Operations Management in Construction Industry - Essay Example

? Table of Contents Introduction................................................................................................. 3 2. Construction Industry a general overview and health of this sector............3 3. The customers and suppliers........................................................................4 4. Analyzing Input and Outputs of the operations...........................................4 5. Detailed analyses of chosen Inputs and outputs of the operation................5 6. Services and Products, Capacity and Meeting varying demands; How? ... 6 7. Effectiveness and efficiency........................................................................7 8. Key performance indicators.........................................................................8 9. Instituting Test Key Performance Indicators...............................................9 10. Explanation and manageability of the KPIs.................................................9 11. Bibliography...............................................................................................11 1. Introduction: “Operations management” is a managerial concern that emphasizes on the processes of production and steering of business operations, in a way, to device better ways for production of goods and services. It helps in taking up the responsibilities assigned, with minimum possible resources. The two major concerns of operations management are; efficiency and effectiveness that translate resources needed into meeting customer demands or requirements. (Arora, 2004) Though primarily urban based, it has been able to transform barren lands into cultivable greeneries. Thus from repairing to building and alterations the construction industry is seemingly of vast scope. Its health can rightly be transpired through the rolling “economies like China are catching up a huge pace. Numerous workgroups have suggested that the stakeholders/ companies under the umbrella of this sector will only survive the tumultuous attitude of present day markets only if they are able to manage better operations management. As an epitome example of Carillion PLC can be cited here which provides best example as far as its management practices and ranking by profit” is concerned. (Sridharan, 2007) 2. Construction Industry a general overview and health of this sector: (Epitome of Construction Company) Operations Management in the above chosen organization is mature, and has been able to departmentalize the products and services of the company. The interdependent departments have been able to transform their rules of business in sub-categories of interrelated yet centralized organizations. The products that were required in construction venture were of humongous amounts and thus they were along with the available resource of services was channelized to start off with further new business organizations. Major services of the company are energy, consultancy, infrastructure development, management and property services. This has made their market expanding new horizons. Their markets are aviation, building, engineering, commercial, defence, education, energy, financial and health services, rail, roads and other such utilities. 3. The customers and suppliers: The “customer base is therefore a complex” of other organizations to individuals depending on the size and types of projects undertaken. As the complexity of the business grows the supplier base has also expanded. (Accenture, 2010) Current and prospective suppliers are not specifically mentioned and are deemed to provide pr supply them with work in different regions and capacities. They include innovative solution developers, challenge analyzers for the satisfaction of customers’ ever increasing demands, commitment helpers for sustainable procurement and workgroups and individuals that may continuously revamp health and safety of the organization on the whole. 4. Analyzing Input and Outputs of the operations: To analyze the operation of the company, one has to consider the input-output scenario to ascertain the efficiency and effectiveness of the operation management. The inputs to operation in the said case can be categorized into two main categories; one from within the project design team and the other from the contractors who are specialized in production management expertise and the productivity data. This is what we can say as the enabling factor for a contractor to produce method statements, site layout plans and processes, tendering and implementation plans. Main aim of operations management practice is to take care of following important factors, namely; “Price, Quality, Time, Flexibility and Availability”. (March, 2009) Similarly the outputs of the same operations management can be categorized in two main streams. First, activity wise outputs can be seen, for example energy related activities and operations can produce material or any resource in access. And second type of output is the gross demand of the overall operation initiated. It can be any type of goods or services. In the case of afore mentioned company, labour services, project plans, planning services, implementation consultancy, material repository and contract fulfilment are a few of the outputs of the operations. Here it is very important to know that the “Input-Output ratio” actually defines efficiency and effectiveness of the operations management. In the case under discussion we see that the Carillion PLC has been able to establish sister concerns that venture out in the projects like energy, consultancy, planning, and even in employment schedules. (Pycraft, 2000) 5. Detailed analyses of chosen Inputs and outputs of the operation: To get into the details of this operation cycle a study of at least six inputs and three outputs is given as follows. After this analysis the products and services in this epitome will be analyzed juxtaposing the market trends with it. The inputs that are analyzed in the operation are here randomly taken from the huge set and are: 1. Material for construction (specifically on site repository) 2. Skilled