Using Cultural Change to Introduce Earned Value Performance Management

Abstract:

Some major construction companies have been used to adopting new management and construction methodologies over the years as a way of successfully gaining new projects and maintaining their market share.

Existing margins in the construction industry have been under considerable pressure for many years and the way that some organisations have survived is by successfully changing their corporate culture. This was usually achieved by using the traditional change management methodologies through the use of major consultancies. While the process yielded quite good results, it was usually rather expensive and many boards did not see value for money. Also many projects did not perform as expected even using these new techniques and changed culture.

The small to medium enterprises in the construction industry for the most part either did not see the value or have the cash flow and staff to implement changes in the traditional business methods that they were used to. But declining margins and overseas competitive pressures are biting into the Small to Medium Enterprise’s in the construction industry and some are beginning to see the need for change.

To maximise margins in the current economic environment and increasingly changing market place requires superior productivity as well as superior knowledge of how the company’s projects are performing. To improve productivity as well as knowledge is about:-

  • Identifying what to the current practices are
  • Identifying what to change through better performance measurement, analysis and reporting
  • Applying a systematic approach for changing existing operating and business processes
  • Understanding the existing culture in the organisation and developing appropriate methodologies to change it

In other words changing staff’s attitudes and behavioural patterns in order to build an improved culture and a can do attitude.

When attempting to introduce a new system or management methodology, for example “Earned Value Performance Management”, the traditional construction company management hopes that the change it is seeking can be easily implemented by sending staff onto specific training courses or having a tailored course delivered to staff by an accredited / recognised training organisation. The view is to send a few people to a training course and the change will filter its way through the company. Most believe that staff attitudes drives the way staff perform their daily functions in a behavioural way, so by providing training, behaviour can be modified. (Don’t forget Pavlov)

Unfortunately when observing the empirical rather than the anecdotal evidence, staff attitudes do not drive the way they perform. Rather it is the gaining of knowledge through experiencing change that cause staff to make changes to their behaviour. Then other’s behaviour is affected by various attitudes some staff members may take about changes. So, if management changes staff behaviour patterns, only then will they be successful in implementing cultural changes.

It has often been said that “systems” drive behaviour; we all know that passive insolence to management demands as often stated by staff “it’s the system, not me”.

Thus if management wants to improved margins, bottom lines and productivity it needs to introduce better systems.

It is the authors belief that the improvements management wants to make to project delivery is by having a superior performance system in house. Such a system is “Earned Value Performance Management”.

The paper will show how cultural change was introduced into an East Gippsland based small to medium Construction Company, through the introduction of Earned Value Performance Management to manage an ever increasing workload and tight market conditions as well as resources. And by market standards at a low cost.

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