6 Progressive Levels of Standards Development

Standards progress through six basic levels as a contractor grows based on impact, frequency, and quantity of different people doing them. Optimum outcomes including scalability are based on choosing the right level - higher is not always better.

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"Without standards, there can be no improvement." - Taiichi Ohno (Toyota)

Standards are both very important for a contractor and can be very overwhelming if you don't understand which level of a standard is appropriate for a particular task or decision.

Standards and feedback loops are the foundation of both continuous improvement and talent development


 

Let's dig a little deeper into what the six basic levels are. There aren't hard lines between these levels. Higher isn't always better. There are a wide range of nuances between these levels. Anyone who tells you there is "One Best Way" or "One Best Format" for all contractors is either a unicorn or inexperienced. There are best practices but the ultimate test is in the outcomes achieved over time. 

  1. Subjective (Judgment): This is where all standards begin, including when there are major updates to a process such as changing tools or job role(s). You are relying on someone with the right combination of experience, thought process, and emotional intelligence to provide feedback. Think about the evaluation of a quality installation for a contractor in the earlier stages of growth. This is about ensuring you have the right person in a management role.
  2. Metrics (Outcomes): This is where you are clearly defining what must be true for the project and company to work. The best example for a contractor is in the production units used for estimating projects such as "[task] at 25 feet per hour with a 3-person crew, a backhoe, and a dump truck." The closer these can be aligned to actual production from operations, the better. As a contractor grows, they will develop outcome-based metrics for the company and for progressively more detailed elements of their business model
  3. Procedures (How-To): The next evolution for standards is defining specifically how those outcomes are best achieved within the company. Eventually, these will progress into measurements for the leading activities that most impact the outcomes. These become the basis for future Quality Assurance (QA - Right Process). This short video below from Jason Shroeder gives a great visual example. 
  4. Variability Ranges (Tolerances): Though there is a target (#2 above), there are also acceptable variability ranges for performance that will trigger different actions. This is part of a broader management system. For instance, production being below target but within a certain range may be handled by the Foreman / Superintendent. Below that minimum would trigger an escalation to dig into it deeper including feedback to estimating if applicable. High limits are also important because they could indicate anything from bad information to cutting quality corners to a new best practice for installation. Variability will never go to zero but one of management's key accountabilities is narrowing the variability range for the most optimum return. 
  5. Workflows (Connections): Few things happen in a vacuum so the interaction between different functions and people inside and outside the business become increasingly more important with growth. Defining what a "Good Hand-Off" looks like including timing, format, quality, and feedback is as critical within a construction business or project as it is on an NBA game. It isn't just about individual functional area metrics (1-4 above), it is about the total throughput of the system
  6. Management (QA/QC Feedback): This is the stage where there is not only the management structure in place but also the standard work that managers do at each level to ensure:
    1. The right outcomes (2) are being achieved within tolerance ranges (4) for critical tasks. This is Quality Control (QC). 
    2. The right process (3) is being followed to achieve those outcomes including updates to improve performance and possibly raising the target outcome (2) while narrowing the variability (4). This is Quality Assurance (QA). 
    3. Feedback is being given to the individuals performing the work so they can improve. Feedback must be both timely and actionable and may require additional training. 

 

Remember that as a contractor, whether you are at stage 1 or 6+, you are probably doing 80% of the same tasks. What makes a difference, and therefore which level you choose, comes down to a few factors:

  1. How big of an impact does the outcome of this task have? For instance, opportunity evaluation and selection has a far higher impact than installation of a $5 piece of material. 
  2. How frequently does this task occur? Opportunity selection may only happen a few times per week, but a routine commodity installation task may happen hundreds of times per day across the business.
  3. How many people are doing this task currently? Opportunity evaluation and selection is usually concentrated to one person throughout the first 3-4 stages of growth. A basic installation task may be done by dozens of different people each day.
  4. What is your rate of growth and turnover? For example, if the person currently doing your opportunity evaluation and selection will be retiring in the next two years, that is very important to improve your level of standards in that area. If you are getting into a type of work that has a lot of a specific production task and you will be increasing your workforce doing this task by 2X over the next two years, this makes it very critical to improve your level of standards around the task. 

 

Remember to evaluate your standards based on the outcomes they achieve and the people they develop rather than some other criteria like how good they look or what kind of software they are in.

At the end of the day, they are a communication tool, and one critical measure of communication is whether the other person received it, interpreted it as expected, and was able to take action on it.

One of the most consistently operating contractors we evaluated had a very simplistic method of documenting their standards but they were consistent and productive. We've seen plenty examples of standards and training that looked great but were poorly executed. The overall company outcomes along with team morale all showed these gaps. 

  • If you have 50 employees and you want to have "Everything Documented," you are choosing the wrong level for standards. Even if you did achieve your vision, you would have created stifling bureaucracy.  
  • If you have 500 employees and your management philosophy is that "Subjective Judgment" on all things is the role of each of your 50 foremen as long as they "Bring the Job In," you are choosing the wrong level. 

Hopefully you are somewhere in between and progressing forward, keeping the levels of standards in alignment with growth. 

 



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