Contractor Management
in this
Post-modern Era
Rudy Phillis (Pr. Eng.)
M. Sc. Eng. (Bus. Mgt.); B. Sc. Eng. Mining; TOC-Jonah
MSAIMM; MAMA; ASACMA; AAMMSA
Chief Executive: Ukhozi Group
Introduction
•
Mining Industry Concern: “Contractor Management
and their safe operation, in our industry”
Workshop Objective:
•
–
•
BEST PRACTICE TOOLS FOR CONTRACTOR
MANAGEMENT
What to change? & To what to change to?
–
–
Technical Questions
The 5th Discipline (Peter Senge):
1.
2.
3.
4.
5.
•
Personal Mastery,
Mental Models,
Build Shared Vision,
Team learning, &
Systems Thinking
Focus: “HOW TO CAUSE THE CHANGE?”
–
Falls within fields of Psychology & Psychiatry
COMPROMISE
Safe Productivity
How to cause
the change ?
Emotional resistance
Perceived threat on
security / satisfaction
Every
improvement is
a change
Every change is
not an
improvement
Perception drives
emotion
Most Management /
Labour prefer
comfort zones
CULTIVATE
Safe Productivity
Emotional resistance
Perceived threat on
security / satisfaction
Every
improvement is
a change
Every change is
not an
improvement
How to cause
the change ?
Emotion of the inventor is
stronger than resistance
Perception drives
emotion
Most Management /
Labour prefer
comfort zones
Induce
Improvement
BEE Partnerships Core Conflict
Business
Fundamentals
Pressure to
promote & protect
Convention
Socio- Political
Imperative
Pressure to
promote & protect
BEE
SUSTAINABLE
DEVELOPMENT
BEE Partnerships Core Conflict
Conventional
‘modes of
operations’
works
Business
Fundamentals
Pressure to
promote & protect
Convention
Socio- Political
Imperative
Pressure to
promote & protect
BEE
SUSTAINABLE
DEVELOPMENT
BBSEE
Charter is
Law
Background
•
•
Objective: Common frame of reference
Management in Antiquity
–
•
Evolution of Management Theory
–
•
(Source: Russell, R. S., & Taylor III, B. W. –
Production & Operations Management)
Quest for a Postmodernist Theory
–
•
•
(Source: Griffin, R.W. – Management 3rd Edition)
(Source: Blignaut, J. N., Department of Economics
– Pretoria University)
Characteristics of the paradigms
Cosmological views of the paradigms
Management in Antiquity
•
Practice of management dates thousands of years
–
•
•
•
3000 B.C. – Summarians, Greeks, Babylonians
Management not considered a serious field
Economics - the first discipline devoted to commerce
Economists believed managerial practice to be efficient
–
•
•
Focus was on Economic Policies & Non-managerial aspects of
business
Business (Family) goals were survival not growth
Organisations were governmental
–
–
Unlimited powers over taxation
Little accountability for waste
Evolution of
Management Theory
•
1700s – Industrial Revolution: Widespread production of
consumer goods
1776 – Adam Smith ‘Wealth of nations’ – labour
division – Unprecedented advance in technology
1800s – Advent of Cost Accounting & other controls
1900s – Scientific Management – Taylor
1700s-1960s – USA dominance
1970s – International competitiveness led by Japan
•
•
•
•
•
–
•
Conversion from mass production – lean manufacturing
2000s – Y2K (No real return on IT investments)
Quest for a
Postmodernist Theory
Ancient
Imperialism
1
2
Feudalism
Socrates
Plato
Aristotle
3
Mercantilism
4
Black
Death
5
500sBC
•
PostModernism
Paradigm
Modernism
Paradigm
476s
1350s 1500s
Source: “Economic
Industrial
Revolution
1770s
Sustainable
Development
1970s
Thought: A passage through time & a Quest for a
postmodernist theory”
by: Prof. Blignaut (Pretoria University)
Characteristics of Paradigms
• Modernism
– Human being as a rational,
autonomous being
– Universe (nature) as object of
the needs of the human being
– Absolute, deterministic
influence of science &
technology
– General optimism with regard to
the prospects of development
and growth – i.e.: Improvement
– Truth as objective and neutral
• Post-modernism
– Human being as a relational
being
– Universe as dynamic
organism
– Science: chaos & qualitative
– Development and progress –
scarcity & limitations
– Truth, objectivity & neutrality
subject to the role of belief &
value systems
“Not merely an adaptation of old Paradigms”
Cosmological View
• Modernism
–
–
–
–
• Post-modernism
Stable
Closed
Determined
Predictable /
measurable /
controllable
Problem: How is it done?
