Transcript: Minimizing Risk? Or Am I Getting in My Own Way? - w/ Dr. Dean Kashiwagi

So there's some things that owners have to understand. The first thing is, if they're to improve, quote, their performance in the delivery of construction services, they must understand that they cause over 90 percent of all project time and cost deviation by thinking and making decisions. And this is not a subjective statement. This is the proof of 25 years of running 1900 tests. Hello, I'm Brittany Campbell-Turner and this is the Constructor Podcast, episode number 33.

Hello and welcome to Constructor, the best way to build it. This podcast is dedicated to helping property owners have certainty in their decisions about their construction projects. We talk about fostering trusting relationships with your project teams, help you to understand how to lower risk, be under budget and off schedule in your projects, and most importantly, exceed your end user's desires. This episode features Dr. Dean Kashiwagi, who is director at Performance Based Studies Research Group and he just retired as professor at Arizona State University in the Del E.

Webb School of Construction. Let me tell you, I felt like I was being taught all over again in school. I see clearly and concisely breaks down concepts, uses logic to describe human interaction and makes plain what is complex. You'll see what I mean when we get into the interview. Dr.

Kashiwagi is someone you may not agree with at first listen, but you've listened to my episodes thus far and if you haven't, take a listen. You'll know that all I want to do is give you practical knowledge on how to lower risk on your projects. He talks about how in an unconventional way, which is very much in line with top performance, lean efficiency, respect, trust, transparency. So without further ado, please listen to this episode with Dr. Kashiwagi.

Dr. Dean, welcome to the Constructor Podcast. Yes, thank you for having me. I'm really happy to give the opportunity to speak with you. We have a lot to cover and I'm excited about the many things that we're going to precisely and accurately uncover here.

I do want to just get a better sense of you. I'd like to just kind of understand a little bit more about your background. Could you talk to us about how you've gotten to the point where you are now? To understand where I came from, I was with the United States Air Force for 14 years. I was born and raised in the state of Hawaii, went to the University of Hawaii, and graduated in civil engineering.

I went on with the United States Air Force. I spent three years at Holloman Air Force Base, New Mexico, two years back at Arizona State University doing a master's degree sponsored by the Air Force, three years down in Florida at Tyndall Air Force Base at the Engineering Services Center, two years in Saudi Arabia as a consultant working for the United States Air Force for the Royal Saudi Air Force. And then I was sent back to Arizona State University for three years of PhD work, of which I graduated in 1991.

I then went up to Dayton Air Force Base to teach for five years as a professor for the United States Air Force in their graduate education program. What evidently what happened was at that same time, the Berlin Wall came down and the Air Force was trying to downsize. And they gave everyone who had my time in the Air Force, which was 14 years, the opportunity to immediately retire with no payback for the education that they had sponsored. And I could go and do anything I wanted to do.

And what happened was I went back to Arizona State University and started as a visiting professor and started doing my research in how to improve the performance of the construction industry. And that was in 1992 that I started. At 25 years later, I recently retired. So I've been doing research for 25 years on this. That's an incredible journey you've been on.

Thanks for sharing that with us. You're welcome. Well, now that you've given us a brief introduction and some of your background, I do want to understand what now have you identified in the delivery of construction services that is significant? How have you impacted the industry now? Well, in going through and working with the United States Air Force and basically working as a consultant, I had the opportunity to watch the construction supply chain.

And I looked at how material and products were delivered in that supply chain. Once I came out to Arizona State University and started actually getting into this research and starting to document what I had known from the Air Force better, I came across several ideas. The first idea is that the construction industry itself was unstable. In other words, they were trying to minimize risk by the use of management, direction, and control. And then I realized that the only difference between very high performance and very low performance, we get low performance when the owners or buyers of construction services are trying to use management, direction, and control to minimize risk.

And high performance came when owners would identify and utilize expertise to minimize the risk. And that was significant. It changed the whole ball game. So all we had to do now and prove, and it took 25 years to really do it well, is to prove that if we could identify and utilize expertise, the cost would be reduced and the value and performance would go up. And so really, if we looked at one major thing that we have done is to prove that that concept is true.

So can we dig into that a little bit more? You specifically say management, direction, and control. How does that, I mean, give us a little bit of an indication of how that's different from utilizing expertise. So basically, when owners try to use management, direction, and control to minimize risk, what they're trying to do is identify what is the optimal way to do a project and then trying to direct somebody else to do it. In doing this approach, they assume that the secret does not lie with the contractors.

