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Keynote Speaker “Crisis in Construction” A User’s Perspective. Jim Porter Vice President and Chief Engineer DuPont. Our DuPont Vision is…. To be the world’s most dynamic science company, creating sustainable solutions essential to a better, safer, healthier life for people everywhere.

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keynote speaker crisis in construction a user s perspective

Keynote Speaker“Crisis in Construction” A User’s Perspective

Jim Porter

Vice President and Chief Engineer

DuPont

our dupont vision is
Our DuPont Vision is…

To be the world’s most dynamic science company, creating sustainable solutions essential to a better, safer, healthier life for people everywhere.

slide3

Transforming For Our Third Century

January 2007

Maturity

Growth

Growth

Maturity

Put Science to Work

Go Where the Growth is

Power of One DuPont

Birth

Growth

Birth

Chemistry,

Energy

Birth

Explosives

Six Sigma

1802 1830 1850 1900 1925 1945 1990 2000 2050 2090

our dupont core values are
Our DuPont Core Values are…
  • Safety and Health
  • Environmental Stewardship
  • Highest Ethical Standards
  • Respect for People

Our Goal is ZERO

my beliefs
My Beliefs…

Construction Industry is critical to future business success.

Construction Industry musthelp users understand how to capture value.

Users must operate in ways that ensure Construction Industry sustainability.

Value

slide6

So, what is our crisis?

  • Unprecedented demand
  • Shrinking owner capabilities
  • Limited contractor resources
  • Sold-out fabricators
  • Spot material shortages
  • Has led to……
  • Higher costs
  • Longer schedules
  • Lower quality
  • Lower ROIC
slide7

ROIC and P/E Multiples

Return on Invested Capital

8% 10% 15% 20%

5% 8.5 10.0 12.0 12.9

10% 5.7 10.0 15.8 18.6

15% 0.1 10.0 23.4 29.9

20% NM 10.0 38.2 52.2

Assume all equity financed; 10% WACC; 20-year forecast.

Earnings Growth

slide8

Look at our Safety accomplishments.

We can do the same for workforce development. But, we all must do our part!

CII data used with permission

what can we do about it w ork together to
What can we do about it?????Work together to………
  • Eliminate Waste
  • Increase Work Process Effectiveness
  • Accelerate FIAPP
  • Improve Human Resource Management
slide10

Value From Alliances

  • If you have:
    • Good Project Processes
    • Value Improving Practices (VE/PS)
    • Integrated Teams
  • Then:
    • Alliances provide access to the best people at a competitive cost (not necessarily the lowest cost).
    • Alliances reduce cycle times.
    • Alliances allow reasonable flexibility at lowest cost.
    • Alliances allow life cycle data for full facilities/programs rather than project by project.
    • Alliances reduce administrative costs.
    • Alliances promote mutual competitiveness.
the hidden costs of poor quality

Rework

Traditional Quality Costs

Rejects

Inspection

(Easily Identified)

Scrap

Warranty

Hidden Quality Costs

Customer Satisfaction

(Difficult to measure)

Lost

Overtime

Lost Sales

Opportunity

Long Cycle Times

Late Delivery

Excess Inventory

Expediting Costs

Productivity Loss

Lengthy Installs

Engineering Change Orders

Lost Customer Loyalty

Employee Morale, Productivity, Turnover

Late Product Introduction

:

Six Sigma attacks the entire “Iceberg” resulting in:

Six Sigma attacks the entire “Iceberg” resulting in:

Higher quality, lower cost, timeliness

Higher quality, lower cost, timeliness

-

-

Increasing

Increasing

value creation

value creation

Higher quality, lower cost, timeliness

-

Increasing

value creation

The Hidden Costs Of Poor Quality
slide12

Capital Productivity Best Practices

  • Front-end load vs. business goals
  • Install competitively superior technology
  • Minimize non-value adding investment
  • Execute projects with no changes

The four CORPORATE BEST PRACTICES FOR CAPITAL PRODUCTIVITYprovide a value-based approach to capital management for DuPont. They align the day-to-day behavior and mindset of employees who plan and execute capital projects with the overall value objectives to the entire organization. They provide the foundation for making value-based decisions in alignment with the greater objectives of the business.

slide14

Globally Converging Mega Trends

  • Fewer resources + unprecedented demand
  • Economic impacts: - energy
  • - disasters
  • - terrorism
  • Flat productivity
  • Vocational training decline
a perfect storm has formed
A Perfect Storm Has Formed
  • Construction Labor Research Council reports Industry needs 95,000 new craft persons per year for the next ten years to replace those leaving.
  • Pre-Katrina growth estimates were 90,000 and today’s estimates range as high as 180,000 each year for the next ten years.
  • This unprecedented demand could cause inadequately skilled people to enter the work force increasing injury rates, installation costs, schedules and overtime while quality suffers.
we all recognize i hope
We all recognize ( I hope) ….
  • There are no quick fixes
  • Contractors can’t solve issues alone
  • Owner investment is required
  • Resolution will benefit everyone
  • The time for action is NOW!!
slide19

We’ve made a good start…..

  • Injury & incident reduction
  • NCCER
  • CII; CURT; FIATECH
  • “Helmets to Hardhats”
  • CTI – CURT Tripartite Initiative
  • BRT “I’M GREAT” Initiative
  • SEMTA
  • This meeting!
needed actions a partial list
Needed actions ( A partial list) …

Users

  • Develop equitable contracting approaches
  • Establish contractor selection criteria which consider training, recruitment, and retention
  • Support contractor training programs
  • Require craft certification
  • Support contractors, associations, and labor organizations in enhancing industry image
needed actions a partial list1
Needed actions ( A partial list) …

Contractors, Associations, Labor

  • Provide career paths and development programs to improve retention
  • Continue to lead and invest in training curriculum development
  • Support standardized and national certifications in the open shop sector
  • Develop industry programs which enhance image
  • Manage the “catch up” factor
slide22

What are DuPont’s commitments?

  • Supporting industry improvement efforts:
      • BRT - CEO and Engineering involvement
      • CII; CURT; FIATECH - Sustained leadership
      • LUC’s - Leadership in existing and new
      • Active in industry organizations, e.g. NPRA
      • NCCER or equivalent training on alliance contracts
  • Sustaining our charge
  • Staying at the table
slide23

We’ve done it before…

We must do it again!!!!!

CII data used with permission

competitive trust relationships
Competitive/Trust Relationships

Cost

Value

Trust

Intimacy X Competency

Trust = f

Risk

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