking the low bidder, value engineering another 5% out of it, and then throwing it over to the construction people who probably had $110 million project that had been bid at 100 million, and then squeezed down to 95 million, and so change orders started flying. And what I try to help the industry understand is that low initial cost doesn’t equal low total delivered price. And so I think the contracting procurement strategies really make a huge difference.

 

Eddie Clayton: 

I agree with that.

 

AJ Waters: 

Yeah. Because at the end of the day, a lot of change orders are bad for both parties. People have the perception that contractors benefit off change orders, but an owner doesn’t want to work with you again if you’ve got a lot of that. It tarnishes the reputation a bit, right?

 

Dr. Gretchen Ga…:  

Yeah. There’s another large owner that there’s a 5% tax that they… Even the owner jokes about it, that it costs us an extra 5% because we know we’re difficult to work with. I’ll give you another example. There was a retail chain that contacted me. They had remodeled 200 stores, bid every job, used 50 different contractors and said, “We don’t think that was the most cost effective way to do that.” And I said, “No, I would agree with you.” So they were doing another brand, and we set up regional alliances and did the risk assessment of how many stores to give each contractor, and interestingly, the finance person in the last meeting we were having about setting these up outside of the construction department said, “How do we know we’re not getting ripped off if we don’t bid the jobs?”

That was his statement to me. And I said, “Look, this is not an Intel chip plant. This is a retail store, and you can benchmark the contractors against one another. You should know about how much it costs per square foot to remodel one of these.” But he had that mentality, and that’s that mentality that we need to get rid of. Eddie, I don’t know if you’ve seen similar instances where people think the only way to get a fair price is to-

 

Eddie Clayton:

Bid. Yes, I have. And we have gone through a transition several years ago to more regionalize the contracting approach, particularly for our plant maintenance, and the money we’ve been able to save by sharing resources within a geographical region have just been tremendous. And that helps also bring about a spirit of cooperation, collaboration as well. And so you could actually benchmark some of those different regions and get information on how we can get better too. So it’s been very helpful.

 

Dr. Gretchen Ga…:

Yeah. We have an example here in Melbourne where we have a lot of trains and trams in Melbourne, and they’re eliminating level crossings because of traffic, and they’ve set up multiple alliances. I’m actually the chair of the judging panel for the Australian Construction Excellence Achievement Awards. I always get the acronym wrong. And I got to judge one of these alliances last year, and they’ve set up these regional alliances, but they also have a hub of technology where all the alliances are sharing innovations with one another. So when one alliance learn something, it’s transferred immediately to all the other alliances, and that’s how we drive innovation in our industry, I think.

 

AJ Waters:

So along those lines, you talk about sharing technology innovations across different alliances, and we talked a little bit through all this around the idea of being more open with your owner and/or trying to get to a point where we know we’re not getting ripped off as an owner. Gretchen, do you think a full open door policy between the contractor and owner is possible for us to achieve?

 

Dr. Gretchen Ga…:

Yeah, absolutely. Back in 1994… I’m aging myself here. I actually started as an intern for Lone Star Gas in ’83, 40 years ago. It’s like, oh my gosh, how did that happen? I worked on a project, I was brought in on a project that had gone really sideways, and the first thing we did was put everybody in an office together, everybody, the owner, the contractor, the subcontractors, everybody physically co-located together. And I think that the things that you can do upfront to create… Eddie, you mentioned deep relationships. Trust is about having a relationship with someone. And we’re not taught in engineering school, I wasn’t taught in engineering school about how to build relationships. I think of another example. Alice Hoffman was the owner’s rep on the Baltimore Ravens stadium back in, I want to say ’96/’97. We bused all the major contractors out and did outward bound in the woods with them, and you should have heard what was being said on the bus way out there.

