Pipeline Workshops™: Velocity Accelerators®

If you had to choose a single word to associate with a Pipeline Workshop™, it would be velocity – speed in a purposeful direction.

We want to elevate velocity to an equal standing with the other component of economic return, which is margin.  In each Pipeline workshop™, we select specific areas of production management for a deeper dive – more discussion, pointed and challenging exercises from the RB Builders: Lessons for the Pipeline© business case, etc.

They are known as Velocity Accelerators®.

Velocity Accelerators® tend to be important areas that do not receive sufficient industry attention;  in fact, beyond a passing understanding, they are often the first meaningful exposure to those areas that builders attending a Pipeline workshop™ have experienced, making these sessions something of a mini-boot camp.

For the upcoming workshop (Pipeline Workshop™ No. 8, October 18-19, 2017, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida), we are highlighting five Velocity Accelerators®:

Epic Partnering™:  Builders attending Pipeline workshops™ consistently emphasize the need for stronger trade-partnering, better coordination, more cohesiveness, a more unified approach to managing the trade side of production.

They acknowledge the obvious:  they do not have the internal resources necessary to perform “the set of all specific actions” required to bring houses through the start-to-completion process, and they are completely dependent and reliant on skilled construction resources that are in short supply;  they understand that they can no longer dictate the terms of engagement.

Developing the business relationships that unify a builder’s value stream is a program of milestones and features, and it is a transformative process;  a program and a process.

Epic Partnering™ has profound implications on both the margin side and the velocity side of economic return.

Business Process Improvement (BPI):  The most basic, most fundamental proposition in the business of building homes is this:  the reason a builder exists is to make money;  the way a builder makes money is by delivering value – benefit in excess of cost – to its homebuyers and other stakeholders;  that value can only be delivered through the work that the building enterprise performs;  that work has to be performed in some manner of workflow, most commonly performed in processes.

Make money . . . by delivering extraordinary value . . . through the work a builder performs . . . in processes.

BPI is the front-end of a process of continuous improvement, one that fundamentally changes the perspective of workflow, and becomes the driving component of the operating model that forms a builder’s strategic value discipline.

As with Epic Partnering™, BPI improves both margin and velocity.

Critical Chain Project Management (CCPM):  Now more than sixty years old, the scheduling algorithm known as the Critical Path Method (CPM) was never intended to function in the environment of homebuilding production, which is project portfolio management with embedded and supporting processes;  CPM was never designed to function in environments in which velocity is important, where faster cycle time and higher inventory turns are critical drivers of business outcomes;  and, CPM is oblivious to the effect variation has on the scheduling of a production system.

CCPM is the leading edge – the future – of project scheduling for homebuilding;  it promises significant improvements in managing homebuilding production – faster cycle times, faster inventory turns;  enabling homebuilders to generate more Revenue, more Gross Income, with a planned, finite, and controlled amount of work-in-process and production capacity.

Unlike either Epic Partnering™ or Business Process Improvement,  Critical Chain is purely a velocity proposition.

Building Information Modeling (BIM):  Building Information Modeling (BIM) explores building design in a 3D model of the three spatial dimensions of width, height, and depth (some would also say time and cost), and links to multiple databases with information on costs, schedules, specifications, engineering data, and more.

BIM integrates, consolidates, and links information;  it makes data more accurate, useful, and manageable.

Much like Epic Partnering™ and BPI, BIM has implications for both the margin side and velocity side of ROA:  on the margin side, better, more collaborative designs with fewer design errors, more accurate job cost books, job budgets, and purchase orders;  on the velocity side, plans that are easier to build, more dependable job schedules, shorter cycle times, faster inventory turns.

Plus – a more satisfying homebuying experience and a higher quality product.

BIM holds the possibility of “making product 35% faster and 25% less costly to build”, according to Continuum AG’s Clark Ellis.

Yet, for all its promise to transform the homebuilding industry, BIM has had a shallow adoption curve, largely because implementing BIM requires too much determination and resolve, a different mental model, and a willingness to abandon past practices.

Which is where opportunity lives.

Open-Book Management and Team-Based Performance Compensation:  The efforts of a homebuilding company to improve operating performance and business outcomes will become far more difficult – if not fail – if it does not succeed first in creating a homebuilding team that works toward commonly-held and commonly understood business goals, versus being a collection of so-called teammates working toward individual goals.  What would be missing, is an underlying business logic that forms the necessary context for understanding everything else.

To become the kind of savvy, motivated, mutually-accountable homebuilding team required to compete effectively in the business world, everyone on the team has to learn the “business” of homebuilding, they have to understand their individual responsibilities as part of the overall team, and they have to understand what is at stake, individually and collectively.

That is the role of Open-Book Management.

It is not enough that teammates understand the business outcome that is at stake, they must each have a personal stake in that business outcome.

That is the role of performance compensation.

 

We like the balance between these five Velocity Accelerators®:  a blend of immediate, mid-term, and long-range initiatives that accelerate velocity, but also improve margins.

Come.  Participate.  Learn.

The next Pipeline workshop™ will be held at the Ponte Vedra Inn and Club, Ponte Vedra Beach, Florida, on October 18-19, 2017.  The cost is $875.00 per person;  for team pricing, inquire here (flgroves@saiconsulting.com)

Delivered by SAI Consulting and Continuum Advisory Group.  Sponsored by BUILDER and BuilderMT.

Details:  www.buildervelocity.com