The Easier, Better, for Construction Show is where people working to make building easier and better share how. Mike Williams and I explored Lean construction, Scrum, Prefabrication, construction software, Waste, Design Phase Planning, Problem-Solving, D...
The Easier, Better, for Construction Show is where people working to make building easier and better share how. Mike Williams and I explored Lean construction, Scrum, Prefabrication, construction software, Waste, Design Phase Planning, Problem-Solving, Design Fees, and Contracts. If you see your company headed into trouble, this episode will give you actions to skillfully sound the alarm and change course.
Today's episode is sponsored by the Lean Construction Institute. Join me and many others from the Lean design and construction community at their 22nd Annual Congress. It is being held virtually this year, the week of October 19th. Our theme is the ABC’s of Lean...Transformation through Actions, Best Practices, and Coaching. Learn more at www.lcicongress.org/2020
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Felipe Engineer 0:04
Welcome to the EBFC show, the easier better for construction podcast. I'm your host, Felipe Engineer Manriquez. This show is all about the business of construction.
Today's episode is sponsored by the Lean Construction Institute. LCI is working to lead the building industry in transforming its practices and culture. Its vision is to create a healthy and thriving industry that delivers outstanding project outcomes every time for everyone join me and many others from the lean design and construction community at their 22nd annual Congress. It is being held virtually this year, the week of October 19. Our theme is the ABCs of lean transformation through actions, best practices and coaching. Check the show notes for more information. Thank you, LCI. Now to the show.
Mike Williams 1:11
I would challenge you, Felipe that you're not you're not doing the entire ROI on this. Because this discussion you and I are having right now. If If, if we get more than 10 people who watch this, and, and get something out of this.
Felipe Engineer 1:26
But absolutely, if we if we dance, both of us come out of it better dancers, that's for sure. Because you know, like a good general contractor. We got to track it. Why don't you go ahead and introduce yourself, Mr. Mike Williams, tell tell the audience something about yourself. Yeah,
Mike Williams 1:42
my plans. I'm an architect with 31 years of experience the end of this year, almost exclusively in the health care area of architecture, some laboratories and other high tech building thrown in there. My background with lean and lean construction, lean design, actually kind of accidentally started in the 1990s when I read an article about value stream mapping, that was related to a publication or an actually a research paper done by MIT, and I began to apply my understanding of value stream mapping at the time to emergency department design. didn't even know the term lean at the time, held like I heard that term until probably 2003 or four. And somebody pulled me aside, he connected Well, what you've been doing is actually value stream mapping, which is part of the lean toolkit that happened about 2007 when I started to line these things up, but so I guess I was doing lean before I really kind of knew it. But that always intrigued me. I've always been processed, driven. As you know, Strength Finders on the problem solver, which I always always line up whatever I do, and a series of events and move through them one at a time. So it made a lot of sense for me. No, thank
Felipe Engineer 3:12
you, Mike. Yeah, ever since the first time I met you. And I feel like you're one of those people that that I've met. And I feel like we've just been we've known each other way longer than we really have. I think we've actually only known each other for about four and a half years. Yeah, five years. Yeah. Seems like seems like longer. But yeah. Yeah, it does seem like longer. I remember the first time talking to you is just perfectly at ease. He totally disarmed me. And I was so curious to there might have been an adult beverage in our hands too at the time.
Mike Williams 3:44
It could have been, I don't know if that was at one of the improving capital projects symposiums or when you were teaching Scrum out at the job site. Yeah, I remember. One of those few times. We're both at the same week. I remember which one was first. But yeah. Yeah, I remember watching you walk the project team through Scrum. I'd sat in the back and watched carefully. And I if you remember, I had a number of questions for you. I wasn't answered your questions. I was answering your questions with questions. Which I think did disarm you.
Felipe Engineer 4:21
Which I love. No, because it shows. I like when people do that you because you're thinking totally differently. And even if you're leading the witness, which you may have been, it's still fun to play and dance that way. Yeah. Scrum is one of my favorite topics of all time, like I could talk about that for 24 or 48 hours straight and not even take a break.
Mike Williams 4:40
So your enthusiasm for Scrum quite frankly, when I watched it the first couple of times I I wasn't that impressed with it. But your enthusiasm for it made me dive deeper in your total belief in the system, maybe dive deeper. And then as you know, we started applying it both to that project in in specific, as well as to our own office for task play. And it's been, it's been fantastic. Every every new pm we bring in and teach it. They kind of wonder why they didn't know it before. And there's always that lightbulb that happens about the third day, right? The first day is, what are we doing with post it notes on the wall? Second day is, well, that kind of worked, okay. And the third, fourth day, it's kind of, Hey, you know, people were actually lining up their tasks and doing it. And we can see the flow, which is, in my opinion, the visual side of what we do in the lean toolkit is more valuable than sometimes the process themselves, being able to visualize the work is a key.
Felipe Engineer 5:54
Now, I always tell people like all these tools, they're all about you, enabling us to do what we want to do, what we're passionate about. Like for me, I'm not passionate about making sticky notes. That's not that's not it. pictures that you sent me of your your office using Scrum. I was just floored, like, Man, that's it, like you got it. Like your board. It was like messy. And it had been like the tags look like really beat up and Haggar. And I was like, yeah, that's a board, it's getting some use.
