The University of Texas at Austin. CII members may ...... air and sea ship building, software development, and health care delivery, to mention but a few.
CONSTRUCTION INDUSTRY INSTITUTE®
ROADMAP AT
LEAN IMPLEMENTATION THE P ROJECT LEVEL
FOR
UNIVERSITY
OF
CALIFORNIA, BERKELEY
GLENN BALLARD MIN LIU
UNIVERSITY
OF
WASHINGTON
YONG-WOO K IM
STATE UNIVERSITY COLLEGE
OF
OF
NEW YORK
ENVIRONMENTAL SCIENCE
AND
FORESTRY
JIN-WOO JANG
Research Report 234-11
ROADMAP FOR LEAN IMPLEMENTATION AT THE PROJECT LEVEL by Glenn Ballard University of California, Berkeley Yong-Woo Kim University of Washington Jin-Woo Jang State University of New York College of Environmental Science and Forestry Min Liu University of California, Berkeley
A Report to Construction Industry Institute The University of Texas at Austin Under the Guidance of CII Research Team 234 Implementation Road Map of Lean Construction at Project Level
CII Research Report 234-11 October 2007
© 2007 Construction Industry Institute®. The University of Texas at Austin. CII members may reproduce and distribute this work internally in any medium at no cost to internal recipients. CII members are permitted to revise and adapt this work for the internal use provided an informational copy is furnished to CII. Available to non-members by purchase; however, no copies may be made or distributed and no modifications made without prior written permission from CII. Contact CII at http://construction-institute.org/catalog.htm to purchase copies. Volume discounts may be available. All CII members, current students, and faculty at a college or university are eligible to purchase CII products at member prices. Faculty and students at a college or university may reproduce and distribute this work without modification for educational use. Printed in the United States of America.
Table of Contents List of Tables ......................................................................................................... ix List of Figures ..........................................................................................................x Executive Summary ............................................................................................... xi
1.0
2.0
Introduction..............................................................................................................1 1.1
What is “Lean”?...........................................................................................1
1.2
Why you should implement lean on your projects ......................................4
1.3
Project production systems ..........................................................................4 1.3.1
Lean Project Delivery System ...................................................5
1.3.2
How projects differ from other types of production system ......7
1.4
How is lean project delivery different from current best practice? .............9
1.5
Muri, Mura, Muda......................................................................................12
1.6
Structure of the report ................................................................................14
Research Strategy...................................................................................................16 2.1.
Research objectives....................................................................................16 2.1.1.
Understand how lean has been implemented in construction..16
2.1.2.
Identify lean tools specific to project production systems.......16
2.1.3.
Investigate relations between lean metrics and traditional project performance metrics ....................................................17
2.1.4.
Analyze the success factors and challenges of a lean journey.17
iii
2.1.5.
Develop a roadmap for each phase of a project.......................17
2.1.6.
Provide know-how on a lean journey ......................................18
2.1.7.
Identify the role in lean implementation of each member of the project team..............................................................................18
2.2.
Research methodology...............................................................................18
2.3.
Research methods ......................................................................................20
2.4.
2.5.
3.0
2.3.1.
Case study ................................................................................20
2.3.2.
Field trials ................................................................................21
2.3.3
Statistical analysis....................................................................22
Data generation and analysis .....................................................................24 2.4.1.
Case selection...........................................................................25
2.4.2.
Interviewing .............................................................................25
2.4.3.
Document analysis ...................................................................26
2.4.4.
Observation ..............................................................................27
2.4.5.
Evaluation of data source.........................................................27
2.4.6.
