Project Management in FocusApril, 2007

The impenetrable Japanese construction industryNakawake (N): Ms. Murayama, as a security analyst, has been studying the construction and real estate industries as an outside observer. On the other hand, Professor Ando has been working from within, pointing out that the Japanese construction production pro-cess system is encountering systematic fatigue and proposing reform.First, Ms. Murayama—as an analyst, what do you think is unique about the Japanese construction world?Murayama (M): Today, overseas investors are quite active in the Japanese securities market and are playing an important role. But the construction industry is a sector that many foreign investors have found hard to understand. The difference between the companies in the industry and their growth forecasts are difcult to comprehend. This lack of clarity makes many investors shy away from construc-tion stocks. Although numerous Japanese construction companies are listed, the industry is not receiving much benet from the capital markets.N: Why is it so difcult to understand, Prof. Ando?Ando (A): In the past when economic growth was strong, the Japa-nese construction industry went through a period of rapid moderniza-tion. During that time, even though demand surpassed supply, the situation entailed that construction companies bear risks for projects, prompting them to want to be in charge of both design and construc-tion. This system contributed to the industry’s unique advancement. However, it resulted in the presentation of different estimates at dif-ferent stages, which may have been a source of uncertainty for over-seas clients. Now, in the 21st century, with supply clearly surpassing demand, risks are always on the side of construction companies, and clients have diversied. I think the problem is that the industry is still applying the same business model that was used during the pe-riod of high economic growth. But I must point out that human resources constitute a bright spot in the industry. There are many experienced site foremen and directors in Japan, so I believe there is no problem from that perspective. In contrast, I think that the strategies of the top management of Japa-nese construction companies are not always so clear. M: I agree with you that experienced workers are abundant. But, as you mentioned, times have changed completely. Accountability to clients has become obligatory and even if the quality of buildings is superb, it won’t amount to anything if the company goes bankrupt. I think that Japan’s construction industry is experiencing situational maladjustment.Involving clients, from planning to managementN: Prof. Ando, based on your expertise regarding core competencies in the industry, what can be done to bring out the best in Japanese construction and lead it to higher ground?A: Even if the industry possesses a variety of core competencies, the benets are often unclear to clients. However, in order to resolve this situation, clients should become more involved in key aspects of the project, thus developing understanding of various issues that may initially be unclear. They should realize that they are often reluctant to bear necessary costs that cover risks and help lead to prots.N: Shouldn’t it be one of the prime tasks of project management to try to simplify such matters?A: Yes, I agree. When the presences of clients become evident, project management receives serious attention. And I also think that the conception of the meaning of the term “management” needs to change. In the 20th century, there was a tendency to separate “plan-ning” and “execution” as two different phases, with “management” being more related to “execution.” But in competitive industries, the “plan” itself becomes a continuing activity and is included in the management process. I believe that this represents a central issue in understanding the changeover to the new reality of the 21st century.What is the signicance of management?N: Project managers are expected to reduce time and expenses, which often delights clients—while those in construction may re-gard managers as a necessary evil. I am rather concerned about the perception of management and the way in which it is regarded. Ms. Murayama, what are your thoughts on the role of management? M: The definition of “management” here may be slightly different compared to that in other parts of the world. Management decides how to steer the company to benet its employees and all others in-volved. Therefore, it is often distanced from work execution at the site.N: In Japan, management is often regarded as a process to be imple-mented to help control things and to follow a predetermined strategy. New Horizons in Creative ManagementMasao Ando [Professor, University of Chiba]Rie Murayama [Managing Director, Goldman Sachs Japan Co., Ltd.]Moderator: Takeshi Nakawake [Nikken Sekkei]Masao AndoProf. Ando graduated from the University of Tokyo in 1972 and received a doctorate in engineering in 2002. He has been teaching at the University of Chiba since 1976 and has held his current position of Professor of the Faculty of Engineering at the University of Chiba since 2003. He received the 2004 Architectural Insti-tute of Japan Award for his thesis "The Method and Theory of Structural Engineering Planning Using Interface Matrices." He has authored many publications on architecture, such as "Modular Coordination" (co-author, published by Maruzen,1976), "Housing Complexes of the 21st century—Creation of an Afuent Society for the Future" (co-author, published by Better Living, 1998), "Conversion Revives Cities and Communities" (co-author, published by Nikkan Kensetsutsushin Shimbun Corporation), and "The Combination of Slender Buildings which Increases the Value and Safety of Architecture and the City" (co-author, published by Japan Architectural Institute of Japan 2006).As Japan’s construction industry changes amid increasing securitization of real estate and other factors, is project management being understood and applied correctly? And why is project management important? We asked Rie Murayama and Masao Ando to explore these and related issues.06FACT NIKKEN SEKKEI    プロジェクトマネジメントの現場 日建設計