So in other words, when somebody uses management, direction, and control, they are the expert. So they're telling somebody else how to do their work. And then they're trying to manage, direct, and inspect them to make sure that the contractors did what they were told. In other words, if you have the buyers and they're telling expert vendors or expert contractors what to do, all you have to do is ask yourself, if they continually do this, does the value of the expert's expertise go up or down? And the answer is it'll go down because you don't need expertise anymore because the expert is the one telling them what to do.

This is what we call management, direction, and control. This is what the traditional construction industry is based on. You have the owner and then you have designers, you have engineers, and they're telling expert contractors what to do. Well, basically, if they're assuming that they're the experts, then there's no expertise really required in the construction industry. Or in other words, you don't need to be highly skilled in doing mechanical, electrical, piping, and plumbing work because you're all the same.

So the people who are doing the work now, it doesn't matter if they actually are technically trained and have expertise. On the job training will suffice simply because somebody on the other side is always watching them and telling them what to do. I think that makes the point a bit clearer. I want to get now sort of the flip side. We understand what's typical and today it's still very typical.

I find that even what I do on a day-to-day basis, I see that management, direction, and control, that being carried out from the owner's perspective, the buyer's perspective. How does a project look different? I don't know, maybe if you could give us an example. Well, I guess the way to lead into the explanation is if you have management, direction, and control, you have somebody telling another party what to do. Then within the other party, there are people telling other people what to do.

So when you use management, direction, and control, you require more people in the environment to deliver the service. You require people to tell other people who tell other people who tell other people what to do. And the question to ask yourself is, does this make the situation more complex and confusing or more simple? And the answer is it makes it more complex. And when you have complexity, you do not have transparency.

And when you have complexity, then people are saying things are difficult and complex. Everybody's thinking more. And when you have people thinking more, these people are thinking because they're confused. And thinking always leads to decision-making and decision-making always leads to risk. And in the traditional system, the problem you have is you have people who are thinking, making decisions, increasing risk, telling other people what to do.

And when something goes wrong, everybody blames everybody else. It's a very confusing, complex environment. The opposite or flip side of this is when you identify and utilize expertise. And the expert can see into the future. In other words, somebody who can see into the future minimizes their thinking and minimizes its decision-making because they can actually see into the future.

When people can see into the future, they know what's going to happen before it happens. These people are the only people who can pre-plan, who can now identify that the only risk they have is the risk that they cannot control. And because they realize they can't control anybody because that's a natural law, one person cannot control another person. They begin to realize that the only reason people think, make decisions, and cause risk is because they don't know any better. In other words, these people cannot see into the future like the expert can.

So someone who's truly an expert immediately identifies that the only way to simplify things and help everyone see into the future, even if they're not an expert, is by simplifying it, by, quote, simplifying what has to be done and what's going to happen before it happens and use metrics, time, cause, quantities, to identify exactly where we're going to be in the future at a specific time. And if you utilize experts, experts quickly understand that there are very few experts around. So experts realize that everybody else doesn't understand what's going on.

And they realize if they, quote, make things complex or try to explain technical issues that most people get confused and they're wasting their time. So the only way is to pre-plan, to simplify the whole schedule by using metrics, and using metrics simplifies simply because metrics is simply something that's observable, and it's a count on what is observable. And it requires no technical knowledge. And so experts simplify it out, and they don't really explain everything that they're going to do. They just simplify it so all the other stakeholders who are not experts can actually see what's going to happen before it happens.

And that is the flip side of today's complexity. Could I ask you a question further about metric tracking? You mentioned time and cost. Can you give us an example of what would be tracked, for instance, for either of those things? Well, the first thing is if you utilize expertise, the person who is actually controlling the project is the expert vendor.

So the expert vendor, because they know what they're doing, and they have simplified the schedule in terms of time, cost, and what's actually being delivered at a specific time. Everybody can look at the simplified schedule and look at the time, cost, and the deliverable that sets up the milestone, and all they have to do is be able to count. For example, if a metric is successful, it's never technical, and anybody can see if what was proposed actually got done. It can be a percentage of an activity.