Data analysis and validation ....................................................28
Research Plan Chart...................................................................................29
Review of the Literature ........................................................................................30 3.1
Toyota ........................................................................................................30 3.1.1
Toyota Production System (TPS) ............................................31
3.1.2
Toyota Product Development System (TPDS) ........................36
3.1.3
The Toyota Way ......................................................................51
iv
3.1.4 3.2
3.3
4.0
Lean in Construction..................................................................................55 3.2.1
Organizations promoting lean in construction.........................56
3.2.2
Project case studies on lean implementation ...........................61
3.2.3
Relevant Previous CII Research ..............................................66
Organizational Change...............................................................................74 3.3.1
Kotter’s Model .........................................................................74
3.3.2
Large Group Method................................................................76
3.3.3
Changing Culture through Supervisory Practices....................79
3.3.4
Individual Change....................................................................80
Findings from Case Studies, Field Experiments and Statistical Analyses.............83 4.1
Statistical analysis of the correlation between PPC and productivity........84
4.2
Case studies................................................................................................86
4.3
5.0
Toyota’s impact beyond manufacturing ..................................54
4.2.1
Case study process and interview questions ............................87
4.2.2
Participants in the case studies.................................................88
4.2.3
Summary of case studies..........................................................90
4.2.4
Findings from case studies.......................................................94
Field trials ................................................................................................130 4.3.1
Field trial process...................................................................130
4.3.2
Summary of field trials ..........................................................130
Conclusions and Recommendations ....................................................................135
v
5.1
Starting your lean journey........................................................................135
5.2
Guidelines for organizational change ......................................................137
5.3
Implementing lean on projects.................................................................139
5.4
Implementation issues by project role .....................................................143
5.5
5.4.1
Owners and Owner Agents ....................................................144
5.4.2
Process Managers...................................................................144
5.4.3
Design and Construction Specialists......................................145
Recommendations for future research .....................................................149 5.5.1
What should owners demand of their service providers? ......149
5.5.2
Enabling pull by reducing lead times and extending the project window of reliability..............................................................150
5.5.3
Links between Lean and Safety .............................................151
5.5.4
How to better incorporate facility use and running costs into capital facility planning?........................................................151
5.5.5
How to better achieve Built-in Quality? ................................152
5.5.6
Demand variability and its consequences in construction .....153
5.5.7
Tolerance management ..........................................................154
5.5.8
Building to a model................................................................155
5.5.9
Set based design.....................................................................155
5.5.10
Lean, Green and Technology.................................................155
5.5.11
How lean can mitigate negative forces in the construction industry ..................................................................................156
5.5.12
Confirmation and analysis of critical relationships ...............156
vi
5.5.13
Effective lean implementation ...............................................157
Appendices..............................................................................................................158 A. Lean Construction Principles from PT 191...................................................159 B. Field Trials ....................................................................................................161 B.1 Abbott/Riley Construction ....................................................................162 B.2 Dow Chemical.......................................................................................170 B.3 Ilyang Construction ...............................................................................179 C. Case Studies ..................................................................................................187 C.1 Air Products...........................................................................................188 C.2 BAA/LOR .............................................................................................195 C.3 General Motors......................................................................................210 C.4 Sutter Health..........................................................................................217 C.5 Integrated Project Delivery ...................................................................241 C.6 Boldt ......................................................................................................254 C.7 GS Construction ....................................................................................266 C.8 Messer Construction..............................................................................277 C.9 Walbridge Aldinger...............................................................................288 C.10 BMW Constructors .............................................................................299 C.11 Dee Cramer .........................................................................................305 C.12 Ilyang...................................................................................................312 C.13 Southland Industries............................................................................320 C.14 Burt Hill Architects & Engineers ........................................................337
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C.15 Spancrete .............................................................................................350
D. Statistical analysis of the correlation between PPC and productivity...........358 D.1 Overview of the project.........................................................................358 D.2 Description of the work areas and crews ..............................................359 D.3 Limitations of the data ..........................................................................361 D.4 Data analysis and findings ....................................................................363 D.4.1 Testing an hypothesis.....................................................................363 D.4.1.1 Group A (Working Area A-G, 90 data points) .........................365 D.4.1.2 Group B (work area H&K, 22 data points).............................368 D.4.1.3 Group C (work area J, 20 data points) ....................................369 D.4.2 The regression equation of productivity and PPC .........................370 D.4.3 Other findings ................................................................................378 D.4.3.1 The relationship between load and output variation and productivity ....................................................................................378 D.4.3.2 PPC and productivity correlation as work load changes.........379 D.4.3.3 Productivity and work load rate ..............................................384 D.4.3.4 Statistical analysis tables and figures......................................387 D.5 Conclusions...........................................................................................400
References...............................................................................................................403
viii
List of Tables Table 3.1 Summary of Previous CII Research on Lean Construction...............................73 Table 4.1 Summary of survey findings-owners.................................................................90 Table 4.2 Summary of survey findings-GCs .....................................................................91 Table 4.3 Summary of survey findings-specialty contractors ...........................................92 Table 4.4 Summary of survey findings-architect/engineer and suppliers..........................93 Table 5.1 Roadmap for implementing lean on projects...................................................140 Table 5.2 Implementation by project role........................................................................146
ix
List of Figures
Figure 1.1 Lean Project Delivery System ............................................................................7 Figure 1.2 Range of Projects..............................................................................................10 Figure 2.1 Research Methods ............................................................................................22 Figure 2.2 Case Studies......................................................................................................25 Figure 2.3 Interview Question Categories .........................................................................26 Figure 2.4 Research Structure............................................................................................29 Figure 3.1 House of Toyota ...............................................................................................32 Figure 3.2 Example of Set-Based Concurrent Engineering...............................................40 Figure 3.3 “4P” of the Toyota Way (Liker, 2004).............................................................52 Figure 4.1 Lean Tools from Case Studies........................................................................109 Figure 4.2 Target Costing in Construction ......................................................................117 Figure 4.3 Success Factors and Barriers ..........................................................................130 Figure 5.1 Starting your lean journey ..............................................................................136
x
Executive Summary CII Research Team 234 was launched to understand secrets of success in applying lean at the project level and to translate this understanding into an implementation road map.
