Perpetual Management

Perpetual Management for Construction: The BuilderChain Revolution

Perpetual Management is not just a philosophy—it’s a transformative approach that redefines how construction companies operate, ensuring that every aspect of a business is managed in real-time, with proactive rather than reactive decision-making. At the heart of this approach is BuilderChain, a powerful digital platform that integrates the principles of Perpetual Management with advanced technologies such as BuilderPay, Palantir’s ontology-based data analytics, and blockchain smart contracts. Together, these tools provide a seamless, integrated environment where every process, transaction, and decision is optimized for operational gain.

BuilderChain’s Perpetual Management framework empowers construction companies to standardize their processes, manage exceptions with precision, and continuously improve through real-time data insights. By leveraging the platform’s ontology-based structure, businesses can move beyond traditional management practices, achieving a level of efficiency, transparency, and control that was previously unattainable.

The purpose of the following sections is to familiarize you with Perpetual Management. We will explain Perpetual Management on three levels: Philosophical, Practical, and Actual Application.

The Philosophy of Perpetual Management

A Process-Oriented Approach

Perpetual Management is grounded in the belief that to truly optimize a business, one must focus on the processes that drive it, not just the outcomes. This process-oriented thinking is embodied in the BuilderChain platform, where every operation is meticulously mapped and continuously monitored through an ontology-based system.

Perpetual Management in a nutshell means managing all aspects of a company's daily business events as they are occurring. It entails standardizing your business processes and managing only the exceptions, analyzing those exceptions, and taking corrective action to prevent re-occurrence.

Perpetual Management is pro-active versus reactive. It examines operational guidelines and provides a method to systematize and professionalize all aspects of a business. Perpetual Management focuses on integration between systems and departments. It encourages establishing points of control and designing policies and procedures to deal with frequent and infrequent business functions.

Rather than simply reacting to events after they occur, Perpetual Management encourages businesses to anticipate challenges, understand the underlying causes, and make informed decisions that prevent issues from arising in the first place. This proactive approach is what sets Perpetual Management apart from traditional management philosophies.

An ontology in this context is more than just a database—it's a dynamic, interconnected framework that understands the relationships and dependencies between every element of your business. BuilderChain’s ontology manages this complexity by ensuring that all processes are aligned, transparent, and adaptable, providing a solid foundation for perpetual improvement.

The Cycles of Business

Perpetual Management Theory recognizes the 'circles', or cycles, in every business. Certain processes (implying actions) are repeated over and over again. These circles can be thought of as the gears of a machine.

For a business to function efficiently, all the gears must mesh smoothly. Perpetual Management also acknowledges the close relationships between all tasks, departments, and procedures. What affects one area of the business will undoubtedly affect the rest of the business.

In a business, there are cycles within cycles, and cycles that intersect at different points. Perpetual Management calls any intersection of processes a point of control. In the Payment Approval Cycle illustrated below, the point of control is clearly defined.

As you can imagine, your actual business has hundreds of points of control. A point of control usually indicates the need for interaction between different parties and requires action from at least one of the parties. In Perpetual Management, every point of control calls for some kind of management action.

Process Control Points

Perpetual Management asks you to identify the points of control -- the points where you have an opportunity to take control of the business. Perpetual Management then requires that you initiate a management action. While the Management by Objective (MBO) Theory succeeds in specifying desired outcomes, Perpetual Management focuses on the cyclical processes that lead to the outcome.

In Perpetual Management, the point of control is where the management action occurs, thus, setting into action other business events. Management action should compel business events to occur

Manage Perpetually

Perpetual Management (the perpetual part of it in particular) means that management action and business events should occur either simultaneously or within a fairly immediate time period. Management action after the fact packs no punch. Sometimes, "after the fact" is too late and you lose an important opportunity to set things right

Below are some examples of how business events and management action coincide. After identifying an event that is going to happen (whether you want it to or not), you can plan for it and take a specific management action -- perpetually.