It can be a percentage of the whole project. It can be done in the amount of square feet of a system that's being installed. It could be the number of systems installed. It can be anything that's observable where two people look at it, and they can count the same number of items. That is what a metric is.

A metric makes things so simple. It minimizes all thinking and decision making, and that's why metrics are so important in simplification and creating transparency. I love it. But remember now, the party who sets up the system requires a detailed schedule, and this detailed schedule does not only include the activities that they are responsible for, but it must include every activity of every stakeholder who participates in the project. Therefore, they're responsible for tracking time and cost deviation, whether they caused it or whether another party caused it.

It really simplifies things. The best way to kind of understand why this is true or why it is accurate is for 25 years we have run over 1,900 tests in over 11 different countries, and it's 98% customer satisfaction. We can count the number of failures on two of our hands. We can clearly explain where the risk happened. So there's some things that owners have to understand.

The first thing is if they're to improve, quote, their performance in the delivery of construction services, they must understand that they cause over 90% of all project time and cost deviation by thinking and making decisions. And this is not a subjective statement. This is the proof of a 25 years of running 1,900 tests, some being small, some being huge. The documentation is all there. Clients or owners cause over 90% of all project time and cost deviation.

And of course, if they cause the risk and the deviation, the question now begets itself, well, why do they try to complain or blame contractors for causing time and cost deviations? I often joke about this. If a procurement group is working for an owner and they're procuring construction services, the question becomes, what is their number one objective and who to protect? And the answer is they should be protecting the contractor simply because the contractor is the one who causes the least amount of risk. And it's the owner who's actually causing all the risk and never knew it.

The increase in the cost for the owners is gigantic. And if anyone ever wants to see case studies on this, we'll tell you where to get this information. So you can go to YouTube and find case studies by searching Kashiwagi. That's K-A-S-H-I-W-A-G-I. Best Value.

In addition to that, you can go to KSM-inc.com. And I did want to talk to you about a specific case study that I like and I thought that would be beneficial to the constructor audience. So I've taken an excerpt from Sharing Plow case study that caught my attention. So here it goes. Sharing Plow is recognized as one of the top 20 pharmaceutical companies in the world and procures about $57.3 million worth of services a year.

Although most of the services they outsource are standard functions due to their nature of business, a minor error could potentially have a large impact in the profit of their organizations. Throughout their growth, the company encountered difficulty with their outsourcing methods and in 2006 decided to begin testing with the Kashiwagi solution model, also known as the Performance Information Procurement System, or PIPs. The process to see if it could improve their selection of facility services and the value of delivered services. The optimal goal was to improve the level of services while lowering the price of the services.

So case in point, the model, the KSM or the PIPs model was successful. It delivered lower cost, almost 50% lower and much higher performances, an increase of 30% best value for Sharing Plow. To give you a specific sense of the results, the original cost of services was $6.9 million, the best value savings was $3.4 million, approximately 50%, and the current cost of services $3.5. And that's as of 2008. What it has done was it minimized the decision making of the client-buyer and transferred the accountability to differentiate and perform to the vendors.

Even though the award wasn't made simply just upon lowest bid or low price, the test at Sharing Plow showed that when the competition was based on value, performance, and price, the best values were offering lower costing. And that's an overall cost throughout the project as I understand it. So in this white paper, in addition, it notes that it validates the 20-year-old, and at this time it was 20-year-old, assumption of Edward Deming. Where have we heard that before? That when performance is identified and high performance is delivered, the costs are lowered, thus providing best value.

So those of you who don't know Edward Deming, he consulted to Toyota, and a lot of his principles are found in the Toyota Way. So the Toyota Way, any other subsequent lean project management methodology, the foundation is based in Edward Deming's teachings. So Kashiwagi, in this white paper goes on to say, it is the minimization of decision making, the use of dominant performance information, and the transfer of the management and minimization of risk that the vendor does not control over to the vendor that creates an alignment of efficient and best values services.

The KSM selection process is easily integrated into an organization's outsourcing process. The pre-planning and risk management processes are more difficult to incorporate due to the change of the paradigm required. So it seems like they had some challenges pretty much integrating the pre-planning and risk management, but overall the selection process, the procurement, right, trying to identify who the right type of person was, or type of organization, vendor, to hire was simple. And it's basically by identifying an expert. What has happened to us over 25 years is we went around the United States and ran tests.

