Improvements in business processes can lead to dramatic increases in competitiveness, profitability and satisfaction. The key to business process improvement is the identification of those activities of a company that add value. Value should always be viewed from the client''s perspective and is the balance between needs and cost. Increasingly in construction tenders are won on a combination of quality and cost, or in other words ''best value''.
The core process of most construction companies starts with market identification and ends with completion of the defects liability period. Value is added within this process and costs are incurred. In today''s markets margins can be typically 2% and this provides little scope when things go wrong. There is often a temptation to increase this margin by reducing costs through cheaper materials or by applying pressure on sub-contractors. Unfortunately these methods often have a detrimental effect on the quality of the project and hence, from the client''s point of view, produce a reduction in value and satisfaction.
Business process improvement examines those areas where value is not added and attempts to remove them. These inefficiencies and wastes can typically account for 40-50% of costs and are often significantly greater. Understanding and improving the processes can therefore have a dramatic effect on profits and hence increase competitiveness, without jeopardising client satisfaction. Examples of non-value adding activities include; high staff turnover, accidents, correcting defects and chasing suppliers. There are a wide range of activities that could be analysed, and it is important to focus on a few key elements rather than attempting to fix everything at once. Through a managed procedure, improvements can be made across the organisation producing an efficient and effective work flow.
Improvement of a process follows from a clear understanding of it, and this is achieved through mapping. A simple method of mapping is to get those associated with the activity to identify, using pens and stick-on notes, how the activity actually works at the minute. Through this simple exercise, people will begin to see areas of waste and delay that can be tackled to produce a more streamlined process and a plan can then be formed to implement the proposed solution. It is important to review any proposed improvements to ensure that they have become the adopted way of working.
