Arouse your management skills
It's the construction equivalent of Championship Manager. The Arousal training course gives you a fictional contractor to run, choosing which tenders you bid for, who you hire and fire, when you pay your suppliers, and ultimately, try to deliver a healthy profit. A team from CJ put its collective management skills to the test.
Frank, the managing director, is "one of the old school" ,"blunt and when necessary rough and tough", and substantially conservative about many aspects of business life". Edwina, the senior QS, has "a great deal of experience", but has recently "been overloaded with work". And Wally, a site manager, "will never do anything unless he's told" and has a "shaky relationship" with his tradesmen.
Sound like a contractor you know? If so, that's exactly the intention. The
people described above work for a fictitious construction company, created
by Arousal - a management training programme developed in the 1970s by
Professor Peter Lansley, chair of construction management at Reading
University. Lansley's company, Management Reality, owns the rights to
Arousal stands for A Real Organisation Unit Simulated As Life, and as the name suggests, it allows managers to develop, evaluate and implement management strategies for a construction company in a risk-free environment.
The simulation is based on a medium-sized contractor in south-west England, and generates all the information that senior management normally receives, from tender information to rumours of staff discontent, and accepts decisions relating to marketing. personnel, organisation and staffing. It operates on a three-monthly cycle, providing performance reports based on those decisions.
Peter Waring, formerly a quantity surveyor with Miller, who runs the CITB's executive management programme, has taken hundreds of delegates through the course.
"It's construction specific, though in theory it could work in any industry that is of a similar contracting nature." he explains.
"But you can learn from this course even if you're not in construction. It teaches business and management principles that could be applied in any industry, perhaps most importantly, how the whole business benefits if everyone works together as a team.
"For example, one of the things we tend to find is how site-based managers, particularly young people under the age of 30, are unaware of how much impact they have on the rest of the business. If a project starts to run behind schedule, then it doesn't affect only your site, it has an effect on the money coming in for the whole business, and ties up resources that you might have planned to allocate to another project."
To put Arousal to the test a team from CJ met up with Waring to try out our management skills.
The training takes place over three days, during which time your team is responsible for the company's performance over 18 months to two years, that is, six to eight decision periods. The team is provided with a PC containing the management information systems of the company which you use to process decisions.
The course can be attended by teams of three to five managers, and it is generally recommended that the team divides into four areas; obtaining work; production, including human resources; finance; organisation; and also elects a chairman.
Before beginning the course, a briefing session is provided on the company, which reviews staff performance, recent decisions and results achieved. On the basis of this information, your team is expected to set some clearly measurable targets on how it plans to improve the company’s performance, which in our case were to improve turnover and margin by 10%.
At the start of each quarter the first priority is deciding what new work to bid for. Arousal gives plenty of information on the tenders you receive, indicating client, location, size and type of job and complexity. It lets you know what your operating margin is likely to be, your overheads, how much resource you will have to allocate to the job over its duration, and even provides you with information such as the current inflation index, useful to know as some jobs are on a fluctuating as opposed to fixed rate.
The tenders you receive are determined by your strategy. It was only through careful analysis of our company's history - and in truth, a degree of trial and error – that we discovered roads and utilities seemed to be our calling, and adjusted our marketing plan accordingly.
In addition, you are able to weight your marketing by area – the system lets you know how the market demand fluctuates across the region – and technology, so if your company seems to make good margins on concrete refurbs you can target that kind of work.
The majority of tenders are for traditional contracts, although occasionally you will receive a design and build or a fee based project – again this is dependent on your marketing strategy. And reflecting recent changes in the industry, the next version of Arousal will include a partnering option.
When bidding for work, the importance of teamwork quickly becomes apparent – a lesson our team swiftly learnt. We found to our cost that if the bidding department brought in more work than there were resources available, morale and productivity quickly plummeted. The result was projects slipping behind schedule, forcing you to allocate more resources to them, which of course deprives you of resources elsewhere.
The Arousal system, places a lot of emphasis on the importance of not overloading staff. The quarterly report gives each member of staff a score out of 100, according to their workload, with 100 seen as the maximum which anyone should take on. It also gives a rating on their performance and commitment, and pinpoints any problem areas, for example salary or technical issues.
However, some staff can handle their workload better others, something hinted at the background notes on the company.
Wally, our laziest site manager couldn't cope with a workload above 70 - he was eventually sacked. By contrast Frank, our indefatigable managing director, seemed happy to operate at 120 or more - although after two consecutive quarters operating at over 140 his commitment to the company had fallen from sound to weak.
It became clear that some reorganisation of the company was necessary for it to handle its workload, let alone the 10% projected in our business plan.
Arousal allows you to recruit new candidates, giving you CVs of prospective candidates, the quality of which are reflective of market conditions. The CVs are also detailed enough for you to recruit people suited to a particular type of work, in our case civils, and gamble on inexperience if you are short of cash. There are even psychological profiles so you can decide if the person would get on with your team,
We eventually decided to bring in a new contracts manager, promote a foreman to site manager, and recruit another foreman. But the approach doesn't solve your problems immediately. Arousal recommends that new appointees be given a maximum workload of 75 initially.
We decided to gamble on giving our new contracts manager a workload of 90, but soon wished we hadn’t; he left after one quarter. Not that we learnt our lesson though. A second contracts manager was recruited, given a workload of 80, but also jacked it in. Only when we appointed a third contracts manager with a workload of just 57 did we hang on to one.
There is also scope in the system to change the reporting lines. A management role means five workload points per person - hence Frank's near burn-out and by moving some of his responsibilities to the contracts manager we probably saved ourselves having to look for a new managing director.
Recruitment is also an option for roles that do not formally exist in the company. We had quickly identified that cash flow was a serious problem; payment delays by debtors were way above the industry average, while in contrast, our payment of creditors was unnecessarily generous.
Coupled with our managing director’s excessive workload and a disillusioned administrator who looked after payroll, this pointed to one thing; recruitment of an accountant. He quickly made a huge difference.
Arousal is an immensely complex system, yet what it delivers is remarkably true to life. Its key messages are true of almost any business culture, namely the need for sharp commercial awareness, teamwork, strong communication between departments, and avoiding the overloading of staff.
It took CJ about a year to get to grips with these principles, something Waring says is true of most teams.
“It takes people till stage three or four to get organised, he says. “You tend to get everything decided by committee at first, whereas what you really need is for everyone to do their own job and then to report back to the chairman who makes the decision. Yet this provides an important lesson in the need to consult everyone in the business; there are a lot of people in the construction industry who don’t consult, and their decisions tend to be less well informed and poorer as a result.”
If there’s one thing that’s common to all Arousal delegates, according to Waring, it’s that everyone enjoys it. “By the time they’ve finished, they all want to come back and have another go," he says, "which proves the value of what it teaches."
And how did the CJ team compare with others who have been on the course?
Up there with the best of them, of course - and no, there weren't any backhanders involved.
. A computer-based simulation of a medium-sized contractor in south-west England.
. Aimed at middle and senior level managers, relevant to all sectors of the industry.
. Team size ideally three to five.
. Course lasts for three days.
. Business trades for six to eight quarters, with a team's decisions based on performance reports provided &tend of each quarter.
. Information provided by reports includes: progress of existing projects; bid invitations; staff workload; payment profile; staff rumours.
. Decisions to be taken include: responses to bid invitations; intensity of working; human resources (hiring, firing, salaries, reporting lines); marketing focus; organisation structure; allocation of staff to projects.
. Further information: Peter Waring, tel: 07770 800393, email: email@example.com.
Transcript from Contract Journal Wednesday 28th September 2005