With 2023 on the horizon, how will the construction industry change? With obstacles like labor shortages and supply chain issues, the key to profitability right now is innovation.
Join Eric Anderton as he talks to best-selling author, keynote speaker, Project Delivery Services Director for The Boldt Company, and the host of The EBFC Show podcast, Felipe Engineer-Manriquez. Listen in as they talk about the state of the construction industry next year. Learn how to mitigate all these risks by focusing on your team and having a little optimism. Find out the generational differences between the construction workforce and how you can use that in your favor. Start scaling your business correctly so you can build your project’s profitability.
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Construction Scrum: Innovating Through Obstacles To Profitability With Felipe Engineer-Manriquez
My guest is Felipe Engineer-Manriquez. He is the Director of Project Delivery Services at The Boldt Company. He’s also the CEO and Host of The EBFC podcast. He is also a published author. The nice thing about Felipe is that he is an optimist but he’s also a realist. He is deeply experienced in the world of construction and the benefits of approaching construction with an innovative and optimistic mindset to help increase the productivity, safety, and quality of the projects that you are working on. In our discussion, we take a look at 2023 and talk about the labor shortage, supply chain issues, and generational differences, all in view of how these things can be mitigated and processed in your business so that you can continue to build your projects profitably.
There are tons of nuggets in our conversation that you will be able to use and apply immediately, from the landmine of the hybrid workspace to how to implement offsite construction effectively with limitations to offsite construction that you need to take into account. We talk about how to proactively manage your schedule so that everyone is on the same page and understands what needs to be done to execute projects profitably. There are tons of great stuff here for you. Enjoy my conversation with Felipe. Thank you for reading.
Felipe, welcome back to the show.
Thank you. It’s a pleasure to be back on.
It’s interesting. I like to bring guests back who have something useful to share with my audience. I want to give you the floor here because you are involved in the business. Tell us your perspective on the current state of construction.
Thank you so much. We’re coming out of the pandemic. It’s late 2022. In construction, we have a massive labor shortage. One of the biggest issues that we’re facing now is that we do not have enough people to do the projects. There are lots of companies. I’m hearing lots of examples across the industry from my peers talking about jobs that they have to pass on because they don’t have the capability or, more so, the capacity to take on the work.
I heard a statistic that for all the construction jobs posted in the United States alone, over 1 million of those posted open jobs will not even get a response. That is how big the gap is. We’ve got five generations working in construction, for people getting out of school or people coming out of high school and going into the trades, all the way to executives and leadership running companies. Plus, we’ve got people in the industry now that are still working with 40 years of experience in construction.For all the construction jobs posted in the United States alone, over 1 million of those will not even get a response. Click To Tweet
There are five different generations, from Gen Z to the Boomers to the traditional generation, all working together. Let me not leave out the Millennials and Gen X as well. You’ve got 5 very unique styles, 5 different spans, and 5 different comfort levels with technology. They’re radically different depending on which communication style as well. Those are some of the things that are facing people.
We’re still coming out of the pandemic across the world. We have the world’s global supply chain. We’ve got issues with procurement. We’re starting to also see some procurement improve but even now for basic switch gear, lead times can be in excess of a year for a lot of people and even some of the commodities. We’re seeing that wood was big during the summer and the early fall when you could not get lumber to support your projects. There were lead times and stories.
People are remembering. You’re traumatized a little bit. I’m with you. I live that trauma with you where it was hard to get wood or even do things around your house. Even residential was impacted pretty hard by the supply chain issue. That’s the state that we’re in coming out of this. There are not enough people. We have way longer than what we have been used to in lead times for materials and even some commodity goods.
There are three things there. The first one is the labor shortage. The second one is the five generations in the workplace and their unique styles, particularly as it relates to technology and then the global supply chain. We’re doing this in late 2022. We’re looking at 2023. Please give me something new on how we’re going to deal with the labor shortage because we have been talking about it. I don’t see it ever changing. There’s both the amount of labor available and the skill of the labor that is available. What am I supposed to do as a construction company owner to address that labor shortage? What can I do?
One of the things you can do is shift toward the easy thing. Take advantage of the labor that you have. Don’t force people to stick-build because stick-building, assembling, or constructing onsite, receiving raw goods or raw materials on your sites and your construction projects, and trying to put things together is going to tie up a lot of your labor. Take some of that key labor. Move it offsite either into your facilities or a warehouse facility adjacent. If you’ve got the space on your project, create an area on your site where you can preassemble things in a controlled environment focused on prioritizing flow.
Some other companies are more sophisticated in this. They have even gone so far as to create a design for manufacturer strategy and implementation where they’re shifting a lot of labor offsite into different facilities or controlled factory-like environments that are well air-conditioned or heated depending on where you are in the world. There are great lighting and much better facilities. They’re shifting preassembled kit-of-parts we call prefabrication or kitting. That is a great strategy where you can dramatically reduce onsite labor hours.
You’re still utilizing the craft and the genius of the people that put the things together for us but you’re creating an environment where hours can be shifted offsite. Those materials can be assembled on your site much faster. We’ve got some examples of companies that have taken this approach and invested in this. The Boldt Company where I work is one such great example where we have created a modular team. We’ve got a group of professionals. Their full-time job is to implement these strategies on projects across the entire organization.
