bsc-cliff moser-pmc-10-05.16
TRANSCRIPT
Designing & Implementing A Balanced Scorecard for the Architectural Firm
Cliff S. Moser, AIA, MSQA
Cliff Moser, AIA, MSQA
Principal at RTKL, Los Angeles, Healthcare Studio
Education
Architecture at University of Utah, Salt Lake City
Quality Assurance at Cal State Dominguez Hills
Worked at:
Barker Rinker Seacat – Denver
Ewing Cole - Philadelphia
Wallace Roberts & Todd – Philadelphia
Moekel Carbonell – Wilmington
Perkins & Will – Los Angeles
who am I?
what is a balanced scorecard?
What & Why a Balanced Scorecard for the Architectural Firm
Three Types of Balanced Scorecards
Project
Initiative
Organized-Based
How to create measures
How to create success
what is an architect?
130,000 Licensed Architects in U.S.
15,000 Architectural Firms
$26 Billion in Annual Fees
30% Billings for Government
60% Billings for Private Business/Institutions
75% firms bill less than $500,000/20% of the work
2% firms bill over $10 million/25% of the work
why a balanced scorecard?
Identified by Kaplan and Norton as new way to measure
performance.
To ensure that all parts of the organization are measured
To identify, manage and leverage:
people, processes, customers, and financial perspectives
To capture knowledge and information
To identify and measure intangible assets
To align organizational goals to organizational strategy
Grew out of Total Quality Management
(TQM) Movement of the 1980’s.
Successful Companies measured success
as more than financial performance.
Kaplan and Norton identified Balanced
Scorecard as a way to diffuse new
performance metrics through
organizations.
80% of Fortune 1000 companies currently
utilize some form of Balanced Scorecard.
what is a balanced scorecard?
what is a balanced scorecard?
Measurement of Four Perspectives
People --staff attraction/retention, learning/growth.
Processes --what does the organization do best?
Customers --who are the organization’s customers?
Finance --identify new measures.
why a balanced scorecard?
Each Perspective Supports the Perspective Below
People – People support Processes
Processes – Processes support Customers
Customers – Customers support Finance
Finance – Finance supports the Organization
-Staff, Management, Administration
-Includes Employee Learning and Growth
People want to do a good job. Knowledge workers. Self-management.
Staff will seek to measure their own performance. There are key measures, strategies, or
policies that people will interpret and act to maximize, with or without a formal system. If
management doesn’t identify the measurement, strategy, or policy, staff will make up their
own, based on their perception of the objectives of the system.
Organizations who believe they have avoided the pitfalls of performance measurement
because they don’t have a formal system are in the worst case situation, because everyone
in the organization is self-defining what constitutes a good job from their own point of view.
Ask -What are you being paid for, and how much time do you spend doing that?
…then start measuring and changing (hire people to do the stuff the architects shouldn’t be
doing).
people
processes The things an organization uses to complete its work
CAD processes, Great design,
Forms and Procedures
Marketing, Accounting and Billing
If Processes aren’t measured, the organization is missing a
major competent success.
Recognizing and measuring processes uncovers hidden
performance issues.
How long does it take to plot a drawing?
How does a pursuit go through Marketing?
What are our billing procedures?
customers External and Internal Customers
External Customers
Clients, Users, Agencies
Create Metrics of Satisfaction
Internal Customers
Other Teams in the Office.
Admin, Marketing,
Consultants
Develop Measures that track, capture and measure Customer Satisfaction.
Identifying and recognizing an Organization’s Customers helps create metrics of Satisfaction.
financial The Traditional Measure of Success
Identify new metrics
Profit per principal
Sales per sf of office
Leading Indicators
Ratio of calls made to calls returned.
Lagging Indicators.
Booked projects to actual.
Try to define new metrics.
3 types of balanced scorecards
Project-Based Balanced Scorecard
Project Specific. Implement at particular project phase, or
through project start to finish.
Initiative-Based Balanced Scorecard
Build around a specific initiative: Examples -
Quality Assurance/Quality Control
Marketing or Business Development Initiative
Organization-Based Balanced Scorecard
Create new Holistic metrics for entire organization
project-based balanced scorecard
Implement at any project phase
First – Align Goals to Strategy
Establish Mission/Vision Statements
Create Goals
Identify Strategy
Create Tactics for Achieving Strategy
Identify and weigh indicators/metrics
Use People, Processes, Customers, Finance to Balance
Metrics and Performance
project-based balanced scorecard
Case Study
Construction Administration Project Phase
Identify Mission & Vision – Best Project, Safest Project…
Identify Leading/Lagging Indicators
Identify and Weigh by using Analytical Hierarchy Method
Determine Reporting Period – weekly, monthly, quarterly
Set goals – support measures
Measure/report goals – what is success? How to achieve.
