TCI 2015 The Construction Cluster Initiative in Bucaramanga, Colombia
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The Construction Cluster Initiative in Bucaramanga, Colombia helped construction companies identify a more profitable value chain focused on total lifecycle value. Through interviews and analysis, the initiative found that advanced buyers were increasingly looking for solutions that minimized total costs, adapted to their needs, and reduced environmental impacts over the building's lifecycle. This represented a shift from traditional construction models focused on price to new knowledge-intensive models providing long-term planning, integrated technology solutions, and ongoing building management services. The initiative developed a strategic vision and defined projects to develop skills in solution development, increase demand sophistication, and support change management to implement the new strategy.
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TCI 2015 The Construction Cluster Initiative in Bucaramanga, Colombia
- 1. The Construction Cluster Initiative in Bucaramanga, Colombia The Importance of Knowledge Based Value Chains and Cluster Management Andrés Guimón, Competitiveness Parallel Session 2.5: Developing Skills for Professional Cluster Management
- 2. Objective Explain how the construction cluster initiative helped companies identify a more profitable value chain and move towards it The Construction Initiative in Bucaramanga
- 3. Interviews with companies and institutions Industry and cluster analysis Segment analysis Advanced Buyer interviews Benchmarking trips Strategy meetings Work groups with cluster agents Expert interviews Action Setup Competitiveness Reinforcement Initiative (CRI) Work Plan Strategic Vision for the Future Launching of Actions Identifying Common Challenges 7 month process 1st meeting 2nd meeting 3rd meeting
- 4. The Construction Initiative in Bucaramanga Cluster Data Services Materials Distributors Financial Serv. Associations Academia & Research Government Construction • City cluster • 10% of GDP • 634 companies • Mostly construction and services • Home & office buildings • Traditional construction model • Competition based on price • Low investment in R&D • Lack of national and Intl. expansion Main Company Challenges Profile
- 5. CRI Contribution to Cluster Competitiveness Understand industry changes and how to adapt 1 1 - Cluster Mapping 3 - Segment Attractiveness' Evolution (5 F) 8 - Benchmarking our cluster against reference/ideal cluster 7 - Ideal Value Chain and cluster Diamond for chosen option 6 - KSFs for the most innovative option 5 - Generic Strategic Options for the future 9 - Feasible strategic options for cluster companies 10 - Areas to improve at company and cluster level 2 - Strategic Segmentation 4 - Advanced BPC analysis t t+5yt-5y t t+5yt-5y A B A B (-) (-) (-) (-) 1 - Cluster Mapping 3 - Segment Attractiveness' Evolution (5 F) 8 - Benchmarking our cluster against reference/ideal cluster 7 - Ideal Value Chain and cluster Diamond for chosen option 6 - KSFs for the most innovative option 5 - Generic Strategic Options for the future 9 - Feasible strategic options for cluster companies 10 - Areas to improve at company and cluster level 2 - Strategic Segmentation 4 - Advanced BPC analysis t t+5yt-5y t t+5yt-5y t t+5yt-5y t t+5yt-5y A B A B A B A B (-) (-) (-) (-) (-) (-) (-) (-)
- 6. CRI Contribution to Cluster Competitiveness Understand industry changes and how to adapt Advanced buyer purchase criteria 1
- 7. Planning Construction Usage Demolition Building lifecycle Advanced buyers increasingly looking for lifecycle value Advanced Buyer Purchase Criteria
- 8. Planning Construction Usage Demolition Building lifecycle Demand for TOTAL VALUE Advanced Buyer Purchase Criteria Advanced buyers increasingly looking for lifecycle value
- 9. 1. TOTAL COST minimisation 2. ADAPTABILITY to client needs 3. Low ENVIRONMENTAL IMPACT Advanced Buyer Purchase Criteria Planning Con stru ctio n U sa g e De mol itio n Building lifecycle Demand for TOTAL VALUE Advanced clients were redefining value in construction They were becoming lifecycle buyers
- 10. CRI Contribution to Cluster Competitiveness Understand industry changes and how to adapt Advanced buyer purchase criteria Understand Value Chain Activities to Respond 1
- 11. Planning Providers Construction Usage Market • Long term planning capacity • Interaction with multi-disciplinary teams (architect, engineer, ops. managers, final user) • Use of integrated technology (BIM system) Understand shift in value chain activities and new roles for actors Lifecycle Strategy