– Unstable / chaos
– Open (holistic)
Systems thinking
– Relative / randomness /
indeterminacy
– Complex
Holistic / Systems Thinking /
Scientific Approach
•
•
Metaphysics, Ethics, Logic & Epistemology
Three distinct stages of Science:
1. Classification
2. Correlation
3. Cause & Effect
•
Only when stage 3 is reached is the subject
a science
Cause & Effect
• Effect-cause-effect
– Research starts with one effect
1
Effect
2
3
Predicted
Effect
(different
in nature)
Hypothesize
a Plausible
Cause
• Once Predicted Effect is found
does the research gain the name of THEORY
Why did the
apple fall down?
3
1
3
Earth revolving
around the Sun
Falling
Apple
Electron revolving
around a neutron
2
Gravity
LAW governing
Management
4
1
3
Logistics /
Distribution
Management
Production
Management
Project /
Engineering
Management
2
LAW
• Operations Management = 1+4+3
Business Complexity
• Holistic
1
4
Finance
Management
Operations
Management
3
People
Management
2
LAW
5
Strategic & Tactical
Management
7
Market
Management
6
Sales
Management
BEE Partnerships Core Conflict
Conventional
‘modes of
operations’
works
Business
Fundamentals
Pressure to
promote & protect
Convention
Socio- Political
Imperative
Pressure to
promote & protect
BEE
SUSTAINABLE
DEVELOPMENT
BBSEE
Charter is
Law
Contractor issues
•
Contractor professionalism is somewhat wanting
–
Site management take chances – behaviour management
–
Resource management cost not discounted when estimating
•
Entrepreneurship mentality (“one wo/man show”)
–
•
Disability of developing human resource capacity
Contractor disability to grow NAV (Net Asset Value)
–
•
Plant/Machine acquisition vs Premium for Plant Hire
Partnership mastery procedure is wanting
–
•
Disputes resolution – “Customer is King” (Judge & Jury)
Contract feasibility – Banks want more
–
Cost of Capital – interest rates higher than Clients
–
Contract profit / period
Belief / understanding of
Complex Sytems
I
LHS
RHS
G
D
A
H
E
B
C
A
E
I
H
(i) What to change ?
Contractors compromise
Safe Productivity
Contractors feel pressure
to take chances
i.e.: skip steps / short cuts
Contractors work with
unreliable resources for the
remaining contract life
Contracts
are at the
End-of-Life
Resources
are at the
End-of-Life
Contractors are forced to
make plans to finish
works without “King”
assistance
Contractors are under pressure
to finish works, already delayed
due to unreliable resources
Financial Institutions
insist on long-term
contracts & credibility
Contractors cultivate
Safe Productivity
Contractors applies
management tools
effectively & efficiently
Contractors work with
reliable resources for the
contract life
Timely issue of 5year contracts
with credibility
statement
Resources
are at Start
of life cycle
(i) To what
to change to ?
Contractor employees make
use of “King” assistance of
maintenance & expertise
Contractor employees have all
necessary resources reliably to
conduct works
Financial Institutions
insist on long-term
contracts & credibility
(ii) What to change ?
Contractors compromise
Safe Productivity
Often Contractor employees
perform works that don’t fall
within scope of contract
Contractors are not
setup to adequately
manage risks/hazards
of out-of-scope works
Contractors simply
cannot risk relations
with “King”
Often “King”/ employees
make requests that don’t
fall within contract scope
Contractors are
desperate for work
Contractors are at the mercy
of the proverbial “King”
for Future Contracts
(ii) To what
to change to ?
Contractors cultivate
Safe Productivity
Often Contractor employees
perform works that don’t fall
within scope of contract
Contractors simply
cannot risk relations
with “King”
Contractors have
5-year Contracts
Contractors & Client manage
risks/hazards of out-of-scope works
Contracts allow for
out-of-scope work
Often “King”/ employees
make requests that don’t
fall within contract scope
Contractors are subject to a fair
monthly performance review system
(with invoices) for Future Contracts
How to
cause change?
I
G
D
A
H
E
B
C
A
E
I
H
Contractors cultivate
Safe Productivity
Emotional resistance
Perceived threat on
security / satisfaction
Every
improvement is
a change
Every change is
not an
improvement
How to cause
the change ?
Emotion of the inventor is
stronger than resistance
Perception drives
emotion
Management / Labour
prefer their comfort zone
Induce
invention
• Socratic Method
Induce Improvement
– Equip management with simple, practicle tools for
clear verbalization of intuition
– Tools must allow for Management to test own
beliefs in a critical manner & unleash true intuition
– Management must facilitate a discovery process:
• Employees are allowed to derive solutions to their
problems vis-a-vis Management providing solutions
– Help employees recognize the limits of their
knowledge & motivates them to learn
Conclusion
• Postmodernist Paradigm
– Primate: Sustainable developent
– Quest to invent a methodology that guarentees success
• ‘What to change’ and ‘To what to change to’ are
technical questions – often intuitively known
• ‘How to cause the change’ – a psychological question
– Manage human behaviour in line with company goals
• There is an integrated LAW that governs business
management:
– Law addresses the physical systems
– Law addresses human systems
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