This explored the connection between contractor success and project innovation in 31 Australian construction projects from the same company.
An innovation framework was developed (client-contractor project innovation, called c2pi), which drew on assessing KPIs and calculations; a completed assessment is shown below. The assessment framework combines efficacy, efficiency and margin.
In this framework, innovation is inferred from “working smarter”; that is, innovation in this sense is about finding ways to reduce cost, improve efficiency and practically solve problems rather than design innovation. They clarify that “It is not about substitution of components for cheaper alternatives, but rather productivity improvement leading to better outcomes in efficacy, efficiency and margin. Productivity is used here as an evidence-based surrogate for the measurement of project innovation” (p15).
Some types of innovation are covered. Recent work on innovation in construction-related industry 4.0 found innovation was often limited to:
- Systems integration
- Simulation
- Internet of things
- Building information modelling (BIM)
Some work found small-to medium-sized enterprises were more likely to implement substantial innovation to improve construction profitability.
Other work concluded that while BIM has “revolutionized the architecture, engineering and construction industry” (p4), a focus on singular technology or innovation solutions makes the use of innovation an “independent solution rather than a coherent strategy” (p4).
Types of innovation include:
- Fine-tuning
- Incremental
- Substantial
- Radical
Results
Client-contractor project innovation (c2pi index) was found to be strongly correlated with head contractor success (r2 value of 71%).
Innovative projects mostly showed positive changes in efficacy, efficiency and margin when assessed on planned vs actual outcomes. E.g. projects with positive c2pi (indicated by light green cells) mostly had positive efficacy, efficiency and margin KPIs, compared to projects with negative c2pi values (light red cells).
Exemplars of innovation delivering better efficiency, efficacy and margins were compared between top performing vs lower performing projects. For instance, top performing projects demonstrated genuine improvements in efficiency like investing significant time and resources into resolving design issues. Intensive buildability analysis helped to deliver a successful project despite some hurdles and mistakes.
Another project came up with a number of innovations to manage dust and noise issues, use of different plant and materials and other things. In another example, a number of factors around clever planning and logistics management helped fuel timely project completion. In one example a cost blow-out of 25% occurred in a project despite project completion being on-track, which the author believes makes it hard to connect “the high c2pi ranking to anything other than finding innovative ways to work smarter” (p18).
Examples from the poorer performing projects were then covered. Found was generally slow and inadequate communication between client and contractors, slow requests for information, underestimations in design and construction risks [with presumably less efforts to resolve and problem solve the issues, although I’m not sure if that’s stated]. Higher defects and safety incidents were also evidenced, as with lower client satisfaction results.
For the contractor, innovation tended to be more fine-tuning or incremental rather than substantial or radical. That is, “there appears no singular innovation that led to success, but rather a series of smaller decisions that collectively added value” (p20). The innovation decisions were focused on process improvement that saved time and cost without lowering quality, in other words “buildability analysis”, “value analysis”, or “business reengineering”.
Projects with higher complexity are more likely to encourage radical innovation, but this wasn’t part of the study sample.
It’s said that “within the studied sample at least, the pursuit of innovation leads to projects that are likely to finish on schedule, make profit, and have less defects, less accidents and higher quality workmanship” (p15). Radical innovation, may involve things like prefab building modules, designing for manufacture and assembly, BIM, artificial intelligence, laser scanning of finished work and more.
Like any study, a number of limitations were present.
Author: Craig Langston, 2022, Engineering, Construction and Architectural Management
Study link: https://doi.org/10.1108/ECAM-05-2021-0460
Link to the LinkedIn article: https://www.linkedin.com/pulse/empirical-relationship-between-contractor-success-ben-hutchinson
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