What is “Lean”? Lean is a fundamental business philosophy—one that is most effective when shared throughout the value stream. “Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals” and “Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others” are 2 of the 14 principles listed in The Toyota Way (Liker, 2004). As a business philosophy, lean is naturally applied at the enterprise level, but can also be applied within business divisions, on projects, or even applied to specific processes. The focus of this research is implementation of lean on projects. To the extent that we treat enterprises or processes, we do so within the context of projects.
Roadmap for Lean Implementation on Capital Projects Your power to do the following will vary with position and circumstance, but to the extent you can, you should: •
select partners or suppliers who are willing and able to adopt lean project delivery
•
structure the project organization to engage downstream players in upstream processes and vice-versa, and to allow resources (e.g., money, float, equipment,
xi
people) to move across organizational boundaries in pursuit of the best projectlevel returns •
encourage thoughtful experimentation and celebrate breakdowns (plan failures, product defects) as opportunities for learning rather than occasions for punishing the guilty
•
practice production control in accordance with lean principles such as making work flow predictable and using pull systems to avoid overproduction
•
do target costing: define and align project scope, budget and schedule to deliver customer value, while challenging previous best practice
•
practice set based design: make design decisions at the last responsible moment, with explicit generation of alternatives, and documented evaluation of those alternatives against stated criteria
•
build quality and safety into your projects by placing primary reliance on those doing the work of designing and making, by acting to prevent breakdowns, including use of pokayoke (error proofing) techniques, by detecting breakdowns at the point of occurrence, by taking immediate corrective action to minimize propagation, and by acting on root causes in order to prevent reoccurrence
Although some have more power than others to implement lean on projects, no one is a helpless victim of fate. Everyone can strive to become a lean enterprise. Everyone can pursue the lean ideal. Everyone can apply lean principles and methods to their own processes. Everyone can invite their customers, suppliers and partners to join them on the lean journey.
xii
1.0 Introduction CII Research Team 234 was launched to understand secrets of success in applying lean at the project level and to translate this understanding into an implementation road map. This involves understanding the peculiarity of projects as a type of production system, the adaptation of lean principles and methods appropriate to this type of production system, and the differences in roles and relationships among project participants and how those differences impact implementation. Our scope was restricted to the project, and only deals with extra-project activities that are relevant to project management; for example, anticipating how the facility to be delivered by the project will be operated, maintained, altered, and ultimately decommissioned. This introduction explains how the research team understood and carried out its mission and how the remainder of the report is structured.
1.1 What is “Lean”? The term “Lean Production” was coined by a member of the International Motor Vehicle Research team to designate what the researchers saw as a new and superior type of production system for motor vehicles (Womack et al, 1990). The researchers were persuaded by the difference in comparative performance measures between Japanese, American and European companies. Subsequently, it was found that the Japanese advantage was largely because of Toyota, and many academics and practitioners now believe that the Toyota Product Development System and the Toyota Production System
1
are exemplars for a new and superior way of designing and making all kinds of products, both goods and services. When Lean first became popular and more widely known, there was a tendency to see it as a collection of tools and techniques, but it is now widely recognized as a fundamental business philosophy. “(Our) final conclusion is that lean cannot be reduced to a set of rules or tools. It must be approached as a system of thinking and behavior that is shared throughout the value stream.” (p.4, Executive Summary, RT191 research report: cf. Diekmann, et al, 2004). Lean can be characterized in terms of objectives, principles, and methods or tools. The Lean Ideal is to provide a custom product exactly fit for purpose delivered instantly with no waste Are you attempting to conduct your business or deliver your projects while maximizing value and minimizing waste? If so, then in a minimal sense, you are lean. But it would make little sense to call someone lean who claims to pursue those objectives but disregards fundamental principles such as those identified by CII PT 191, which focus on the process level, or the 14 principles defined in Jeffrey Liker’s The Toyota Way, which deal with the lean enterprise. The same holds for those claiming allegiance to these principles but not using available methods. For example, a candidate might proclaim the principle of Creating Connected Process Flow, but fail to use pull mechanisms to release work between specialists or fail to reduce batch sizes or fail to right size work-in-progress inventories. Lastly, since lean is a never ending journey in pursuit of perfection, it is more appropriate to ask about the rate of learning rather than the level of conformance to the ideal—remember the fable of the Tortoise and the Hare.
2
How can you tell if a project or company is lean? Assess yourself by answering the following questions: •
Are you pursuing the lean ideal?
•
Are you following the appropriate principles in your striving for the lean ideal?