After identifying an event that is going to happen (whether you want it to or not), you can plan for it and take a specific management action -- perpetually. Allowing a number of issues requiring management action to set for a lengthy period of time, with the intent of periodically addressing all of them at some future date, is not perpetual.

Either events occur and you take action OR you take action and drive events to occur. In either case, events and action occur on a one-to-one basis.

Perpetual Management encourages business cycles to be totally completed. Incomplete cycles are no longer cycles; they are loose ends. We need to close the loop.

Closing the loop brings a cycle to an end. It's the bow on the package. It let's you keep control of the business by knowing that things are finished and having the backup documents to prove it

Processes, Not Departments

Perpetual Management recognizes processes, not departments, as the foundation of a business. However, many business processes cross departmental boundaries. In cases where departmental barriers are rigid it is more difficult for a process to be completed effectively.

Processes are the primary driving force in your business; departments are secondary (a useful division for budgeting purposes). Departmental barriers must be minimized for processes to flow smoothly. Many leading-edge businesses are finding that lateral organizational structures without departmental barriers are more efficient and productive than the widely accepted old school organizational structures. Recognizing the importance of processes is a beginning step in this direction.

Perpetual Management by Exception

Perpetual Management in action translates into something called Perpetual Management by Exception.

When you are truly perpetually managing your business, all you will need to worry about are the EXCEPTIONS (or unplanned events).

Perpetual Management by Exception involves separating planned events from unplanned events and identifying the differences in management action taken for each. Planned events are routine and expected; unplanned events are the monkey wrenches in the machinery. They are the crises, the occurrences you need to stop everything for, and half the reason for overtime. Perpetual Management advocates establishing procedures to deal with unplanned events.

Unplanned events should have their own cycle. They should also be carefully documented to provide a self-correcting feedback loop. The feedback loop provides valuable information that identifies weak spots in your processes and your organization.

Planned and Unplanned Management Cycles

Management time can be spent analyzing the exceptions which identify themselves automatically. You can then take corrective action to prevent, or minimize, re-occurrence. (Again, even when dealing with unplanned events, we are still focusing on a closed loop process that will produce a desired outcome.)

Below is an example of a method to control costs by documenting an unplanned event.

Cycles for planned and unplanned events can be quite similar. However, there needs to be a built-in feedback mechanism in the unplanned event cycle. Below, the feedback mechanism is 'Analysis of VPOs'

The Practical Application of Perpetual Management

In the Real World

So, what does all this mean in the real world? Well, it means that you might want to take a look at some of the symptoms or byproducts of your current business processes. Does your business have any problems with:

• Bottlenecked paper flow (i.e. stuff stacked in people's IN baskets)

• Untimely, missed, or back-ordered deliveries from suppliers

• Lack of dependability or cooperation from subcontractors

• Inability to consistently deliver a house on schedule

• Conspicuous lack of referral sales

• Unclear or non-existent documented operating procedures

• Ambiguous or outdated job descriptions

• Changeable company mission and goals

• Constant frictiondepartments

• Departments unaware of other department's priorities

• Significant staff overhead dedicated to problem-solving (i.e. clean-up labor)

These are all symptoms of lack of control in a business. This may seem like a harsh bottom line, but it is the truth.

Evaluate these processes rigorously.

Does your company have procedures to accomplish these processes?

What philosophy are your policies and procedures based on?

Who designed them and what was the management theory they were based on?

How would you change them and what would be the points of control?

Does your company practice periodic procedures?

For example, invoices come into the office every day and once a week the Superintendent sits down and approves a stack of invoices for payment. This is a periodic procedure and the way it is done in almost every home builder in the country until we have a chance to work with them.

In Perpetual Management's view, object-oriented thinking generated a periodic procedure, i.e. the Superintendent sitting down once a week to approve the invoices. In Perpetual Management every purchase order is approved on the Job Site as the work is completed. There is no stack to sift through periodically.