- 12. Planning Providers Construction Usage Market • From products to SOLUTIONS AC Unit Air Quality (measurable) • Understanding needs • New business partners • Pilot testing to measure results Understand shift in value chain activities and new roles for actors Lifecycle Strategy
- 13. Planning Providers Construction Usage Market • Benefits: – Improves lead time – More security and quality Towards Industrialisation: Understand shift in value chain activities and new roles for actors Lifecycle Strategy
- 14. Planning Providers Construction Usage Market • Professional management of buildings • Strong service culture • Opportunities for provider integration Planning Construction Usage Demolition Building Lifecycle 1% 14% 80% 5% Understand shift in value chain activities and new roles for actors Lifecycle Strategy
- 15. Planning Providers Construction Usage Market Pushes up barriers to entry High switch costs Attractive Business Allows for internationalisation of knowledge through partnerships and licensing Knowledge Intensive and Highly Integrated Value Chain Understand shift in value chain activities and new roles for actors Lifecycle Strategy
- 16. Strategic Vision for Cluster Local Total Value Construction - Multi-Local + Differentiation Price Based Construction 1 Knowledge Exports2
- 17. Understand industry changes and how to adapt Advanced buyer purchase criteria Understand Value Chain Activities CRI Contribution to Cluster Competitiveness From Vision to Action Areas of Improvement Define projects 1 2 Actions are defined and implemented only after thorough strategic analysis Implement projects
- 18. Areas of Improvement Strategic Projects Demand Sophistication 1. Expert Workshops with the Public Sector 2. Pilot Project: new tendering manual Solution Development 1. Workshops with intl. experts from academia 2. Total Value Syllabus Draft for Implementation in universities Education 1. Value Chain Innovation Workshops 2. Total Value Solution Award 3. Launching of Total Value Internet Blog
- 19. Change Management 1. Secure a neutral and capable implementation team 2. Secure funding for project implementation • Awarded in march 2015 • 250.000 USD
- 20. • 2014 & 2015 • 100.000 USD • Success cases /networking • Sustainable construction Change Management
- 21. Understand industry changes and how to adapt Advanced buyer purchase criteria Conclusion From Vision to Action Areas of Improvement Define projects Implement projects 2 Understand Value Chain Activities 1
Editor's Notes
- Thank you very much. It is a great pleassure to talk to all of you today. I have been working for 6 years now in a consulting firm (Competitiveness), executing cluster initiatives in Brasil, Colombia and Mexico. Today I would like to talk to you about one CI I leaded in the construction cluster in Bucaramanga a city in northeastern colombia….
- Especifically, I would like to explain how this CI helped companies identify a more profitable value chain and move towards it.
- As you can see, for us, a CI is a 7 month process were we work closely with companies and other cluster agents with two goals: Understand the different business segments within the industry and the rules of the game for each segment Generate action towards the most interesting segment for the cluster We do this through a methodology that combines analisis and change management
- So we applied this process two years ago in Bucaramanga with the chamber of commerce of Bucaramanga as our local partner. Here are some details from the cluster: It was a very important sector in the region: 10% of PIB of the city Large number of companies, including key national leaders in the industry (Marval, Urbanas, etc.) Most of these companies are construction companies and ingeneering services. Not that many are material providers Mostly dedicated to home and office buildings and less so infrastructure Tradicional construction model: Cluster was focused on construction and delivery activities. Price competition. Zero sum game Low innovation levels in the value chain Lack of access to national and internacional markets (losing opportunities to expand)
- Ok, this was certainly one of the important contributions of the cluster initiative. A lot of effort was put on strategic analisis and this was passed to the companies. We spent 2 or three months talking about strategy with companies before doing any project. Why? Because it is very important that these projects are defined within the right business segment, the one were companies can compete profitably and sustainably.