•
Are you using the best methods for implementing those principles?
•
How fast are you learning as a project organization?
Incorporation of lean into the theory of production has lagged behind innovations in practice. Factory Physics (Hopp and Spearman, 2000) is one important attempt to incorporate lean into the theory of manufacturing management. Toyota’s Product Development System has attracted even less theoretical inquiry, but there have been notable exceptions, principally the work of Ward, Sobek, and Liker1. Researchers in the International Group for Lean Construction (www.iglc.net) are working to adapt lean concepts and techniques to projects, and especially to construction projects, conceived as a type of production system. As for practice, lean has spread widely in manufacturing, moving far beyond the automobile sector where it originated and also beyond the shop floor into white collar functions. Lean has also spread from manufacturing into product development, services, air and sea ship building, software development, and health care delivery, to mention but a few.
1
See Ward, et al. (1995), Sobek, et al. (1998), Sobek, et al. (1999) and Liker (2004)..
3
1.2 Why you should implement lean on your projects You may have a wide variety of reasons for implementing lean on your projects, but all fall under the objective of generating greater value with less waste. What counts as value varies with circumstance. For example, one owner involved in this research launched lean project delivery in order to make themselves more attractive as a client, and hence increase their access to scarce resources in an oversubscribed market. Lean project delivery does not establish values, but rather seeks to continuously increase the capability of delivering what is of value to specific customers in their specific circumstances, and doing so with less waste of time, of capacity, of spirit, of everything. Hitting a market window, minimizing environmental impacts, becoming more reliable in reaching performance targets, reducing running costs, improving facility outputs, becoming a better member of a community—these and many more objectives may define customer value. You should implement lean on your projects in order to develop and exploit this value generation and waste reduction capability.
1.3 Project production systems The background for this research is the work of CII Project Team 191, which differentiated the enterprise, project, and process levels of lean implementation, and explored application of lean methods and tools to processes on construction sites. Although our research focus is the project, we have become convinced in the course of this research that at least the organization driving the project must be committed to becoming a lean enterprise in order that project implementation have the best chance of
4
success. Without deep commitment and consistent leadership, project teams tend to slip back into old habits of thought and action once the going gets tough. Consequently, we have chosen to provide a roadmap for implementation of lean on ‘demonstration’ projects, meaning that the project is understood, structured, and managed by at least one member of the project delivery team as an exploration how to apply or adapt some lean principles or techniques to that organization’s delivery of projects.
1.3.1 Lean Project Delivery System What we mean by a project is shown in Figure 1.1, a diagram of the Lean Project Delivery System 2 . Projects have long been understood in terms of phases, e.g., predesign, design, procurement, installation and commissioning. One of the key differences between traditional and lean project delivery concerns the relationship between phases and the participants in each phase. The model in Figure 1.1 represents those phases in overlapping triangles, the first of which is Project Definition, which has the job of generating and aligning customer and stakeholder values, constraints, and design concepts.. Those three elements may each influence the other, so a conversation is necessary among the various stakeholders. Typically, like a good conversation, everyone leaves with a different and better understanding than anyone brought with them. Traditionally, project definition has been done by the architect (or engineer, for nonbuilding projects) working alone with the client. In Lean Project Definition, representatives of every stage in the life cycle of the facility are involved, including members of the production team that is to design and construct. Alignment of values,
2
The diagram and explanatory text are reproduced with permission from Best and de Valence (2002).
5
concepts, and criteria allows transition to the Lean Design phase, in which a similar conversation occurs, this time dedicated to developing and aligning product and process design at the level of functional systems. During this phase, the project team stays alert for opportunities to increase value. Consequently, the project may revert to Project Definition. Further, design decisions are systematically deferred to allow more time for developing and exploring alternatives (Liker, 2004): Make decisions slowly and implement quickly.). By contrast, traditional design management is characterized by demands for a freeze of design and by a tendency to rapidly narrow a set of alternatives to a single selection. Although done in the name of speed (and often encouraged by limited design fees), this causes rework and turmoil, as a design decision made by one specialist conflicts with the design criteria of another. The “set based” strategy employed in Lean Design allows interdependent specialists to move forward within the limits of the set of alternatives currently under consideration. Obviously, time is rarely unlimited on capital projects, so selection from alternatives must eventually be made. The practice in lean design is to select those alternatives at the last responsible moment, which is a function of the lead time required for realizing each alternative. Reducing those lead times by restructuring and streamlining supply chains allows later selection and thus more time invested in designing and value generation. The transition to detailed engineering occurs once the product and process design for a specific system has been completed and released for detailing, fabrication, and delivery. At least the latter two functions occur repetitively over the life of a project, hence the model shows Fabrication and Logistics as the hinge between Supply and Assembly.
