It is remarkable that construction being primarily one of the oldest industries in the world has its main problems such as the resolution of Disruption unsolved. It is evident that the discipline of Disruption in the construction industry has more to it than what meets the eye, hence it remains scarcely defined and misunderstood. The good news is that the bad news in reality is a symptom or clue to what lies beneath the ‘superficial’ cognition of the reductionist methodology. The bad news is indeed the good news for it leads to a great scientific discovery and perhaps the development of what lies beyond in the unchartered territory of human thought.
Joshua Gans in his book ‘The Disruption Dilemma’ defines a very different sort of Disruption – something which is completely different to the Disruption of the construction industry. Gans (2016) defines Disruption as follows:
“For the purpose of this book, I define disruption as what a firm faces when the choices that once drove a firm’s success now become those that destroy its future. This will allow us to see disruption as a legitimate phenomenon but also provide a means of distinguishing disruption from other situations that may face a firm.”
What we see above is an exemplary definition of the term Disruption in the Management Sciences world. However, the same term Disruption means a very different thing in the Construction world. The Society of Construction Law (SCL) defines Disruption as follows:
“Disruption (as distinct from delay) is a disturbance, hindrance or interruption to a Contractor’s normal working methods, resulting in lower efficiency. Disruption claims relate to loss of productivity in the execution of particular work activities. Because of the disruption, these work activities are not able to be carried out as efficiently as reasonably planned (or as possible). The loss and expense resulting from that loss of productivity may be compensable where it was caused by disruption events for which the other party is contractually responsible.” (Society of Construction Law, 2017)
When it comes to Disruption in Quantum Claims; the burden of proof is indeed a burden first to be realised as a burden that actually exists. The first step in Disruption Analysis is to search for evidence of such a proposed claim. Without evidence and proof of efficiency loss – nothing can be ascertained. The one thing common about the Disruption of the Management Sciences and the Disruption in Construction Projects is they both are largely hidden until and unless they start to manifest themselves as either profitability erosion or efficiency loss respectively. In the corporate world the loss of profitability erosion can be traced back to a disruptive market entrant but loss of efficiency in construction projects without credible analysis, substantial establishment of cause-and-effect relationship may sometimes never come to be witnessed to anyone at all. In other words, Disruption of the Construction Industry has a far greater tendency to never get established or correctly demonstrated. The inherent unknown factors and its resulting complexity is higher in a disrupted construction project, hence claims made on the basis of disruption largely remains rejected. In Disruption we are looking for an ‘interdisciplinary answer to a multidisciplinary problem’ especially when projects are big and complex – we are looking for a certain subjective objectivity to which everyone can agree with after a good degree of understanding is provided. Indeed, the subjective objectivity we are talking about is a scientific discovery which was left unturned and hence unknown during the course of the project.
Buckley (1968), an American sociologist was the first one to coin the term Complex Adaptive System (CAS). Dooley (1997) discussed CAS as:
“A CAS is both self-organizing and learning; examples of CAS include social systems, ecologies, economies, cultures, politics, technologies, traffic, weather, etc.”
Dooley (1997) cites Dooley et al. (1995), Lewin (1992) and Waldrop (1992) as follows:
“The complexity paradigm uses systemic inquiry to build fuzzy, multivalent, multilevel and multidisciplinary representations of reality. Systems can be understood by looking for patterns within their complexity, patterns that describe potential evolutions of the system. Descriptions are indeterminate and complimentary, and observer-dependent. Systems transition naturally between equilibrium points through environmental adaptation and self-organization; control and order are emergent rather than hierarchical”.
