Radical Reform for a Construction Industry in Crisis

Five decades of 1st tier misaligned incentives have doubled the inflation-adjusted construction cost. The more recent adding of 2nd tier cost-plus and billable hour contracting has grown the problem three times.

Cost per Operating Room Cost per OR (USD) $0$1M$2M$3M$4M$5M$6M$7M$8M$9M$10M 20002004200820122016202020242028 $1,539,442 $985,243 $2,567,144 $1,386,258 High range$9,287,176Observed trend$7,143,982Low range$5,715,185Construction Analytics$4,379,246National Inflation$2,014,453

An alarming and unsustainable surge in healthcare construction cost is adding tens to hundreds of millions of dollars in non-value-added waste on many hospital projects.

There's good news. Construction reform is readily available to replace our severely stagnated and wasteful state with a Construction as a System alternative.

Construction as a System

The same management philosophy and systems thinking that profoundly impacted Toyota is now available to reform construction. W. Edwards Deming’s System of Profound Knowledge is the answer.

Building CATALYST has been developed as construction’s first Intelligent Automation System (IAS) solution. The following videos help cast the vision and provide a glimpse of what a highly automated future looks like.

To Learn more visit: www.buildingcatalyst.com

Owner / Developer

Transformation Starts with Planning

Even while other sectors from retail to manufacturing have transformed their efficiency, boosted their productivity, and embraced the digital age, construction appears to be stuck in a time warp. McKinsey Global Institute's 2017 report

In just days, you'll experience the difference in the now 88 year time-warped construction process - and one that has been transformed. Today, you can start eliminating layers of waste in time and cost. Here are a few of the many benefits that a value-driven, win-win system provides you:

  1. TRANSFORMED PLANNING Rather than the weeks long cycle time it takes for feasibility studies, scope / program studies, and related budgeting - these cycles can be performed collaboratively and in real time.
  2. TRANSFORMED PROGRAMMING Replace one-off, Excel spread sheet space programs based on erroneous grossing factors with impartial data-informed and computerized programming models.
  3. TRANSFORMED BUDGETING Replace the "fox in the hen house" budgeting process with impartial, real world, data-informed time and cost models.
  4. VARIATION (RISK and OPPORTUNITY) ANALYSIS Apply data and the Pareto (critical few) analysis to resolve variation to better manage uncertainty, and make better informed decisions.
  5. STREAMLINING, PROCESS and VALUE IMPROVEMENT Apply the Toyota 5S approach experienced in transformed planning, programming, and budgeting throughout the design and construction process.
  6. MEASURABLE WASTE REMOVAL in TIME and COST Replace unconstrained billable-hour, allowances, contingencies, and other embedded waste with an object, computer-aided, measurement system.
  7. ENJOYMENT and FREEDOM Experience the difference between a value-driven, win-win approach compared to our current tedious, oppressive, abusive, archaic, cost-driven approach.

We provide initial services and supporting technology at no cost. After the project assessment, we offer ongoing service and technology options based primarily on measurable value improvement.

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Owner Rep / Consultant

Transformation Requires a System

What we need to do is learn to work in the system, by which I mean that everybody, every team, every platform, every division, every component is there not for individual competitive profit or recognition, but for contribution to the system as a whole on a win-win basis. W. Edwards Deming

Our goal is to partner with you to provide a win-win alternative where your client benefits from a more certain and much lower cost, and everyone else - including you - can generate a significantly higher return on effort - by working together as a system. The waste has become so enormous and the solution so ready - that this goal is easily attained. Today, you can start eliminating layers of waste in time and cost. Here are a few of the many benefits that a value-driven, win-win system provides your client:

  1. TRANSFORMED PLANNING Rather than the weeks long cycle time it takes for feasibility studies, scope / program studies, and related budgeting - these cycles can be performed collaboratively and in real time.
  2. TRANSFORMED PROGRAMMING Replace one-off, Excel spread sheet space programs based on erroneous grossing factors with impartial data-informed and computerized programming models.
  3. TRANSFORMED BUDGETING Replace the "fox in the hen house" budgeting process with impartial, real world, data-informed time and cost models.
  4. VARIATION (RISK and OPPORTUNITY) ANALYSIS Apply data and the Pareto (critical few) analysis to resolve variation to better manage uncertainty, and make better informed decisions.
  5. STREAMLINING, PROCESS and VALUE IMPROVEMENT Apply the Toyota 5S approach experienced in transformed planning, programming, and budgeting throughout the design and construction process.
  6. MEASURABLE WASTE REMOVAL in TIME and COST Replace unconstrained billable-hour, allowances, contingencies, and other embedded waste with an object, computer-aided, measurement system.
  7. ENJOYMENT and FREEDOM Experience the difference between a value-driven, win-win approach compared to our current tedious, oppressive, abusive, archaic, cost-driven approach.

