From the Stone Age to the digital age | KPMG | SG

In conversation: From the Stone Age to the digital age

From the Stone Age to the digital age

Bent Flyvbjerg, one of the world’s leading authorities on construction projects, talks with KPMG’s Geno Armstrong about optimism and disruption.

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Bent Flyvbjerg, Professor of Major Programme Management at Oxford University’s Saïd Business School and one of the world’s leading authorities on construction projects, talks with KPMG’s Geno Armstrong about optimism, disruption and burning those binders!

Geno
Not for the first time we’ve highlighted the engineering and construction industry’s inability to overcome productivity and performance barriers. And yet we’re also seeing a lot of optimism. What’s your take on this?

Bent
The industry is run by optimists! Which is not in essence a bad thing, so long as you mix it with a degree of skepticism. Unfortunately this unwarranted optimism runs deep, so we always feel we can solve any problems later rather than addressing them head on. Plus, we don’t like passing bad news to our superiors, so it gets suppressed until it finally surfaces in a big way, and you get delays and failure. On the flip side, when executives create a transparent culture where people are actually encouraged to speak up, you tend to get better performance.

Geno
I agree. On the one hand, if we weren’t crazy optimists, we wouldn’t create such amazing physical monuments. But on the other hand, you want a balance on your team. I have heard you speak about ‘optimism bias’ — maintaining optimism despite convincing evidence to the contrary — which is a term that resonates with both high- and low-performing teams we encounter. When I was in the field we used to joke about needing a ‘Chief Pessimism Officer’.

Bent
That’s right, although I’d perhaps rename the position as ‘Chief Realism Officer’. All project teams need hardheaded people who know the details of costs and schedules, and are good at diagnostics. Plus, we have to encourage a culture of openness, so that unpleasant news doesn’t get hidden, to ensure that leaders are aware when things aren’t going to plan, and can act quickly.

Geno
In your experience, are there many instances where we have more reason to be optimistic?

Bent
Well, We’ve been studying projects in 100 countries to try to discover who’s getting it right, and we’ve found that owners from countries like the Netherlands and Hong Kong in particular appear to have a better track record than in most other parts of the world. Which gives players from other regions something to think about and, potentially, learn from. And, from my viewpoint, owners have a better track record than contractors.

Geno
Over the years our surveys repeatedly throw up the contradiction of ever-increasing investment in controls that can’t seem to overcome poor performance. What’s your view on this dilemma?

Bent
Frankly I want to blow up the entire system and replace it with technology. Our industry is literally thousands of years old but some of the techniques we use have barely changed in all that time. Contrast this to the automotive industry, which is only a hundred years old, yet has embraced technology and innovation to make vastly superior products. Put it this way: I wouldn’t be confident in placing a house on wheels on a freeway and running it at eighty miles per hour!

Geno
So, burn the binders that contain all the rules and dictate how we run our business! And swing to technology.

Bent
Absolutely. You need real innovation to overcome the productivity gap. You need to digitize, to get one data system running an entire site. We’ve had BIM for a long time, but it hasn’t really taken off like we expected. Why? Because, as your colleague Clay Gilge points out, the industry is so fragmented, both structurally and geographically. Going digital can bring the economies of scale we’ve been seeking for so long. Industries like automotive and aerospace are doing just that and we need to study and learn from their approach.

Geno
It’s almost like engineering and construction is due its Uber moment.

Bent
It is due its Uber moment, and, like many other industries, the disruptors may well come from outside, which may not be pleasant for the current players. But, as we all know, disruption occurs when industries are inefficient.

Geno
I’m sure you’re right. Perhaps the solution is less about making constant tweaks to controls, systems, contracting, training, material tracking, estimating, and so on, and more about breaking the value chain, to make the leap out of the Stone Age. An Uber-type solution could cut through the entire structure of players in the value chain (owners, designers, project managers, contractors and vendors) and put the owner directly in contact with manufacturers, at a stroke removing the layers of complexity you’ve talked about.

Bent
There’s every chance that may happen. Right now, project owners may already be wary of going direct to contractors because they don’t have full confidence in them. So I can’t believe that it will be long before an Elon Musk-type figure is disrupting the industry.

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