6
Assembly completes when the client has beneficial use of the facility, which typically occurs after commissioning and start-up. The management of production throughout the project is indicated by the horizontal bars labeled Production Control and Work Structuring, and the systematic use of feedback loops between supplier and customer processes is symbolized by the inclusion of post occupancy evaluations.
Means (Design Concepts)
Ends
Constraints
Project Definition
Product Design
Fabrication & Logistics
Process Design
Detailed Engineering
Lean Design
Lean Supply
Alteration & Decommission -ing
Commissioning
Installation
Lean Assembly
Operations & Maintenance
Use
Production Management :: Production Control and Work Structuring
Learning Loops
Figure 1.1: Lean Project Delivery System
1.3.2 How projects differ from other types of production system What are the characteristics of projects that make a difference for lean implementation? We understand a production system to be a collection of people and other resources organized to design and make something of value to a customer. The product can be goods or services, and are of value only to the extent that they enable realization of
7
customer or stakeholder purpose. Projects are one type of production system, but a very important type because all products are designed and made the first time in projects, even products like cars and refrigerators that are mass produced. Note that the delivery of capital facilities is one subset of projects. To the extent that capital projects involve making things, the concepts and methods of the Toyota Production System definitely apply, but for projects as a whole, Toyota’s Product Development System is a more appropriate model and inspiration because product development is also a type of project production system, and requires integration of designing and making. Turning to the issue of differentiating characteristics, the first is that projects start by specifying customer value through an iterative and generative process, as opposed to production systems devoted exclusively to making, which start from customer orders for products that have previously been defined and designed. Those responsible for filling the order have nothing to say about what the customer actually needs, if they can afford it, or how multiple stakeholders will be satisfied. This scenario is well known to those familiar with value stream mapping, where value can be defined as that which is necessary to complete the customer order without reference to how the customer will use what is ordered or why they need it. A second differentiating characteristic of projects is that load on the system changes both qualitatively and quantitatively during the course of a project. Consequently the principle of achieving production system stability (avoiding mura—see 1.5) must be achieved primarily by making the change in loads predictable rather than invariant.
8
A third differentiating characteristic is a direct consequence of the inclusion of definition and design in projects; namely, that direct collaboration is necessary between multiple specialists in order to achieve optimal project outcomes, as opposed to synchronization of interdependent specialists as occurs in lean manufacturing. A fourth differentiating characteristic is a consequence of the previous three; namely that relational contracts are needed to structure the project organization and align incentives, as opposed to transactional contracts. Relational contracts are agreements among the parties about how to work together toward the lean ideal, as opposed to transactional contracts that specify terms of exchange.
1.4 How is lean project delivery different from current best practice? PMI’s Project Management Body of Knowledge (Project Management Institute, 2006) is representative of a number of prescriptive models of project management that have been developed based on experience. Their lack of an explicit underlying theoretical model has been criticized and their implicit theories of production and production management revealed by a critique from the lean perspective (Koskela & Howell, 2002a; Williams, 2004). These and other critics (Howell et al, 1993) have also advanced empirical data to support the claim that traditional methods of project management are ineffective, especially as projects become increasingly complex, quick, and uncertain as regards both ends and means.
9
“The deficiencies of the theory of the project and of the theory of management reinforce each other and their detrimental effects propagate through the life cycle of a project. Typically, customer requirements are poorly investigated at the outset, and the process of requirement clarification and change leads to disruption in the progress of the project. The actual progress starts to drift from the plan, the updating of which is too cumbersome to be done regularly. Without an up-to-date plan, the work authorization system transforms to an approach of informal management. Increasingly, tasks are commenced without all inputs and prerequisites at hand, leading to low efficiency or task interruption and increased variability downstream. Correspondingly, controlling by means of a performance baseline that is not based on the actual status becomes ineffective or simply counterproductive. All in all, systematic project management is transformed to a facade, behind which the job actually gets done, even if with reduced efficiency and lessened value to the customer.” 3
Figure 1.2 Range of projects Some lean construction advocates have argued that the deficiencies of traditional project management become progressively more apparent as projects become more dynamic; i.e., 3
Reproduced with permission from p. 11, Koskela & Howell, 2002a.
10
as they become more complex, uncertain and quick. (Koskela & Howell, 2002a) This is supported by the finding that lean project delivery is virtually mandatory on projects pursuing sustainability objectives, which are arguably the most comprehensive and complex, engaging the most stakeholders, and posing the greatest technical challenges. The primary criticisms of best practice-based prescriptions are: •
they assume a theory of the project as a transformation of inputs into outputs, neglecting the flow and value perspectives so central to lean
•
they assume a command and control theory of management; one in which the planning function is dominant over the execution function
•
they assume that projects can be divided into parts and the parts managed as if they were independent one of another except for sequential dependency.
