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.

Contractor Management Contractor Management in this in this

Post-modern Era 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 GroupChief Executive: Ukhozi Group

Introduction• Mining Industry Concern: Mining Industry Concern: “Contractor Management “Contractor Management

and their safe operation, in our industry”and their safe operation, in our industry”• Workshop Objective:

– BEST PRACTICE TOOLS FOR CONTRACTOR BEST PRACTICE TOOLS FOR CONTRACTOR MANAGEMENTMANAGEMENT

• What to change? & To what to change to?– Technical Questions– The 5The 5thth Discipline (Peter Senge): Discipline (Peter Senge):

1.1. Personal Mastery,Personal Mastery,2.2. Mental Models,Mental Models,3.3. Build Shared Vision, Build Shared Vision, 4.4. Team learning, & Team learning, & 5.5. Systems ThinkingSystems Thinking

• Focus: “HOW TO CAUSE THE CHANGE?”“HOW TO CAUSE THE CHANGE?” – Falls within fields of Psychology & Psychiatry

How to cause the change ?

Every improvement is

a change

Perceived threat on security / satisfaction

COMPROMISE Safe Productivity

Every change is not an

improvement

Most Management / Labour prefer comfort zones

Perception drives emotion

Emotional resistance

How to cause the change ?

Every improvement is

a change

Perceived threat on security / satisfaction

CULTIVATE Safe Productivity

Every change is not an

improvement

Most Management / Labour prefer comfort zones

Emotion of the inventor is stronger than resistance

Perception drives emotion

Emotional resistance

Induce Induce ImprovementImprovement

BEE Partnerships -Core Conflict

Pressure to Pressure to promote & protect promote & protect

ConventionConvention

BusinessBusinessFundamentalsFundamentals

SUSTAINABLESUSTAINABLEDEVELOPMENTDEVELOPMENT

Pressure to Pressure to promote & protect promote & protect

BEEBEE

Socio- PoliticalSocio- PoliticalImperativeImperative

BEE Partnerships -Core Conflict

Pressure to Pressure to promote & protect promote & protect

ConventionConvention

BusinessBusinessFundamentalsFundamentals

SUSTAINABLESUSTAINABLEDEVELOPMENTDEVELOPMENT

Pressure to Pressure to promote & protect promote & protect

BEEBEE

Socio- PoliticalSocio- PoliticalImperativeImperative

Conventional ‘modes of

operations’ works

BBSEE Charter is

Law

Background• Objective: Common frame of reference• Management in Antiquity

– (Source: Griffin, R.W. – Management 3rd Edition)• Evolution of Management Theory

– (Source: Russell, R. S., & Taylor III, B. W. – Production & Operations Management)

• Quest for a Postmodernist Theory– (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 Quest for a Postmodernist TheoryPostmodernist Theory

• Source: Source: “Economic Thought: A passage through time & a Quest for a “Economic Thought: A passage through time & a Quest for a postmodernist theory”postmodernist theory” by: Prof. Blignaut (Pretoria University)by: Prof. Blignaut (Pretoria University)

19701970ss476476ss 13501350ss 15001500ss500500ssBCBC

Ancient Ancient ImperialismImperialism

MercantilismMercantilism

FeudalismFeudalism

IndustrialIndustrialRevolutionRevolution

SustainableSustainableDevelopment Development

33

22

11

44

55

17701770ss

ModernismParadigm

Post-ModernismParadigm

Black Death

SocratesPlatoAristotle

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 Not merely an adaptation of old Paradigms”Paradigms”

Cosmological View

• Modernism– Stable

– Closed

– Determined

– Predictable / measurable / controllable

• Post-modernism– Unstable / chaos

– Open (holistic) Systems thinking

– Relative / randomness / indeterminacy

– Complex

Problem: How is it done? Problem: How is it done?

