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Associated Builders and Contractors’ (ABC) 2014 BizCon, held in February in Maui, Hawaii, brought 350 construction industry members together to discuss emerging markets, major challenges and trends, and leadership opportunities. The event featured three panel discussions and two keynote addresses—all geared toward helping attendees run more profitable and productive businesses.

Bridging the Workforce Gap
Panelists discussed how to create a large and diverse workforce, including expanding opportunities available to the next generation and leveraging BIM, prefabrication and lean project delivery.

Dick Bayer, Realignment Group, Ltd.
Statistics have shown 82 percent of the workforce is completely disengaged from their work. How do you increase the 18 percent that love their work? People involved in lean construction solve problems every day in how they schedule and execute work. It’s phenomenal how engaged they are. When everyone comes onsite—no matter how young—they have a voice on how that project is done. We see productivity improvements of 50 percent to 75 percent on lean projects. Regarding prefabrication, the most powerful thing is multi-trade racking of prefabricated systems. That requires teamwork and collaboration to save money. BIM is so much more than clash detection; it increases collaboration and has pushed forward when we start hiring teams because they have to work together.

Michael Casten, Construction Concepts
We should strive to give craftsmen a specific assignment each day that can be measured for completion at the end of the day. This has an amazing impact not only on the predictability and reliability of the work, but also the effectiveness and efficiency of craftsmen. The work at the crew level is the final expression of project leadership and company management. We can come up with all kinds of high-tech solutions, but my sense is our projects are way over-managed and way under-led. We’ve grown used to a certain amount of variability being injected into projects, and general contractors aren’t providing the kind of gateways that ensure a reliable and predictable flow. As techie as we can get, we still have to make sure worksites are clean, crews have a well-developed plan and we’re doing something to measure if the work is being done as planned. (For more productivity insight from Casten, click here.)

Mark W. Drury, Shapiro & Duncan, Inc.
Raise the level of employees by investing in training and apprenticeship, and let them know that what they do impacts the bottom line. Show them career paths. See who the career and tech ed leaders are at the state, county and grassroots level, and garnish their support. Sign up to give public testimony at school board meetings and talk about career-based opportunities in construction. Change the mindset that construction is a fallback career. Kids today are digital natives and they want to be involved as part of a team. We often bring young people in and give them menial tasks because they don’t know anything yet, but they can be valuable members of a group. Take them to meetings, let them see the problems and come up with solutions. In terms of prefabrication, bring young people in as well as seasoned veterans so you have experienced foremen working alongside CAD whizzes.

Eric P. Newell, Careers: the Next Generation 
We have to expand the talent among young people, especially in the skilled trades. Getting more companies to realize this is a business issue is our biggest challenge. If you can link what students are learning to earnings and good jobs in your industry, they will complete school and pursue it. The industry has to step forward and take the leadership role. Companies need to break down myths that only smart people go to college, as well as become more disciplined and purposeful about the mentorship being provided to young people.

Ken Stowe, Autodesk, Inc.
Some of our best customers invest in creating a sense of energy and excitement around transforming the company. It’s tied to lean construction, new technology and new contract forms, and can provide a more attractive place for people to work. The best way to aim a productivity initiative is directly at the waste, or what I like to call dominos of failure: documents with errors and omissions and RFIs that lead to change orders, cost overruns and delays. Don’t create a BIM initiative; create a performance initiative. Then use modern technology as one of the tools to conquer this. Doing so will draw people in and keep good people motivated.

A Rise in Energy
Panelists discussed which energy sectors—and related geographic markets—will grow the fastest in the next few years, as well as which sectors will have the highest demand for construction overall.

David Collyer, Canadian Association of Petroleum Producers
Canada has the third largest oil reserve in the world, mostly in the oil sands. You need infrastructure to support the energy boom and develop capacity in small communities, which is good for construction. The level of demand is where it has always been, but supply is in new places. As a result, we have to reconfigure infrastructure in North America to connect the supply to the markets. A lot of the activity is where there isn’t a lot of infrastructure, so there are opportunities to create capacity in these small communities to allow development to occur.

Kyle Isakower,
American Petroleum Institute 
Five years ago the concern was an energy scarcity; today there is an abundance. Hydraulic fracturing and horizontal drilling have changed the game— increasing the cost-effectiveness of development tenfold or more. America’s oil production has increased from six million barrels a day two years ago to eight million barrels a day now. During the next 12 years, $1.14 trillion will be spent on infrastructure—pipelines, rail, marine terminals, etc. ($95 billion per year on average). That will equate to 1.15 million jobs per year, 100,000 of which will be direct construction jobs. Oil demand is flat domestically; worldwide it will go up. Supply of both oil and natural gas is increasing, and demand for natural gas is increasing domestically.

Joel Jarding, URS Oil & Gas
The Permian Basin in Texas and New Mexico will account for 31 percent of drilling in the United States in 2014. Of the 49,562 wells forecasted to be drilled this year, 3,550 will be in the Eagle Ford Shale. The Bakken Shale continues to pull out massive amounts of production: 100,000 barrels per day were produced five to seven years ago; now it’s approaching one million barrels per day. Regarding the outlook for liquefied natural gas, the U.S. Department of Energy has approved four applications worth $12 billion in capital expenditures and 21 are pending review (covering 19 facilities worth more than $75 billion in capital expenditures).