We provide initial services and supporting technology at no cost. After the project assessment, we offer ongoing service and technology options based primarily on measurable value improvement.

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Builder

Transformation Requires a Change in Philosophy

A change in philosophy requires unlearning industrial thinking evident in departmentalization, scarcity of knowledge and information competitiveness. W. Edwards Deming

Our goal is to help you start removing layers of accumulated waste - turning it into lower cost for your customers, and higher profit and return-on-effort for you, This requires a change in management philosophy described throughout this site. The waste has become so enormous and the solution so ready - that this goal is easily attained. Here are a few of the many benefits that a value-driven, win-win system provides you and your customers:

  1. ALIGNED INTRINSIC and FINANCIAL MOTIVATION By eliminating Cost-plus and billable hour approach to generating profit - your intrinsic motivation towards excellence and producing value is now aligned with the financial motivation to turn waste into profit.
  2. WIN BETTER PROJECTS When pursuing conventional RFPs you can be equipped with a powerful knowledge system and contracting alternative to beat your competition by providing measurable value improvement to your customer.
  3. TRANSFORMED COST MANAGEMENT Replace conventional estimating and estimators with professionals motivated and equipped to drive out waste in project and company overhead to steer projects to optimal outcomes.
  4. VARIATION (RISK and OPPORTUNITY) ANALYSIS Apply data and the Pareto (critical few) analysis to resolve variation to better manage uncertainty, and make better informed decisions.
  5. STREAMLINING, PROCESS and VALUE IMPROVEMENT Replace unconstrained billable-hour, allowances, contingencies, and other embedded waste with an object, computer-aided, measurement system.
  6. MEASURABLE WASTE REMOVAL in TIME and COST Apply the Toyota 5S approach experienced in transformed preconstruction and construction.
  7. REDUCE OVERHEAD AND PEOPLE Start removing layers upon layers of waste in overhead - project and internally. Significantly reduce the need for non-productive, indirect labor on and off-site.
  8. TRANSFORMED CONTRACTING Transition from the currently bifurcated design and construction to a truly integrated form of design/build, a turnkey delivery. Tomorrow's building producer becomes more like yesteryear's master builder.
  9. ENJOYMENT and FREEDOM Experience the difference between a value-driven, win-win approach compared to our current tedious, oppressive, abusive, archaic, cost-driven approach.

We provide initial services and supporting technology at no cost. After the project assessment, we offer ongoing service and technology options based primarily on measurable value improvement. One of our goals is to develop and train a new class of customer service and cost professionals to take over the operation of Building CATALYST from the owner or owners rep, through the completion of the project.

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Architect

Making the original BIM vision possible

Building Information Modeling (BIM) is a digital representation of physical and functional characteristics of a facility. A BIM is a shared knowledge resource for information about a facility forming a reliable basis for decisions during its life-cycle; defined as existing from earliest conception to demolition. US National Building Information Modeling Standard

This knowledge oriented BIM vision, together with a dynamically integrated version of today's design oriented BIM is ready to transform the PDC (Planning, Design, and Construction) process. Building CATALYST provides the knowledge oriented BIM and, when combined with a value-driven, win-win suite of contracting forms, will provide many benefits to the architect and engineer, including:

  1. RAPID SCENARIO PLANNING Offer multiple, program/design solutions, in a fraction of the time that it currently takes to produce just one.
  2. MORE OUTSTANDING DESIGN As uncertainty and waste are removed, the opportunity to present and afford more beautiful and elegant designs are enhanced.
  3. STREAMLINE DESIGN DEVELOPMENT End the tedious, seemingly endless, meeting-laden cycle: present, discuss, price, review, re-present, re-discuss, re-price, and then repeat. Cut the monthly cycle times into days.
  4. STREAMLINE DESIGN EXECUTION Standardize, integrate, and automate within your company and across the project team to eliminate layers upon layers of waste in time and cost.
  5. INCREASE PROFIT As value-driven, win-win design and construction grows, so will your return-on-effort.

In the matter of a few days, you can experience the power of this BIM vision to transform the planning, design, and construction of buildings.

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Educator / Researcher

Transformation Requires a Knowledge System

Lack of knowledge…that is the problem…Information is not knowledge. Let's not confuse the two…The world is drowning in information but is slow in acquisition of knowledge. There is no substitute for knowledge…We are here to learn, to make a difference and to have fun. W. Edwards Deming

Data discoveries over the past few years call for a broader and deeper research, pursuit of knowledge, application of the scientific method for innovation, and then educating future architects, engineers, and builders. These questions are posed to leaders among construction science and industry educators and researchers:

  1. DATA RESEARCH : Has the data on this site inspired you toward further data research to test the Genesis/Deming hypotheses?
  2. SCIENTIFIC APPROACH: Is there a credible case that Deming's management philosophy, and scientific approach, can transform facility planning, design, and cost management?
  3. COURSEWORK: Would you be interested in exploring the development of coursework based on the application of Deming's management philosophy with other construction science programs and industry leaders?
  4. APPLIED RESEARCH: Would your campus planning and facilities department be interested in piloting the alternative to cost-plus contracting, and trying out features of a Deming-based, value-driven planning, design, and delivery process?