Does your company practice periodic procedures?

Do you want more control of your business?

If so, then let's look at some of the benefits of control and what that will mean.

Decreased Construction Costs by

• Communicating via Purchase Orders and Contracts

• Managing by exception with the use of Variance Purchase Orders and Schedule Delays

• Maximizing material utilization and eliminating waste

• Inducing suppliers to meet the builder's expectations rather than vice versa

• Paying from Purchase Orders rather than invoices

• Reducing subcontractor bid costs by providing a predictable planned schedule and scope of work

Decreased Indirect Costs by

• Reducing the number of days it takes to build a unit through standardized schedules

• Enabling builders to build more buildings with the same amount of time and people

• Reducing the amount of labor used in reacting to problems

Reduced Overhead by

• Streamlining information flow

• Allowing a pro-active vs reactive operation

Greater Quality or Freedom by

• Establishing clear policies and procedures that allow staff to pick up the ball when others aren't around

• Helping people know their roles within the larger picture

• Creating a team atmosphere

• Letting the business run itself

• Getting the job done according to plan, rather than cleaning up problem

Implementing Perpetual Management with BuilderChain

Action versus Object

Verbs versus Nouns

Movement versus Fixed

Process versus Function

Perpetual versus Periodic

Integrated versus Departmental

In practice, Perpetual Management with BuilderChain involves a few key principles. First, it’s about staying on top of every task, knowing exactly where you are in the process at any given moment, and making immediate adjustments as needed. This requires a shift from periodic, reactive management to a perpetual, proactive approach.

Real-Time Process Integration: BuilderChain’s ontology integrates all aspects of your construction projects—every task, department, and transaction—into a single, cohesive system. This ensures that all processes are interconnected, allowing for seamless information flow and collaboration across your organization.

Exception Management with BuilderPay: As part of the BuilderChain platform, BuilderPay automates financial transactions based on real-time project data, ensuring that payments are only made when predefined conditions are met. This not only streamlines the payment process but also enhances exception management by automatically flagging any deviations from the plan, such as cost overruns or delays, and triggering the necessary corrective actions.

Palantir’s Analytics for Continuous Improvement: Palantir’s advanced analytics capabilities are fully integrated into BuilderChain, providing deep insights into your operations. By analyzing historical data and identifying trends, Palantir helps you understand the root causes of any exceptions and offers actionable recommendations for continuous improvement. This creates a feedback loop where every decision is informed by data, and every action is aligned with the overall project goals.

Applying Perpetual Management: Achieving Operational Excellence

BuilderChain’s Perpetual Management framework is designed to address common challenges in the construction industry, such as bottlenecked workflows, unreliable suppliers, and inconsistent project delivery. By standardizing operations and enhancing cross-departmental communication, the platform helps you eliminate inefficiencies and achieve operational excellence.

Purchase Orders and Variance Purchase Orders (VPOs): With BuilderChain, purchase orders are approved on-site as work is completed, reducing the need for periodic approvals and ensuring that all financial transactions are directly tied to project progress. Variance Purchase Orders (VPOs) are automatically generated in response to any deviations from the original plan, providing a proactive approach to exception management. These VPOs capture the reasons for the variance and can assign responsibility to the appropriate vendor, ensuring accountability and transparency.

Cross-Organizational Workflows: BuilderChain’s platform-based workflows break down the barriers between departments, enabling seamless collaboration and communication. Every task is tracked in real-time, with the platform ensuring that all stakeholders are aligned and working towards the same objectives. This integration across organizations is key to maintaining the flow of processes and preventing the disruptions that often plague construction projects.

AI-Driven Optimization: BuilderChain’s AI Swarming Agents continuously monitor your operations, identifying potential risks and opportunities for improvement. These agents work together to optimize resource allocation, ensuring that your projects remain on track and that any issues are addressed promptly.