Tim Sullivan in his HBR (Harvard Business Review) article ‘Embracing Complexity’ describes a CAS as follows:
“A complex adaptive system has three characteristics. The first is that the system consists of a number of heterogeneous agents, and each of those agents makes decisions about how to behave. The most important dimension here is that those decisions will evolve over time. The second characteristic is that the agents interact with one another. That interaction leads to the third—something that scientists call emergence: In a very real way, the whole becomes greater than the sum of the parts. The key issue is that you can’t really understand the whole system by simply looking at its individual parts.” (Sullivan, 2011)
What we are witnessing as the ‘hiddenness’ in the above two examples of Disruption in Construction and Management Sciences worlds, is the manifestation of systems as Complex Adaptive Systems (CAS). What we are made to acknowledge is that we primarily live and operate in a CAS which cannot be reduced to mere parts and can prove out to be hidden and mysterious due to its emergent properties especially when a reductionist method of research and analysis is used. Without proper cause and effect relationship in place no substantiation for a disruption claim is reached. The dilemma of quantum claims is as such that effectiveness needs to be calculated in terms of efficiency. While in the world of Management Sciences effectiveness includes efficiency rather than the other way round. In other words, the loss of effectiveness has to be portrayed as a loss within ‘efficiency’. Fortunately, quantum claims can be accepted on a higher level of balance of probabilities. Increasing the balance of probabilities and objectively establishing the ‘correct’ quantum upon a disruption claim is more of an art than science as running from objectivity towards subjectivity and then coming back to objectivity requires a great amount of discipline in terms of practicing neutrality as the foreground of achieving success in a disruption claim. Hence, neutrality is the art required to evaluate a CAS while bringing out objective truth with a reductionist mindset; this would be nothing less than reiterating a forgotten or misunderstood scientific truth in the course of a project or even getting to discovering a new scientific truth altogether. We are required to establish and demonstrate the ‘objective singularity’ required to establish the loss of efficiency with enough substantiation in the background out of the multiple complex layers of project works.
Yaneer Bar-Yam (2018) in his book Dynamics of Complex Systems states:
“It is impossible to understand complex systems without recognizing that simple atoms must somehow, in large numbers, give rise to complex collective behaviors. How and when this occurs is the simplest and yet the most profound problem that the study of complex systems faces. The problem can be approached first by developing an understanding of the term “emergence”. For many, the concept of emergent behavior means that the behavior is not captured by the behavior of the parts. This is a serious misunderstanding. It arises because the collective behavior is not readily understood from the behavior of the parts. The collective behavior is, however, contained in the behavior of the parts if they are studied in the context in which they are found. To explain this, we discuss examples of emergent properties that illustrate the difference between local emergence – where collective behavior appears in small part of the system – and global emergence – where collective behavior pertains to the system as a whole. It is the latter which is particularly relevant to the study of complex systems.”
We see a similar dialogue in the literature of disruption. Long, Carter, Buddemeyer (2014, p. 35) cites Finke (2008, p.319) as follows:
“Conceived in these terms, local disruption consists of direct, immediate, proximate and foreseeable consequences based on temporal or spatial relationships flowing out of specific individual change orders.
Cumulative disruption, on the other hand, is a combined synergistic effect caused indirectly, unforeseeably, remotely, or distantly by an indivisible group of change orders, is not based on a temporal or spatial relationship and includes all disruption not treated as local disruption.”
…
“Although disruption (i.e. the loss of productivity) is sometimes categorized as being either local or cumulative, there is no such thing as synergistic, greater-than-the-sum of its parts cumulative disruption. At least insofar as entitlement is concerned, all disruption is “local”. It is more accurate to refer to “unforeseeable” disruption rather “cumulative” disruption. To use the term “cumulative” implies that the disruption is somehow causally different from local disruption and this is simply not the case. In fact, the typical cumulative disruption claim is nothing more than a “total productivity loss” claim and should be subject to the same prerequisites as “total cost” claim…”
We can see that local disruption is actually the local emergence and unforeseeable or cumulative disruption is the global emergence. When substantiation is concerned then we have to portray loss of productivity and effectiveness within the domain of efficiency loss. Hence, in terms of proving causation all disruption has to be linked back to local emergence or local disruption. In other words, the ‘objective singularity’ of evidential substantiation has to be reached. The work of the disruption analyst hence would be to find and establish the hidden links between what is known and what is yet unknown.