Mike Williams 6:22
Yeah, our company is taking this this kind of COVID. I guess, respite from a lot of work. I mean, we have some gaps in our work right now. And we've been doing a number of initiatives, internally to increase our ability to connect them information to production, direct to fabrication. And we've also been going through an internal lean initiative in the company. And right now it's focusing on our project management and on our accounting areas, in the company where we're focusing first, we're turning this in, not just outwardly facing with, with clean initiatives. So one of the one of the areas we've been looking at, and we've gotten a little bit of press about it is what we've been doing in prefabrication. So I thought it would be nice to connect those three things. So we've been doing a lot of interviews with owners. I haven't gotten around to general contractors, but you guys are on the list, as well, as I've been talking to people about, you know, prefabrication modularization. In, in what I think is kind of going to be the next wave is, is more direct to fabrication. You know, there's a lot of, I don't want to call them futures. It's a lot of people in my profession that see the handwriting on the wall.
Felipe Engineer 7:58
When would you say futurist, can you unpack futures for people listening? If they've never heard that term before you and I are well versed and we know a futurist. So yes, you unpack what that is for folks?
Mike Williams 8:09
Well, it's somebody who's who's critically looking at our profession and the deficiencies and the issues, daily issues in our profession, and looking at how future technologies in future working relationships can, can solve those problems. And I think I think that's one way a futurist is looking at, I think that's a linear way of looking at it, I think there's a disruption coming, quite frankly, if you go back to 1925, or 1930, you and I would be in two very significantly different roles than we are today. I would turn over, you know, 45 pages of documents to you to build a 300,000 square foot hospital, and you would fill in the gaps. Yeah, that was the way it was done.
Felipe Engineer 9:00
And I think you'd be on site with me every day.
Mike Williams 9:05
Yeah. Yeah. And I think that's gonna come full circle, in a way. I think, you know, buildings have gotten much more complicated, obviously, in construction materials have gotten much more standardized. But I think I think both of those things actually can can work to create a disruption in our in our profession, which really needs it. I mean, you know, you and I, we sit in those LCI conferences we listen to, you know, 60% of what we do is waste. And that's conservative, in my opinion.
Felipe Engineer 9:35
I've heard as much as 80%.
Mike Williams 9:37
Yeah, so so 60% to 80% of what we do is waste and we're the first ripple in the pond. We're trying to we're the ones on the on the up on the catbird seat yelling iceberg.
Yeah, we can see it. But you know, the futurists really look at this. And there's some of them out there that come from outside our professions that look at this and say, Well, why, why are we creating all of this information in BIM, only to print it on the paper and turn it over? And then leave it open for interpretation? Because you can't print everything you can do in BIM. And, and I think that I think there's something there, I think, with a couple of programs between a BIM platform and a fabrication platform, you can go directly to fabrication. So what needs to change in the profession to do that? Does it need to be a third party? Who owns that liability? owns that risk? Does it mean? Is it a GC? Is it a different contract? And is it a different procurement method? And I think all those things are swirling around in LCI and these other lean initiatives going on nationwide? there's not there's not a focus yet. But I think the focus is coming, I think. I think we'll see it, I think there's an awful lot of need. I think buildings can be built. I, I've experienced it, we built a 260,000 square foot Hospital in a little over 12 months, from pressive. Right? Well, it sounds impressive, but when I went through it, it, it was actually the same amount of work, we typically do all the stuff in between, it was a true IPD. Of course, in all of the stuff between the work we do wasn't there, you know, if all the white noise of a project was gone, and the team was focused, and it can be done. I mean, if that was done, when we were using BIM on the cloud didn't really exist. At that time, you were doing that off a central server in our Ontario office, and we had at any given time, 85 people in the model, and all of the headaches of that, that's all gone. Technology headaches we had five years ago doing that or not. So I think the I think the ability is there. I think the desire is there at the grassroots level. I don't think it's gotten to the leadership of our industry yet, but I think it's...
Felipe Engineer 12:22
It's definitely coming, I bumped into a guy at a lean construction is to conference some years ago. And he was operating the space. And he was working for a family owned general contractor company. And he said, I really like them. I like the promise of what he can do. He's like, what doesn't make any sense to me is that when the job's done, the model just gets put on the shelf, you know, so the figurative file cabinet and no one touches it ever again. And he said even during the construction process, it's not really used for scheduling. It's not used to plan the work, or torn form things outside of like clash detection for coordination. You know, the big C word the the word that architects in general contractors, and owners love to like talk about what's included in coordination, what isn't, because like, it doesn't get that much usage. And then, you know, that was that was three years ago, he eventually started his own little company. And he's recently got bought out by a large organization. But they developed a workflow, where you do all the same things you would do in building information modeling. But the caveat is, you put put the foreman and the superintendent in a virtual environment. And they click and touch and schedule work by touching the pieces of the model. And then that model, because somehow he had heard about Scrum. I don't know how you heard that Mike, where he picked that up from last planner system, which is an LCI poll planning system. He said, wouldn't it be great if we just pulled and we build things, the way that we know they should be built in the schedule reflected that. He said, One, that'd be great. And I said, that would be great. And he did it, he pulled it off. And so now he has a, created a program that takes that model, and allows a foreman, you know, to get inside of it, and touch, you know, with their hand with wearing VR glasses. And then the way that they touch things, creates a sequence that then generates Scrum tags. And then they can actually just pull the sequence through. There's some kind of logic and intelligence behind what they touch, and what information gets populated on the tag, like you would see in a typical last planner, thinking predict based on how they schedule the sequence and the flow. When it's going to get done. It's pretty darn accurate. Now, I lost track of him after after they got purchased. But I just thought there's an individual that worked in the space got frustrated, and then got gathered around a group of people and solve the problem. That's a disruption. Right and those disruptions can come like from inside or from outside and we've seen You know, most of the time, if you look at the, you know, the blue chip stocks today, versus 50 years ago, you don't recognize those companies. If you and I were standing back at that 1925. Mark, like you'd said, almost none of the top companies would be there today. They're all new companies.