There was a lot of poo-pooing of how this was all going to impact. And not only was that stadium highly successful in achieving schedule and budget and safety and quality, they had so much fun. They produced a CD of songs from this project because every stand and deliver, they had a guy who was very musical and he would write some song about what was going on, and they gave me a copy of the CD at the end of the project. So I think it can be done, and I think one thing we need to understand is, if we don’t reduce the stress in our industry, we’re going to continue to lead in suicides and we’re not going to attract the brightest talent to our industry. So it’s not just about achieving project results, it’s about let’s make this fun. Who wants to go to work and know that you’re going to be budding up against everybody every day? Let’s make this a good time.

 

AJ Waters:

That’s a really good point. And one of the projects I’ve been studying a lot lately, because historically speaking, it’s kind of a fun one to look at, is the Empire State Building. At the time that it was built, tallest building in the world. It was considered a mega project, and they did similar things. They had what they would call the board of directors that had owners reps, contractors, subcontractors, real estate agents selling the property, and the engineers all on the board at all times, and that’s how they got that building built in just under a year. So incredible project, and it’s about getting everybody in the same room. And with today’s dispersed teams, that’s a little harder, but technology like this can maybe solve for that. So shifting gears a little bit then. If we have the general consensus that working together and/or being more transparent is possible, let’s shift gears into what transparency can do for us.

So next poll question is launching, and that poll is around risk assessments. Who is typically involved in your risk assessment when you’re working on a project or some pre-construction? Is it just the project team? Is it just the scheduler doing it? Is everyone involved? So are you getting the owners and even subcontractors involved, or what risk assessment is kind of the fun one? But those results are starting to come in, and as we get a few answers, it looks like the project team is leading, but not too far behind is the everyone answer. So we’ll go ahead and we’ll share those results here quick with everyone. So at least most people are not saying what risk assessment at this point, but let’s say that we are able to increase this transparency. So Gretchen, what do you see as one of the biggest advantages of collaboration when you talk about risk?

 

Dr. Gretchen Ga…: 

Yeah, it’s all about risk. I think another systemic issue in our industry is, we’re shifting risk onto people without being willing to pay for it, and we’re not always putting the person or the organization that can most effectively manage the risk in charge of the risk. And so I think that through collaboration and transparency and being able to have those open conversations and really deeply assess… And I think sometimes we think we know what the risks are on a project, but I think there’s room to dig more deeply and to do that collectively so that, once again, the people or the organization that can most effectively manage that risk are in charge of that risk and are being compensated for managing that risk.

 

AJ Waters: 

If we do that, Eddie, is there some low-hanging fruit that we could maybe grab onto and adjust accordingly so that those compensations work out for people?

 

Eddie Clayton:

Absolutely. Well, I don’t know about the compensation, but I think if everyone’s successful, I think everybody will be adequately compensated. But in bringing all the parties to bear… And one area that we’ve currently had some success is identifying labor risk and getting our contractors and our labor partners together to not only talk about what the project needs for that particular project, but looking more broadly within our system, the competition at other plants and other construction projects, and also using technology that we have available for the whole industry for industrial construction, non-residential construction… The Construction Labor Market Analyzer’s a great tool to help show what those project staffing risks are, and then how are we working together, the contractors and our labor providers, of how to mitigate those risks, and we try to do that well in advance too.

 

Dr. Gretchen Ga…: 

That’s a great point. We in the early 2000s worked with a technology owner that we pulled all the construction managers together nationally because there was such labor risk, and had them all sitting around the table figuring it out nationally for this owner. And I think at the time, I had never seen anything like it being done, but I think it’s a really great point. We have that problem here in Australia. We have a massive infrastructure, and they’re projecting 150,000 person shortage in the trades. That’s an industry risk in our ability to deliver these large programs, and thinking about it at a more strategic level, and I think it’s awesome that you all are doing that, Eddie.

 

Eddie Clayton:

Yeah, we’re looking at close to 2 million shortage in this country.

 

Dr. Gretchen Ga…:

Crazy.

