How Peter Beck helped create a more efficient way to design and construct buildings Featured

8:01pm EDT March 31, 2012
How Peter Beck helped create a more efficient way to design and construct buildings

When Peter Beck took over the top spot at his family’s Dallas-based construction firm two decades ago, he had worked for the firm for about 10 years, and that work had given him broad ground-floor knowledge of the acute inefficiencies rooted in the process of designing and constructing buildings.

Beck decided it was time to find ways to get rid of those inefficiencies, and that pursuit led him and his team on a quest that culminated in a revamp of the company’s business model. In so doing, his firm, The Beck Group, became one of the first in its industry to merge the functions of building design and construction under one roof.

That process didn’t happen overnight. In fact, Beck and his team went through a long series of false starts and trial and error that ultimately lasted a decade and a half before The Beck Group began to reach the point of successfully integrating the building industry’s two main functions.

“It’s been a long process,” Beck says. “It’s certainly taken more time than we originally thought it would. A lot more.”

The inefficiencies Beck took aim at, which cause building projects to take longer to complete and to cost more than they should, are rooted in the traditional way construction projects are done, with the main players — architect, engineers, consultants, general contractor, subcontractors — going about their jobs with very little coordination and sharing of ideas about the best ways to perform the multitude of tasks that go into a project.

“There are a lot of parties involved with unique and separate bottom lines,” Beck says. “And because of that, there’s little optimization for the benefit of the project. In other words, there’s little incentive for all these parties to do what’s best for the project. You have a lot of silos, and everyone is focused on their own bottom line.”

The silos needed to be opened up and aired out — or maybe even torn down.

Upgrade technology

Attacking the problem from the angle of its background in general contracting, The Beck Group’s initial focus in its quest to make building projects run more efficiently was to find a more sophisticated way to estimate construction costs.

“We started having discussions internally in our organization,” Beck says. “They were fairly energetic debates, actually. There were some people who felt we were already really good at providing estimates on projects. So we discussed whether we actually were doing a good job at what we call preconstruction — and really, whether our industry as a whole was. I like to think we were one of the best at doing it. But we debated whether we were actually doing it as well as we could. And that led to, ‘OK, if we’re going to try to do it better, how would we go about it?’”

Beck and his team spent a good deal of time, effort and energy researching different types of software and other technologies that would help the firm integrate building design and estimating. Eventually they found a project cost estimating tool in England that they felt, with some tailoring, would be able to perform the sophisticated modeling and estimating that The Beck Group sought. The program the firm settled on was akin to the technologies Boeing uses to design aircraft and Ford and Toyota use to design cars.

“It’s a very similar technology,” Beck says. “The difference is that we have millions of parts that go into buildings, where jet engines, while they have some similar parts, they don’t the have millions of different types of parts.”

The Beck Group bought a license to the British technology and began developing software applications based on it. That led to the creation of a software product called DProfiler that enables the user to model a building in great detail, to determine the cost quickly, and to make design changes and see how the changes affect the cost. The Beck Group began licensing DProfiler to the industry five years ago.

Gradually, though, while the firm was going through the process of developing these software applications, Beck and his team began to realize that technology alone wasn’t going to solve the most pressing problems the firm and its industry faced in terms of inefficiency in building projects — that while technology could make the firm more efficient in estimating project costs, in the end, it would not break down the silos.

“We saw that this was just a small microcosm of the overall issue about the industry, and that there was no incentive for anybody to produce a tool that would marry the cost of a project with the design of the project,” Beck says. “We had people that were motivated to produce the design, and there were great technologies to do that; and there were great technologies to estimate [building costs]. But there wasn’t any integration between the two.”

Beck says he and his team had mistakenly convinced themselves that technology would solve all of the problems related to inefficiency in the design and construction process.

“In fact, as we got further into it, we realized it was more of a business model and process issue,” he says. “Yes, you do need better tools — there’s no question about that. But you also need a better process, a better business model.

“And that’s when we decided that we really needed to integrate design and construction internally, to create common incentives between designers and builders to produce better projects and reduce costs, to increase speed and improve the quality.”

Attract talent

Beck’s first move in the direction of integrating the design and construction functions was to go out and hire some architects to join The Beck Group.

“We started by trying to attact architects to the firm,” Beck says. “But as a general contractor, we had great difficulty in doing that.”

The concept of merging with an architecture firm began to take shape, and, after looking around for some time, The Beck Group found a viable candidate in 1999: Urban Architecture of Dallas, a company that Beck was collaborating on a project with that coincidentally had recently reached a similar conclusion — that it needed to find a way to get closer to the construction industry.

“We started having discussions about merging,” Beck says. “Those discussions worked through, and we came to the conclusion that a merger made good sense.”

The companies didn’t rush into the union. It took a couple of years to coalesce.

“We hired a firm out of California to do an assessment of both firms,” he says. “We did a lot of different types of analyses of our strengths and weaknesses, our characteristics, our personalities, and so forth, and we matched them. Where we found that we were different, we assigned internal teams — we had three or four of these — populated with people from both firms to identify how we would get alignment around some of these potential differences between us — and then to hold us accountable after the merger for at least a year. Some of these teams actually continued for two years after the merger.”