And then somebody from the Netherlands who had heard me, in Israel and in Singapore, they were having a big problem in the Netherlands with the delivery of construction services. What they found out was all the major general contractors and subcontractors and material manufacturers were colluding on every major government vertical and horizontal construction project. And they would all meet. They had procured a castle. They had their own boards.

And the project would come up and they would determine which contractor would get the project. Then everyone else would bid, would bid higher. And when the project was awarded, then everybody received a payment for their efforts. And they would rotate this around. And this went on in my perception for three or four years.

And everybody knew it was happening. Even people in the government knew it was happening. And finally, somebody who was unaware of what was acceptable in the delivery of construction services said that this is illegal and it resulted in a criminal investigation and police action. And so what happened was everybody came up with all their answers of why it happened and how to solve it. And the reason collusion actually happens is because the environment has to be non-transparent.

Because if it's transparent, there's no reason to collude. So when you have collusion, it's all is non-transparency. When you have non-transparency, profit margins go down, risk goes up, cost goes up. And so basically now, contractors cannot sustain themselves. So I believe the subcontractors or even the general contractors were operating on a 2% margin, which barely kept them alive.

And they had, and the government started managing, directing, and controlling even more, which creates inefficiency. And from what I proposed, the owner was causing the risk anyway, so it became very difficult to make a profit. And someone had heard me. They had this collusion case. They didn't have a solution, so they brought me into the Netherlands.

And it took about two or three years of them listening and then beginning to realize, wow, this guy is actually, he makes sense. He's saying, do not manage, direct, and control the vendor. He's saying, let the vendor identify what the actual scope is and let the vendor track their time and cost deviation and let the vendor mitigate risk because you can never pass risk and expect to lower the cost. And it made sense to a lot of people. Okay, yes, so it made sense for a few reasons.

The difference between management direction and control of contractors and the best value explanation is really this. Number one, the simplicity and clarity of the explanation. Number two, the solution was not a technical construction industry solution, but a supply chain solution. Number three, the solution had been tested hundreds of times with dominant results like awards, time, cost savings, and increased vendor profits. Number four, the industry structure model explanation matched the observations of the Dutch construction collusion environment and results.

And last but not least, five, it was the only solution that proposed a win-win result. Lower project cost and higher construction contractor profit. So preliminary test results, which Kashiwagi didn't get a chance to say but I think are really notable, are that 98% customer satisfaction took place and it was on time and on budget. The vendors increased their profit as much as 100%. And the PIP system, as we mentioned before, could reduce government transactions as much as 90%.

But it wasn't until I believe 29 or 2010 that they really had an issue that they needed to take a gamble on. What happened was the Netherlands was going to an extreme problem in delivering construction services to maintain their roads, waterways. And they had a problem to travel very short distances. Everybody was an hour, hour and a half on the road just to go a few miles. It was politically driven that they were told that they had a billion dollars worth of infrastructure repair and modification that they had to do within three to five years.

And if they didn't do it, that the people who were delivering the services would be exposed as being non-experts. Now it normally took them for this type of scale 12 years to deliver, quote, the construction service. But given only three to five years, I mean, this was totally impossible with the traditional system. So they called me in and they asked me, can we implement your, quote, American system under European laws? And we ran it.

It's like the difference between an old, old Volkswagen bus and our newer cars that are fully censored. I mean, it was like not good at all. And it was so crude. But we did it. And the end result was they cut 25% off their construction time.

They cut 50% off their procurement time. They confirmed that over 90% of all risk and project time and cost deviation was actually caused by the owner. And within three years, instead of finishing a projected 10 projects, they finished 14 projects. And they finished the majority of projects within five years. It had such a stunning impact because it was so obvious what had happened that their procurement group, which is made up of a combination of ISM, which in ISM is the Institute of Supply Chain Management for Private Groups in the United States, and the NIGP, which is the government procurement folks.

They have a combination called Navy. The Navy came over to Arizona State University and licensed all the material and is in the process now of educating and training and certifying every consultant who is required to work on government projects to assist in the delivery of services to learn this process. This has become the mainstream approach in the Netherlands. And this took about five to six years. And now it's moved into Norway.

And they've run a couple of huge projects. And now we're going into Poland to train people. And companies that are located in the Netherlands but have other groups in different European countries are taking the approach to their counterparts in the different European countries. So this has really become a big movement in Europe. Thanks for sharing that experience you had with the group in the Netherlands.