 

AJ Waters:

We might come back to that labor shortage question here in a bit, but I have kind of a different question for each of you. And Gretchen, maybe you could start, and then Eddie follow up. We hear the statistics all the time, construction is over budget, construction is way late. Every project, you hear about how it’s trending past its budget and how it’s coming in late. And over and over again, they point at it being a construction problem. My question for you is, in your experience with projects that have gone severely over budget or have been severely late… And you kind of hinted at this earlier, Gretchen, so that’s why I’m directing it towards you first. Do you think it was the project being that over budget and that late, or do you think maybe the estimate and the schedule were wrong upfront?

 

Dr. Gretchen Ga…:

I think it’s all of the above. I think sometimes we tell the owner what the owner wants to hear. We have that problem here with politicians wanting to look good and saying that this light rail’s going to be done by this time or this. So I think being really realistic upfront about what the budget is. And the other critical issue… So I’m harking back to another project. I’ve seen the good, the bad, and the ugly. I have seen really good projects like the Baltimore Ravens Stadium, but I’ve seen some really bad ones too. And I got called in on a project that was a GMP, and it ended up, it was I think a $40 million GMP, and it was a $12 million change order on this project. And in doing the forensics on it, which is not my specialty, but in really understanding what happened, we didn’t have transparency, we didn’t have collaboration, we didn’t have sharing of information.

So the owner was making changes, and the contractor was going, okay, sure, we’ll do that, and just kind of keeping a tab and not having the hard conversation with the owner at that time and saying, look, that’s great, we can change this, but it’s going to cost you X, Y, and Z, and thinking, well, we’ll just absorb this. And then when it got too big, and then it was really big, and then we were all sitting down talking about a $12 million change order on a $40 million GMP. So I think it goes back, AJ, to everything you’re talking about transparency upfront, reality about what is a realistic schedule and budget, and then being able to have those hard conversations throughout the life of the project and being just really open and transparent with one another.

 

Eddie Clayton:

Yeah, we’re not there yet in all areas. We typically dictate a schedule, and we have a pretty idea of what we want it to cost, and then the contractors haven’t really been very open by coming, look, this is not realistic, this is what it takes, and having those conversations, and unfortunately when that happens, the project is doomed from the start.

 

AJ Waters: 

Yeah, it’s funny because, anybody can put a date on a piece of paper and just make the durations what they need to make them, but whether or not that’s realistic, that’s a big question.

 

Dr. Gretchen Ga…:

And AJ, I want to go back to procurement, because that $40 million GMP that I was talking about was a design build project. It should have never been a design build project. It was too unique to the owner. The owner wasn’t sophisticated enough to keep up with the decisions that needed to be made. The market got really hot. All their estimates on concrete and everything went out the window because a design build’s supposed to overlap, and it kind of didn’t anymore. And so that also goes back to your point about procurement strategies and really understanding how to set the project up for success from the very beginning in how it’s structured.

 

AJ Waters:

So if we were to hypothetically make our own board of directors like the Empire State Building did, and you mentioned procurement there, who would be the best players to have on that team if we wanted to open the doors up and be more transparent and more collaborative on things like this GMP that went way over?

 

Dr. Gretchen Ga…: 

I’m going to jump in here because I have a strong opinion about this. We’re not listening to the subs enough, the subcontractors, and a lot of times maybe we might bring the MEP in or steel or whatever, but I saw a lean design meeting where it was a large owner that’s a member of the Construction User Roundtable, and we had a 13 month schedule, and we needed to get it down to nine months, and it was the steel erector in the room that really took the lead and said, “Hey, we’re not thinking about… What if we thought outside the box about the order of how we do things?” And did [inaudible] planning, and we got down to a nine-month schedule, but I don’t think we engaged the subcontractors enough in our thinking. That’s just one opinion I have about this board of directors.

 

AJ Waters:

What do you think, Eddie?

 

Eddie Clayton:

Well, you got to identify who the subcontractors are sooner than later in order to have that conversation, and typically that’s not always clear to us. I think it’d be great. I think it’d be great to have the equipment manufacturers as well, because it seems to be those lead times have already had project impact as well.

 

AJ Waters: 

Yeah, that’s usually where those long lead items reside. So going back to… Oh, go ahead Gretchen.

