Process Improvement drives over 100% Productivity Growth for Construction Conglomerate

Background

Construction plays an important role in economic growth in Southeast Asia. The infrastructure and real estate sectors are the largest contributors to the industry. These sectors are expected to grow significantly in the future.

Our client is a conglomerate in Southeast Asia, with a diverse portfolio of businesses including construction, real estate, logistics, education, and human resources. Founded in the 1950s as a single-family owned construction company, it has since grown into one of the region’s leading conglomerates.

Analysis

Due to its growth and expansion, our client recognised the need to improve productivity through better use of management control systems. After an initial one-week analysis, Renoir identified opportunities to improve productivity across all project sites, which would lead to cost reductions for three of its Group companies. As a result, Renoir was asked to implement more robust management control systems, dashboards, and key performance indicators (KPIs) for the three Group companies and to set up a shared services function for the organisation.

Project Approach

The project was structured into two workstreams:

1. End-to-End Process Improvement: Focused on improving productivity and operational performance improvement.
2. Organisational Development and Performance Management: Covering organisational structure, KPIs, and dashboards.

In addition, we identified two immediate areas for improvement – reducing overtime and enhancing revenue collection.

Implementation began with the selection and training of a Taskforce, comprising Group staff who had management potential. They were supported by a full-time team of Renoir consultants. The Taskforce named the project ‘PRIMUS’.

Renoir trained and coached the Taskforce in its methodologies, including behavioural change techniques and strategies. We also supervised the programme to ensure that the agreed outcomes were achieved. The joint team reviewed results and progress at weekly Management Action Team (MAT) meetings.

The executive steering committee met every two weeks. It was made up of the MAT chairpersons and the Board of Directors. The purpose of the meetings was to provide guidance, make key decisions, and ensure that the programme remained on track, to deliver the desired results.

Implementation

End-to-End Process Improvement workstream

This workstream encompassed various construction projects, including housing, high-rise, and port developments. It also involved the manufacturing division, specifically steel and carpentry, and the ready-mixed concrete division.

An initial mapping and assessment of all the management control systems were carried out, identifying systemic and process issues. Training and coaching were then provided to team leaders, supervisors, and managers to improve their supervisory skills and familiarise them with the revised management control systems.

The entire standards library underwent a review and consolidation process as part of the improvement efforts. A baseline performance level was set and used as a benchmark for measuring subsequent improvements. Weekly planning was improved, and daily follow-up reviews were implemented, involving all construction project leaders and operations managers.

Performance data was utilised to populate the dashboards, which were designed as part of the Organisational Development work stream. Daily reporting summaries provided were used to track individual team performance. Where results were not being achieved, coaching was instituted to ensure that performance improved.

Organisational Development and Performance Management workstream

This workstream worked closely with the executive team to create a revamped structure for the Group. The structure provided a clear roadmap for the future organisation. A shared services group was established, consolidating Human Resources, Finance and Administration, Supply Chain, Management Information Systems, Asset Management, Legal and Marketing. The consolidated structure served the entire Group effectively.

Management dashboards were created for senior executives and operational management. The change for transition was planned with the Human Resources team and departmental heads.

As a result of the tasks performed for this workstream, we achieved two results, which are:

• Annualised benefit of 25% of the overall savings following the introduction of strict planning and approval processes were put in place for overtime.
• Improved collection processes – including active collection practices – delivered positive results. This was achieved through consistent collection of outstanding funds against base period rates for the three business units.

Key results