Mike Williams 15:17
No, okay. You know, I was under the age of 18, my father helped me purchase it. But you know, the, the hot stock of the late 70s was Polaroid. Wow. You know, they were they were the, they were the they were the apple of the day, you know, they were disrupting everything. You know, they were they were you're gonna erase Kodak, if you will. And now they're both gone. It just is. Those were the two giants of photography at the time. Yeah, you're right. It happens. Those were those were the leading companies in the 1970s. Yeah. The the interesting dilemma we have with technology, one of the things when I look critically at how we apply technology, is the cycle of technological evolution is much faster these days than a building project cycle. Yeah. So you have to choose your technology at the beginning of the of the product cycle or billing cycle. And you have to stick with it. And changing technologies. And as you said, you mentioned that this gentleman got his into D got purchased. That's the other thing is, you know, we were halfway through a very large project, and the platform we were using, was purchased. And the transition was difficult. Definitely, like losing, you know, a 35 gig BIM model, you know, two weeks before permits that. But those things happen. So, so I think there's there's both sides of the double edged sword is we're moving so fast with technology, we didn't do a product project cycle that lasts, you know, four or five years, you guys are in California, to translate it into your term, seven, eight years. Right. So so it's very, it's very important to pick stable technology platforms for that, for that aspect of what we do. But then again, the stable technology platforms are usually the big behemoths that are going to get disrupted, right? That's right. So so the startups come in, and, and disrupt them. So it's always an interesting way. And that's why I think every project, we do have size, we always try to do cluster groups, and one of the cluster groups is dedicated to nothing more than them, and document management in the deployment of technology. And that's what they do. It's usually the VDC teams from each one of the entities involved. And we really don't give them any other any other role other than managing the technology, both in training the people who are trained on it, helping to procure the technology we're going to use on the project, and give you an understanding of how the inner polarity is going to work between all of the entities and who's going to be responsible for them action plan, if you will. So, you know, that's, that's the key piece. It's it's a differentiator, I think, in our professions, and I think, you know, my company, we're about a 400 person company, we've started to deploy people in all of our offices who do nothing but that they're not really architects, they're not really from the design profession. They're really from the software side of things. Not even it so much. They're more experts in deploying and managing software for us, which I think that's a that's an area that we will have specialists who do that for architects and specialists to do that for contractors.
Felipe Engineer 19:00
That's a good number ofvirtual design construction groups across the country are, continue to add people and the technology keeps shifting. And, you know, you and I are both pretty active on social media, in particular, LinkedIn, I've get probably, you know, half a dozen pings per year, if not, some months, it's just seems like if there's a conference, even more people, you know, selling new technology, like, Hey, here's this new thing that we've developed, and a lot of things I mean, just this morning, at like, 6am, I got a request to connect with somebody who has BIM services, you know, that's actually getting more and more common. Like the threshold to get into that space is getting easier the software is coming down in cost. It's getting easier to use, like even you and I can jump into a model and at least figure out how to move around. You know, if not, you could probably get way more sophisticated than I that I can with your your design. I I'm just but a humble general contractor.
Mike Williams 20:00
Like, you know, yeah, actually, you know, what's interesting is is the company I worked for I started in 88. And at that time, AutoCAD was interesting. It was a it was an interesting oddity, a couple of firms here and there, we're starting to experiment with it. We went to a Technology Conference in 1991. So I've been with the firm about three, four years, and we were looking at a company by the name of ARCHICAD. And they were doing something really interesting. So what was really interesting to us was, they were they were actually creating three dimensional models. So it was really the beginning of them, I think their term for it was virtual building at that time. And they I think we're the first commercially available widely available BIM platform software. And in 91, we adopted it, we jumped right over cat. It was on the apple platform at the time. So we had an office of 18 people, we had Macs in the office, and we went started using ARCHICAD. So I created a fly around model of a design for a hospital in Newport, Washington, small community hospital, in 2019, in 1993, took almost almost three days to render it. fly around. So BIM was something I jumped in right away, actually, you couldn't use CAD, most people my age, can sit down and work their way through AutoCAD, then a difficult time with the BIM platforms. I'm actually the other way around, I can jump into Revit, or any of these other ones that I'm much more at home than I am an AutoCAD, I'm always looking for a different a different way to do what we do. That's what I've done my entire career successfully and unsuccessfully, you know, you learn from learn from mistakes, when you deploy something isn't quite ready for primetime at times. But back to the overall technology idea, and direct to fabrication. I think the key place where we see a lot of our waste is between the time we finish a model, and the time that you guys are out in the field putting the pieces together. I think I think the biggest piece of waste is right there. We've got to get away from this idea that drawing sets, stamp drawing sets are the way to do this. There's a lot of things that have to change. Electronic submissions, yeah. You know, the ability, the ability for someone in a in a prefab shop or in a fabrication shop, to be able to fabricate multi specialty items, get them inspected in the shop and then deliver them across the country. You know, for instance, uh, to go back to health care, headwall system, you know, stud manufacturer can can build the head wall, you can drop in pre made piping sections from a plumbing contractor and premade conduit sections from an electrical contractor. And if you had the ability to get that inspected, there have an inspection level there that would that would work in all 50 states or all municipalities we can really start to eliminate the waste and move construction from the job site to the factors. I think direct fabrication is more interesting to me than than prefabrication and modularization. Both of those are looking at taking a design and breaking them into repetitive pieces and you have to have X number of repetitive pieces to make the costs pencil out. That's kind of where we're at right now. We're looking at bathrooms in the hospital. You know if we can get 60 bathrooms that are exactly right. Okay, now it starts to make sense we get 100 Yeah, we're we're cashflow positive 100 that works.
