Can Harry Mashburn Bring a New Direction to the Construction Industry?

Here, Garrison comments on the theme of "contractors as owners' advocate" of Harry Mashburn's 2006 presidency of AGC of America. Mashburn, who is president of Mashburn Construction Co. of Columbia, S.C., was profiled in the March/April cover story of Constructor magazine, the official publication of AGC of America.

By Ted Garrison

When I ask audiences, "How many people think the construction industry is better off today than it was 10 or 15 years ago?" only a few people raise their hands. Those who do often mention safety or technology. However, when I ask about less stress, less confrontation or more profitability, the hands go down.

The responses indicate that change is needed. Harry Mashburn, as the new president of Associated General Contractors of America, has an opportunity to set a new direction. For sure, he can't turn the ship around by himself, but he can certainly toot the horn for needed change. From the bully pulpit of the largest trade association in the construction industry, Mashburn has the opportunity to make a difference. (Mashburn is founder and president of Mashburn Construction Co. of Columbia, S.C.)

To improve the industry, the various groups must stop fighting each other. Instead, they must work together for the collective good. Successful companies understand they must take care of their customers, employees and subcontractors, while maintaining their own financial health. The first step is for the contractor to use its experience and knowledge for the benefit of the client. Mashburn's theme for his presidency, "contractors as the owners' advocate," is the attitude that's needed.

While there are those owners and contractors that believe that highly competitive low-price bidding is the best way to go, the evidence does not bear this out. Instead, the low-bid environment lowers quality, increases confrontation, lowers efficiency and reduces contractor profits.

In the recent Constructor cover story, Mashburn hinted at the solution with his statement, "Early collaboration is the key to a project's success. That includes major vendors, too. Architects and engineers need to design according to the capability of materials, and they need to know about that up front. It means establishing a new type of relationship among all parties involved in a project."

Contractors have a lot to offer - a lot more than simply finding the cheapest way to install something or the ability to get someone else to do it for less. Instead, they need to use their knowledge and experience to increase innovation to find better solutions. Mashburn says, "We want owners to look to the construction industry, and specifically, contractors, as professionals who are a vital part of the whole process, not just a commodity."

Dr. Dean Kashiwagi, director of the Performance Based Studies Research Group and Professor at Arizona State University, has learned from his 13 years of study of best value procurement that there is no correlation between quality and cost. This means when contractors are allowed to compete based on performance - delivering the customer's desired results - instead of merely following plans and specifications, high-performing contractors deliver better results, often at lower costs, while increasing their own profit margins.

This approach also encourages investment in training. On the other hand, the low-bid environment discourages training, because training increases costs. (Not only is there the training cost, but also better-trained workers want to be paid more!)

Meanwhile, the low-bid environment discourages training because some of these contractors don't want the workers to think. They merely want them to follow the plans and specifications, whether they work or not. If the contractor deviates from the plans and specifications, it could be in trouble. However, if the plans and specifications don't work, then it gets a change order. In contrast, in the performance-based approach, a contractor encourages its workers to find the best way of doing things. This requires worker development.

Beyond the short-term benefit to the project, this approach will attract better workers into the industry. When potential workers begin to understand that the industry wants them for their brains and not just their brawn, we will begin attracting better people. Since the greatest threat to the industry is the lack of skilled workers, a performance-based approach is essential to turning that condition around.

Whether you are a member of AGC or not, Mashburn's presidency is something everyone in the industry should support. He's trying to turn the ship of industry in a direction that will benefit everyone. But he needs all of our support. This is a strategic change about what needs to be done. Once we are headed in the right direction then we can begin working on the details of how to best accomplish the outcome. Don't resist the change in direction because some of the details are not in place.

Ted Garrison, author of Strategic Planning for Contractors, works with businesses in the construction industry. He can be reached at Growing@TedGarrison.com.