Holistic / Systems Thinking / Scientific Approach

• Metaphysics, Ethics, Logic & Epistemology

• Three distinct stages of Science:1.1. ClassificationClassification

2.2. CorrelationCorrelation

3.3. Cause & EffectCause & Effect

• Only when stage 3 is reached is the subject a science

Cause & Effect Cause & Effect • Effect-cause-effect

– Research starts with one effect

• Once Predicted Effect is found does the research gain the name of THEORY

11

Effect Effect

22

Hypothesize Hypothesize a Plausiblea Plausible

CauseCause

33

Predicted Predicted Effect Effect

(different (different in nature)in nature)

Why did the Why did the apple fall down? apple fall down?

11

Falling Falling Apple Apple

22

GravityGravity

33

Electron revolving Electron revolving around a neutron around a neutron

33

Earth revolving Earth revolving around the Sun around the Sun

LAW governing LAW governing Management Management

• Operations Management = 1+4+3

11

ProductionProductionManagement Management

22

LAWLAW

33

Project / Project / Engineering Engineering ManagementManagement

44

Logistics / Logistics / DistributionDistributionManagementManagement

Business Complexity Business Complexity

• Holistic11

OperationsOperationsManagement Management

22

LAWLAW

33

People People ManagementManagement

44

Finance Finance ManagementManagement

77

MarketMarketManagementManagement

55

Strategic & Tactical Strategic & Tactical ManagementManagement 66

Sales Sales ManagementManagement

BEE Partnerships -Core Conflict

Pressure to Pressure to promote & protect promote & protect

ConventionConvention

BusinessBusinessFundamentalsFundamentals

SUSTAINABLESUSTAINABLEDEVELOPMENTDEVELOPMENT

Pressure to Pressure to promote & protect promote & protect

BEEBEE

Socio- PoliticalSocio- PoliticalImperativeImperative

Conventional ‘modes of

operations’ works

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 profitprofit / periodperiod

Belief / understanding of Complex Sytems

A

D

I

B C

H

E

G

HI

EA

LHSLHS RHSRHS

(i) What to change ?

Contracts are at the

End-of-Life

Contractors work with unreliable resources for the

remaining contract life

Contractors compromise Safe Productivity

Resources are at the

End-of-Life

Financial Institutions insist on long-term

contracts & credibility

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

Contractors feel pressure to take chances

i.e.: skip steps / short cuts

(i) To what to change to ?

Timely issue of 5-year contracts with credibility

statement

Contractors work with reliable resources for the

contract life

Contractors cultivate Safe Productivity

Resources are at Start of life cycle

Financial Institutions insist on long-term

contracts & credibility

Contractor employees make use of “King” assistance of maintenance & expertise

Contractor employees have all necessary resources reliably to

conduct works

Contractors applies management tools

effectively & efficiently

(ii) What to change ?

Often Contractor employees perform works that don’t fall

within scope of contract

Contractors are desperate for work

Contractors simply cannot risk relations

with “King”

Contractors compromise Safe Productivity

Contractors are at the mercy of the proverbial “King”

for Future Contracts

Often “King”/ employees make requests that don’t fall within contract scope

Contractors are not setup to adequately

manage risks/hazards of out-of-scope works

(ii) To what to change to ?

Often Contractor employees perform works that don’t fall

within scope of contract

Contractors have 5-year Contracts

Contractors simply cannot risk relations

with “King”

Contractors cultivate Safe Productivity

Contractors are subject to a fair monthly performance review system (with invoices) for Future Contracts

Often “King”/ employees make requests that don’t fall within contract scope

Contractors & Client manage risks/hazards of out-of-scope works

Contracts allow for out-of-scope work

How to cause change?

A

D

I

B C

H

E

GHI

EA

How to cause the change ?

Every improvement is

a change

Perceived threat on security / satisfaction

Contractors cultivate Safe Productivity

Every change is not an

improvement

Management / Labour prefer their comfort zone

Emotion of the inventor is stronger than resistance

Perception drives emotion

Emotional resistance

Induce Induce inventioninvention

Induce Improvement • Socratic Method

– 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 integratedintegrated LAW that governs business management:– Law addresses the physical systems– Law addresses human systemshuman systems

Technology Top 100 Company (2001)Technology Top 100 Company (2001)

‘Environmental & Social ResponsibilityEnvironmental & Social Responsibility’’