•
they attempt to control projects through after-the-fact variance detection
•
as a consequence of all the above, on dynamic projects, actual project execution and formal management practices tend to drift apart, with management becoming increasingly an observer and commentator on what is happening rather than a driver of the project toward its objectives
On the other side of the ledger, it must be acknowledged that some elements of lean methods are found in current practice. The construction industry has more than its share of bright, dedicated people. It is no surprise that many innovations have been developed, and that some of the best project managers and supervisors succeed by ‘breaking the rules’. The critical point here is the lack of a theoretical foundation from which to explain
11
why effective management practice is successful. Without that underlying theory, systematic learning and improvement is not possible. Lean provides just such a theory, with explicit principles and methods. Lean is the basis for never ending innovation in both theory and practice, each reinforcing the other.
1.5 Muri, Mura, Muda The popularity of the Toyota Production System (TPS) has led many to understand lean entirely in terms of reducing waste, where waste is understood as anything not necessary for delivering value to a customer. The TPS is how Toyota manufactures its products. In that context, value is understood in terms of what the customer orders; i.e., entirely in terms of the product to be provided. Consequently, it is quite natural to focus on eliminating muda, non-value-adding activities. However, several authors have noted the inadequacy of this view. For example, Jeffrey Liker, in his The Toyota Way explains that Toyota’s more fundamental principles and practices actually start not from muda, but most fundamentally from muri and mura. Muri is ‘unreasonableness’; e.g., overburdening people or tools. Mura is inconsistency or variability. In Liker’s opinion, mura is the most fundamental because failure to avoid unevenness causes both overburdening and non-value-adding activities. On the other hand, Kitano (1997) sees muri as the starting point of a Plan-Do-Check-Act cycle in which muri is addressed in Planning, mura is controlled in Doing, and muda is attacked in Checking (after-the-fact analysis). In production systems dedicated to making copies of an already-produced design, unevenness can be avoided by level loading production; in other words, by making things
12
ahead of the time they are needed, and so achieve a better match between capacity and load in the manufacturing facility.4 In projects, stability-the opposite of variability and unevenness-can be provided by making load predictable so capacity can better be matched to it. In both cases, achieving stability is the starting point, but it is achieved through level loaded production schedules in manufacturing and by making work flow predictable in projects. In addition to this adaptation of production control, it is also necessary to specify the handoffs between specialists in project production systems. In a manufacturing facility, this can be done through layout of workstations and routing of materials, but such structures and routes change frequently in construction, so rapid redesign of the production system is a vital capability. Some theorists and practitioners believe that these redesigns are done best through collaborative team planning using a technique called reverse phase scheduling. Several principles and techniques need little or no adaptation and can be directly applied to capital projects. One example is set based design, which is central to Toyota’s product development system. Another is the self-imposition of artificial necessity as illustrated in the famous Toyota dictum “Lower the river to reveal the rocks.” (Ohno, 1988). Indeed, since most projects are relatively short cycle, they offer the opportunity for more frequent experimentation and more rapid learning, suggesting that project delivery teams should be tasked with production of knowledge along with delivery of the project. 4
There appears to be a contradiction between ’making things ahead of time’ and the concept of overproduction. Overproduction means making things before they are needed. This refers to the needs or readiness of the immediate customer, but also refers to the needs of the production system as a whole, one of which is to avoid loss of capacity.
13
There are also principles and techniques that are directly applicable in large part to projects, but require study and experimentation to make that application. One very important example is Built-In Quality; i.e., building quality into the design and making process
1.6 Structure of the Report The remainder of this report consists of an explanation of our research methodology; a review of the literature; a report on findings from statistical analyses, case studies, and field trials; and presentation of a roadmap for implementing lean on projects; followed by appendices and references. We present two roadmaps, one within the other. The first, more comprehensive is a concept-level roadmap for an organization striving to become a lean enterprise. The second is a more detailed roadmap for planning and executing demonstration projects, one of the milestones along the on ramp to the lean highway. The appendices include lists of lean principles, the case studies, the field trials, a statistical analysis of the correlation between work flow reliability and productivity, and description of lean methods and tools adapted for project production systems, including cross functional team structures, relational contracts, target costing, set based design, production control, reverse phase scheduling, and built-in quality. We do not include descriptions or instructions for using many other lean tools and methods, both because they are not unique to project production systems, and because they are already in the literature. For the same reason, we do not try to convince the
14
reader to take the lean road. We hope, however, to have provided useful advice to those who make that choice.
15
2.0 Research Strategy 2.1 Research Objectives The primary purpose is to understand secrets of success in applying lean at the project level and to translate that understanding into an implementation road map
2.1.1 Understand how lean has been implemented in construction In order to understand secrets of success in applying lean at the project level, it is necessary to understand implementation practices which are effective and ineffective. For that purpose, descriptive research is included, describing how industry practitioners implement lean principles at the project level.