Felipe Engineer 24:11
I think even some of that might be accounting or the estimating though as people do it today. It's not really on par with what the savings are like I've heard the this conversation comes up all the time because i mean i was i was doing a tour in San Antonio a few years ago. We're on vacation passing through and Ron this river tour and they showed the Hilton Hotel right on the river. I can't remember the name of it. And that was a done got it that thick. The the tour guide said it was done like in the 50s or 60s. And then as they put the whole the entire rooms were done. even had the bed on it. Like the sheets were on the bed and like stuff in the closet like the the hangers for the clothes were already in the closet inside the compartment And that was like, just sitting there in 2019 or 18. And to think I was over 50 years ago, where did that information go? Why don't we keep doing it? And I think some of it has to do with how we account for costs on a project. And just like your thinking that the way we look at drawings has to change your mind is just so wide open. I mean, what you just said, about the drawings changing is, I would say it's architectural heresy. Because I've heard so many people, you know, defend that the systems in place. And here you are, the little, you know, the wild Western person that you are having grown up in the western part of the United States, and you're just totally wide open to like what's possible. I think that in the same way, we'd have to approach the cost to, to look at like, what, what is the actual like, we break that compartmental Pease, because we typically in those jobs are looking at that you're already contracted most of the time, Mike. And the way that people take jobs off, they figure in efficiencies based on a total job, like whole project, just like you guys look at something as versus, you know, total hours. So what it's going to take, that's the way a lot of contractors and subcontractors approached the work to and, and to think differently, we'd almost need to see something from the design team as a first baby step, maybe. And maybe I'm crazy. But to say like this piece, this pieces, like just, you know, if you just set it in writing 60 bathrooms with a sink, you know, a toilet, a mirror, whatever lightswitch. And whatever else is in the bathroom or shower, shower pan, and some kind of rudimentary details, then someone could just take that off and multiply it times 60. And then you'd know what that cost would be, and then say, okay, figure it built stick built on site, and then figured built and dropped in from off site. And you can get real apples, apples, but when you're already contracted, you've taken off, and someone's trying to go back in their estimate, and just carve out those little pieces. There's a lot of inefficiencies getting carved in. And I think the numbers and the ROI, the return on investment, is probably off just because of how we sliced it. And then we're resizing it, and there's waste in that. So we'd like to tell people on the figure buying be on the same page, like if an owner wants to do prefabrication or modularization, or offsite construction, in lieu of just, you know, breaking something down after the fact you're gonna get, you know, much faster delivery. The earlier you tell people, that's what you want. Huh?
Mike Williams 27:32
Yeah, well, I think I think you've touched on what I've seen on a couple of these IPD projects, even on the street, down and dirty IPD projects where speed is the key. If put yourself in a plumbing contractor shoes, okay, okay. You've been brought on board, we have 100 100 and $50 million project going? plumbing is 28% of the overall budget, right? Course 20 30% here in a second. Yeah, the team is the team is sitting in the in the big room, and they come to the plumbing contractor and say, you know what we thought that'd be really great to prefabricate 100 bathrooms, we're gonna work with the architect, and we're gonna design all of the patient bathrooms to be same handed and be exactly the same. And we believe we can we can save money by doing this. Are you set up to do this full finish? bathrooms, tile, you know, paint? shower rod everything? No, I'm set up to do plumbing. Okay, well, we'll go out to a prefabrication. That person just lost a whole bunch of scope of work. Yeah. So then we go back to them and say, Okay, what, what was your bid number or your effort number for these 110? bathrooms? Yeah, where is their incentive to give you back? That number, and even on IPD project, I had a plumbing contractor pulled me aside and say, You know what, we were coming out of the out of the 2009. It was 2013. And we were up in Las Vegas. I can't, I can't go back to the union hall and tell him this work just left the state. That's, that's something we can't do. And there's all these layers in there. When you're disrupting a profession that way. You know, then if if it actually moves to where I think it's going to move someday, most of those complex components are built off site. And where I think it's going is you don't need to have 100 bathrooms exactly the same. To do it. I think you can actually do unique one offs as easily. If you can move the information without using paper. I'll put it that way. If you can move that into electronically, and the end fabricator can have some say, in the design of the bathroom, you know, if you made the shower two and a half inches wider, it allows me to use, you know, three whole sheets of sheet rock or green board, rather than, you know, two and a half. And we're actually looking at some of that, you know, we've we've actually been looking at scripts inside of our BIM that help us understand what we're at the planning stage, you know, how many, how many sheets of sheet rocker, we waste, even this room, I've actually challenged the people writing the scripts internally. As you know, one of the wastes on job site is material waste. And if we we know what carpet we're using, we know how wide the loom is, you know, if the loom is 12 feet wide, you don't make a 13 foot wide room, please don't. Yeah, in those sorts of things, you start to you start to have the software which can be intelligent, you got to tell it what to tell you. But if you tell it what to tell you, it can give you that feedback at any point in design process. And I think that's that's where the next step is, for us on the design side is actually recognizing, at the very beginning of a project, we're laying out walls, doors, windows, skin, Florida floor heights, understanding the components. Typically, we hire engineers, who are experts in those components to help us they're experts in designing the systems, we need to understand as architects, the the constructability of those systems, not the design of the systems. And that's where I think a more integrated approach is, is needed. And I actually think you guys as general contractors, and most of the major subs need to be there in the room when the building's been designed. I know a lot of my profession see that as a huge risk. I actually don't, I did the first time I went through it, I thought, you know, why am I sitting here programming the hospital with a handful of contractors in other people who have no business being in this room with that? What do they know? Yeah, and lo and behold, you know, grudgingly over beers, the first few days, I'm like, well, they actually had some really good ideas. So that, you know, another month went by, and I'm like, you know, I really don't mind this another one month by and I'm, I'm emailing them questions. Because the value is there.