Let me ask you about that because the toughest challenge is that I know there are things I should do and I understand the logic of that, yet it’s the allocation of resources to that. Internally there at Boldt, how do you go through that process of determining where internal allocation resources need to be allocated that aren’t necessarily directly project-related immediately in the short term? How do you go about putting together those teams and disciplining yourself to focus on those things that aren’t necessarily building something on a job site?
We have been experiencing this at our company for a long time. We’ve got an aging workforce. We looked at the future and said, “We’re not going to have enough people because there’s not a pipeline as there used to be.” The countermeasure to that was to create this modular team. We created a couple of key positions. Mel Taylor is helping with our self-perform. Klas is helping with our modular leadership.
There are a couple of key people. Some self-perform and purposely modular work hand in glove together to make it available to all project teams where this is a need at the beginning. This is something we talk about in the pursuit phase. What’s going to be our strategy for design for manufacturer kitting, prefabrication, and offsite assembly? We bring that as an option when we’re pursuing work through the planning of the work and execution of the work.
I want to give you two options. I want to give you the easy button and the more future long-term. The easy button is that if you’re on a job, all you have to do is talk to the trades working on your project and say, “What capabilities do you have where we can do some kitting, pre-manufacture, or preassembly?” Ask them. That’s something that you can implement in your project.
You can have a conversation with your key trades and say, “What capabilities do you have? What can we add to this job so that we can implement some of that?” If you’re an owner of a company or a leader in an existing company, and you don’t have any type of modularization or dedicated resources, look at the labor market and your forecasts for 2023 and say, “How can I continue to serve my clients and deliver projects reliably but still segregate?”
You can start by making it some portion of some leader’s time, or you can make a hire and bring somebody to that’s got the experience to implement this at your organization. That’s a little more of a resource commitment. At The Boldt Company, they made that commitment a long time, way before I got here. I’m seeing the benefits of that. There have been case studies published on our website.
Go to Boldt.com. You can click on that to read case studies and see examples of some of these stories. The things that we were able to even deploy during the pandemic with major supply chain issues still successfully create clinics. There’s a great example of the STAAT MOD project. Read more about how that was done and how quickly you can pivot and be flexible.
Let me ask you this, then because modular offsite construction is something that does work but it’s also something that has limits. What are the limits of offsite construction from your experience looking at the industry?
There are two big things to consider. If you’re going to go to the most extreme example where you’re creating Lego interconnecting parts, pieces, and modules that you drop in, one of the things you have to consider is you’re going to add a lot of structural steel to that project. One of the limits is this. Can you afford to add that much steel? For example, you’re making bathroom mods. There are quite a few companies out there that make turnkey bathrooms that you can plug and play into your building.
Even if it’s a traditional stick-build construction, you’ve got additional steel and reinforcing for those types of things. You also need to consider inspections. Depending on where you are in the country, you might have to have some additional inspection expenses that you should pass on to your owners because the owner should be paying for this as part of the project costs.
You’re going to have to have inspectors go to an offsite facility and do some inspections for things that they won’t be able to see other than in the warehouse or the factory where they’re putting it together. There’s steel, additional weights, and additional costs on steel beyond what’s normal because of how these things come in. They have to stand alone to be able to go down the highway on the road to get connected.
The other constraint that you’re going to have is engineering and design to allow for some of this to happen. If you’re on a hard-bid project, you’ve already received completed drawings. You cannot change it unless through the RFI, bulletin process, or whatever your contract allows. There are certain things that you cannot change easily.
You could argue that you could change anything with the right change order, you can make it happen. In practicality and reality, the engineer and the architect of record have already designed something that works and that’s at least majority coordinated between the different design disciplines. If you’re going to introduce something modular to that already completed design, that’s going to be a major design change. That’s a limitation.
In a lot of the work that we do or involve our modular team, we’re involved way early even oftentimes at conceptual design, creating that strategy with the client and saying, “What do you want to achieve?” We have to show them, “Here are the benefits to the schedule so you can have your finished building faster.” A lot of things can happen even when you’re still finishing your later design packages. If you have a modular strategy that you’re implementing, you can start to release those components into construction while you’re still doing earthwork and some of the early trades.
That’s interesting because that speaks to another limitation potentially of modular. It’s the types of projects I’m building, the contracts associated with them, the way the contract is structured, and the way the design is done. Do you think that 5, 10, or 15 years from now because of the advantages of modular offsite construction and the impact on the project the very structure of contracts and the way that construction is designed and bid is going to be changing? Do you think it’s always going to have that hard bid design upfront element to it?
We’re already seeing in the industry a shift towards more design-build. There are some statistics here by the Design-Build Institute of America that I’m going to not get correct. I’m not going to put a number out there but I know the numbers that they share at the last conference that I attended physically in Napa some years ago. They showed an exponential increase in design-build projects as a proportion of total projects per year in the United States, specifically West of the Rocky Mountains. All the states West of the Rocky Mountains saw an exponential increase. This would be double-digits. It’s exponential. It’s greater than a 10% increase. It was more than 25% from memory.