The Strategic Advantage of Perpetual Management with BuilderChain

The strategic advantage of Perpetual Management lies in its ability to transform how you manage your business. By integrating BuilderChain, BuilderPay, and Palantir’s analytics into your operations, you gain real-time visibility and control over every aspect of your projects. This not only enhances efficiency but also ensures that your business is always prepared to adapt to changes and challenges.

Decreased Construction Costs: Through standardized processes, proactive exception management, and real-time data analysis, BuilderChain helps you reduce construction costs, maximize resource utilization, and minimize waste.

Reduced Indirect Costs: By optimizing your workflows and streamlining information flow, BuilderChain enables you to build more projects with the same resources, reducing the need for additional labor and overhead.

Enhanced Quality and Freedom: BuilderChain’s clear policies and procedures empower your team to take ownership of their roles, fostering a collaborative atmosphere and allowing your business to run more efficiently.

Embracing Perpetual Management: The Path to Operational Excellence

Adopting Perpetual Management with BuilderChain requires a commitment to change and a willingness to rethink established processes. However, the rewards are substantial. By embracing this approach, you can achieve greater control over your business, reduce stress, and increase profitability.

BuilderChain’s Perpetual Management framework is a perpetual process in itself—one that requires continuous effort and reflection. But with each step forward, you move closer to a state of operational excellence, where every process is optimized, every exception is managed proactively, and your business is positioned for long-term success.

Conclusion: Join the BuilderChain Revolution

Perpetual Management asks you to change the way you think, the way your business processes information, and sometimes, the way your business operates. This is a pretty tall order, isn't it? For some businesses it might require a lot of change, and some people might be defensive and resistant to that change. We know that when we ask for change its risky business. When we make any kind of change it is tramping into unknown territory. Who knows what lurks beyond? It is very comfortable to stay in the familiar.

Be it ever so humble, there's no place like home. We would be remiss if we did not acknowledge that many of you got to where you are today through great personal and professional efforts. Many of you embody a true entrepreneurial spirit and we salute you for your persistence and innovation. It is because of that spirit and those qualities that you see before you now a different way of doing things.

Initially, Perpetual Management may be a big challenge for your organization. Successfully implementing this management system will require discipline (a word with a bad reputation, but a word that deserves a chance), a certain amount of re-thinking processes, and a good deal of initial setup.

Managing and operating a business day-to-day, in accordance with the Perpetual Management Theory, also requires a certain amount of discipline; however, that discipline will give you more control over the business and more freedom. There will be less stress and more time to focus on what you like to do. All the policies, procedures, and systems of the business will be taking care of themselves AND the business will be making more money than it did before.

It might be a little strange to think about things operating automatically, like an assembly line, when we think about home building. But when you consider it carefully, assembly lines are a form of perpetual management. Unfortunately, an assembly-line mentality is associated with little individuality or flexibility and would never work in the home building industry. Or would it? Could we standardize operations without losing individuality?

Perpetual Management says -- yes.

Perpetual Management asks you to look at every part of your business, define it, standardize it, write policies and procedures for it and identify the points of control. Determine when and where management action should take place and close the loops. Clarify operational procedures and expectations in-house and with your suppliers, subcontractors and clients; take control of these relationships. Develop the systems your business needs to operate effectively. Manage the exceptions to the regular procedures and keep track of what those exceptions are. Compel events to form to your plan. Be pro-active, not reactive.

All of this requires setting your sights awfully high and having intense commitment (a dirty word, but the Japanese seem to like it). A lot of builders have traveled the Perpetual Management trail. Sometimes, things get pretty tough and they give up.

After a year or so, they look at themselves and say "Why couldn't I do that?"

Perpetual Management, when integrated with BuilderChain, BuilderPay, and Palantir’s ontology-based analytics, offers a powerful framework for transforming your construction business. It’s not just about managing day-to-day operations—it’s about achieving continuous improvement, operational excellence, and strategic advantage.

We invite you to join us in this pursuit of excellence and experience the transformative power of Perpetual Management with BuilderChain.