Felipe Engineer 32:34
So you're touching on one of those things that we say, you know, in the, in the lean space about having a project first thinking, and you shifted from, from optimizing for yourself, to starting to optimize for the whole project to realize, you know, open your hand and, and reach out for somebody to, you know, to help you with that you can be held. And likewise, they want to help they've got information they want to share, too. And if we all agree that we're, we're putting the job First, we automatically lowered the silos and we have to reach across and help each other.
Mike Williams 33:07
Yeah. Yeah. The, you know, the reality is when you come back to your own entity, you have insurance and liability. fences put around you about what you can do and can't do. And quite frankly, one of the large IPD projects we did, we spent almost four months writing the contract. What was interesting is we worked under weekly notices to proceed for almost three months. Well, the 11 signers rewrote the contract and we actually wrote in the contract, I won't go into the boring details of it. So we became a self indemnified group. So so a lot of our insurance was collected on that project. To the extent it could be, but that started to break down some of those hurdles from our risk management level people in our firms. But there's a lot of hurdles there. Most of the hurdles are administrative in my opinion and risk. But I see a time when designers start to circle back to what we did, you know, 80 to 100 years ago, which is, you know, designing buildings, not draw drawings. The, my profession, I get frustrated at it, oftentimes, we still kind of pursue our work in the Overlay and trace method. So for a contractor such as yourself, you may not know what that means. So you know, 1850 code, the modern way of organizing our architectural or engineering practice again, where you had a room full of people with gigantic desks and you moved paper around from desk to desk, from general to specific. So you always started out the design for generally and finished it up details late them them allows you to go right to the details. But we still pursue our projects, we array our hours as a profession, based on this general to specific, you know, pre design and schematic design design development CDs, I think we need to rethink that entirely. Oftentimes, I pursue projects, right, do final design development room level drawings, before I've programmed the building. So what I'm doing is I know I'm going to have patient rooms, I know I'm gonna have Ed bays and knowing that I don't know how many are where they're going to be, but I'm going to have these rooms. So why not release that work to the team, if we have an integrated team of some sort, why not release that work and get that known up front, typically, an engineer in that Overlay and trace method, that kind of legacy, way we do projects is waiting around too late designed developments before he understands how many med gas outlets you know, are and where they are, if I can give them that information much earlier, that makes everything actually in a hospital. You know, there's about 130 unique rooms in the hospital. Most of those rooms have very little variation in them. from project to project, everybody likes to think they've invented the new soiled utility room, but I can pretty much guarantee you have it. These things are relatively standardized. To draw at a at a very detailed level day one, before you figured out how many of those you need and where they go, you might have to alter that room slightly to make it fit into design later, there may be a column then under chase later, but those are easily overcome. But to release that work up front, that's where that's where this starts to really push, push what we do to more speed and more quality, because you get much more time of the engineers and trade partners, looking at those systems upfront, costing those systems understanding how to put them together, that can give you much more critical feedback, rather than waiting until the end, where I've got to have the answers. And here's the DVD set, I need any constructability answers in a week, or I'm not going to be able to make my 50% CD set in six weeks, you know that sort of thinking? That's where we're at right now, as we think about drawing sets, we don't think about the product that often. And that is legacy from the Overlay and trace method, quite frankly, and I think we need to rethink how we do that. And I push inside my firm, I push owners to think differently about it. I think I told you, you were in the big room one day when we were talking about.
Planning tax for the last planner system. And somebody had put up 50% design development, and I lost my mind. I said define that. Is that half issue?
Felipe Engineer 38:21
That's why we're such good friends, Mike, just like that.
Mike Williams 38:23
I love that about is that is that half the sheets, we would have in a normal design element set, or instead of 30 by 42 sheets, or they have sight sheets of a design development set? Or is it half the work, we would typically put it in and tell the who asked for it. And if if someone needs to know the size of all the rooms, okay, then pull that tag up on the wall. If someone needs to know the ceiling heights, then put that tag up on the wall. If someone needs to know where the plumbing is put that tag on the wall, those are all easily doable things. But to go through the effort of collating and creating an entire set of documents in which everybody needs one or two pieces of information out of that's that's waste right there.
Felipe Engineer 39:14
I mean, not not even got that right. Yeah. I can't figure out like where we get that from.