- So from all the work we did I would highlight the interviews with advanced construction buyers who are today using advanced criteria that everyone will use in 5 to 10 years. This was a critical process.
- And what we found is that they were changing radically the way they bought buildings. Traditionally buyers were interested in construction and delivery but increasingly they were following a lifecycle approach looking for value in the whole building lifecycle
- So this is what we call a total value strategy were they were demanding 3 things:
- So on the client side there was being a clear shift of purchase paradigm from traditional buyers to lifecycle buyers. MENSAJE: This was very useful to make companies understand that little by little clients were redefining value in construction.
- Once this client shift was understood, the next step was to understand and explain to companies how the ideal value chain is to compete in the lifecycle strategy in order to design improvement actions at a later stage. How did we research this?
- In the lifecycle strategy planning needed to be a lot more sophisticated. The better you plan and the more you invest in planning and design, the more you can minimize costs and env. Impact. So this phase is key. Multi-disciplinary teams are key. Working with building managers, final users, arch and engineers at the planning stage is critical to help understand the impact of planning actions for example in the usage stage. This also leads to the use of advanced technology like BIM, that helps integrate all these prespectives.
- We also saw a transition form products to solutions. Providers are selling the benefit not the thing. For example air quality not only the ac unit. This implies collaboration of product and service providers to set up a solution (important change in the value chain)
- The construction of the site is being done everyday more in factories and modules are taken to the sites to be built. This has tremendous benefits for the lifecycle strategy
- Finally management gets profesionalised to guarantee efficiency. This is key as usage represents 80% of total costs so you need to perform well here.
- In conclusion, to address new buyer criteria the cluster needs to transition from a traditional non coordinated VC were the essence is the contruction and building delivery towards a lifecycle value chain, were the essence is total value in the whole cycle IT IS A TRANSITION TOWARDS A KNOWLEDGE INTENSIVE VALUE CHAIN -- this is not easy -- but it is the way clients are changing and you build barriers to entry It is an attractive business. We also spent some time understanding what was the ideal business environment for this strategy to flourish.
- With all this information a consensus was reached for the need to transition from price based to value based lifecycle construction. First to increase this value in local projects and with more experience to be able to export knowledge internatonally
- Now to tackle this vision, companies needed to make improvements in certain areas. Those areas and improvement projects needed to be defined and agreed. I think therefore that the second contribution of the process we carried out was preciselly to help cluster agents define areas of improvement and strategic projects to ignite this change both at company and environment level.
- So we leaded workgroups to do this and these are the areas of improvement and strat projects that were defined. Area 1: Demand sophistication: pilots to make the government become an advanced buyer Area 2: Development of innovative Solution: Innovation workshops with key steakholders / Lifecycle construction award. Area 3: Human Resources: Workshops with academia to ignite changes in curricula towards lifecycle value. Explain SON CONCRETAS, TIENEN RESPONSABLES, NO SON CARAS, ESTAN DEFINIDAS POR ELLOS MISMOS!!! CLAVE PARA DETONAR So the CRI really contributed on both sides of the equation: Definition of a direction and a common vision for the future Action plan definition for fist steps towards it
- The chamber of commerce acts as the general coordinator of the plan. Look at the structure. Until now the chamber has done two things that have been key for implementation: - Secure a capable and neutral team to deal with the cluster, promote the actions and maintain the strategic orientation
- For example, they have done two important forums of total value and sustainable construction, one in 2014 and the other in 2015, bringing and extraordinary agenda with best practices and innovations from all around the globe and offering companies and excellent opportunity to learn and network.
- As you have seen therefore, the CRI had important contributions in the agenda to increase construction company competitiveness in Bucaramanga: 1.- First helping understand changes and ways to adapt. Setting a strategic direction for the future (total value strategy) 2.- Pushing companies and institutions from vision to action Detailed business plans Sense of ownership Not too expensive Guided 3.- The effects of the CRI were adequatelly complemented with a sound management from the chamber of commerce: Securing a capable team Securing funding Movilizing resources in the short term before funding came to make sure motivation was kept up to follow the strategy.