I think it's quite interesting that they had a fear of not being the experts themselves. And with your teaching, with your expertise on this subject of changing around how to much optimize their construction, they were able to have that success rate of being able to do 14 projects instead of 10 as planned. Yeah it was, they were so amazed. And so today in the Netherlands and in other European countries, this approach is not only used to deliver construction. It's used to deliver any type of service that can be bought.

In fact, people think the construction service delivery is very poor. But in reality, now that we have been exposed to all the different industries, the success rate in the construction industry, which is if somebody can really give the industry the benefit of the dot and say 75% of all times, you know, it's delivered on time and the client is satisfied in the delivery of IT services, the 75% is the failure rate. And they waste billions of dollars. So the construction industry because of quote, construction is a project management like type or project management oriented approach.

The project managers in construction are much better than the project managers in any of the other industries. In fact, even with our design services and engineering services that are delivered, which the customer satisfaction is very low on those two areas, if they would learn how to utilize proper project management skills, they would do much better. Dr. Dean, I know we've talked a little bit already about how to optimize getting the services that a buyer can buy. I know we we talked a little bit about IT just now.

And obviously, the main the main focus is construction, just because that's the main topic of this podcast. Is there any other thing that you would recommend in order for its owners to learn about in order for them to optimize the services that they buy and procure? Well, there's there's some what we call natural laws and obvious observable facts that owners must realize. The first is there are very few experts who can see from beginning and end of projects. And so experts must be utilized for their expertise, not only by owners who find expert vendors, but this is really a vendor or contractor issue.

Owners must understand that when they have an expert, that they utilize their own expertise. For example, logic tells you if you have an expert by the definition of the expert can see from beginning to end, when would you utilize experts in the beginning of the project or at the end of the project? If you had problems and have the experts come in and rectify whatever problems you have. Well, common sense would tell you that you're bringing expert in in the beginning of the project. That's right.

Well, what happens if the expert lays out the project correctly? And this is where the misunderstanding is. What does it mean for an expert to lay it out correctly? When they lay it out correctly, it has a detailed schedule from beginning to end of all activities of every stakeholder who's involved. And they also have a simplified milestone schedule, where all milestones are in terms of metrics, which is time, cost, and some type of deliverable or percentage of a deliverable.

That has to be done. If people have a lot of experience in the construction industry, they'll find out very few people can do this. Very few people can see a project from beginning to end. But if you had an expert and your expert could actually do this, what would you do after the expert laid a project out from beginning to end? The first thing is they would minimize the cost estimate.

They would not depend on contingency, because normally when you lay things out and create transparency, contingency is not needed. So once the expert actually lays this out, the question is, let's say a construction project is going to take three years. Would you keep the expert on that project? And the answer is, if an owner of a construction company wanted to increase their profit margin, they would want to utilize the expertise of experts. You would never leave the expert on that project, simply because the expert would get bored, and you're just wasting him.

And so what contractors themselves need to understand is when the expert has laid it out from beginning to end, and it's easy to follow, that means other construction personnel, more junior people, can step in and actually run the project. And they take the expert and put him on the next project to do the same thing. Well the problem that contractors have, if you're going to do this, you have to know who your experts are. And experts aren't always the guys who've been in a company who have seniority.

They're not normally the guys who know the bosses the best. They're people who actually have an innate skill to see from beginning to end. And they are leadership based. They can identify and utilize other people's expertise. The problem that contractors have is, most contractor environments are relationship based.

They're based in time and service. They're based on who you know. And so in order to identify and utilize expertise, they would have to change their own environment. The other thing they'd have to do is, they'd have to try to get more out of the experts because they actually have expertise, which means they would have to treat experts differently, which means experts would be treated like kings because they actually have expertise and they actually are accountable and they actually generate more income than anybody else. Well, the problem with this is, the majority of people in the construction industry are not experts.

And when some people get identified and utilized as experts and other people know they're not experts, this causes a problem. It goes back to the reason we have management direction control in our construction industry. It's because the majority of people are not experts and they use management direction control to mitigate risk. It causes non-transparency and it separates accountability from the expertise. So it's a much bigger problem.