Re-set goals – Continuous Improvement
Modify Measures (Plan, Do, Check, Act)
case-study - construction administration
Process Perspective –
Submittal Turnaround
RFI Turnaround
Error Free Drawings
Timely Field Decisions
Inspection Approval
Mix of Leading/
Lagging indicators
Subm
itta
l Turn
aro
und
RFI
Turn
aro
und
Err
or
Fre
e D
raw
ings
Tim
ely
Fie
ld D
ecis
ions
Insp
ection A
ppro
val
Submittal Turnaround 1 1 1/5 1/9 1/9RFI Turnaround 1 1 1/4 1/8 1/9Error Free Drawings 5 4 1 2 1Timely Field Decisions 9 8 2 1 2Inspection Approval 9 9 2 1 1
Rank each measure against each other in order to determine
which measure is more important.
case-study - construction administration
Submittal Turnaround
RFI Turnaround
Error Free Drawings
Timely Field Decisions
Inspection Approval
Complete paired ranking and total each column
Subm
itta
l Turn
aro
und
RFI
Turn
aro
und
Err
or
Fre
e D
raw
ings
Tim
ely
Fie
ld D
ecis
ions
Insp
ection A
ppro
val
Submittal Turnaround 1.00 1.00 0.20 0.11 0.11
RFI Turnaround 1.00 1.00 0.25 0.13 0.11
Error Free Drawings 5.00 4.00 1.00 2.00 1.00
Timely Field Decisions 9.00 8.00 2.00 1.00 2.00
Inspection Approval 9.00 9.00 2.00 1.00 1.00Total 25.00 23.00 5.45 4.24 4.22
case-study - construction administration
Normalize each issue to determine ranking against each other. Then normalize total. Rankings:
Submittal Turnaround .03
RFI Turnaround .04
Error Free Drawings .25
Timely Field Decisions .36
Inspection Approval .32
Subm
itta
l Turn
around
RFI T
urnaround
Erro
r Free D
raw
ings
Tim
ely
Fie
ld D
ecis
ions
Inspection A
ppro
val
Tota
l
Norm
alized T
ota
l
Submittal Turnaround 0.04 0.04 0.04 0.03 0.03 0.17 0.03
RFI Turnaround 0.04 0.04 0.05 0.03 0.03 0.18 0.04
Error Free Drawings 0.20 0.17 0.18 0.47 0.24 1.27 0.25
Timely Field Decisions 0.36 0.35 0.37 0.24 0.47 1.78 0.36
Inspection Approval 0.36 0.39 0.37 0.24 0.24 1.59 0.32
Total 1.00 1.00 1.00 1.00 1.00 5.00 1.00
case-study - construction administration
Create Goals (90%) for Achievement and Reporting Periods.
Submittals 3% below the goal of 90%. Therefore the team multiplies
0.97x0.03=0.0291
RFIs were 5% below the goal of 90%.
0.95x0.04=0.038
Error Free Drawings were above the goal by 8%
1.08x0.25=0.27
Timely Field Decision. Unfortunately, this metric will bring down the
goal for the month. 65% creates a 25% gap: 0.75x0.36=0.27
Inspection. Again, a bad month leaves the team 20% shy of its goal
of 90% 0.8x0.32=.256
case-study - construction administration
Adding the totals brings the month’s achievement goal as follows:
0.029+0.038+0.27+0.27+0.27+0.256=0.836 or 84% of the team’s process
goals for the month, which is close to the target of 90%.
Measuring against the AHP determined percentages & recognizing what
the team believes to be important (in other words a 100% win in Inspection,
Field Walks, and Error free drawings) deliver its results immediately.
Instead of arbitrary or immediate metrics, the team can begin to create and
implement stretch goals in order to create endorsed and sustaining
improvement.
exercise Identify measures for a project based scorecard.
Construction Document Phase –
People
Processes
Customers
Finance
Include leading and lagging Indicators
initiative-based balanced scorecard
More than an expanded Project-Based BSC.
Use to recognize and help solve Organizational Learning Disabilities.
Capture and disseminate Extrinsic and Intrinsic Knowledge, and Identify Intangible Assets.
Extrinsic Knowledge
Rules, Protocols, Established way of doing things.
Intrinsic Knowledge
Learning by doing, Trial and Error, Apprentice-ship
Intangible Assets
Creating Value by Innovation, identify, nurture, and leverage
Disruptive Processes within the firm.
initiative-based balanced scorecard
Extrinsic Knowledge
Initiative-Based Scorecard to create and maintain standards:
Sheet numbering, standard details, general notes,
specifications, meeting minutes database. Anything that
establishes standards that capture, sort or transfer
information.
Lunch and Learn, Formal Training, Continuing Education
Requirement for everyone.
Use People, Process, Customer and Financial Perspectives
to align and support goals and understanding.
initiative-based balanced scorecard
Intrinsic Based Knowledge
Initiative-Based Scorecard to create and share knowledge:
Lessons Learned, Marketing, Presentations. Intrinsic
knowledge can be captured by using People and Process-
Based Perspective Measures
Lunch and Learn, Formal Training, Cross-functional
mentoring/training, Story-Telling
Require managers to learn the processes their staff uses.