We were in Napa. You have to forgive me because wine was passed out at many different breaks. It was somewhere North of there. We’re seeing on the East Coast as well an increase in design-build projects. A lot of industrial projects have been this way for a long time. The EPC or Engineering, Procurement, and Construction industrial work have been this type of delivery model for a long time.
We’re seeing a reduction in the typical design-build hard bid. In those environments where the general contractor is now responsible, there’s an incentive there to do more of this modularization because it does improve the total construction time, which is a great lever to pull on to be more profitable and have an easier delivery as well. That’s going to continue to increase.
How much of the work that Boldt does is self-performed? I’m curious.
I don’t have that statistic. We self-perform about a dozen different trades from engineers, millwrights, masonry, concrete, and rigging. To people at Boldt, if I left any out, you will have to forgive me. We will give you a link to the website because this is all on our site. With concrete masonry, structural steel, operators, and millwrights, it’s right around plus or minus twelve different trades that we self-perform. It’s quite a bit depending on the geography. We travel across the entire United States, including Alaska and Hawaii, to do projects as well.
The reason I’m curious is I didn’t hear MEP trades in there. Did I hear that correctly?
To the best of my knowledge, there’s not at scale. We have a lot of good MEP partners that we work with and travel with. They will go with us across the country.
Have you found that those folks are the ones who initiate a lot of the offsite discussions because those are the types of trades that lend themselves the most to the offsite modular approaches?
For all the people that aren’t super key onto the acronyms that Eric and I are dropping down, the Mechanical, Electrical, Plumbing, and Fire Protection trades are MEPF, which we shortened to MEP.
You threw in the F there.
It’s the first F of the show. There are always going to be some. There are no apologies for that. In those types of trades, a lot of the companies, especially the larger ones that we work with all have some capability. Some of them are way more advanced than others. I’ve been in construction for over 25 years. I’ve worked one time with a very small plumbing contractor. They utilized this prefabrication in kitting on a project that was under 100,000 square feet with a two-year-long duration, and because they kitted in prefab, they were able to keep a 4 to 6-person plumbing crew on that project and never miss a date because of that approach.
This is from starting with the model and taking that model information all the way to things that they spool up and make on their site. It was to the bewilderment of the onsite supervision at times how small their crew could be but the crew was consistent. It was the same people every time. The quality was much higher. A lot of times, you see this on crews that don’t do this. The contrast is that when you’re assembling everything on the site, you can have a lot of variation and fluctuations in labor.
You might have 10 plumbers this week, 25 plumbers the following week, 3 plumbers in another week, and no plumbers in some weeks. To pick on plumbers for a second, this is true of all the different trades that we have mentioned. Use utilizing prefabrication, kitting is the easiest thing to do. Most MEPF people reading will say to some degree, they already use this to be competitive. You have to be competitive because there’s a lack of labor, as Eric and I talked about. This was a good countermeasure for people to overcome the labor issue of not having enough.Prefab and kitting are easy and important to use to be competitive because of the lack of labor right now in construction. Click To Tweet
When it comes to offsite construction and modular construction, what about the limitations of access? How do those create a constraint on effectively using modular and offsite? I’m trying to access the site but because of the nature of the site, the unique geography of a particular project limits me.
If you’re working in a space, let’s say it has zero lot lines, which means you’re building butts against buildings on 2 or 3 sides, or you’ve got a roadway, you’re going to have limitations of where can you set cranes because plugging in modular construction usually requires a lot of heavier and bigger cranes. Sometimes that could be a limitation. If we have that input going in the early phases of setting up the site logistics, those things are considered.
We drop in crane pick maps and weights and try to understand, “Are we going to get bang for our buck? Is there going to be a return on investment for going to this level of modular, given the site constraints? Sometimes it doesn’t pay back.” We do all that in the early phases with sometimes even sketches and some standard crane charts that we have. We can determine whether it has a payback or not and then either scale back the modular or upsize the crane if it’s going to give us good scheduled performance because that can turn into major savings for the client as well.
Let’s pivot a little bit to the supply chain. We have heard the story repeated again and again. COVID devastated the supply chain in many cases. We’re recording this at the end of ’22. This will be going out in the first quarter of ’23. What’s your perspective on the supply chain for the next 12 to 18 months? Where are we going to be? What is it going to look like? What do contractors need to do to prepare for that?
The first thing is don’t guess. Talk to your suppliers, vendors, and preferred contractors and ask them to be transparent with what’s going on. You will get good answers. There are strategies that you can implement. I’m optimistic. We’re seeing numbers and durations decrease even for things like roofing. We forgot to mention that roofing was one of the major things that became challenged in the supply chain. We’re seeing durations coming back down to what’s the new normal. It’s not quite what it used to be in 2017, 2018, and the early 2010s that we were used to, but things are starting to come back. We’re seeing improvement through the different ports.
It’s a global supply chain. Everything is coming from somewhere. A lot of components still come from across the ocean depending on what part of the country you’re in. All that has to be considered. The best advice is to temper my optimism because I’m very optimistic. I’m in a lot of scheduled meetings with a lot of different project teams. In general, I’m seeing improvements in those supply chain things.
If you’re on a project now and you’re not talking to your vendors and trade partners, you’re going to err on the side of probably being too conservative or too optimistic. You’re going to be wrong. Take that schedule information that you’re getting. If you’re getting a rage of 12 to 18 weeks on something, plug that into your forecasts and plan for it.
