Building Back Better: The Logic and Value of Industry Sectors

When I became the Director of CII five years ago, the first official action I took was to form a CII Task Force comprised of 15 influential leaders. Their purpose was to conduct a study that many corporations call Activity Value Analysis (AVA). We wanted to find out which CII activities added value to our members and which did not. At the time, there had been 472 different companies who had belonged to CII since its founding 32 years earlier. And yet, only 130 remained. Despite all the landmark work that CII had accomplished to that point, what root cause persisted - above all others - that could explain this amount of turnover? And, what could be done about it?

In AVA, the value of each activity is determined based on customers' requirements. Through interviews, we learned that our members had to be able to clearly identify and quantify improvements to their capital projects. While they respected Institute research, if they could not tangibly understand how their projects could use this information to do better, the value of CII to their company was often in doubt. Looking closer, our Task Force discovered that success was dependent on two things:

  1. The innovations created through research had to be paired with dedicated resources (i.e., people and technologies) for effective implementation; and

  2. These deployments needed to be tailored to the contexts and environments (i.e., financial, regulatory, etc.) of the different industry sectors.

So, what about the 72 percent of the members that left CII and hadn't returned? We discovered that the vast majority - over 80 percent of them - were from sectors other than oil, gas, chemicals and power generation. While the innovation and research was generalizable to capital projects of any kind, the verbiage and application was not. Additionally, the needs and interests in the different industry sectors vary over time; while one sector cares about productivity and Advanced Work Packaging (AWP), another is concurrently much more concerned with lifecycle cost estimation and benchmarking. Our Task Force learned that in order to create value, CII needed to do both: create landmark innovation AND sector-specific deployment pathways.

Today, CII has five industry sector committees. For the past four years, these groups have looked after the sometimes-disparate engineering and construction interests of 1) Facilities and Healthcare; 2) Power, Utilities and Infrastructure; 3) Manufacturing and Life Sciences; 4) Upstream, Midstream and Mining; and 5) the Downstream and Chemicals sectors. Each has advanced value creation in their line of business, often by leveraging prior research or innovation such as Front End Planning (FEP) and related tools such as the Project Definition Rating Index (PDRI). The focus on sectors has paid off for our members as added value and for CII in terms of our ability to sustain and grow our cohort of leading companies.

Without a doubt, a focus on sectors is something that CII is eager to bring to the Joint Venture. As with our Task Force five years ago, the logic of beginning with the end in mind continues to be a winning proposition. A starting point for the Joint Venture will be to routinely conduct market research to understand the business conditions present in each sector of our industry. Knowing what these companies need will help us to understand the gaps, need for R&D, and align our deployment resources. It is a strategy that has already shown promise in the CII Sector Program - but building the Joint Venture specifically as a response to identified needs in these sectors will be a game changer.

This issue of The VOICE  features an article on the future of infrastructure that highlights how the planning, design, construction, and operation of these facilities could be vastly different moving forward. Infrastructure spending is a timely topic. Along with a new administration in the United States, governments around the world may look to new and rehabilitated infrastructure projects as a way to stimulate their economies coming out of the pandemic. Even at CII, our Power, Utilities and Infrastructure sector committee has been closely studying how current supply chain practices in regulated environments may be destroying the value creation and capital efficiency in these facilities. Consequently, it is our intent to feature stories in future issues of The VOICE about how different sectors are addressing specific challenges and opportunities in their capital projects and programs.

As we conclude an unexpected and challenging 2020, I remain undeterred in my optimism about the future of our industry. I'm bullish about the potential for CII to provide even more value for you, your company, and your industry sector in the years ahead. I am grateful for the support that you continue to show for our shared mission to improve the engineering and construction industry that we love. Last but not least, I wish you tremendous personal and organizational success in 2021 and beyond!

Date posted: February 10, 2021