--Southwest Airlines managers hauling luggage.
Use metrics for the Perspectives to align and support goals
and understanding.
Intangible Assets
Branding, Innovation, Disruptive Processes & Technologies
Use BSC to identify, create, manage, and (most
importantly, leverage) Intangibles.
Branding Initiative
Use Perspectives to align goals:
People-----
Process----
Customers----
Financial----
initiative-based balanced scorecard
Training
New Tools
Awareness of New Brand & Meaning
Adequate Funding of Initiative
Example -Disruptive Processes & Technology Initiative
Use perspectives to align goals:
People: Training, reward ideas or use of new
innovations.
Process: New Tools, Install discovery-based processes
to explore and test new ideas, tools and
processes.
Customers: Sell the ideas to all customers, make them
part of the process of exploration.
Financial: Adequate Funding of Initiative, build in Failure
allowances. Fund ideas that have greatest
risk/reward.
initiative-based balanced scorecard
Initiative-Based Scorecard should Align Success behind the
Mission and Vision of the Initiative from people to financial.
The pieces of a successful Balanced Scorecard
Mission and Vision Statements
Used to create plans, ideas and goals for all types of BSC.
Most important for creating a successful Organizational-Based
BSC.
Mission Statement
Reason the firm exists.
Single Core Purpose
…but not too specific — allow room to grow.
organizational-based balanced scorecard
Mission Statement -continued
Identify and list the Firm’s Core Purpose
Idealistic reason for existing.
Use “Five Whys” to discover Core Purpose
Not selected but discovered as part of the process
Must be value truly held by organization
Mission Statement NOT list of goals/aspirations
organizational-based balanced scorecard
Vision Statement
I have a Dream…
Make goals demanding, inspire & challenge stakeholders
Target – quantitative or qualitative goals such as a sales target or to
design the best hospital
Common Enemy – centered on overtaking another firm within the same
industry.
Role Model – to become like another firm in a different industry or market.
For example, the firm may want to become the GE of Healthcare.
Internal Transformation – especially appropriate for very large
corporations. The firm may set a goal to be the best stadium architect.
Once a Vision is achieved, replace. Completed goals stagnate the
firm. This frames the essence of continual improvement and
transformation.
organizational-based balanced scorecard
Use a Balanced Scorecard to Identify and Organization’s Core
Capabilities
Employee knowledge and skill — People — Intangible
Physical technical systems — Processes — technical
competence in databases, extrinsic systems.
Values and norms —types of knowledge which are sought and
nurtured. Values serve as knowledge-screening and control
mechanisms.
Managerial and Customer systems — Customers and Financial —
monitored and supported by the company’s system of education,
rewards, and incentives.
organizational-based balanced scorecard
Core Capabilities
How to use BSC to monitor Core Capabilities.
Physical technical systems —technical competence in databases,
extrinsic systems.
Managerial systems —monitored by the company’s system of
education, rewards, and incentives.
Values and norms —types of knowledge which are sought and
nurtured. Values serve as knowledge-screening and control
mechanisms.
Remember – Equilibrium in nature is a precursor to death – When
a living system is in a state of Equilibrium, it is less responsive to
changes occurring around it.
Living systems cannot be directed along a linear path. Systems
must be disturbed towards a desired outcome.
organizational-based balanced scorecard
Use a Balanced Scorecard to Identify Core Rigidities
Why is it easy for Core Capabilities to become Rigidities?
Inertia —acquires a momentum of its own and becomes
difficult to overcome, even if it is now outmoded or excessive.
Path dependency —cultural lag, the power of the past. Rise
of the creative class —still paying out of the school staff
starvation wages, sense that we are limited by what we can
accomplish because that’s all we’ve done before.
Limited problem solving skills —unfamiliar with new
approaches or opportunities.
organizational-based balanced scorecard
Core Rigidities
How to use BSC to battle Core Rigidities
Fight Inertia —Challenge firm to try new risks. Inertia comes
in many forms: Go/no-go propositions, new market, etc. Safe
bets sometimes means being left behind.
Counter Path dependency —think of new ways of doing
things. Leverage the extrinsic creative class knowledge from
younger staff into shared knowledge for older experiences
staff.
Develop New Problem Solving Skills —once content, a firm
stagnates and begins losing valuable intangible assets.
organizational-based balanced scorecard
Summary: 3 types of balanced scorecards
Project-Based Balanced Scorecard
Project Specific. Implement at particular phase, or through
project start to finish.
Initiative-Based Balanced Scorecard
Build around a specific initiative:
Quality Assurance/Quality Control
Marketing or Business Development Initiative
Organization-Based Balanced Scorecard
Holistic metrics for entire organization
discussion