At The Boldt Company, we utilize a system called the Boldt Production System, which is built on the Last Planner System production controls. It allows us a very standard way to look far into the future and make reliable promises in the short term. Using that system allows us to take into account these long-term issues with procurement. It makes it easier to manage in the daily reliable promising once we get to putting work in place.
Let’s say I’m not The Boldt Company. I don’t have these particular processes in place right away. What can I do to begin to build those processes so that I can be more accurate in my forecasting?
Don’t assume that everyone can read your schedule. I’m going to elaborate on that. The schedule is something that you use as a tool to have the right conversations and dialogue with your team. Every single project, without exception, has at least two dates. It has a start date when you’re going to start construction and an end date when you’re going to substantially turn it over or the owner takes beneficial occupancy of the site.
It’s two dates minimum. When do I start? When do I end? In how you get there, all the in-between is the exciting part. This is where a lot of companies have low-hanging fruit. You can improve that by socializing that thing. Talk about it. Don’t hand it to people. If you’re emailing schedules or you’re putting them and giving them to people, you’re missing out on having the dialogue.
The first step is to talk about the activities in meaningful ways with the people. Don’t lecture people. Ask people, “What does this mean to you? This milestone we’re trying to achieve now includes XYZ and does not include ABC.” It’s both saying what’s in and what’s out. That’s the very first step. Anybody can do this. Step two is to make it visual. Put it on display. Let’s say you have a 65-page schedule, and you’re on a two-and-a-half-year project. That’s not something you paste up as wallpaper in your office.
Take some of the main work breakdown structure activities that roll down into some milestone types of activities or, from scheduling professionals out there, hammocks. Show those as a simple bar chart. Put some milestones up in your conference room with some key dates, show some hammocks or bar charts when you collapse your schedule to a more summary level, and gut-check it. When you’re in meetings with your teams, talk through the sequence if you’re not to the level where you’re pole planning yet or using Last Planner System or other agile types of methods like Scrum, then make it visual, communicate with people, and use it as an excuse to have a conversation about what’s in and what’s out.
Don’t you love the fact that we don’t have sponsorships on the show? That’s why I have no problem taking a quick break in the middle of the interview with Felipe to remind you about my book, Construction Genius. This is a great book for construction companies that want to improve their leadership, strategy, sales, and marketing.
This is what you should do. Go out to Amazon, purchase a copy of Construction Genius for you and your leadership team, and then have each of the leaders in your organization read one chapter a month and meet for one hour once a month to discuss the chapter and talk about how you can use and apply the information in your construction company.
You can get the softcover or paperback for $20. Let’s say you have seven guys in your leadership team. 7 times 20 is $140. You invest $140 into your leadership team. You’re going to get a tremendous return on investment as you read it, use it, and apply it in your business. Go out and grab yourself a copy of Construction Genius.
You mentioned your optimism. I’m naturally a pessimist. I’m always waiting for the other shoe to drop. I found in working in construction that many of the people who are in the business are pessimistic as well by nature because they have to be, or at least they feel they have to be, to mitigate the risks and manage the risks. How do you, as an optimist, maintain your credibility when you’re in a room full of pessimists?
You hit on something. There’s that trend. Construction is full of pessimistic people because it takes 1 or 2 bad experiences that repeat multiple times and create a pattern. People will assume rightfully that bad things are likely to happen based on experience. The reason I stay optimistic is that I know that in using different types of lean tools and tactics, you can take the pessimistic worst-case scenario type of thinking and create countermeasures to mitigate those risks.
Almost every risk can be mitigated and planned for on your team. There will be some variations and some events, like a global pandemic, where you could not have forecasted what was going to happen. They call that force majeure type of thing, to use contract language. There could be some force majeure events but for the most part, the people on your team know from experience what things typically happen. Planning with pessimists makes for reliable plans because you could get good countermeasures.Planning with pessimists makes for really reliable plans. Click To Tweet
I always like to ask people, “Based on your experience, where will this plan fail?” We can take little pieces of that plan and create mitigation measures. We can make some decision points. Let’s say, for example, that structural steel wide flange members start to become scarce or something. There are a lot of data centers being built across the country but that’s going to start to come to an end as the different companies that are pulling those levers start to get to their saturation of where they’re going to be. We know there’s going to be a dip in demand for some of these commodity items.
We can ask people, “Where do you think we are in this?” and let people with experiences say, “The last job I did was this. In the last three jobs, I’ve seen this. We have five projects doing this. This is what we did.” If you take that information, you can change your plan. The way that I build credibility with teams is that we change the plan live based on their input. It goes from being our plan as the general contractor to becoming our plan for the project with all people contributing.
That makes a big difference. When you shift from your plan to our plan, you start to implement some of that project-first thinking. Everyone starts to put their hands around it. I see increased accountability. I’ve never had an issue with personal accountability on project teams because we are always making moves to shift to our plan, collaborative scheduling and planning using some of these Lean Construction methods and tools.