 

Dr. Gretchen Ga…:

I was just going to throw out one more thing, another owner that I’ve worked with that just popped into my head. We didn’t have the end user at the table, and I was like, “Well, that’s kind of…” To me, that was kind of bizarre, because you’re building something that somebody’s going to operate, shouldn’t the person that’s going to operate this be at the table? And it was like, no, no, we’ll be the interface to them. We don’t want them messing around and asking for things we can’t afford and things like that. So I think having the right people on the owner side, because owners in and of themselves, especially large owners, can be very siloed. And Eddie, I don’t know if you have an opinion about this, but sometimes it’s hard to get all the right players at the table on the client side.

 

Eddie Clayton:

We’ve been fairly successful in that area far as getting our operations teams involved on the front end. From some of my earliest projects in my career, that was always an emphasis, to make sure the folks who are going to be left with that asset, managing it, or that have something to say about it. I was actually involved in one of the largest plants we have. The startup team… And I’ve been at probably 200 OCRs during that time, but to just get the changes we felt like we needed when we operated, but it was a lot of fun.

 

AJ Waters:

So going back to something you both mentioned a little bit ago, the labor shortage. So we continue to see that starting to pop up not just as a risk, but overall it’s here. It’s something that we’re dealing with. I know in multiple parts of the country, mega projects are popping up, and owners are worried about these larger projects taking away from some of the work that they need done. Eddie, is there something that we can do with transparency, or even not between owner and contractor, but maybe transparency of what construction looks like, to young professionals to help push that wave of more labor workforce?

 

Eddie Clayton:

Yes, AJ. There was a study by CII recently completed, RT-370 Workforce 2030, talking about what the future workforce is going to look like and what can we do to prepare, and also make our industry more attractive, because we recognize we’re on a cliff of workforce shortages, and we’re already there. And all these mega projects that’s being announced, it’s just going to make matters worse. We don’t have workers in the pipeline to fill that. And if you think about all the workers who we’re going to be losing in the industry, all the baby boomers, all the experienced hands, we’re way behind the eight ball in getting those replacements trained. It takes 10 to 12 in order to get, once you’re in the industry, trained where you’re really a seasoned professional. But looking at the feedback we had from that research, we’ve got to make a change on our projects as far as the culture to where it’s more inclusive and more attractive to the younger generation that’s coming in, or we’re going have a much worse problem than we do now.

 

Dr. Gretchen Ga…:

Yeah, I couldn’t agree more. I sit on a thing here in Australia called The Construction Industry Culture Task Force. In fact, we just had a strategy session earlier this week, and they’ve written a culture code that they’re trying to get adopted here that, construction projects in Australia are all six days a week, all of them, and they’re doing research on five day work weeks, more flexibility, more inclusion, more diversity. And it’s like… I don’t know. This is another thing that I asked. I don’t have the results of this, but when I presented this study at the Construction User Roundtable conference, there’s a thing called the AGC Culture of Care that the associated general contractors has started, but when I interviewed owners about it, they don’t know about it.

So once again, we have this fragmentation. And thousands of companies have signed onto this Culture of Care, and it’s really a commitment by the associated general contractors and the contractors throughout the United States in thinking about these things and realizing that if we don’t make some changes, we’re going to be in big trouble. One of the questions I asked in the study in an audience poll when I was there, how well are we doing at improving the diversity of our industry on a scale of one to four? What do you think the answer was on a scale of one to four on how well we are doing it at improving the diversity?

 

Eddie Clayton:

One being bad?

 

Dr. Gretchen Ga…: 

Pardon?

 

Eddie Clayton: 

One being bad?

 

Dr. Gretchen Ga…: 

One being bad.

 

Eddie Clayton:

I’d say we’re probably around one.

 

AJ Waters:

Yeah, 1.1, something like that.

 

Dr. Gretchen Ga…:

1.85. So a little higher. And I think I’m seeing a little bit of a tipping point here where we really do realize that we need to be work on the diversity of our industry.

