Problem-Resolution Cost Pyramid - Earlier is Always Better

An easy way to visualize the cost of problem resolution at different stages of construction is with this pyramid.

D. Brown Management Profile Picture
Share

To illustrate this, we will use a common example of a commercial kitchen equipment plan not being fully coordinated with the electrical plans.  

Field Productivity: Problem-Resolution Cost Pyramid. Example of the electrical power plan not matching the kitchen equipment drawings. Before starting work the impact would be 1X, During and requiring rework, 3X. After completion causing delays and major rework the problem could easily cost 10X. Learn to identify problems early and mitigate.

A piece of equipment requiring a dedicated circuit is shown on the panel schedule but not the power plan so it was easy to miss in the estimate. When the problem is identified determines the total cost of fixing the problem:

  • Before - some plastic conduit run under slab, some wire, and a couple hours (max) of time.  
  • During - more expensive metal conduit run overhead and 6-8 hours of time.
  • After - remobilization time to the work area, protection for finishes, working above hard lid ceiling, etc. plus the customer is likely frustrated.  

The cost of the problem is the cost of the problem (1X). Finding it ahead of time minimizes the costs and maximizes customer satisfaction. Finding it during construction will cost about 3X and after construction 10X+.  


What systems do you have in place to find problems early? Create a checklist by phase of work that helps identify potential problems early.

How many problems did you have last month that could have been found earlier? Study all your RFIs and Change Orders for the last month. Could they have been identified sooner? Put those items on your checklists (above). Repeat each month with your top PM, Estimator, and Field Leader. You will be surprised at how quickly you improve profitability and customer satisfaction while lowering stress. Contact us to schedule time to talk about how we have approached this in the past. We will freely share all lessons-learned, both the good and the bad. 

Early identification is a trainable skill and a workflow process including checklists

 


Labor Productivity
Field labor is the often the biggest variable on a construction project - making it the biggest risk and opportunity....

Related Training
Labor Productivity
Field labor is the often the biggest variable on a construction project - making it the biggest risk and opportunity....

Building an Effective Preconstruction Team
Your precon team is your company from the perspective of the project owner. Put your best foot forward by selecting the right people in the right roles at the right stage of the project.
Change Tracking Log & Management
Great change management starts with a good tracking system. The far more important part of change management is the rigorous review process at least 2X monthly with your PMs that will limit your risk, increase your opportunities, and train your team.
Setting Standards and the Feedback Loop
Set the standard. Train to the standard. Certify to the standard. Plan the work to the standard. Execute to the plan and the standard. Check against the standard. Make prioritized improvements to the standard, training, planning, and execution.