Mike Williams 39:21
I don't either, but I would look at that. Yeah, I always ask those questions because as a problem solver, you know, number one is restorative. I look at that and say, Well, the problem is approval. So what do you need to get approval? I mean, that's just that's just the nature. You know, the reason we are there is because they're too busy making 50% DVD sets. Exactly. Well, we get an RFP and you know, one of the large healthcare entities in my area. They have like a five page RFP that goes out for a single word remodel or it goes out for a new top Pretty much the same. They have some areas where they can add or subtract text. We were pursuing a, a very large project within that area of their RFP had maybe two or three paragraphs describing the project. So we have to look at what they're putting out there for a budget, and we see 100 and $10 million construction. So we started crafting a fee off that based on historic stuff inside the firm. So if we, if we out here, one of the branch offices turned into fee, that is way outside the line for $110 million project internally, the phone rings. And we have to talk about it. So our effort is based on, you know, a risk of we don't have enough effort, or we have too much. And then we have to look at the firm's we're competing against and say, Well, how are they going to see this, done projects like this, they know what they're doing. So, so we put together fees, you'd be surprised. There's systems for us to do that. But you'd be surprised how much kind of guesswork there is not guesswork, but how much kind of feel there is in that. And then we don't know who the rest of our partners are going to be, you guys have it a little different, at least the way these jobs are procured in this market, is, when you're competing for the work, you already know who the architect and design team is. And you know, we can work with them, we can do this, we can ratchet our fee down half a percent or three quarters of a percent with this architect, or no, this architect, this design team, they're not gonna they're gonna kind of go old school badass, we're not gonna be able to make some of these, these advances, we need to be up here. And we're the kind of tip of that spear, we're trying to figure out that Plus, there's all there. Depending on the project manager with this particular one, project manager project executive, we're going to do the project one way or the other one, we're going to do it another way. So yeah, when we get all said and done, we typically don't know where our fee really sits. If we're going to make profit or loss on a project, probably until about 50 to 60% of the way through construction documents is about the time, we start to see a trend in one way or the other, and...
Felipe Engineer 42:18
A long time to not know how you're doing.
Mike Williams 42:20
Well, quite frankly, the bell curve for an architectural fee is we spend, we earn 35 to 40% of our fee, typically in a three month a four month period in construction documents.
Felipe Engineer 42:34
That's where we have the highest burn of FTS on the project. And that's where we do it. So that's usually referring for all the other people that don't speak all the military acronyms full time equivalent employees.
Mike Williams 42:47
Full time equivalent, we have the most people working on the project at that period. You know, project team can go from one and a half full time equivalents at the beginning of a project even on a project of significant size on a traditional delivery, up to eight to 11 in the middle, and then back down to one or two during construction. So you can imagine a bell curve going up and down. And if the team can affect the top of that bell curve for an architect, we can become profitable. If the team affects it negatively, we can become unprofitable. That's just the nature of the business. It's like it same thing with construction. You guys start out digging holes and putting up steel and concrete, two or three trades on site. Right? Where you guys really start to get concerned. And rfis fly and everybody's quit sleeping is that last five months when you're doing finish work and crunch time?
Felipe Engineer 43:45
Yeah, everyone calls it crunch time.
Mike Williams 43:47
Right? But it's when it's when that same bell curve kind of happens for you later in the construction process where you're looking at working weekends or nights to catch up on the schedule or, or a piece of your schedule and so fast, nobody anticipated it. And now the next sub isn't there for a week.
Felipe Engineer 44:06
Or have a sub goes bankrupt and you've got to replace the subcontractor that's a one month to two month impact with that trade and let those dominoes fall because that happens, especially with the economy. You know, cash flow is very critical for a lot of subcontractors, rightly so.
Mike Williams 44:25
The difference I saw for us in the when we look at the IPD projects, the true IPD projects we did is we weren't asked for a fee, we were asked for a fee estimate. And that's much different. So we're putting together the project total cost estimate and the PTC for this particular owner and we had to went through a validation process we're validating that they're kind of pie in the sky idea of building a hospital in Las Vegas for 25% below market in 30% less time then would be done typically, that we are easy. Yeah, well, if we didn't even have we have nothing but a business plan, we'd have a program. We didn't even know how big it was gonna be, we actually backed into that, quite frankly.
Felipe Engineer 45:16
You had like a bad number, right? Like a cost per bed number, right?
Mike Williams 45:19
That number, we had a bed number they wanted. And then we as planners had to figure out, Okay, well, that number of beds means this number of CT scanners and this number of vd bays and those sorts of things. But, but the interesting part about that was is we put out a fee number, and we can based on what we thought to build, it would be done. And we said, okay, well, we'll play the 30% less game, and we'll take, you know, 25% out of Murphy. And, and we put that as the fee, and then we sort of burning against it. And this particular project IPD, and the way the profit pool was created, is the owner did an audit of our organization, they figured out what our profit was on similar buildings in similar locations. And they removed that amount of money from our billing rates, so we billed hourly. And for instance, you know, it was about 12 and a half percent, I think, is what the number was. So they pull, you know, I was 200 bucks an hour in those days, they pulled 25 bucks out of every hour, I worked and that created the contingency, if you will, or the risk pool for the project. At the end of the project, long story short, at the end of the project, we were about $375,000 under burn rate under our estimated number. So this was a learning experience. So this particular owner was happy about that, in one way. And they asked us the question, but when did you know this? Because this project was done in such a way that the owner, so the first group of savings under the project, total cost estimate, the first 10%, or the first 50% underneath that dollar for dollar 50 cents of every dollar under that was shared equally among the team and the owner. And when we got to the next 10%, the owner could add scope in that was on the bubble. So we made decisions. So the owner looked at that and said, well, the team is now leaving the site, and we just found $350,000 we could have shelled another row art. If you would have told us this, six months ago, now the teams are demobilizing and, and graded savings, we're gonna all share the money that we would have liked to have the extra scope. You know, well, there's chalk that up as a learning experience, right? That's a mind bending learning experience, you walk in and say, Well, guess what, you know, we're $350,000.
