Business Process Management (BPM) and Why It Matters in Construction
The practice of Business Process Management (BPM) involves analyzing and optimizing the processes that achieve specific business objectives.
These processes are the sequences of interdependent tasks that ultimately produce value for the customer and revenue for the business.
Business process management makes sense
Process is an intriguing concept in construction.
The built environment is always in process. From conception through design, preconstruction, procurement, construction, closeout, commissioning, and eventual decommissioning, the built environment continually moves into, through, and out of form.
It makes sense then to analyze and optimize the processes required to conceive, plan, construct, and maintain the built environment.
Managing these complex processes is the only sure way to deliver a quality product, on time, on budget, and at a profit.
What are the primary categories of Business Process Management (BPM)?
There are three primary categories of business processes in the construction industry:
- Core processes
- Support processes
- Long-tail processes
The core processes are building the physical structure, supplying it with its systems and services, restoring and landscaping the environment, and commissioning the facility before the final handoff.
But only some tasks performed during the construction phase provide value and earn revenue.
Support processes are critical to the core processes yet do not directly provide value to the owner or generate revenue for the construction firm.
Examples of support processes for construction firms include
- Recruiting and Human Resources (HR) activities
- Accounting and Enterprise Resource Planning (ERP) activities
- Procurement, material delivery, storage, and staging
- Document management, site security, and waste management.
Support processes are any work that directly supports construction yet does not add value or produce revenue on its own.
The long-tail business processes can be thought of as the one-off, incidental, and sometimes unexpected tasks required to run a construction business.
Long-tail business processes are not profitable but fill the gaps between systems, workflows, and departments and serve the organization’s overall mission.
These activities are “long-tail” because they trail away from the company’s core, value-adding, and revenue-generating activities and often drain the company’s resources.
Examples of long-tail activities include
- Managing subcontractor documentation (W-9, COI, Diversity requirements, etc.)
- Request For Information (RFI) processing
- Request For Proposal (RFP) processing
- Rework due to errors in drawings, specifications, and construction
- Unable to complete a task due to missing resources or unforeseen events, crews switch tasks or locations on the job site
- Task-switching is often necessary, but highly inefficient
- Equipment transport and maintenance
- Inefficient resource management will often leave tools and equipment stranded and idle rather than readily available when crews need them
- Unsold inventory, tool and equipment warehousing, and material storage
Long-tail processes are challenging for several reasons.
First, long-tail activities are typically unplanned yet mission-critical. Second, long-tail activities’ unexpected and urgent nature often means the work required to complete them does not follow a logical sequence making it inefficient.
And most importantly, long-tail processes pull resources and efforts from the business’s core and support processes, which drain profit and productivity.
Business process management vs. business process automation
Managing business processes for efficiency often means automating repetitive manual tasks whenever possible.
The trouble is, so few construction companies do this well.
In 2020, Bloomberg reported that 72% of finance teams spend up to 10 people-hours per week, or 520 hours per year, manually processing the following AP-related tasks they could automate.
- Invoice processing,
- Supplier inquiries,
- Supplier payments execution,
- PO matching,
- New supplier registration, and
- Payment reconciliation.
The current average national hourly wage for information workers is $38.93 (including benefits). That translates to a loss of $20,243.60 annually on unproductive tasks.
Over $20,000.00 per year per department is wasted on manual tasks.
And that’s only one department.
Construction firms are losing tens, possibly hundreds of thousands of dollars annually on wasted business processes and manual tasks–in the office and the field.
A case for business process automation
The research also found automation improved the customer experience, reduced risk (fraud, audits compliance, etc.), improved visibility, and resulted in faster financial reporting.
And as a final result of eliminating manual, repetitive tasks, 17% of respondents were able to move team members into more strategic roles within the organization, which, not surprisingly, created a considerable improvement in company morale.
Optimizing job site, resource, and project management with automation
Resource management, job site management, and project management are all interdependent and fall within the business process management category.
Different people manage each division, and many responsibilities overlap. Project managers, resource managers, and site superintendents do their best to work together, but each is busy managing their own set of business processes.
The separation across these three departments is where long-tail processes wreak the most havoc.
Project managers may run one or more projects and are ultimately responsible for core, support, and long-tail business management processes.
One of a project manager’s many duties involves document management across the portfolio of projects under their control.
Project managers often juggle documents in multiple formats: printed documents go to site offices, electronic records go to head offices, paper copies go to the owner, and pdfs go to subcontractor e-mails.
The project manager is responsible for many long-tail processes involving the exchange of documents of this sort.
- Specifications and product submittals
- Subcontractor documentation (W-9, COI, Diversity requirements, etc.)
- Request For Information (RFIs)
- Request For Proposal (RFPs)
These long-tail manual tasks result in extended document cycle times, delayed decisions, and delayed progress on the job site.
Intuitive, easy-to-use project management software can help.
Cloud-based project management software provides a shared workspace for stakeholders to collaborate, communicate, and share documents in real-time.
Instead of manually distributing copies and waiting for a response, automated alerts inform stakeholders whenever a new record is created, or action is required so the job keeps moving forward.
Job sites are typically spread out across multiple locations, far from the central office.
Relying on standard work orders and paper requisition forms takes too much time, and details fall between the cracks.
Cloud-based software with pre-built requisition templates makes it easy for supervisors to request what they need.
And the software gives resource managers a fast and reliable way to track their resources on the go so they can quickly allocate resources where they’re needed and operate at maximum efficiency.
Job site management
The job site is where all the core business processes take place.
Construction firms deliver value and earn revenue on the building site, so good business process management is critical here.
Job site superintendents have a lot of people to manage and a lot of work to get done, and they’re constantly battling the clock.
Superintendents must communicate quickly and efficiently with their work crews and suppliers when site conditions change to prevent bottlenecks and work delays.
Sending multiple texts, emails, and phone calls wastes time, but collaborative project management software solves this problem.
The case for automated business process management:
Avoid costly rework by ensuring work crews have only the most accurate and up-to-date drawings, specifications, and plan sheets.
Curtail productivity-crushing task-switching and expertly allocate your work crews and the necessary tools, equipment, and material resources.
Automate timecard entries, payroll processes, and job cost accounting by routing employee entries through an intuitive, easy-to-use mobile app directly into your company’s ERP or accounting software.
Minimize profit-draining long-tail business processes by connecting your project managers, resource managers, site superintendents, subcontractors, and work crews on a collaborative communication platform.
Optimize your business process management with reliable automation.
Contact your Linarc representative today and see how cloud-based software built for the construction industry can help you take your business process management plan to the next level.