As long as it took the marriage to come together, it took even longer for it to become a union that was sufficiently comfortable and smooth-running that the combined firm could fully realize the benefits of integrating design and construction under one roof.

“For a long time before this merger, we had worked closely with architects in team approaches on many projects going back several decades, so we thought we understood architects very well,” Beck says. “And the architects we merged with felt like they really understood contractors, what motivated them, etc. And I’ll tell you, nothing could have been further from the truth. We spent a number of years trying to marry these two disciplines successfully. It was challenging.”

How long was that “number of years”?

“Let me put it this way,” Beck says. “It took at least five to six, maybe seven years before the best of the best in either discipline could laugh at their own proclivities in the presence of the other. In a way that may sound silly, but it was, behaviorally speaking, a reflection of, ‘When do you arrive at a point where you’re comfortable in your own skin, and you can admit that you can do things better, you can ask for advice, you can share concerns, and have fierce, meaningful but constructive discussions, and walk away friends?’ That takes time. And I’m not saying we’ve totally accomplished it. But we’re miles from where we used to be.

“There’s a natural proclivity in these disciplines to not share information,” he says. “If you’ve built a house or been involved in a construction project, you know this as well as I do, or better.”

Those tendencies had to be whittled away, and as The Beck Group learned, the whittling became, of necessity, a gradual multiyear process.

Realize efficiencies

Beck started to see solid signs that the union was beginning to work — that significant efficiencies were being realized — about three years after the merger was completed.

“There was a project we built for a good customer of ours that we did on an integrated basis,” he says. “I distinctly remember visiting the jobsite and walking up the stairs. Now, we use a material called Bondo on stairs because when you’re building them, you have the railings and everything else, and — up until recently with some improvements and some more sophisticated tools we have now — the stairs were always wrong. And whenever you have metal that has to be attached to metal, you weld it and put Bondo over it. Then eventually it all gets painted, so it disappears. A lot of the waste in construction is in the rework that has to be done.

“But I remember walking that job, and walking that set of stairs and not seeing any rework, along the rails or the channels or anything. And then later we looked at the overall [building] delivery time, and we had cut it down significantly. So that was an important job for us, because it was one of the first ones we did that way [with design and construction fully integrated], and we got a bit of an ‘aha’ — like, you know, ‘We can really make this work.’”

The most eye-opening efficiency The Beck Group has gained from integrating design and construction has been in the speed of getting projects done.

“When you see the statistical results of an integrated project — when you do a regression analysis on conventionally fast-tracked projects versus integrated projects — the efficiency becomes pretty apparent,” Beck says. “The delivery speed is 18 to 25 percent faster.”

Ultimately, The Beck Group’s grand experiment in merging the design and construction functions is about trust between workers and departments performing the many tasks needed to complete an extremely complex project. It’s about everyone being motivated by a single goal. And it’s about eliminating everyone’s ability to pass the buck — to point at one of the other parties involved in the project and say, “It’s their fault, not ours.”

In the end, it’s about good customer service — delivering a higher-quality building faster and at lower cost.

“When you’re rewarded as one bottom line across the disciplines, [as a designer] you have a much stronger motivation to produce accurate, complete and timely information from which to build,” Beck says. “And when you’re a builder in that environment, you have much stronger motivation to help those producing the information to get it right the first time. Those motivations don’t exist when you have several separate organizations working on the project.

“It drives a different kind of behavior. You can’t look across the table and say, ‘This is the other guy’s problem.’ You become more responsible in a deep and visceral way.”

HOW TO REACH: The Beck Group, (214) 303-6200, www.beckgroup.com

 

THE BECK FILE

NAME: Peter Beck

TITLE: Managing director and CEO

COMPANY: The Beck Group

Born: Dallas

Education: Princeton University, Bachelor’s Degree, Civil Engineering, 1977; Stanford University, MBA, 1981

What was the most important thing you learned during your years in school?

In business school I studied organizational behavior, and broadly speaking, I learned a lot about people’s motivations, and that how you design system models is critical in terms of how it impacts people’s behavior.

What was your first job, and what did you learn from it?

I was an office engineer on the construction of Reunion Arena in Dallas, and the thing I remember most is the rolls of drawings I was responsible for. Whenever a change was issued by the architect, we’d have to hand out multiple rolls of drawings with rubber bands around them. There must have been 50 of them. And I remember thinking how wasteful it seemed, the amount of paper we were consuming, and that there had to be a better way to do it.

Do you have a business philosophy that you use to guide you?

Our company has benefited from leaving the last dollar on the table for the other guy. This allows you to develop a good reputation working with customers. What you want to do is delight the customer. And if that costs money sometimes, then it costs money. As an underlying philosophy, that’s critical to our culture.

What trait do you think is most important for a CEO to have to be a successful leader?

Listening well and having empathy. Having an understanding of the predicament, the opportunities and aspirations of your people, your customers, your peer companies, your joint venture partners. It’s about understanding other people.

What’s the best advice anyone ever gave you related to business leadership?

My father impressed upon all of us children the importance of being financially conservative. He said it a lot of different ways, and often.