Over the last several years, I have worked with a number of large construction firms that have outgrown their systems and processes, almost without awareness of the respective management teams. We are talking about firms that perform $500M to $1B a year in construction revenue and function as they did when they were doing $100M to $200M. Legacy systems, lack of integration, manually developed reporting, and lots of spreadsheets are symptomatic of this condition. Usually, there is an event or series of events that finally brings this to the top of the list for management but often, that’s not soon enough.
I would offer a couple of causes here. No single nick in efficiency, such as relying on a spreadsheet or double handling data, seems particularly problematic on its own. But over a few years, that can add up to a lot of leaking in the boat. No one complains, or if they do, it is not loud enough to get management’s attention. All solutions to the problems seem large, expensive, and disruptive so it’s easier to continue sweeping them under the proverbial rug. And so it goes. The problems continue to build, under the rug and out of sight.
There is also the issue of not having proper governance tools in place to monitor and manage process change. The industry has only just started to implement more structured management techniques like Change Advisory Boards (CABs) to get a handle on this sprawl. BCG would suggest that most firms, at least those over $100M in revenue, would benefit from even a basic CAB to begin monitoring and managing change.
BCG recommends that large firms, that have experienced considerable growth over the last several years, take a step back and look at their organization and their processes objectively and from a high level. If the organization is spending untold hours handling data, working in spreadsheets, communicating business processes through e-mail, and the like, establishing processes and protocols around efficiency and standards should become a priority. So put down the broom and the dustpan and get serious about process efficiency. This will lead to an organization that keeps pace with the demands of the organization and marketplace as well as the available technology. At the risk of sounding alarmist, BCG sees the pace of change caused by AI to further extend the gap between the haves and the have-nots over the next three years.
Change Advisory Board
| Who | A CAB can be made up of anywhere from 6 to 10 people from within the organization. These should be mid-level managers with some executive representation. In terms of tech-forward positions, it is less important to be tech-savvy and more important to have open-minded, process-oriented, forward-thinking people on the CAB.
There is one other position firms can benefit from and that is a “process owner”. If firms have a person designated for specific processes like “procure-to-pay” or “Contract-to-Cash,” those individuals can be used as a first layer of approval on CAB proposals. Making sure they pass muster before getting in front of the full CAB. To lighten the burden, the CAB could be rotating people, with maybe five permanent members and three rotating members, for example. |
| When | The frequency of the CAB meetings should begin with quarterly and move to bi-monthly if needed. CAB meetings can be anywhere from a couple of hours to half-day per quarter depending on how much work is in front of the committee. |
| Objectives | The goal of the CAB is to have a permanent body in place to review all proposals for process changes. This can include software changes, process changes, and the like. The CAB will approve not only the idea or recommendation, but also the budget, schedule, allocation of resources, and expected outcomes. The CAB is not a body that “does” the work but instead assesses the priorities and resource loads and sanctions the effort. |
| Process | CAB Proposal 1 – This is the first proposal which is the initial idea that someone has put forward. It requires some thought and detail around why, when, who, how much, etc. but does not have to have full detail or R&D backing. If this proposal passes, it is assigned to a Process Team for further vetting and development of Proposal 2. Some Proposals that are straightforward and do not reach a certain threshold of investment or resources can be approved here.
CAB Proposal 2 – This is the larger more official proposal that is in a final state before an initiative is approved. This proposal will contain all information needed for the CAB to make a clear decision about whether to move forward or not. Proposals can be pushed back for further evaluation and development. Proposal 2 contains enough information for the CAB to make decisions around resources, priorities, schedule and budget. |
| Tools | CAB Charter
Proposal 1 Proposal 2 IT Service Management |