That gets us to have these different types of outcomes radically different. It has to do with our philosophy. I stay optimistic surrounded by pessimists. I love pessimists. I love people that say that Lean doesn’t work on this type of job. I hear that all the time. Even now, where I work, sometimes people say, “We tried this Lean thing, and it didn’t work.” I’ll ask them to tell me more. They will describe some processes. I’ll say, “When that thing happened, what did you do to experiment on that?” They’re like, “We jumped over it.” They will have some reason as to why it didn’t work.
I said, “Now that we know that, could we try something different instead? Let’s use your experience and build on it.” If they’re still resistant, my next go-to thing is to say, “What can we subtract? What are you doing now to mitigate something that might not be a risk on this job? What’s some work we can take off your shoulders to create the capacity to try something else?” That way, we’re not piling on.
People in construction that are working say, “Thank you, everybody, for your service working in our industry to build the world that we live in.” I want to be someone that contributes to making that work easier and better. I don’t want to be somebody that adds more work to your already heavy plate. Those are some of the ways that I use my optimism and enthusiasm to reduce the burden on people. I use the genius of each individual on the team to make it shift from I to we.
That’s interesting, though, because I do run across occasionally optimistic people in construction. I know maybe three but what I like about what you were saying there is that you are not going in and saying, “Come on. We can do this.” You’re going in with, “I acknowledge your pessimism and the value of it. Let’s talk about how we cannot be constrained by pessimism in a negative way but use it to focus on how we can build the project as profitably and effectively as possible.”
I want everyone to be profitable. I tell people, “Let’s do things that pull the lever to improve your profitability.” At the same time, if I’m going into a job that already had some challenges, I’ll come in and say, “Let’s pull some levers to reduce the frustration and stress on this project because what we do is already complex enough. We don’t need to add to it and make it harder on ourselves.” Sometimes we can do little things to reduce that stress and frustration.
One example is we had a job that was scheduled challenged. The team had been together for over two years. We have walked the site. From a conference room, you’re going to know almost nothing. You have to go out there and walk the site. We walked the site and realized the way to access the building was difficult. I asked our team, “As a gesture of goodwill, can we improve site access to the building by creating a path even if we pour some temporary concrete so people can walk in?”
They said, “We didn’t think about that. We didn’t realize how hard it was to get in and out. We had been used to it because we have been living with it for two years.” They made that move. That bought a tremendous amount of goodwill. We saw productivity on that site increase for every single trade because we made access to the site easier. People could walk on a paved path versus the conditions they had before, which was non-ideal.
It’s very interesting. We have talked about the supply chain and labor issues. I would like to pivot and talk about the generational diversity that we have. There are five generations in the workforce. Let me posit something to you, and you can push back on it. My perspective on generational differences is that it’s something that consultants like to emphasize to make a buck.
What I mean by that is back in the day, it was your Millennial consultant and now it’s your Gen Z consultant. As a consultant, I get it but I have this phrase that always comes into my mind, “Ballers ball.” What that means is, “I don’t care who you are, where you come from, the color of your skin, your gender, your political persuasion, or whatever it is, ballers ball.” I’m always looking for ballers in my organization to build my projects. Are there ballers in every generation?
In every generation, you have people that identify with others. They will say, “Don’t label me.” I hear that all the time, too. People say, “Don’t label me.” I’ll say, “In the cohort of people that you grew up with, your culture is used to certain things that the other generations were not used to and are still not used to.” This is all public information. You can spend three minutes on your favorite search engine and get some of this. One of the key things that I want to share is communication preferences. Let me paint you the most dramatic contrast.
The traditional generation is people that are within ten years of retirement. You can tell those individuals one time what the goals are for your organization, and you never have to tell them again. They will work towards that goal that you set up, like your company’s mission or a project’s vision. One time is all you have to tell them. They don’t even need to know why. Sometimes they don’t even care. You can say, “This is the result we’re trying to go to.” They will drive to that result.
In contrast to Gen Z, these are people entering the workforce now or who entered the workforce within the last few years. Even some of the later Millennials fall into this as well. You have to tell them what the result you’re driving towards is multiple times a day. If you don’t tell them multiple times a day, they don’t think it’s important. It seems to be less important. They don’t trust it, don’t believe it, and don’t drive toward it. That’s one major contrast. I’m not a psychologist. I can’t answer that but I’ve even asked some of the younger people, “What’s your biggest complaint? What’s one thing you would want to change working on this project?” It’s always an answer around not enough communication.
It’s the crack pipe.
For those reading, Eric has held up his smartphone.
What it has done is rewire our brains. In my generation, it rewired my brain. I’m Gen X. I wasn’t born with the internet but I am now locked in whereas your Gen Z-ers, two generations removed from me, have had this locked into their heads from the very beginning. The nature of the way this communicates information to us through scrolling and clicking in rapid dissemination lends itself to the need for me to communicate multiple times and perhaps in multiple ways with younger generations for a message to be locked in. That’s because they have been brought up with this, which communicates information in multiple ways with multiple messages. What do you think about that?
That’s a good hypothesis. There’s a lot of science behind attention. I’ve heard a lot of consultants, especially lately. I’m sure we’re going to see a lot of books on attention and focus. There have already been some bestselling books on focus that have come out there because there are so many distractions. It is hard to lock people in and keep them focused.