2.1.2 Identify lean tools specific to project production systems Implementation of lean on projects involves the application of methods and tools, some of which may be applied not only to construction but also to other industries. However, there are some lean tools that are designed or adapted specifically for project production systems. It is important to identify lean tools for project production system and to present how to use them.
16
2.1.3 Investigate relations between lean metrics and traditional project performance metrics Some industry practitioners who have not applied lean on their projects want to know if successful lean implementation leads to project success which can be measured in traditional project metrics. The study investigates relations between Percent Plan Complete (PPC) and productivity using statistical analysis. The research team used only one metric (i.e., PPC) for this study because PPC was the only common metric that most case study organizations have used and data is available.
2.1.4 Analyze the success factors and challenges of a lean journey Understanding current practices for lean implementation will allow for better analysis of the success factors and challenges on a lean journey. As a guide for a journey, it is important to know what is important and what challenges will be faced.
2.1.5 Develop a roadmap for each phase of a project A significant part of the research is to develop a roadmap for each phase of a project, which includes pre-project planning, design, supply, construction, and use phase. A roadmap in each phase of a project consists of a set of recommended actions and processes derived from the research.
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2.1.6 Provide know-how on a lean journey Tips are to be provided in the research in addition to general guidelines. Tips come from the experience of industry practitioners who successfully applied lean on their projects.
2.1.7 Identify the role in lean implementation of each member of the project team The research will specify the role in lean implementation of each member of the project team (i.e., owner, owner agent, process managers, specialists, and supplier). It includes implementation issues and advice for each stakeholder.
2.2 Research Methodology The primary purpose of this research is to define the implementation of lean at the project level and to develop an implementation road map. Qualitative research seems appropriate to our research for the following reasons: 1) Too few organizations or projects have applied lean to support statistical analysis of standardized survey results 2) Discovering secrets or pattern of lean success requires more than standardized survey Qualitative research is useful for studying many different aspects of a relatively small number of cases (Ragin, 1994). Qualitative methodology is different from quantitative methodology in several ways. The results of qualitative research can only be expressed verbally. On the contrary, quantitative methodology can be summarized in numbers or
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tables (Have, 2004). Ragin (1994) stated that qualitative research is used to study commonalities, which are common properties, within a relatively small number of cases of which many aspects are taken into account. Cases are examined intensively, with techniques designed to facilitate the clarification of theoretical concepts and empirical categories, whereas quantitative research is used to study the co-variation within large data-sets, which have a relatively small number of features. While quantitative research is focused on summary characterizations and statistical explanations, qualitative research offers complex descriptions and tries to explicate webs of meaning. The important feature of qualitative research is to ‘work up’ one’s research materials, to search for hidden meanings, non-obvious features, multiple interpretations, implied connotations, and unheard voices. Ragin (1994) also stated that ‘most quantitative data techniques are data condensers: and qualitative methods, by contrast, are best understood as data enhancers’. ‘Most qualitative research tends to be based on an interpretative approach, in the sense that the meanings of events, actions, and expressions is not taken as ‘given’ or selfevident’, but as requiring some kind of contextual interpretation’ (Have, 2004). Considering the characteristics of both qualitative and quantitative research methodologies, the research team has conducted research with a combination of qualitative and quantitative methodologies, however, the focus is placed on qualitative methodology. Quantitative research was used to analyze the correlation between productivity and PPC (Percent Plan Complete, a measure of planning reliability).
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2.3 Research Methods Research methods have been classified in many different ways (Robson, 1993). One general approach distinguishes between three main strategies; experiments, surveys, and case studies. “Experiment is to measure the effects of manipulating one variable on other variables. Survey is to collect information in standardized form from groups of people. Survey usually employs questionnaire or structured interview. Case study is a development of detailed, intensive knowledge about a single ‘case’, or of a small number of related ‘cases’.” (Robson, 1993; p. 40)
2.3.1 Case Study Case studies are investigations of particular cases (Hamel, 1993), and are conducted by giving special attention to bringing together the findings from observing, reconstructing and analyzing the cases under study (Zonabend, 1992). The case study is also defined as “an empirical inquiry that: investigates the contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used” (Yin, 1989, p.23). The case study has been criticized for: its lack of representativeness and for its lack of rigor in the collection, construction, and analysis of the empirical materials that give rise to case studies (Hamel, 1993). Despite these criticisms, however, the case study has been one of the top-ranking methods in qualitative research. The case study can be a very worthwhile way of exploring existing theory. A well-constructed case study may provide a source of new theory when there are a small number of examples.