And it takes a visionary to see this or somebody who's very old, who actually knows what's going on in the construction industry. Dr. Dane, how does someone identify an expert? How do they find them? An expert is one who would be more complex or more simple.

They'd always be more simple. Do they talk more or talk less? They don't always talk less. Are they nicer people or not nice people? They're always nicer because people who can see are always nicer.

And people who are experts can always see into the future. Okay. And they use metrics. Yes, that's what I was going to ask next. So even just satisfaction with the time cost and whatever the other metric is that you're planning on tracking, people like to use key performance indicators.

I don't know if that's what you would utilize, but people like to use those terms a lot of the time. Yeah, they use these terms, but they never use it in the proper way. See, because a natural law is no person controls any other person. This is just a natural law. Parents can't control their kids.

Spouses can't control each other. No entity can control another entity, regardless if the entity signs a contract. The idea that somebody can actually influence and control another entity or person is totally inaccurate. So once you begin to understand this, you begin to understand that the only people who can improve their performance are the experts themselves. And therefore, the metrics that they use are metrics that they can actually use to improve their own performance and are not metrics.

There are sometimes called standards, right, which always turn out to be minimum, which need a lot of subjectivity and decision making on it, which create non transparency. So just understanding what complications. Yeah, just understanding what effective metrics are is very difficult for the construction industry. And you can you can see that just by observation. For example, if you take a vertical construction project, which is buildings, you quickly begin to realize that the most critical elements in this building are going to be the MEP, the mechanical systems, the electrical systems and the plumbing and piping systems.

But yet. Who controls the project? It's normally a general contractor and a project manager who have no expertise in any. And it's gotten so bad that the MEP contractors, subcontractors don't even know. How to impact the whole supply chain now, because they don't realize that the client, they have to get their client and explain that MEP control schedule.

It controls costs that everything else is now commodity. And they should actually, if they're doing a project, whether it be designed, bid, bill or design, they'd better get expert MEPs in. And anybody in the industry knows that. But no one knows how to articulate this. Simply because the system is so non transparent.

You mentioned the two delivery models, the design build and the design bid build. I'm curious because of your your work in Europe. How have the delivery models. Changed from the traditional ones in the work that you've that you've worked that you've done and talking with those groups or are they the same and are they still optimizing? So just to give you a little bit of context around why I'm asking this question to Dr.

Dean. It's really because in past podcasts, I have talked specifically about integrated project delivery and the IFA way. You'll know from from interviews with James P's and with Renee Chang. We talked a lot about the value of those particular models, even if it's not contractual. But the fact that there's that transparency and the fact that there's that shared risk shared reward approach.

So just wanted to get an understanding of what his thoughts were on this without specifically broadening. Well, basically the same environment of management, direction control, non transparency, lack of expertise is in every country. So whatever problems we have here in America, we have over here. There's no doubt in my mind. You can go to Africa and find the same project problem.

Going to Saudi Arabia, they have the same problem. Going to Asia and China, they have the same problem. Regardless of what everybody says that one country is so much better off than another country, they all have the same problem. And basically, if you can identify and utilize expertise, you can use design, build or design, build. Design, build has fewer parties in it.

And it allows the vendor to control the project, which means if they're an actual expert, it actually simplifies the whole situation. But if they're not the expert or if the owner hires a design, build contractor, then keeps telling the contractor what to do. You have the same problem. It is the actual management, direction of control of one party over another party or the lack of utilizing the expertise that causes all the problems. Everything else is just window dressing.

It's just a little different. It adds more value to the business model. It's identification and utilization of expertise and creating simplicity so that everybody can see is the contractor doing exactly what they said they were going to do. Understood. So it doesn't matter what contract type.

It matters the transparency. It matters the expertise. Some of the things that are going to be done are going to be done by the contractor, the kind of the way that the contractor is going to be doing it. It's the ability to identify and utilize expertise. Got it.

Love it.

We're going to, I guess, move on to our next question here. We talked about these concepts. How do they affect project management, risk management? These words like to be thrown out a lot in construction, project management, risk management particularly. How are these impacted?

Well, you have project management personnel representing the owner and representing the contractor. So basically, if you identify and utilize expertise, then the project management group for the vendor will be actually tracking the project and identifying project costs and time deviations. It is their job to simplify with their milestone schedule and create transparency. On the other side, on the owner's side, if they have project management people, they are actually doing only quality assurance, which means to simply ensure that the contractor or vendor they hired has a system to track time and cost deviation and performance metrics and risk management and quality control.