That’s one of the things. We use these Lean Construction techniques as some of the older generations have complained, “Why don’t we need to come together and talk about conditions of satisfaction? Doesn’t everybody know what we need to do here?” The newer people don’t have that information. They don’t have the 25 years or 40 years of experience to know what are the drivers.
Let me give you another pushback then. I’ll buy into what you’re saying that someone Gen Z needs to hear a message multiple times a day to believe it. I’m a Boomer or a Gen X-er. I’m like, “I don’t care. I’m going to keep looking for the people who are not like that.” Am I looking for unicorns? Are there people out there who even though they’re Gen Z, they’re old school anyway? They’re going to be able to hear the message once, receive it, and act on it?
We see that natural systems will tend to follow a normal distribution curve, a Gaussian curve, or a bell curve. You’re going to find your unicorns but if you look at your bell curve, that’s going to be less than 5% of the total population. We talked about it earlier in the show. Of all the jobs posted in 2022, more than 1 million jobs never even got a response because that’s how big the labor gap is for the demand for skilled and professional labor and the availability of people that are graduating, going into our fields, and entering the construction industry.
I’m going to tell you something. All the unicorns are already working for somebody. They’re already working. Unless you have a strategy to poach these unicorns, how will you even know? If they’re working for somebody, they’re doing a great job. You’re not even going to know that they exist when you’re searching.
Let’s talk a little bit more then. In your experience, what are some of the most effective strategies for the integration of the various generations in a construction company?
My favorite thing is the lean principle that we use called making things visual. We borrowed this from the Toyota production system. I can cite my sources here. It’s principle number seven published in The Toyota Way, “Make work visible, so no problems are hidden.” That’s the actual phrase. We found that this speaks across all five generations. When you can take some aspects of your project and make it visual, that gives people something that they can point to, talk to, and look at together.Make work visible, so no problems are hidden. Click To Tweet
A lot of our teams are mixed. We’ve got people that are going to retire within five years or less. We’ve got people that just came from school or joined the craft as apprentices, and this is their first project. When you make things visual, everybody can stand shoulder to shoulder, look at something in front of them, and talk to it. They can point to it. It’s a much better communication thing for people.
The richness and the saturation are so much higher versus the words, an occasional email, or some of the other strategies that companies do or don’t use. Even if they’re skeptical beforehand, once they do it, and we have some project teams that have all five generations working on the same project, the feedback has been like, “This is making everything so much easier and better for us.”
There has been a lot of thank yous. Even people said, “This is common sense.” For anyone reading, and you’re like, “This is common sense,” I want you to think about the projects that you’re involved in and try to find it. It’s not going to be common. It’s not as common as you think. You need to have an intention and then action to make it real.
How do I create boundaries when it comes to integrating generations? I want to adapt myself to the younger generations and this whole topic that we discussed around how they receive information. What are the lines where I say, “I’m going to adapt myself but at this point, this is where I’m going to stop with that adaptation? If you don’t perform up to my expectations, then there isn’t a place for you in this company.” How do you draw those lines? Describe those lines.
The best thing to do is negotiate. Come at it like a negotiator. Don’t come at it like a dictator. If you’re working in a company, you’re like, “I run this company.” You run the company, own the company, and control the company’s destiny but you’re in the same labor market that the rest of us are in. As a starting point, you should say, “These are my expectations.”
If you’re the owner of the company and you’re used to telling people what to do, realize that you’re a major constraint in the ability of your company to grow, thrive, and adapt. Instead, you can take the position, “These are my minimum standard work hours.” This is something very contentious among the generations, especially in construction work. There’s an unwritten expectation that you should work more than ten hours a day. It doesn’t matter if it’s design or project work in the field. Everyone across the industry has this expectation.
The other landmine we can jump on is hybrid work or remote work. We won’t jump on that landmine yet. If you’re the leader of the company, I don’t mean to have it written down in some policy buried in a file cabinet. Tell the person and show them, “This is what our expectation is at this organization.” Ask, “What do you understand this means to you?” Listen to what they say and then say, “Based on this, where are some areas that you would consider valuable if we were flexible?” Listen to what they say.
By asking for them to repeat back what it means to them and then asking where it would be more valuable to them where you could be flexible, you can negotiate. You’ve already found the common ground because they’re going to inevitably say things that are lined up with what your minimum expectations are. You’ve found common ground. You can negotiate. Know, for you as a leader, what’s important and where you can be flexible. It does not have to be black and white or yes or no. It does not have to be 100% my way and not their way at all. There can be some flexibility.
It’s very interesting. I’m going to push back and say that I need to negotiate with someone that I hired about how they’re supposed to perform. This is your job description. I’m giving you money. Here you go. Execute.
This is one of the other generational things that these consultants make a real good living telling you. We see a trend. Younger people will work for a company that has more flexibility even for less pay. We see that Gen Z will sacrifice pay and also the purpose. Gen Z or the new generation coming in will take a pay cut. Let’s say the pay for a certain position is $50,000 a year. They will come down tens of thousands of dollars for a position if the purpose speaks to what they want. They want to have a more meaningful impact on society. They will take pay cuts to have that impact.