Felipe Engineer 47:56
You're all happy and excited.
Mike Williams 47:59
Couple people were happy and excited. This particular project manager, which you and I both know, he looked at me and said, Well, how long have you known?
Felipe Engineer 48:10
So that was the break your leg in the parking lot?
Mike Williams 48:13
Next, right? So yeah, he was happy like everybody else. But they will say we would like to have the additional scope, which would be money, quite frankly, the way that was working, is we give that money back and then they turn around and pay us to design the additional scope. So we still get it. Yeah, you still get it back. But you know, those those types of contracts are few and far between when you work out when it really does change your perspective of how you do projects, and contracting type.
Felipe Engineer 48:43
Mike, that's a technology in of itself. Yeah, whole process around an integrated form agreement and sharing risk and reward. That's a technology thing that changes so many things. It has a massive cascade on how people behave, how the project performs, you know, what happens when people get stressed, all different from a traditional contract is more normal contract time, like a cm at risk, or a typical lump sum.
Mike Williams 49:11
Yeah, in in it really, I would say the technology doesn't create the behaviors, the behaviors allow the integration of technology into that, because we don't have the right behaviors at the beginning of that. Those types of projects. They go bad, you know, the few IPD projects that have gone bad can be traced back to, of course, like everything else behavior, of course. But yeah, it's, uh, they are interesting, you know, we're seeing more and more owners creep toward that way. You know, they're looking at IPD like, and then they're looking at, but what if we incentivize a CMR contract for these things or we go to progressive design build. It's good to see it's quite frankly Good to see more and more owners asking us about that. Which I do get, I am in contact with several owners on a regular basis, and more and more of them are asking, but how did you get those results there? Or I saw you put something up on LinkedIn about all this prefabrication? How did you get that to work? You know, with, with all the risk models and that prefabricating pieces that have never been done in this market, for example. And those all lead to really good conversations that I think will bear fruit maybe outside of my career window. But I think it's going to be moving that way. Quickly, by I mean, I'm going to turn us around a little bit.
Felipe Engineer 50:42
Oh, yeah. This is a good segue.
Mike Williams 50:46
Some of the stuff you're doing with that company, which, you know, from from outside sometimes looks like a monolithic entity.
Felipe Engineer 50:57
So it's a I mean, it's a great organization, it's got everything that I need to be happy, and to, you know, to be tested and to be growing and developing and learning like yourself. I'm in the same boat as you. And they tap my shoulder and said, Would you like to do this full time? And I said, Let me think about it. Yes. Okay, I thought about it, the answer is yes. Because I was already basically near full time with it. Even though I was on a project I was I was on my second heartbeat job, applying Lean principles and techniques on my second heartbeat job in a row. And I just thought like, it doesn't matter what kind of contract you have, you can do this no matter what, all the time. So it got it got more formalized. And then we had like an idea of what the position would be. And then I kind of, you know, tweaked it. And I said, what it should be about, you know, based on what we need, and what what is the objective here, just because like you'd said, you'd work a long time you start you fell on value stream mapping, had no idea it was part of a lean toolkit, right, a real lean tool and method. And that was a lot of people, I'd worked half my career and never heard about Lean construction, let alone manufacturing, or even the word lean, outside of like, you know, the body image space where you don't like diets and fads of that sort. So my job is to set the strategy for lean adoption at our company, right? We knew a lot of competitors at the time, that had had these programs and had made it, you know, pushing from the top down. And like you'd see like some improvements for a while, and then it would like trail off. I talked to somebody in Minneapolis on Monday, a friend of mine from a prior life, we used to work together. And he was asking me like how have you had a cannot understand like how we've had so much success, we deliver for the clients, and to be able to work with them. And that space is so unique. And in flavors, like what I'm doing in the organization. Like yesterday, I was talking with an architect on the phone, one of your competitors. And they were just like they had told me this isn't exactly I'm glad you brought it up, Mike it because they said I tried to figure you out. And I can't figure you out. I actually interviewed people on your team to learn what you do. And now I'm just and they all told me to just talk to you directly. And I thought that is so strange. I was like, they you just call me like I'll tell you whatever, like, um, I don't have a filter. I just don't know if you don't have a filter. So I just, you know, you asked me direct question, I'm gonna answer you directly. And they were they were just amazed and like, you know what I do? And I said, Yeah, it just, it just comes from within, like, Don't let the microphone follow you. Right? I'm just a human being that talks. Right. Like you said, I wish I'd known sooner. You know, I feel the same way. Like, I wish I would have known this stuff sooner I would, I would have been doing it way earlier. It's had it's just a massive impact on me. And I told the person I was like, it doesn't matter what my title is. It doesn't matter who I'm speaking to. These types of ideas always work, like I personally can always get better. It's possible. Right? I mean, there's some limits, like I can't sprout wings and fly. Right? There's some like physical things that you don't till Ilan figures out how to connect us to the cloud, and we can start merging with technology for all your future risks out there. Mike, I hear you're talking to but you know, the limits of the human being, I can actually get better and improve my talents.
