A System to Help Construction
Break Out of a 1945 Time Warp

Part 01

The Problem to Be Solved

Starting in the 1970s, Construction Management, Design-Build, and Integrated Project Delivery challenged the bifurcated Design-Bid-Build model. Yet they have not solved the industry’s deeper problem: a persistent cacophony of fragmented departments, organizations, information sources, processes, and technologies.

The articles A Solvable Hospital Cost Crisis and Why Hospitals Are in a Cost Crisis warn of an emerging economic disaster if the forces driving the hospital cost crisis are allowed to spread rather than being reversed soon.

Part 02

A Ready-to-Implement Solution

Construction as a System represents a significant reform—a shift in management philosophy, contracting, and business-to-business operations. Because it applies a system where none previously existed, and because it streamlines and automates processes from the early planning stages, owners have nothing to lose and everything to gain by piloting and implementing CaaS.

CATALYST’s focus begins with a top-down pilot-to-implementation strategy led by owners and their advisors:

1. Pilot and implement the Intelligent Automation System on a selected project to advance and automate planning, programming, and budgeting.
2. Identify and train planning and management professionals in the use of IAS.
3. Invite designers and builders to help pilot and implement the Value-based Contracting System.
4. Identify and train design and construction professionals in Construction as a System.

The Owner-driven CaaS Process provides the roadmap for moving from piloting to implementation across the first two foundational stages.

CaaS can be applied to any delivery method: Design-Bid-Build, Construction Management, Design-Build, or Integrated Project Delivery. A systems-based Design-Build approach, however, provides the best method for achieving the greatest CaaS value. Here, “systems-based” means the design disciplines reside in-house or operate under a master, multi-project agreement between the design and build disciplines. In many cases, that includes MEP design-build subcontracts.

Part 03

A Brief, Relevant History of Construction

From ancient history to the 19th-century Industrial Revolution, building design and construction were performed by a master builder. The builder was also the designer. The word architect—architekton in Greek—literally meant “master builder.”

The American Institute of Architects was formed in 1857, a key milestone in formally separating the designer from the builder. The resulting Design-Bid-Build approach predominated for the next 125 years. In short, the industry shifted toward larger, more complex, and more specialized projects faster than its planning and management practices evolved. Projects increasingly finished over budget and behind schedule.

Construction Management gained traction in the 1970s as an alternative intended to address construction cost, schedule, and coordination problems. CM and other negotiated general-contracting methods gradually replaced traditional Design-Bid-Build.

Claims of being “under budget” and “ahead of schedule” may have been true within individual project baselines, but national cost data show that these gains came at an excessive cost. By 2024, owners were paying, on average, twice the inflation-adjusted value of buildings, even though building-material and wage costs had risen only slightly faster than inflation over the same period.

Following CM’s failure to improve productivity and value, several innovations emerged—including Partnering, TQM, BIM, LEED, Lean Construction, IPD, and VDC. In 2017, the McKinsey Global Institute described construction as being stuck in a 1945-era time warp marked by severe stagnation. In the years since, construction’s cost problem has grown far worse, as evidenced most starkly by a 35-hospital data study.

Four Hypotheses Emerging From the Data

1. Non-value-added scope and cost make up 70% to 85% of design and construction cost. Only 15% to 30% is building materials and direct labor.
2. There is a strong correlation between the most extreme cost escalation and growth of negotiated second- and third-tier contracting, including trades and prefabrication.
3. Misaligned incentives are central to excessive cost escalation. Cost-plus and billable-hour compensation frameworks span consultants, designers, builders, and trade contractors.
4. Until the misaligned-incentive problem is solved, pursuing meaningful automation or measurable process improvement will remain futile.

Part 04

CATALYST Background

Building CATALYST was founded in 2013 by Mark Sands, Bruce Carlson, and Scott Jasperse. Bruce and Scott are the software engineers; Mark provided the vision and designed the system. CATALYST was inspired by the transformation of post-World War II Japanese industry and by W. Edwards Deming—the world-renowned statistician, engineer, physicist, and management theorist who was one of that transformation’s chief architects.