So basically, the project management quote, normal functions on the owner's side almost completely go away. And all they have to do is ensure that the contractor's side, project management personnel are actually doing quality control and risk management in a very simplified way using the milestone schedule and their metrics. And so project management really changes because most project management, most concepts are control based. So they're into management direction control. They're not into identification, utilization.

So project management changes a lot. Even though people are saying, oh, well, we already do all that, they don't really do it. And the other thing that gets affected is risk management. If a vendor is an expert in whatever they do, they always minimize their scope. When they minimize their scope, their risk goes down because they only do what they're expert in.

Once they minimize their scope, they will quickly identify that the only risk they have on the project is the risk caused by other stakeholders that will stop them from doing their job. And by using common sense and observation of human beings, the only reason stakeholders cause risk when it's their project is because they know no better. In other words, they cannot see into the future. They cannot see that they're causing risk. Therefore, now what the expert vendor will do, it will identify the risk that can be caused before it actually happens and identifies the parties who are going to cause it and assist them to know that when they normally cause risk, what they have to do to mitigate the risk.

And therefore, an expert vendor knows that they can never influence or control the other stakeholders, but they can surely use risk mitigation to help them identify when the risk will be caused and help the parties who are causing the risk to not cause the risk. Which means, do we have risk on every project? The answer is no. We only have risk when we have stakeholders who are not experts. And if you do have that risk, then the expert vendor will try to mitigate that risk by creating transparency and simplifying everything.

Therefore, an expert has no risk at all. An expert has no risk simply because they see into the future. Now, in my recollection of what is the average risk caused by vendors on projects where we can clearly see because transparency has been created. The risk that vendors cause is normally less than a percent. Wow, that's very low.

And it's acceptable. And when the risk goes down, the cost goes down. So, we have a risk of what is the average risk caused by vendors on projects where we can clearly see because transparency has been created. It's very low. And when the risk goes down, the cost goes down.

The time of delivery is quicker. And it's just logical. It is. It is. And, you know, I have such an emotional attachment and desire to learn about optimization and efficiency.

Those who listen to this podcast understand I'm always asking about how do we do this? How do we understand the best steps to do so? And I think that, Dr. Dean, you've given us a great understanding of how to do this for construction projects. How to think about that from the owner's side and the general contractor's side.

So, I want to thank you very much. Do you have anything that you'd like to share with the audience at this point? Well, you know, we've been doing this for 25 years. And we've gone into so many different countries. And we've run test after test.

And a lot of this is documented. So, if somebody says, wow, this guy's really like, boy, he's crazy. I mean, I don't even agree with him. What they have to realize is this is all based on 1900 tests in 10 different countries over 25 years. And it's documented very well.

So, if somebody would get on the website and say, okay, I want to see the documentation. They can just get on a website. And in a bundle, they can get the case studies. They can get the latest simplified steps. They can get all the history.

They can find, like, one of the 300 articles that were written on all these projects. And they can clearly see that this is accurate. But, you know, not everybody is looking to become efficient, right? So, you have to have a passion for this. But whatever problems we have in construction, it is not a technical problem.

It is a humanistic problem. And it's in every other industry. So, the construction industry is no different. People cause problems, not technology. Yeah, and I think it's a mindset towards wanting to take the right steps in order to improve.

And I think that the listeners have that passion along with me. So, well, with that, thank you, Dr. Dean. I'm really happy to have had this interview with you. And I look forward to staying in touch.

Not a problem. Thank you very much. So, with that, I hope you guys enjoyed the podcast with Dr. Dean. He dushed on a light on a little bit of a different perspective of how owners should be making decisions.

By hiring and trusting an expert who can see from beginning to end clearly. And share those metrics that really help everybody to just see exactly what's going on. That one keyword, transparency. Really make that reality for a project. So, with that, I hope you like this podcast.

Don't forget to subscribe at Constructor. That's ConstructRR.com to get email updates from me about upcoming podcasts. And other fun and exciting things that I like to send you. So, if you haven't already subscribed at iTunes or Stitcher, you can do so. And please leave a review to show your support and let me know that you're enjoying the podcast.

I look forward to talking with you guys next week.