Mike Williams 54:29
You can't change what you don't know. Right? Exactly. You got to be told. And typically what happens when people tell you things that need to be changed, you're immediately defensive. So yeah, that's a that's a difficult thing to do.
Felipe Engineer 54:45
And like that is just priceless.
Mike Williams 54:48
Priceless. It is difficult. Yeah. You know, the company I'm in we do. We do three or four different types of architecture K through 12. Some higher ed healthcare in specific, we find that there's a lot of interest and a lot of interest in senior leadership in the health care group, more so than the other ones. We're trying to break those down as we go. But yeah, we we have those barriers internally as well. You know, as a company, we're not nearly as far along, we have two or three of us in the company who have experienced a lot of these kind of career changing IPD projects, sure that we want to, we want to do this, we want to take every project everywhere. And we have to be careful not to hammer it down from the top right. We're going to do this. We don't ask, we're just we tell people, we're going to do it. So we have to be careful there. We're in the process, I think I've told you this before, we're in the process of doing a lean initiative internally. And we're really looking at the project manager level to start because we have to prove it to our to our senior leadership and our board, that it will have a return on investment. So still where you were measuring return on investment, we're still at the we have to show you how it will return on investment.
Felipe Engineer 56:16
But I spent time Mike like to, you know, I looked at inside the company and I even sat at a at a conference that I think you were at. And they had brought in a researcher from Canada that was looking at KPIs key performance indicators for construction. And I got I was just so lucky to actually sit next to him. It was Mark who Mark who Allison, I believe his last name at lunch. And I was picking his brain. And I said, What is your research been showing you and he said, we don't have he's like across construction projects in North America. We don't consistently monitor the same KPIs even from project to project; company to company.
Mike Williams 56:52
That is part of the that that actually is right where we're at internally, we have a group internally looking at, let's not talk about the final indicator of whether or not this word we have to figure out a standardized way to measure it. And we have to figure out a standardized way to create a baseline. And really, we're having a hard time, more or less creating the baseline from which to measure from. And that was my one piece of advice is, is to that that, particularly, was to really understand that baseline and everything that goes into it. Because that will give you your KPIs, you need to study on the outside, not just not just a revenue, percentage per project, or hours per project, but look at more critical pieces of what the project itself was, and how it was delivered and those sorts of things. So we're trying to create those baselines. We're baby steps right now. And like I said, way back at the beginning of this discussion, we're trying to connect it to a couple of other initiatives we have, and that's the technology piece where we're looking at writing some software, maybe even, you know, doing something crazy setting up an outside subsidiary to do some of this stuff for us, to help us. But we're trying to connect, you know, two or three siloed improvement processes going on in my company, together, break down the silos, it's interesting that we have these kind of three pillars. Yeah. And when I when I kind of learned to understand them all, there's common people between the three little silos. Yeah. And they didn't really even recognize they were in the silos until I kind of said, so what did you bring in from our, our digital practice initiatives into the lien practice? Well, I didn't really see them as connected. And so we'll think about, well, I guess, work some connections. And there's some connections to the project management initiatives. And so yeah, there are we don't, we don't do these little pieces of work, and then throw them over the cubicle wall to somebody else, we actually all connected when we do it. So it's an interesting process to sit back and watch. I'm not deeply involved in it other than getting some questions from time to time. And I think that's really the way it should be because we really tried to push it for more from the bottom up to we're going to push it bottom up or kind of mid up and down right now with the way we're looking at it. So the mid level people looking to create some interest at the grassroots level in the company with the with the younger people that are doing most of the work. And then we're also putting our feelers out up to the senior leadership, and we've gotten a lot of good feedback from them. There's a lot of interest. There's a lot of interest in looking at taking some of the success we've done externally. can turn it inside. You mentioned this to me a few weeks ago, I thought, you know, I thought you said you wanted me to be one of your first two or three people you had on. I thought that's an honor, quite frankly. And thank you for for including me in this and I have a feeling, maybe not this particular episode, but you'll have a lot of success with this. Hopefully, I've imparted something that that somebody can take away in this conversation is valuable. But I'm honored to share that with you. Because I really, I really have a lot of admiration for you and what you're doing to me. But I don't want to get created a big head for you here. But...
Felipe Engineer 1:00:41
Oh, no, don't worry. I got I got family members here that keep my head down on planet earth.
Mike Williams 1:00:46
Yeah, but but I've watched you I've watched you yellow iceberg for four or five years now. And the ships turning in, it's evident from the outside, which is the most important way to measure it, in my opinion, is the average person can see your company changing the way it does things. And I think that contributed a lot to what you've done.
Felipe Engineer 1:01:10
It's been great. Connecting and talkinng Mike. I appreciate that the same for you. I mean, I've seen your organization, you know, a couple different offices, and there's definitely there's a Mike Williams fingerprint on a lot of things that I see. It's not like.
Mike Williams 1:01:25
We try, we try we don't talk as often as we should, and we don't share as often as we should, but hopefully we can change it a little more definitely.
Felipe Engineer 1:01:41
Very special thanks to my guest. I'm Felipe Engineer Manriquez. The EBFC show is created by Felipe and produced by a passion to build easier and better. Thanks for listening. Stay safe, everybody. Let's go build!