If any of these questions appeal to you, please reach out. We'd love to start the conversation.

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Thought Leader / Reformer

Transformation Requires a Bold Leadership

The source of innovation is freedom. All we have - new knowledge, invention - comes from freedom. Discoveries and new knowledge come from freedom…Long-term commitment to new learning and new philosophy is required of any management that seeks transformation.…Our prevailing system of management has destroyed our people. People are born with intrinsic motivation, self-respect, dignity, curiosity to learn, joy in learning. W. Edwards Deming

In 2003/4 the Construction Industry Institute (CII) and the Department of Commerce Bureau of Labor Statistics (BLS) released data studies comparing construction and manufacturing productivity. Then, in 2017 the McKinsey Global Institute (MGI) released a report Reinventing Construction from an exhaustive study, best captured by this quote:

…construction appears to be stuck in a time warp. In the United States since 1945, productivity in manufacturing, retail, and agriculture has grown by as much as 1,500 percent; productivity in construction has barely increased at all.

As shown throughout this site, data discoveries since then show that following each of these studies, construction costs surged to even greater levels. The cost crisis has become far greater than when these troubling studies were published. If you're engaged in the AEC industry as a thought leader, reformer, or leader among such associations, enterprises, or universities, then these questions are for you:

  1. Do the data discoveries on this site motivate you to challenge or validate the various hypotheses - from construction costs now double what they should - to the primary culprit being cost-plus and billable hour contracting?
  2. Do they inspire or challenge you and your colleagues to initiate further research and/or pilot solutions to the proposed problems?
  3. Would you like to join a community of like-minded thought leaders to advance research and/or Deming's scientific method toward innovation, and measurable process improvement?

If so, please reach out. We'd love to start the conversation.

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Be Transformed by the Renewing of your Mind

All people are trapped in their particular silo and charged with optimizing their silo’s part. Construction reform requires systems thinkers in every aspect of the building process. Are you one of those? If these Deming quotes ring true to you – then you are likely a systems thinker and can help lead construction out of its linear, competitive, opaque, and self-focused thinking.

W. Edwards Deming portrait
W. Edwards Deming

Construction as a System: The Five Stages

Construction as a System for planning, design, and delivery rolls out in five stages. Any project currently in planning or early design can start experiencing benefits in weeks.

Planning and Budgeting

Apply impartial market data to rapidly and reliably plan, program, budget and optimize project scope and cost.

Value-based Contracting

Align facility management, consulting, design, and construction compensation to reward value improvement and increase return-on-effort.

Design and Construction

Integrate, automate, and optimize design and construction support efforts via structured data standards and processes across all organizations.

Total Project Development

Incorporate all soft cost to the integrated automated system to optimize the total project (total first cost) development.

Total Cost of Ownership

Incorporate all facility life cycle aspects to optimize the total cost of ownership (TCO) expressed as Net Present Value.

Construction Reform Can Start with You

Any person or organization can instigate the Construction as a System alternative. Here’s how:

Owner

Demand a higher-performance, more cost-effective building and process

Experience transformed planning, design, construction, and occupancy as a high-performance system.

Learn More →

Owner Advisor

Lead your owner and team with a high-performance end-to-end system

Orchestrate the planning, budgeting, team selection, design, procurement, and construction based on a systems approach.

Learn More →

Design Builder

Produce higher-value buildings with far less effort.

Be among the first to embrace a fully integrated Construction as a System design and delivery method and help lead a construction reform movement.

Learn More →

Architect

Help trade waste for more outstanding and cost-effective design

You hold the keys to a highly integrated and automated design to completion system that helps eradicate the deepest levels of waste.

Learn More →

Builder

Produce higher-value buildings with far less effort.

Be among the first Systems-based Builder to deliver more cost-effective buildings at a higher return while helping lead a construction reform movement.

Learn More →

A System that POWERS Planning, Programming, and Management - with Intelligent Automation built in.

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Data Sources

The US Inflation Rate data can be accessed here. It provides historical inflation rates with annual figures from 1914 to present. These inflation rates are calculated using the Consumer Price Index, which is published monthly by the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor.

Also shown in figure 1, is the combined building materials escalation and construction industry wage rate growth. The produce price index data is provided here on the Statista website. Wage rate growth data is provided here on the Federal Reserve Bank website.

Construction Analytics forms the basis of the Owner's Building Cost data and can be accessed here.
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