John Pegues,
KBR, Inc.
In 2012, more electricity was produced with natural gas than coal for the first time ever. The power industry is projecting a 20- to 25-year supply in the $4 to $7 range, which is generating a lot of investment in natural gas power plants. We also are in the midst of a large investment in renewable energy driven by tax credits. Solar is getting close to being able to compete with conventional power plant costs due to technology. Nuclear plants are being retired for economic reasons.

Navigating the Industry for Users And Owners

Panelists discussed major challenges facing the U.S. and Canadian construction industries, the hottest short-term and long-term market sectors, and creative approaches to financing, safety, workforce development, diversity and expansion.

Theophilus R. Nix, Jr., DuPont Corporation
The construction industry has to wrap its arms around every dimension of diversity, including diversity of thought, age, gender and ethnicity. The companies that are doing this now will keep getting our work. We need to find contractors and suppliers to do renovation and repair work at our U.S. plants, as well as go around the world with us to help build new plants. The ability to train a diverse global workforce is key to success. Contractors can’t sit on the sidelines while a company like ours hires 12 million Chinese to do the work instead of U.S. workers. Folks overseas need to be trained, so why aren’t we doing the training here instead? We’ve found American talent is the best in the world and the most productive. Help me as an owner make the case to bring those jobs back to America and you’ll have a ton of work from companies like us.

Dan Ogus, be.group
Senior living remains a strong market: 75 percent of the wealth in America is held by people age 65 and older. There’s a dramatic need for services for this group of people. The places we currently operate are geared toward wealthy and low-income residents; in the next 10 years, I expect to see growth in middle-market, apartment- type living. From a construction perspective, there’s very little expertise in this market. Not a lot of contractors are interested in specializing in our work; sometimes we have a hard time getting three bids on a project. We made a policy change last year: We’ll only work with contractors that have senior living experience as well as demonstrate how they’ll make the worksite safe for seniors.

Peter Sims, Lend Lease
Our CEO has very clearly told us that we won’t do work unless it is safe and profitable—in that order. If you want to stand out, being innovative in the safety space is what will get Lend Lease’s attention. We do a lot of high-rise construction and see a lot of urbanization. We have shrunk our workforce to focus on this type of work in New York, Boston, Chicago and San Francisco. We also focus on public-private partnership (P3) business with the Department of Defense and want to see that grow. We’re less interested in hard bid work and more interested in creating our own work. We originate our own deals; develop, design and construct them; and then operate and maintain them.

Andreas Wolf, Ledcor Construction, Inc.
This is an excellent time to re-focus your attention on the 30,000-foot-view of your business—where you can be successful and the value you bring to the market. You can’t be everything to everyone. We’re interested in the need for public infrastructure work. The problem is, it’s coming at a time when many agencies are short on cash. This means there’s an opportunity for companies that can look beyond traditional design-bid-build to cooperative agreements such as P3s. This comes with risks, but also tremendous payoffs. Truly qualified people that can do the work that needs to be done are in short supply. If we paid as much attention to upgrading our workforce as our products and services, the industry would be much better off.

Transforming Vision Into Action
Sharing the lessons learned from the terrorist attack on the USS Cole, keynote speaker and retired Navy Commander KirkLippold revealed five “pillars of leadership” organizations should follow to lead their “crew” to quantifiable success.
  1. Integrity: Act with integrity regardless of consequences.
  2. Vision: Make sure the crew understands the performance expectations of management and how they can contribute to them. 
  3. Personal Responsibility and Accountability: Teach crew members how to define a project, set and achieve benchmarks, measure progress and take ownership of their successes. 
  4. Trust and Invest: Trust the crew to do the right thing; give people an opportunity to fail. 
  5. Professional Competence: Give crew members the tools and resources to do the job right.
Secrets of the World’s Best Performing Companies and Leaders
As a leading author on leadership, growth and productivity, keynote speaker Jason Jennings shared five traits embodied by the world’s most enduring and high-performing businesses, including Starbucks, Charles Schwab, Nucor and Ikea. According to Jennings’ research, companies that achieve consistent growth…
… have cultures built around a big noble purpose.
It’s the non-financial reason why the company does what it does.
… make growth a guiding principle. A business’ first obligation is to grow, including keeping the right personnel and partnering with the right vendors and suppliers. Make people feel like they are part of a winning team.
… know how to let go. What got the company to where it is will not necessarily get it where it wants to go. Don’t wait until something is broken to fix it. Innovation must be intentional.
… make lots of small bets. Scale bets that work and get rid of the ones that don’t. Don’t be dismissive of new ideas; use failures to inspire people to take new chances.
… see themselves as good stewards. They put service over short-term self-interest, abandon power over others, share information with everyone, and remain accessible to employees, customers, vendors and suppliers.

Compiled by Joanna Masterson, editor of Construction Executive. For more information, email masterson@abc.org.

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