Optimize Jobsite Material to Improve Productivity & Cut Costs
The old and famous saying in the industry, “I’d rather look at them than look for them” could not be more wrong now, than at any time in the history of the industry. The last few years in the construction industry have been proven to be challenging to say the least. Gone are construction’s glory days of win the job, pay the field guys, and collect the money with amazing profits.
Planning and prefabrication are just a couple of the buzz words gaining attention in the industry; however they are just the beginning of the bigger picture. The Industrialization of the Construction Industry™ is no longer an idea on the horizon – it is here and already changing the nature of the industry. Many are just now waking up to the realization and are scrambling to adapt to the new business models necessary to survive and remain profitable in the industry.
One of the main cost drivers on every construction project is the misuse of labor’s time.
Everyone has heard the term that “Labor is the riskiest component of all the constriction projects.” Have you asked yourself why that is? It is not the labor that is risky—it is what they do, when, where, and how they do it, which introduces the risk to the project.
One of the main components of labor risk is material handling. According to our studies, over the last twenty years, and as verified by many contractors, over 40 percent of the labor’s time in the field is spent on material handling. Contractors can reduce the labor wastage in material handling by using Integrated Material Logistic Solutions™ (IMLS™) to optimize the material levels on the jobsite, leading to reduced cost and improved productivity. Figure 1 shows a potential outcome of this approach. The IMLS™ is a comprehensive approach to Agile Procurement™, which leads to services and solutions to reducing labor time spent on material handling. Whether or not a vendor partnership is in place, the IMLS™ does require the electrical contractor to integrate their jobsite planning with that of the distributor’s to identify solutions to excessive material handling and ensure they are executed properly.
Jobsite Realities County Hospital: 6 am
The crew arrives at the jobsite, preparing for the day’s work. Coffee procured, donuts eaten, toolboxes unlocked, assignments given. Materials are located, except for the six additional boxes and 20 feet of cable, ordered yesterday. They’ll be on the next delivery truck; they were promised for first delivery.
The first truck of the day arrives. More material arrives, but without a pallet jack. One crew stops to help carry it all to the 6th floor.
The next truck shows up, a different distributor. The general contractor didn’t leave instructions for this truck to have access to a restricted area. The foreman spends 15 minutes trying to locate the project manager. The truck will have to come back tomorrow to try again.
Now the project foreman is on a cell phone with the project manager trying to track down yet another order – where is it? Will it be arriving this morning or not? Our elevator time is at 8:30am. The truck is enroute, but not expected to arrive until 10am. The crew awaits further instructions.
Finally, the truck arrives with its awaited 20 feet of cable and five boxes. The 6th box was backordered, but all six were needed to finish the installation. The five are stashed in storage to wait for the last one. Maybe the distributor will get more in today and someone can go pick it up.
A return is packed and waiting, ready to be picked up. The driver doesn’t have the return authorization paperwork; the crew moves the material back to a safe place to wait until tomorrow.
Next comes a third party shipper with a truck that doesn’t fit inside the fence. The electricians make several trips between the building and the street to unload 400 fixtures, only 50 of which will be installed this week.
To the contractor, labor matters. Delivery matters. Even though the contractors constantly fight for the lowest material price, in reality, price is secondary. Without the lowest prices, and often even with the lowest prices, contractors are unable to recover from the labor losses associated with handling materials instead of installing.
To combat the labor wastage on material handling, Agile Procurement™ was developed as one of the pillars of Agile Construction® (explained in the September/October 2013 issue of Insights in an article titled “Industrialization of Construction”). The goal of Agile Procurement™ is to reduce jobsite material handling and other waste, rather than to reduce the price of the material. For this reason, suppliers should be selected based on what they can do to provide the correct material, at the installation location, prepared to be installed, at the time that the labor is ready to install it. The tradeoff for increased productivity will be worth a higher price on the material if the cost includes such labor productivity increasing services as:
- Specification verification
- Submittal preparation support
- Receiving, inspection, and damage claims support
- Offsite storage at the vendor’s secure warehouse
- Preassembly of selected components
- Wire cutting and paralleling
- Testing of equipment
- Kitting and packaging in job packs suitable for installation
- Staged deliveries to the jobsite; delivering as the material is needed
- Stocking and maintaining onsite boxes and trailers for commodity materials
- Material returns processing
- Job site material clean-off
Some examples of such services are shown in Figures 2-4. These, and other, services are identified through a dedicated procurement planning session, including the electrical contractor’s project team (project manager, superintendent, foreman, procurement manager) as well as the vendor’s team, which needs to go beyond the salesperson. The solutions come from reducing risk at the point of installation, and when more parties are involved in planning, more solutions are possible, along with higher likelihood they will come off without a hitch.
According to our, and many other researchers’, investigations, the most optimized amount of material on a jobsite is the amount needed for the next three days. It is also of a great advantage if the material is set on movable carts.
To use material procurement as an Agile Construction® tool, the contractor has to focus on the total cost of the final installed material versus the purchase price of that material. The lost man- hours in receiving, handling, returning, moving, and storing the material will often be much more expensive than the potential savings due to early purchases and payments. The cost of labor spent on material handling could be as high as forty percent of the total labor used for the job.
Various methods of helping the labor to reduce the time spent handling material can be implemented. For example, the types of issues that could be considered when establishing the job site delivery for the Agile Procurement™ process might be:
- Location of delivery by vendors or third party carriers.
- Manpower required to unload trucks and who will provide the manpower.
- Types and quantity of equipment needed to move material on the jobsite and who will provide or arrange for the equipment.
- Procedures to deal with delays and changes after the material has been delivered.
- Process exceptions and variations that will be needed in order to accommodate errors and other emergency material needs.
Dr. Perry Daneshgari is the President / CEO of MCA Inc. MCA Inc is a research and implementation company that focuses on implementing process and product development, waste reduction and productivity improvement of labor, project management, estimation, accounting and customer care. MCA Inc. has worked with various national and international companies all over the globe. He has taught several classes and conducted several presentations for MCA, MCA of Canada, the Electrical Contracting industry, NWCCC, and was keynote speaker at the 2009 IEC national convention. Daneshgari has completed over 12 research projects for construction and distribution industries as well as published several papers and articles. He has also published 4 books and an ASTM Standard for Job Productivity Measurement. MCA, Inc.’s experience is available and applicable to companies of all sizes and industries.
Dr. Heather Moore is Vice President of Operations for MCA Inc. and has taught numerous classes for NECA, IEC, MCAA, and MCAA of Canada; contributed to several research projects for the Electrical Contracting Foundation, MCAA, the New Horizons Foundation, and the National Association of Wholesaler-Distributors. She holds a Ph.D. in Construction Management, Michigan State University. Additionally she holds an MBA, University of Michigan-Flint, and a B.S.E. in Industrial and Operations Engineering, University of Michigan, Ann Arbor. She specializes in process design and operations research. She was a contributor for the ASTM Standard E2691 “Job Productivity Measurement” and also was co-author of the newly published ASTM book “Application of ASTM E2691 Standard Practice for Job Productivity Measurement in Agile Construction®.”