It’s not money. Money is not a significant enough driver in and of itself. There’s a minimum threshold but once you meet that threshold, now you’re competing. These other things and intangibles are going to differentiate you to create a place that’s going to be a magnet for good labor and talent versus repulsing labor and talent. You’re going to struggle. If you’re a company and you’re struggling to get people to come to work in your construction organization, talk to your recruiting people and see what feedback you’re getting from the candidates that pass. It’s also very common in this market for candidates to receive multiple offers. This is an employee’s market unless you work for Twitter.
You’ve brought up a landmine. I want to dive into it. It’s the hybrid work landmine. Maybe I’m a software developer. I can see building a team with my guys here, there, and everywhere. It’s all good but is it feasible in construction to stick with that hybrid work environment or even the remote work environment? What are your thoughts there?
It’s position-dependent. It’s also construction phase-dependent. No one is going to disagree with this. At some point during the early forming of a team, you’ve got to have at least one in-person gathering so that people can read each other and get a sense of what they’re like. There are certain things that you’re never going to experience virtually. We heard this throughout. There are thousands of stories about people that got hired and have been working for two years before they finally met in person.
In construction, how we work and operate is all built on trust. There’s no shortcut to trust but there are things that prevent or slow trust building down. The sooner we can get together as people at least one time together to create that environment where we can build trust, then we can go hybrid after. It’s easier to go hybrid if you have to. That’s true in design, especially brand new teams coming together. It’s so critical that the initial session, that first kickoff meeting, or some of these early planning meetings happens face-to-face and shoulder-to-shoulder. After that, you can flex and shift toward a hybrid.
In the construction phase, there are certain things. The building does not assemble with robots. Human beings put the building together. As far as how the supervision for that can happen, if you’re on a management team, let’s say it’s a ten-person project. Do all 10 people have to physically be onsite 5 days a week? They don’t have to be. Depending on your phase, you can flex and have some hybrid work.
We saw, early in the pandemic, people that could work from home on active construction sites. Their productivity increased because they had decreased commute times. There are some major advantages to letting people have a hybrid environment. If you hired the right people and trust them, and they trust you, they’re not going to be messing around, not working, and not being productive. If you’ve got hybrid people, and they’re missing deadlines and not showing up to meetings, that’s a wholly different issue.
My buddy Andrew put a post on LinkedIn. He took the position that a construction superintendent on an active construction project site should 100% be able to work remotely at key times. I’m going to exaggerate but it seemed like 10,000 people commented. The vast majority of comments that he was getting to that post were saying, “That’s impossible. We can’t do it.”
He had given some details and some context of how it was being done. A construction superintendent can sometimes be remote. We at The Boldt Company have some construction superintendents that are occasionally remote. I’m not making this up. This is not a made-up story. This is something real. It can work but it has to work with some boundaries so they could be successful.
I can understand the logic of a hybrid work environment for this project but help me with this part. There is an aspect of being in person that you can’t replace. I’m curious about the impact of hybrid work environments on the development of junior people. Let me paint you a scenario here. Back in 2019, I’m a project manager in the office. A phone call comes in from the client. I pick up the phone call. I’m having the conversation.
In the office next door is my project engineer, who happens to be in the office at the same time and is listening to the way that I’m handling the issue with the client. I get off the phone, go into the project engineer’s office, and break down my thought process with them about how I dealt with this issue. The project engineer then gets a valuable learning lesson. Am I painting at least a reasonably possible scenario here?
I’ve had the same experience.
From that point of view, it strikes me that one of the issues with hybrid environments is that scenario is diminished quite a bit. The frequency of that scenario happening and, therefore, the development of our junior people is being hindered by the hybrid work environment.
If you’re on a team that’s hybrid, and you don’t have a strategy for how you’re going to create that scenario where you can have a shared learning opportunity and you do the work only, you are majorly short-circuiting the development of your team because you’re going to get through that project. You might have accomplished everything that the project needed, but your team coming off of that project will not have grown and have additional skills to move up.If your hybrid team isn't a shared learning opportunity, you're short-circuiting the development of your team. Click To Tweet
One of the big frustrations of younger people is that they want to see a path to continuous learning and recognition for that learning, sometimes through promotions but if you don’t create that environment where they can have that exposure and you do the work only, that’s not enough to get promoted. Listen to me, people. If you’re out there and you do your job, that is not enough to get promoted.
To get promoted and move up means that you’re increasing your responsibilities and capabilities. If you’re not in an environment where you’re getting exposed to somebody with experience where you can have those learnings, then you’re going to have a hard time being able to move up, develop, and grow. You’re going to get bored.
If I’m an engineer now in a job and all I do is change orders after 1 project or 2, I’ve got the mastery of that one thing. That doesn’t mean that I can supervise, lead work, or create strategies to improve project delivery if I’m good at changing orders. That’s stifling my development and capabilities. The hybrid people have to bring people back together at key points.
One of the things I’ve heard from some teams that do this is that they have made it mandatory as an easy start to give people some flexibility that wants this but it’s hard to do it. They will say, “Friday is the optional hybrid work-from-home day.” People can plan for that. Some other teams will say, “Every Tuesday and Thursday, we will be on-site together.” They set up rules. Those are two different rules for two different types of teams that you can set up and think about. Once you set something, try it a couple of times and then change it if it doesn’t work. Don’t do it for two years straight. If it sucked on the 1st or 2nd week, don’t keep doing bad stuff. Change it.