Mark’s vision for Building CATALYST was to help transform American construction into an end-to-end, high-performance, operationally excellent process, starting in the planning and early design stages.

Building CATALYST was designed and built around Deming’s System of Profound Knowledge, as described in Construction Reform Requires Profound Knowledge.

CATALYST applies advanced structured-data methodologies, complexity science, and multivariate analysis to manage and optimize highly complex building programs. These capabilities are essential to integrating and automating planning, programming, design, budgeting, and cost management. They are equally critical to measurable, continuous value improvement—a central CATALYST mission.

Building CATALYST combines Intelligent Automation and Value-based Contracting to create Construction as a System—a holistic, end-to-end alternative to the fragmented planning, design, and construction processes that define conventional project delivery. CaaS therefore offers the first credible solution for a construction reform movement.

What the First Decade Taught Us

The original strategy focused on reaching large builders because we believed they would have the detailed, real-world project data needed to validate the solution. That assumption proved correct. Through those relationships, we compiled data from more than 180 projects and subjected it to a comprehensive Deming PDSA—Plan, Do, Study, Act—cycle for validation and calibration.

We also believed large builders would have both the capabilities and motivation to expand their services using CATALYST. In the hands of an experienced user, CATALYST transforms planning, feasibility studies, programming, budgeting, and design-to-budget decision-making. Processes that traditionally take days or weeks can be completed in real time or within hours—with greater accuracy.

That second assumption did not prove true. The central reason, we believe, was a lack of motivation driven by misaligned incentives. Building CATALYST is therefore developing a Value-based Contracting System to replace misaligned motivations with aligned purpose and financial rewards. Together, IAS and VCS make up CaaS.

Part 05

Mark Sands’ Relevant Background

Mark holds a Bachelor of Science in Civil Engineering from Michigan State University and an MBA from Western Michigan University. He has also held Professional Engineer licenses in Michigan, Indiana, and Iowa.

Mark began his construction career in 1974 as an intern with The Miller-Davis Company in Kalamazoo, Michigan. Over the next 25 years, he held leadership roles progressing from superintendent to vice president, primarily with The Christman Company and The Weitz Company. In 1999, Mark started Genesis Building Company.

For nearly fifty years, Mark has been frustrated by construction’s fragmentation and monotony—and the waste they cause. After learning about W. Edwards Deming in the early 1990s, he spent much of his career advocating for construction’s transformation through the principles Deming brought to manufacturing, especially the Toyota Production System.

In designing Building CATALYST, Mark focused everything around Deming’s System of Profound Knowledge. The resulting Intelligent Automation System supplied the means to transform planning, design, and construction. It did not, however, address the motivation needed for transformation. Deming’s System of Profound Knowledge emphasizes motivation as a key agent of change. Motivation is everything.

A Philosophy Grounded in a Biblical Worldview

It was not only Deming’s management philosophy and systems theories that inspired Mark, but also his Christian worldview. As Mark sees it, without that worldview there would be no System of Profound Knowledge.

Beyond data science, impartial analysis, statistics, and process control, Deming was interested in human relationships and called leaders to lead relationally. Rather than individual or organizational self-interest, he understood that the well-being of the whole system was essential. Philippians 2:3–4 is particularly relevant: “Do nothing out of selfish ambition or vain conceit. Rather, in humility value others above yourselves, not looking to your own interests but each of you to the interests of the others.”

We can now apply advanced systems, technology, contracts, and controls to solve extraordinary problems. Above all, however, reform requires the inner motivation and ability to think beyond the here and now—to create lasting impacts on people while designing and producing beautiful, high-performance buildings that will endure far beyond our lifetimes.

It is not necessary to share Deming’s Christian faith to appreciate the importance of these principles. Reform will, however, require the same fundamental shift in mindset: away from optimizing individual interests and toward creating a Deming-based system in which every participant can succeed by increasing the value of the whole.