 

Eddie Clayton:

This study I was referring to, the Workforce 2030 too, they’re also looking at the rate of suicide that Gretchen mentioned earlier in this industry is extremely high. At one point, it was the highest of any industry out there. And so if we don’t have more of a culture of inclusiveness and also respect in the workforce, then we’re not going to make any difference in that area.

 

Dr. Gretchen Ga…:

Yeah-

 

Eddie Clayton: 

[inaudible].

 

Dr. Gretchen Ga…: 

A person is four to five times more likely to die of suicide in construction than to die of a construction accident. So we’ve done a really good job on the physical wellbeing, but the mental wellbeing, that was another question I asked, how well do we take care of our employees’ mental wellbeing in the construction industry? And again, we were a 1.8 on a scale of one to four. So there’s definitely… And I think it goes back to your point, AJ, about transparency, risk, all of these pressures that we place on our people in the industry. But I see more acknowledgement of understanding that we need to fix some of these issues.

 

Eddie Clayton:

Yeah, I think a lot of this is training our frontline supervision project management too.

 

AJ Waters:

Yeah. So you made another comment in there, Eddie, that I think is interesting. You mentioned that the aging out of the workforce too, the retiring of the workforce, and not just the physical body leaving, but the knowledge, what are some of the things that transparency within your own organization could do to maybe unlock what’s up here a bit? One of the things I remember when I was an engineer was, we had a spreadsheet of past costs that we would like to reference. It’s on a shared drive. What are some of the things that as an org you could be opening up to try to transfer that knowledge to those new hires that are onboarding so that it isn’t a 12-year experience gain, maybe it’s a two-year contextual understanding of the data gained, you know what I mean?

 

Eddie Clayton:

I’m not sure about that AJ, but I would say that having procedures that can be adapted based on the circumstances should they dictate, but getting people who are aren’t as familiar with how to project manage risks, certain things, tasks associated with that, having clear procedures, and having mentors that help them guide them through that will help with their success. But go revisiting them and be having truthful evaluations of lessons learned and communicating that… I’d rather someone learn from my mistakes than have them make them themselves.

 

Dr. Gretchen Ga…:

I think that’s a really excellent point. And I think sometimes we’re staffed so thin, we don’t have the opportunity for people to go shadow people. And somebody who’s been in a position for, or worked their way up over 30 to 40 years, sometimes their knowledge is their power. So sometimes it’s a little, back to your point about transparency, it’s a little hard for them to share that. But I think Eddie make an excellent point, more debriefing, more learning from our mistakes, being more transparent about those and sharing those would be helpful.

 

Eddie Clayton: 

I probably have enough for a pretty thick book of lesson’s learned [inaudible].

 

AJ Waters:

I’m right there with you. So that leads us to our last poll question and to our last theme before we get to maybe some Q&A from the audience, which is when we talk about maybe trying to share experience by using data that we’ve collected over time and contextualizing that, how many different software systems are you as a company using to feed progress reports or dashboards? Some examples might be cost systems, scheduling systems, some sort of quantity book, advanced work packaging systems, time sheets. Those are all examples of some of the different products that you’ll find around a construction site. We got some results coming in. Looks like the clear leading factors is four or more. That’s half of the responses thus far. Maybe just a few more to get to the count that we’ve seen on some of the other questions. So I’ll share these quick.

So for the majority of people, it’s more than one. 86% of the group is using more than one in… One of the things that we talk about at InEight, kind of going back to the beginning, is the consolidation of what were point solutions historically throughout the construction industry. How could you see maybe consolidating to a single source of truth starting to lead or guide transparency, or at least open the doors for transparency if everyone’s working from a singular dataset and you’re not trying to dive into 18 different softwares that are moving around the project?

 

Eddie Clayton:

Well, we prescribe the utilization of several software that we use on our projects, all fed into Oracle base, but the contractors had their own. They had their own system, their own familiarity, so then they look to try to make interfaces into ours or do manual uploads. And so it’s just been an ongoing struggle, but we have just made some recent investments and changes to our enterprise solutions and all the different programs that feed into that, so I’m hoping the future’s going to look very, very bright, and all that data we’re collecting will be able to be useful at some point.