To understand the above in light of a practical industry which uses ‘hiddenness’ of complex systems to its own advantage is the investment industry. The world of investment resides completely on the skills of analysis and forecasting. No one knows what is the future, however a confident future can be ascertained for a stock by an expert and experienced investment analyst. As disruption analysis just does not includes analysis but ‘forecasting’ as where the hidden links to loss of efficiency may reside within the project works, the art of work that implies in both industries is very similar. In disruption analysis we try to find lost and hidden value while in investment analysis we try to find the hidden value of a stock. Here, the art is disciplined neutrality towards finding the truth. Jason Zweig while doing commentary on the book The Intelligent Investor mentions the following:
“Risk exists in another dimension: inside you. If you overestimate how you really understand an investment, or overstate your ability to ride out a temporary plunge in prices, it doesn’t even matter what you own or how the market does. Ultimately, financial risk resides not in what kinds of investments you have, but in what kind of investor you are. If you want to know what risk really is, go to the nearest bathroom and step up to the mirror. That’s risk, gazing back at you from the glass.” (Zweig, 2003)
The key skill to disruption analysis in ‘forecasting’ hidden links and evidential substantiation lies in the in-depth qualitative understanding of the project works. Loss in efficiency and hence the value lost can be traced back to the ‘mismanagement’ of the project arising out of change to the normal course of project works.
As an analyst I vividly acknowledge the underdevelopment of the construction industry if compared to the investment industry. The primary benefit of comparing the investment industry to the construction industry reveals a complete lack of ownership orientation in the construction industry towards a specific project. Value investment as taught by Benjamin Graham the teacher of Warren E. Buffett has always kept ownership-oriented mindset as the key to a successful forecasting and understanding of a prospective investment opportunity. Benjamin Graham mentions in his book The Intelligence Investor:
“An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meetings these requirements are speculative.”
…
“Yet every corporate security may best be viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise.” (Graham, 1973)
McKinsey Global Institute in its research mentions:
“The construction sector is one of the largest in the world economy, with about $10 trillion spent on construction-related goods and services every year. However, the industry’s productivity has trailed that of other sectors for decades, and there is a $1.6 trillion opportunity to close the gap.”
“… industry dynamics that contribute to low productivity—construction is among the most fragmented industries in the world, the contracting structures governing projects are rife with mismatched risk allocation, and owners and buyers, who are often inexperienced, must navigate a challenging and opaque marketplace. The results are operational failures within firms, including inefficient design with limited standardization; insufficient time spent on planning and implementing the latest thinking on project management and execution; and a low-skilled workforce. In addition, the construction industry is highly volatile and has bottom-quartile profit margins compared with other sectors, constraining investment in the technology and digitization that would help raise productivity.” (McKinsey Global Institute, 2017)
Elhag, T. et al (2020) discusses and cites Laan et al (2011) in their article ‘Moderating Claims and Disputes Through Collaborative Procurement’:
“… Respondents have identified the ‘selection of contractors on the basis of lowest bids’ as the second major reason for disputes in construction. In order to become competitive, contractors are forced to become opportunistic whereby they don’t declare the mistakes and lack of buildability in the design. Laan et al (2011) revealed that contractors lower their bid as they foresee lot of claim potential during construction stages, which leads to time and cost overruns in the project. Disputes on quality and performance of the works are also common in the post contract stages.”
“… the opinions of the experts about the relationships between construction project stakeholders. About only quarter of the respondents think that relationship is friendly or gain/pain share type of approach. On the other hand, around 77% of the experts believe that the relationship is either adversarial, lack of trust, win-lose attitude, or dismissive and opportunistic behavior.”
Comparison of the construction industry with investment industry just does not reveals partly the methodology to be followed in predicting the hidden links in a disruption claim but rather it points to a greater problem i.e., who owns the construction problem. If the employers is choosing contractors mostly on the lowest bids and contractors are eyeing claim potential then who owns the construction phenomenon. This is a serious problem and the main cause that has halted the growth of the construction industry. Ownership orientation is not just a mindset, but in reality, is the completion of intelligence needed to excel.
Clarken (2009) is his paper ‘Moral Intelligence in the Schools’ cites Johnston (1994) and, Snow and Jackson (1993):
“Philosophers such as Plato, Kant, Leibnitz, Wundt and May suggested that intelligence includes aspects of knowing and thinking (cognition), valuing and emotion (affection) and volition and ethics (conation) (Johnston, 1994). Snow and Jackson (1993) argue that the distinction among cognitive, affective and conative domains is one of emphasis, as they each affect and relate to one another, and each should be considered in learning.”