labour defining the quality control parameters 3. Project Planning department 4. Coordination methodology for transportation of material 5. Implementation overseers 6. Energy related requirements The outputs are also randomly picked and analyzed from the point inside the supply chain to the delivery or commissioning stage. Three of them are 1. Infrastructure developments services (design, finance, build, service functions) 2. Energy services 3. Advice or consultancy services Usually the material of construction is a mix. From on site land pile testing machinery to the raw material like concrete, cementing mixtures, steel and materials alike are used throughout the process of project. It is important to state here that the size and type of material may vary according to the type of project. Therefore, separate warehouses or repository that is specialized to keep specific or distinct material need to be established. They are the basic input to the operations and its management. Next to it the labour and its mobility and deployment on the site of construction is the major part of “resource management”. Its deployment according to the demand and overseeing the needs play a vital role. (Kochan, 2004) Skilled labour is actually needed at the stage where the crude stage of initial establishment culminates. It starts soon with the need of site survey after the installation and transport of material and other initiating processes. Thus the skilled labour is actually the methodology that has a indigenous quality substance in its nature. This input actually defines the credibility of the operation to be carried out and the management pertaining to it would of course need soliciting professionalism in management. Project planning resource is actually the brain of the overall operational input, it has a lot more to do with the actual operability plus the viability of the carried out operations. Being service sector oriented in today’s corporate regime, its input means the facet of the company known to the end customer. Timely delivery, quality controlling and all such basic requirements are founded by this resource. The input provided by it forms the credibility of a company; Carillion PLC has transformed this very section into a separate entity that not only fulfils the demands of the company within, but also helps the consultancy services (output) of the company. This has actually impacted the revenue of the company in a positive way causing its standing stable at number 2 in top 100 construction companies of UK. Next thing important to the planning input is the input of the resource for efficient and effective coordination among the responsible elements in the company’s operations structure. This is what we can say the eyes and ears of the company that are important to have a check on stages and quality of the operation. Telecommunication infrastructure and IT aids are also a big part of the coordination mechanism (Theconstructionindex.co.uk, 2011). 6. Services and Products, Capacity and Meeting varying demands; How? Implementation progress administration and reporting is perhaps the way pace, quality and other checks can be ensured. The well defined template for reporting, and the reporting mechanism in addition to the scheduled meetings among the project implementation stakeholders is actually the task that is entrusted to this section of the company. Last input among the selected inputs of the operations is energy requirements of the operation tasks. They are divided in two main categories (The Open University, 2011). First is the category related to the electricity for machinery and base line production phases, and offices, and the other is related to the site access, vehicle and remote energy requirements in the project. The energy services are also a part of this company. Thus internal resources are actually few of the suppliers. This supply and demand “cycle is managed“ according to the operational requirements. Establishment of local grid station, feeder sections, transmission lines and distribution section with proper electrification services all are inclusive in the energy services of construction co. like Carillion PLC. They as their constant resource are available for separate services (one of the sister concerns of the company) (Theconstructionindex.co.uk, 2011). The output of the operation is also a two pronged. On one hand internal requirements are fulfilled that are a type of open and looped mechanism concentrating on the consumer or customer requirements. They contractual obligations are fulfilled along with the surplus of products and services are spared for internal and further outside utilization. Infrastructure development that is aimed at services and products related to design, service, finance and build is one of the outputs of the operations. The design aspect is divided with two main tasks of providing consultancy and designed services to “Internal and External customers” (Galloway, 1988). Similarly the energy establishment and other consultancy services work with multiple outputs beneficent for within and outside of the company at a time. This is only possible with the best management practices to maintain a specific ration between inputs and outputs of the operation. 