 

Dr. Gretchen Ga…:

Yeah. Useful at some point, that’s a great statement. That was another quote that came out of the study about technology, that right now, we’re kind of drowning in data also sometimes. And as you said, AJ, it might be in multiple places, but then we might just have a lot of it and it’s like, oh my gosh, what do we do with it? How do we leverage it? And Eddie, I think your point about it is challenging when the owner or the client is driving a certain technology, and the contractor doesn’t use that technology. I’m not sure exactly how we solve that problem in the industry.

 

Eddie Clayton:

I’m very mindful too of us pushing it on the contractor, the contractor pushing these data collection onto first line supervision. They have too much on their plate already. They need to be making… Well, especially these younger unskilled workers, be spending more time on the job watching and mentoring and coaching. And there may be some software out there that could be collecting what you need without taking so much of your first line supervision time, but I see us making mistakes time and time again by not having them available in the field where they need to be, therefore it hurts our productivity and success of our project.

 

AJ Waters: 

So one of the things that I’ve kind of been thinking about over time, when I was a kid and I got my first car and I wanted to change the oil, I went to my dad and I asked him, and we sat down and he taught me how to change the oil, if… And I’m just going to throw this out there. I want to see how you two answer. If you were today to realize that you’ve got a bulb out on the headlight of your car, where would you go to try to figure out how to change that? Would you take it into the dealer, or would you go to a place and watch a quick video?

 

Dr. Gretchen Ga…:   

I’d watch a video. I watch videos for everything. It’s amazing what I’ve figured out being my own tech support for the last couple of years here in Australia and the pandemic, what I’ve figured out how to do through videos.

 

Eddie Clayton:  

I think I could change a bulb out, but I do go to videos for other things.

 

AJ Waters:

Yeah. Right. So obviously I’m kind of leading the witness a bit, but YouTube has become like a consolidated knowledge library, and the fact that we all have one of these devices, we can just go learn how to do something like that. The idea of the data in construction being useful someday, what if we got to the point where you could look at how to install that item quickly with a video like that, and that’s empowering our labor force, or if you could type something in like with the new chat bots that are out there, type something in, I want this type of facility with this kind of capacity, and it’d give you a ROM for a budget and a schedule, do you think we can get there someday?

 

Dr. Gretchen Ga…:  

Absolutely. I think virtual reality and augmented reality, artificial intelligence, we’re just on the first wave of all of this. I’m going to give a really simple example. It’s not exactly what you’re talking about, but the first speech I gave here in Australia at the Australian Pipeline and Gas Association four years ago, the guy that spoke before me, the person was talking about how they’re using augmented reality to train welders. So they have welders sitting at a desk, they have all their welding gear on, and they’re using artificial intelligence to… There’s no actual flame coming out. Well, they see a flame when they put the goggles on. They have virtual reality goggles on. So they’re not wasting materials by training them, and it tells them if their angle of their hand is correct, or if their speed is correct.

And so they go through this training process before they actually start welding. And the other thing it’s done is, they take this machine out to job fairs, and there’s a line around the block because everybody wants to play the welding video game, back to our point about attracting people into the industry. So if we’re an industry that’s seen as being on the cutting edge of implementing technology and leveraging virtual reality and augmented reality and artificial intelligence and the things that you’re talking about, AJ, I think it can only help our industry.

 

Eddie Clayton:

Oh, absolutely. Yeah, virtual training is very cool. It’s expensive though right now. Hopefully technology will get to where it’s not as much, so we could have more widespread utilization of it, but for those areas we have used, we’ve had a lot of success with it. So I guess to answer your question, theoretically you could expand that to build a power house, but we’re not there yet.

 

AJ Waters: 

Not yet, but maybe someday.

 

Dr. Gretchen Ga…: 

Someday. We’ll have flying cars too, Jetsons. That’s what I’m waiting on, that flying car.