…
“Even when right and wrong is clear, the valuing, internal controls and moral commitment may not be sufficient to translate that knowledge into action”.
Hence ownership-oriented mindset, if applied, will complete the intelligence domain while acquiring ‘the will to act righteously’ in any discipline and profession. There is indeed a universal wisdom embedded in such a mindset where you can easily see yourself in the place of others. Moreover, it is based on a win-win situation and translates to a non-zero-sum game environment. The principle of equity and equitable justice would flourish with such a mindset. This leads to the least chances of making a crippling management decision hence also a bad investment decision. Such an approach drastically changes the stance of the quantum expert from one of proving quantum to the ownership of non-harmony between the Contractor and the Employer with the origin of problem in the mind.
Overall, disruption (of innovation – Management Sciences) of disruption (of construction) shall lead to a whole new disruption (knowing the true nature of the scientific methodology). Disruption shall be elevated – this is the endeavour of the third kind.
Carl Jung mentions in his ‘The Archetypes and the Collective Unconscious’:
“In all chaos there is a cosmos, in all disorder a secret order, in all caprice a fixed law, for everything that works is grounded in its opposite.” (Jung, 1968) Hence, the objective causality of the evidential substantiation can lie in the unsearched, unrealised and untouched ‘abstraction’ of the seemingly misunderstood, unknown and yet undiscovered scientific facts.
Thank you for reading
Note: Please note that the views of this article are of the author alone and does not necessarily represent the views of any organisation.
Article No. 1A-1
Bibliography:
Bar-Yam, Y. (1997). Dynamics of Complex Systems, New York: Routledge
Buckley, W. (1968). Society as Complex Adaptative Systems, Modern Systems Research for the Behavioral Scientist, Chicago: Aldine Publishing Company
Clarken, R. H. (2009) ‘Moral Intelligence in the Schools’, paper presented as the annual meeting of the Michigan Academy of Sciences, Arts and Letters, Wayne State University, Detroit, MI, March 20, 2009. Available online at: https://files.eric.ed.gov/fulltext/ED508485.pdf [Accessed on 16/05/2022]
Dooley (1997). A Complex Adaptive Systems Model of Organization Change, Nonlinear Dynamics, Psychology, and Life Sciences, Vol. 1, No. 1, pp. 69-97
Elhag, T., Eapen, S. and Ballal, T. (2020). Moderating Claims and Disputes through Collaborative Procurement. Construction Innovation: Information, Processes, Management, 167. pp. 220-231. Available online at: http://centaur.reading.ac.uk/86921/ (Accessed on 10/03/2021)
Gans, J. (2016). The Disruption Dilemma, Cambridge: The MIT Press
Graham, B. (1973). The Intelligent Investor, Reprint, New York: HarperCollins, 2006
Jung, C. G. (1968). The Archetypes and the Collective Unconscious, Volume 9, Part 1, Translated by R. F. C. Hull. New York: Routledge
Long, R. J., Carter, R.C., Buddemeyer, H.E. (2014). Cumulative Impact and Other Disruption Claims in Construction, Texas: Virtualbookworm.com Publishing Inc.
McKinsey Global Institute (2017). Reinventing Construction: A Route to Higher Productivity. Available online at: https://www.mckinsey.com/~/media/mckinsey/business%20functions/operations/our%20insights/reinventing%20construction%20through%20a%20productivity%20revolution/mgi-reinventing-construction-executive-summary.pdf [Accessed on 20/04/2022]
Society of Construction Law (SCL) (2017), Delay and Disruption Protocol, 2nd Edition, Leicestershire: Society of Construction Law (UK). Available online at: https://www.scl.org.uk/sites/default/files/documents/SCL_Delay_Protocol_2nd_Edition_Final.pdf [Accessed on 15/05/2022]
Sullivan, T. (2011). Embracing Complexity, Harvard Business Review, (September).
Zweig. J. (2003). ‘Commentary on Chapter 20’, The Intelligent Investor, New York: HarperCollins, pp. 525-531