7. Effectiveness and efficiency: “Effective and efficient operations management” is actually the area of management that is concerned with the production of services and goods involving the operations carried out as object oriented and precise (Svikis). They are such practices that utilize minimum inputs for maximum output scenarios. To differentiate among the efficiency and effectiveness of an operation, it is important to define these two terms is a simple way. Efficiency is actually achieved after correct evaluation of the business activities and doing things right to achieve the aim, whereas the effectiveness of the process by doing correct thing or opting correct approach to achieve the aim. In simple words efficiency is doing things right and “effectiveness is doing the right thing to achieve the task”. This ensures the overall resources savings, maximizing profit and gains, maintaining quality, following the given set of contractual and ethical standards. It also ensures a win-win situation for the stakeholders, and all the internal and external consumers. (Griffith and Watson, 2004) 8. Key Performance Indicators: The importance of effectiveness and efficiency of an operation is not only important for above scenarios but also to design KPIs (key performance indicators) that tell about the progress, ability, loopholes, flaws and slack that may reside anywhere through the operation. These KPIs can be designed tier wise or stage wise, further a composite methodology can also be achieved to “conclude multiple tasks under a single performance indicator”. (LBS, 2007) In the case of construction business, in general, KPIs play important roles that help out in tightening the slack. They hold check throughout the implementation to delivery stages. To design a KPI one has to know that their usage is specified for four main areas, namely; 1. Revenue improvement 2. Cost reduction 3. Process cycle and time improvement 4. Customer satisfaction In a real life scenario, following KPIs can be used as examples to for basis of design, later: 1. Average process overdue time 2. Overdue process percentage 3. Average time to complete task 4. Downtime required and the service losses ratio 5. Outstanding actions against agreed upon schedule 6. Percentage of customer pending issues 7. Deviation aggregate against planned schedule of active projects etc Here, one this which is common is the need of KPI, to argue and point out the effectiveness and efficiency along with progress of the operational stage. The KPIs can be categorized to see and “administrative effectiveness” and efficiency of the operation. (Enns, 2004) 9. Instituting Test Key Performance Indicators: A test case can be used to design 6 KPIs, 3 each for administration and management of the efficiency and effectiveness. For efficiency we chose an indicator at the grass root level, taking the telecom department for the IT and communication services inside the company we can test the said parameter as by noting down: 1. Number of tasks per on-site engineer 2. Number of process-errors 3. Number of internal customer complaints during the operation For effectiveness of the operation and the governing rules for cost management following test beds be formed for pertaining KPIs 1. Mobility cost and issue resolution ratio 2. Manual versus automated system of conveyer belts for transport of material 3. Creation of a post of on-site engineer 10. Explanation and manageability of the KPIs: For “efficiency indication” of a specific sub-operation that actually aid the major or overall operability KPIs are needed, they vary for task to task and situation to situation. As already discussed, the communication systems that may be constituted by the Telecom or IT infrastructure mean a lot for a cost effective solution. They lessen coordination time and reduce the personal mobility requirements. Here as situation is set in a specific setting of this department of the company. A workgroup is assigned and entrusted with a task to provide communication services that must be resilient and dependable. Here a KPI can be designed in order to delegate the tasks to the incumbents employed to achieve the said target. (Shehi, Guxho and Spahija, 2012) To take a closer look on the engineers on-site, their assignments, availability, requirement a matrix can be formed. This responsibility matrix gauges the assignments, skills and working hours with respect to the company expenses, their usability. It is to be noted that time constraint and environmental factors are also emphasized in order to mark a credible KPI for the engineers on site. Of course “engineering skills and services have climbed all time high expenses” thus their sharp evaluation is always needed. (Sethi, 2011) The stage to stage progress of an operation its timely delivery and robustness is perhaps the most important thing management wants. It is of course a pace setter with which the overall progress of a company depends. Any slackened stage will cause other subsequent stages to suffer and ultimately loss of resource and uncalled for events can ensue. A KPI is there required and this is the basic logic in defining a methodology through which errors at a stage or time can be pointed out and dealt with subsequently. In the present scenario, let the internal customers of IT/Telecom department receive dropped calls or faulty communication line complains pretty often and it causes manual and personal mobility cost to rise up, then this KPI will be able to note down the responsibility assignment and expenditure head in this regard. Internal customers of a company are actually those incumbent peers that are interconnected for completion of a task/assignment that is a basic unit to achieve a larger goal of the company. From service to service and stage to stage, the delivery and reception ends in the sub-operational stage define internal customers inside the company. When these customers send a query to the management or a concerned department, it is taken up as the impediment or a potential delay in the progress of an operation. In the domain of effectiveness the KPIs like Mobility cost and issue resolution ratio. Manual versus automated system of conveyer belts for transport of material. Creation of a post of on-site engineer all can be pitched to keep check on the expenditure and profit conclusions. To keep them as an indicator for curtailing complaints, time required to resolve issues, cost related issues etc is what is being said a best practice in operation management. This KPI, thus, helps in managing and administration for better and “efficient management of the operations”. (Gabcanova, 2006) References Accenture USA (2010). Manufacturing’s Secret Shift Gaining Competitive Advantage by Getting Closer to the Customer. Retrieved from http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_Manufacturings_Secret_Shift.pdf ARORA, K. (2004). Comprehensive production and operation management. Bangalore, Laxmi Publications. 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