 

AJ Waters:

Yeah. We hit 2015, and Back to the Future all of a sudden became disappointing. All right. Well, thank you both for your time today and for your excellent wisdom. We’re going to go ahead and we’ll open it up to audience Q&A if there are any questions. And then I think Ronna, you had one more slide that you wanted shared, correct?

 

Ronna Dubro:

So AJ, there was a comment about unrealistic budgets and incomplete design specifically stating that if you frame a project correctly and have a firm scope of work, then the relationship is great. That is not the norm on most projects, but we strive to reach that level on every project. A lot of owners have unrealistic budgets and incomplete design, but expect a contractor to operate within those parameters, which I would say in my opinion creates distress. Comments?

 

Dr. Gretchen Ga…:  

I’m going to comment. And I just had this conversation around a consulting project that I’m going to be doing in the United States, and I saw this happen with a very specific project where the owner said, “here’s what we want.” And they designed it and they said, “Nope, we can’t afford that.” And they designed it again, “No, we can’t afford that.” And it’s like, just say what you can afford. Just say our budget is 84 million, and let’s design something that’s maybe 78 million so we have a little wiggle room or something. So I think being more transparent about that and not fishing in the market to see and then getting something that’s really unrealistic, I think that would help our industry. Just a thought.

 

Ronna Dubro:  

[inaudible]-

 

AJ Waters: 

Eddie, any comments?

 

Eddie Clayton:

Yeah, I hear that a lot what Ronna just said about firm scope, but not sufficient budget, and that creates distrust. I hear that a lot from our contractors. Not necessarily our contractors, but the contractor community in my role with CURT. We’re trying to get better with that. There are business opportunities for us we thought we had a scope that was complete, but not necessarily always. And I’m not going to throw to my friends in estimating on the bus either.

 

Dr. Gretchen Ga…: 

There you go.

 

AJ Waters: 

Thank you. That’s my background.

 

Ronna Dubro: 

AJ, I’m going to turn it back to you.

 

AJ Waters:

All right. Well, I am going to quickly share this survey for everyone. So if you would, scan this QR code and take a survey for the group. Let us know how we did today. And while you’re doing that, I do have one final question that I want to throw out to both Gretchen and Eddie. Gretchen, we’ll start with you. For this particular webinar, we had the promotional emails that CURT sent out, had a really cool word art with a bunch of different words from construction. And the more often they pop up, the bigger the word gets. Any particular word stand out to you in that graphic, or any other words you might want to leave for our attendees today?

 

Dr. Gretchen Ga…:  

Yeah. It was a great word art, and there were a lot of… I was having a hard time picking a word there. And then another word popped into my mind, and that word is inclusion. And it’s interesting when I did the study last year… I’ve done this study on and off since the ’90s. For the first time, I was deliberate about whose voices I was lifting up. And I’m a woman in the industry. I’d never had this idea. Half of the participants of the 44 were female, and 10% identified as people of color. And so being an inclusive organization, including diverse people will only make our industry better and lead to better collaboration, better innovation, better transparency, et cetera. So inclusion is one of my favorite words right now, so I would pick that one.

 

AJ Waters: 

I love it. Eddie, what about you?

 

Eddie Clayton:

Well, AJ, when you get to be my age, it’s getting a little harder to see, so I was attracted to the big letters, risk management there at the forefront. And everything we talked about kind of fits in that category, but also to Gretchen’s point about maybe something that was missing. Maybe it was too small, I couldn’t see it, and that’s relationships. I think we need to put more emphasis on that area.

 

AJ Waters:   

I just love how you both went to the people. It’s about the people. It’s still a people business, right? Until the robot and drones take over, it’s a people business, and so that’s where it’s important. That’s where we’re going to make headway in trust, that’s where we’re going to make headway in lower stress, if we can work on those relationships and work on inclusion. Well, thank you everyone for today. I certainly learned a lot and enjoyed this conversation, and appreciate both of your time today.

 

Ronna Dubro: 

And thank you, AJ. We appreciated your time as well as Gretchen and Eddie’s. And thank you to our audience for joining us today.