By Michael Tobias
Strategic management in construction is a relatively recent discipline, but it is one that has the potential to greatly improve project performance. Strategic management doesn’t operate in isolation to traditional management in construction. However, while the planning and execution of projects are paramount in traditional project management, strategic management addresses the challenges of operating construction organizations rather than just focusing on the planning and control of resources within individual projects.
There is absolutely no doubt that the construction industry is a driving force in the global economy, even though there is speculation (and some evidence) of a downturn since 2017.
Figures released on November 1 by the U.S. Census Bureau for construction spending during August and September 2019 tipped $1,287.1 and $1,293.6 billion respectively, with the latter figure dropping by $26.1 billion from September 2018. Residential construction has been relatively consistent, increasing from $509,632 billion in May 2019 to $517,977 billion in September. Non-residential construction figures decreased a little from $787,831 in May to $775,637 billion.
More than a million firms of varying sizes operate in the construction industry, offering different services from design to the provision of quality air inside buildings and the installation of suitable energy-efficient appliances. Unlike manufacturing companies that produce items like computers, air-conditioners, or automobiles, the construction industry produces a vast array of unique end products. Traditionally project management has been utilized to do this successfully.
Understanding Strategic Management
A strategy is an overall plan or approach based on an idea or ideas that respond to multiple external and internal influences. Because strategies aren’t based on material science, physics, or mathematics, they don’t contain universal truths than can be documented or proved using theorems. However, strategic management is formalized by logistics, operations, and finance. Human resource management also plays a major role. Additionally, diverse organizations have varied needs and demands that are technical, professional, and strategic.
Furthermore, there are different people in organizations that might take on the role of a strategic manager including trained professionals offering construction, plumbing, mechanical, and electric engineering services in Chicago, New York, Toronto, or any of the world’s big cities.
What makes successful strategic management difficult in the construction industry is that there are companies and people, many of whom have competing interests, all working towards a common goal. Although all highly trained professionals, architects, engineers, and construction specialists, have partially incompatible vocabularies and ways of working. They all work from their own definitional bases, which have similarities but aren’t the same.
As a civil and environmental engineer, Paul Chinowsky states in an article on Strategic Management in Construction published in the Journal of Construction Engineering and Management in 2000, there is a need for “foundational concepts” that include strategy and well as strategic plans and planning, in addition to strategic management. This still applies today.
While individual projects require execution and control plans, management strategies are developed in essentially the same way rulers and military leaders have developed their strategies during war and colonization. … Read More...