Agile CM: AEC’s Competitive Advantage

Steve Denning in this Forbes article states, “Traditional strategy theory has held that to be successful, a company gains competitive advantage by configuring its value chain, i.e. the set of activities involved in creating, producing, selling, delivering, and supporting its products or services: it must create a distinctive value proposition that meets the needs of chosen set of customers.”

Applying traditional strategy theory, the business purpose in the Architecture, Engineering, Construction (AEC) industry is to create the built environment. For AEC companies to be successful, the strategy to gain a competitive advantage are the skills and knowledge in the set of activities involved in creating, producing, delivering, and supporting the built environment: it must create a distinctive value proposition that meets the needs of the building owner.

Denning goes on to say about traditional strategy theory, “There’s just one problem here: it doesn’t work.” In order to increase profit, the company must cut costs or raise prices. Gains from cost cutting are limited, and raising prices results in lower sales volume.

Regardless of delivery method, pricing arrangement, and selection criteria; the AEC value proposition is typically to deliver on time, under budget, and within quality standards. Akin to traditional strategy theory, as a value proposition — it doesn’t work. The schedule is driven by the date the building transitions from a construction project to a revenue stream, satisfying the owner, investors, and lenders. The budget is determined by the owner’s ability to raise capital and secure loans. Quality is measured by building code compliance.

In another Forbes article, Denning quotes Peter Drucker, in The Practice of Management, “There is only one valid definition of a business purpose: to create a customer.”

Agile CM is an approach to developing a competitive advantage in today’s fast-moving marketplace. The owner, design, construction, and property management entities work together as a single team that responds quickly to customer desires and input through a highly integrated information technology communication system to produce high-quality, highly customizable products.

Agile enables AEC teams to master continuous change, but it requires a reversal of some fundamental assumptions of construction management. It places a strong focus on the built environment as the customer, turning speed and agility into a key competitive advantage. The Owner, Architect, Engineer, and Construction team work as a singular entity. Time, budget, and quality are defined through an iterative process that is responsible for design and construction durations and cost while remaining accountable to the owner, investor, and lender revenue requirement.