A Personal Note to My Friends and Colleagues
Hello Everyone,
If it feels like I am trying to talk you into something in this note, you would be correct. In fact, that’s all I’ve been trying to do for 30 years. I’m trying to convince construction professionals to see that management in the construction industry is a science just like engineering. Their descriptions are quite similar.
• Engineering is the applied science of acquiring and applying knowledge to design, analysis, and construction of works for practical purposes.
• Management is the applied science of acquiring and applying knowledge to design, analysis, and operation of organizations for practical purposes.
We wouldn’t even consider starting a job without reliable engineering in advance. We shouldn’t even consider operating our companies without a working knowledge of the applied science of business management.
• The American Engineers’ Council for Professional Development defines Engineering as: The creative application of scientific principles to design or develop structures, machines, apparatus, or manufacturing processes, or works utilizing them singly or in combination; or to construct or operate the same with full cognizance of their design; or to forecast their behavior under specific operating conditions; all as respects and intended function, economics of operation and safety to life and property.
In my opinion, “The creative application of scientific principles to design and develop processes” goes for business management as well.
Where I’m Coming From
When I began my career as a young contractor in New Jersey, I was a 16-year-old carpenter who a few years later decided to go into business with my brother. Very soon after beginning, I realized I needed to attend night school to learn engineering. I spent countless years on the job all day and in the classroom at night. I knew it would be difficult to be successful in the long run if I didn’t have an everyday grasp of the science of a builder. With night school, my estimating and bidding improved and my everyday skill at “running” the job and “quality” control gradually came into focus.
However, we were managing our contracting business by the seat of our pants. We had guts and street smarts and thought that was all we needed. And as long as it was just me and my brother doing a few jobs at a time it was sufficient. But as the business grew, we began to realize we didn’t know enough about banking and bonding. We needed to understand our contracts more fully, and we hadn’t developed an organization to help us handle all the administrative tasks that were starting to snowball. In other words, we realized we knew very little about the science of managing a business.
Little by little, I began to view the construction business through a sharper lens. I continued my formal education including business management and eventually started what became the largest workout firm in the country, hired to complete jobs for sureties that had been left holding the bag when contractors suddenly failed. During that period, I amassed an enormous data base on the causes of construction business failure and the science of effective management. That was the beginning of my in-depth research and study of the science of construction business management.
Where I Was Coming From
“OJT (on-the-job-training); that’s where you learn how to run one of these construction companies.” Every contractor I knew believed that. I agree to a point. But as my brief bio above points out, once a construction company becomes a “complex” organization it takes a professional manager to operate it successfully. The only question remaining is, are we willing to become professional managers or are we willing to hire one? One way or the other, as our companies grow our success depends on it.
I didn’t need extensive engineering skills to frame a three-bedroom house in 1963. But once I started to build 2-story elementary schools and churches with steeples and lofts and arches, I knew I needed engineering education. Eventually that wasn’t enough because I was no longer “building” things; the people who worked for me were. I was “managing” an organization that built things.
If your company builds one project at a time for $2 million in annual revenues, you can handle everything with a gopher and a secretary. But if you build $30, $60 or $100 million worth of apartment buildings, highways, or specialty trades every year in widespread markets, you need true management professionals to sort through the mess and squeeze out a respectable profit.
Business Management Is a Science
For the next 10 weeks we will be discussing the science of construction business management. The topics will be broken down into the following functional disciplines:
1. Strategic Planning
2. Budgeting
3. Accounting Controls
4. Risk Evaluation
5. Project Selection
6. Organizational Behavior
7. Succession Planning
8. Banking and Bonding
9. Marketing
10. Legal
You might want to share this widely with your managers because I am going to try to talk you into using the business management sciences to run your company or to carry out your role in the construction process.
For more information on the organizational management of construction company management, click this link: https://simplarfoundation.org/?s=business+management
For a broader view on the organizational change, read more here: https://simplarfoundation.org/?s=organizational+change
To receive the free weekly Construction Messages, ask questions, or make comments contact me at research@simplarfoundation.org.
Please circulate this widely. It will benefit your constituents. This research is continuous and includes new information weekly as it becomes available. Thank you.