In summary, with this particular point, how can I create continuous learning opportunities in a hybrid work environment for my junior people so they’re not getting stagnant and they are developing?
You start with why it’s important for us to be together as a team. We often find that if you ask people, “In your experience, what builds trust?” and listen to what people say, it’s going to be human interaction. As good as these cameras are and as good as this microphone is, being able to hear me like that scenario you described would be a great story to share.
I have so many stories where I heard a PM having a difficult conversation with the client. Had I not been in the trailer with them, I never would have heard it, or been in a conference room where we’re negotiating something or having to deliver bad news. If I had not physically been there, I never would have had that experience and I would not know how to do it. I would be guessing and reinventing the wheel.
Start with sharing why is this important for us and then share what frequency we think we want to create for this for our improvement and development. The follow-up is like, “Where can we flex to be adaptive for you?” It’s a give-and-take. It’s not one way or one direction. What are some of the things that the younger generation knows and the skills that they have that we don’t have that they can teach us? We should have them teaching us as much as we’re teaching them. It should be give-and-take.
What do you think are the skills that younger people have that we as older folks need to learn?
On the virtual design and construction or building information modeling, I’ve seen the ease and comfort of the people coming out of school now because they’re learning these skills in the classroom, even in the trades. I toured a carpenters’ union in Las Vegas in their training center. They have courses where they’re teaching the carpenters coming up for training on how to navigate an augmented virtual reality. That’s something that’s part of their everyday training.
You and I didn’t have that when we were coming up. That’s something we’re going to either learn on the job, or we’re going to have to go take a separate course but why not learn that from the people that already got that training? They can teach us. We can accelerate our learning and development. That’s one example of a technology thing. There are other things that they’re learning as well.
We were talking about the labor shortage. We did the supply chain. We have talked about generational issues with the hybrid work environment landmine. As we’re wrapping up here, what haven’t we talked about that we need to talk about, particularly in light of construction in 2023?
There’s one thing I want to showcase. All the things we discussed and talked about have been countermeasures. I have to plug my book, Construction Scrum. This is the plug or what we’re trying to offer you. In 2023, if you cannot adapt and be agile, you’re going to suffer unnecessarily. People, visit my link TheFelipe.bio.link. There are free resources. My book is available for free on Kindle Unlimited.
You can read the book and download the first section from the link that I’ve provided to you. You can read the coolest sections on how to get started, become agile, and be agile. That’s all experimenting and countermeasures to the high uncertainty and complexity in the environment. These are things that you can start on your project at any phase at any time. I’ve got terabytes worth of resources for free.
Check out TheEBFCShow.com. The Easier, Better, for Construction podcast is all about featuring the brilliant people in the construction industry to come on and share ideas and real stories of implementations and improvements to how projects are delivered so that you don’t have to reinvent the wheel. Learn from others, stand on the shoulders of giants, iterate, be agile and adaptive, experiment, learn, and share the learning. That’s how we’re going to get better.
That’s awesome. I agree with that. I pulled up your book on Amazon here. It’s got a high rating there. Congratulations there.
Check out the resources and Felipe’s podcast. It is well worth your time. Thank you for coming to the show again. We should make an annual event of getting you back on for 2024’s forecast into construction. Thank you for coming on.
Thank you, Eric.
Thank you for listening to my interview with Felipe. I enjoyed that. Feel free to contact Felipe, check out his book Construction Scrum, and share the interview with other people that you think would benefit from the content and the information. Finally, I have a request. Can you please give the show a rating or a review wherever you get your podcasts?
It helps us to get seen on the internet in terms of spreading the show through the web. I’m not quite sure how everything works there but I know it does. I’m looking at my page. We have 126 ratings and a 4.9-out-of-5-star review. If you can go to Apple Podcasts and give us an honest review and an honest rating, that would be tremendously helpful. Thank you for reading.
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About Felipe Engineer-Manriquez
Felipe Engineer-Manriquez is a best-selling author, keynote speaker, Project Delivery Services Director for The Boldt Company, The EBFC Show podcast host, and proven construction change-maker from million to billion-dollar-sized projects and companies worldwide implementing Lean and Agile practices. Engineer-Manriquez helps people work twice as fast with half the effort – easier, better, and faster. Felipe is a Registered Scrum Trainer™ (RST) and enables change via blogging, coaching, social media, and his book, Construction Scrum. He is also a Lean Construction Institute Chairman’s Award recipient for his contributions to the industry.
Felipe Engineer-Manriquez joined The Boldt Company in 2022. As a Project Delivery Services Director, he is responsible for growing the firm’s Integrated Lean Project Delivery® (ILPD) methodology and practice for regional offices and projects. He will also be responsible for coaching teams to implement ILPD in all facets of construction. Engineer-Manriquez will be based out of the company’s Sacramento office, supporting operations and projects nationwide.
About The Boldt Company
The Boldt Company is one of the leading construction management firms in the United States. The firm is a nationally recognized leader in Integrated Lean Project Delivery® within a variety of markets including healthcare, industrial, commercial and energy and power. Boldt is headquartered in Appleton, Wisconsin and has 18 offices nationwide.