I’m sure most readers have heard how Volkswagen modified the software on their vehicles over several years to give false emissions readings. Without these software modifications many of their vehicles wouldn’t have met the vehicle emissions standards in some countries. This has caused a huge scandal which has led to at least one country banning the sale of VW’s and it may lead to class action law suits and fines. Sales have been impacted and VW’s credibility has been severely dented. Presently Volkswagen has set aside billions of dollars to deal with the fall-out, but some think it could cost billions more. Is there a lesson other businesses can learn, and in particular what can construction companies learn from this mess?
Contractors are always trying to save costs. Unfortunately some of these cost savings are at the cost of the client or owner and may deliver a substandard project. These savings may include using alternative or substandard materials, reducing thicknesses of concrete slabs and in extreme cases even leaving out items. These acts often weaken the building, which in the worst cases have resulted in building collapses and the deaths of hundreds of occupants and workers. Sometimes these products can be a fire hazard (as reported in Australia with some imported building external claddings), or a health hazard leaking toxic vapours or hazardous fibres and dust. As a minimum some of these products or shortcuts may cause the facility to start deteriorating sooner resulting in the contractor in many cases having to return to carry out maintenance and the owner suffering disruption and additional costs.
In addition contractors have been known to hide quality problems from the client, or to undertake clandestine unapproved repairs to defects before the client’s representative detected the error.
I learnt early on in my career that it doesn’t pay to hide mistakes or try a quick fix. Inevitably the problem was uncovered later and not only cost more money to repair but invariably was embarrassing and impacted my credibility and the credibility of our company. Furthermore, water is the best lie detector ever, and poor workmanship will become apparent when water is involved. Just think how often contractors return to projects to repair leaking roofs, damp problems, blocked pipes, leaking pipes, etc.
VW also decided to cover up a problem by fudging software in their cars. They thought that no one would find out. This was really optimistic considering there were millions of cars involved. Time and numbers were always going to be against them. Now the whole world knows what they have done. What will it cost to fix the problem? How many sales will they lose because of this deception? How long will it take for the general public to trust VW again? The short cut VW took, and the savings gained, will be far outweighed by the costs to fix the problems now and rebuild their reputation and brand.
But VW’s culpability went further than this! After the problem was first reported, more than a year ago, they tried to cover it up. If they had taken steps immediately to fix the problem it probably wouldn’t have festered for over a year with rumours, more investigations and more agencies becoming involved. The problem could have been fixed in their production lines sooner so that a year’s worth of vehicles could have been built to the correct standard. They could now have faced the public saying there was a problem but it had been fixed. The public could now confidently purchase a new VW knowing that it was problem free. They could at least have saved some credibility from this disaster. Instead they boldly carried on with business as usual and appeared not to have a back-up plan, except to continue denying the problem existed.
So to in construction, some contractors will go to extreme lengths to deny a problem or cover the problem up. This denial often wastes considerable time, it means that the problem goes unfixed for longer which often means that it becomes more costly to fix. I’m sure we have all had to fix problems after a building was completed. This repair often had to be done after hours incurring extra expense and resources had to be mobilised at extra costs. Also, invariably other completed work was damaged in the repair process which resulted in further expense.
When the problem was first detected what did VW’s management do? They certainly didn’t appear to take control. As they say where there is smoke there is fire, yet their managers appeared to ignore the warning signs and only reacted when there was a raging inferno. So it is often the case in construction, where some managers appear to ignore the warning signs, only acting when projects become almost unsalvageable, due to; poor productivity, quality problems, an unhappy client, schedule slippage or financial losses. In fact I’ve known some managers who avoided visiting problem projects or who ordered their Project Managers to fudge the project costings so they told a better story.
I think we can take the following lessons from the VW saga:
What do you think we can learn from VW’s problems?
This article is adapted from the author's books.
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