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The objective of RT234 is to produce roadmaps for implementing Lean on construction projects. The case study takes shape as part of an inductive approach. The research team studied fifteen (15) cases, abstracted key findings from the cases, and generalized the findings to conclusions.
2.3.2 Field Trials Field trials in lean implementation were conducted on three different projects. The term “field trials” is used instead of “experiments” because it is not possible to control all variables when trying out new practices in a complex socio-technical system like a project. The purpose of these trials is to evaluate selected case study findings and to get in-depth insight into lean implementation. Three companies were involved in the experiments: Abbott, Ilyang Construction, and Dow Chemical. Abbott and Dow Chemical are owner companies. Ilyang Construction is a specialist in earthwork and structural construction located in South Korea. All field trials focused on production control, the primary purpose of which is to improve work flow reliability (i.e.,.predictable hand-offs). Researchers participated in the course of the trials and observed and documented lean implementation practices.
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Case Study
Experiments
• 15 case studies • To interview using questions
• 3 field trials (Abbott, Ilyang and
prepared and agreed by team members
To involve in the course of entire experiments
Dow Chemical)
•
•
•
To scrutinize documents and to have observations
To observe and document lean implementation
•
To discover the implementation strategy during the limited time.
• To generalize the findings • To develop a roadmap in each phase of a project Fig 2.1. Research Methods
2.3.3 Statistical analysis Statistical analysis was performed to test the hypothesis that PPC and productivity are positively correlated. Key methodology issues include the nature of statistical significance, the interpretation of levels of correlation, and the method of clustering analysis. Bryman and Cramer (2005) speak to the first two of these three issues: “The test of statistical significance tells us whether a correlation could have arisen by chance (i.e. sample error) or whether it is likely to exist in the population from which the sample was selected. It tells us how likely it is that we might conclude from sample data that there is a relationship between two variables when there is no relationship between them in the population. Thus, if correlation is significant at 0.01 level, there is only one chance in 100 that we could have selected a sample that shows a relationship when none exists in the population. We would almost certainly
22
conclude that the relationship is statistically significant. However, if the significant level is 0.1, there are ten chances in 100 that we have selected a sample which show a relationship when none exists in the population. We would probably decide that the risk of concluding that there is a relationship in the population is too great and conclude that the relationship is non-significant.” Bryman and Cramer (2005) also discuss how to interpret the correlation coefficient values as below: “What is a large correlation? Cohen and Holliday (1982) suggest the following: 0.19 and below is very low; 0.20 to 0.39 is low; 0.40 to 0.69 is modest; 0.70 to 0.89 is high; and 0.90 to 1 is very high. However, these are rules of thumb and should not be regarded as definitive indications, since there are hardly any guidelines for interpretation over which there is substantial consensus.” “A useful aid to the interpretation of a correlation coefficient i) …the coefficient of determination ( r 2 ). This is simply the square of the correlation coefficient r multiplied by 100. It provides us with an indication of how far variation in one variable is accounted for by the other. Thus, if r=-0.6, then r 2 =36 per cent. This means that 36 per cent of the variance in one variable is due to the other. When r=0.3, then r 2 will be 9 per cent. Thus, although an r of –0.6 is twice as large as one of –0.3, it cannot indicate that the former is twice as strong as the latter, because four times more variance is being accounted for by an r of –0.6 than one of –0.3). Clustering analysis is the analytical method used in detailed exploration of correlation between target variables. Clustering analysis requires that we first find some possible differences within the data set. The data set was divided into groups based on similarities
23
such as the type of work, complexity of work, crews’ skill levels and number of crews. Then a potentially differentiating characteristic is selected; for example, the number of tasks planned each week. Each of the groups is further divided in accordance with the clustering method, based on the differentiating characteristic. An example: We divided the 92 data points in Group A into two clusters: Group A-1 and Group A-2 according to how many tasks were planned each week. SPSS statistical software was used in clustering, which involved the following three steps: Step 1: Find the most widely spaced initial cluster centers. In this case, there exist Cluster 1 with a center of 0 and Cluster 2 with a center of 380. Step 2: Assign each data point to its closest cluster center and update the cluster center. For example, the first set of data has 6 tasks planned. Its closest cluster center is 0. So it belongs to Cluster 1. The updated cluster center is 3 ((6+0)/2). This process was repeated until all data sets had been assigned and the cluster centers updated. Step 3: Repeat Step 2 until there is no more change in cluster centers.5
2.4 Data Generation and Analysis Methods for data generation include interviews, direct observation, and review of documentation. The methods generate data focused on motivation, preparation, training, organization, contract, scope of control, implementation, tools, lessons learned, success factors, challenges, and advice.
5
See Appendix D for a detailed description of the statistical analysis.
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2.4.1 Case selection Lean implementation at the project level relies on lean implementation at the organizational level. Therefore, the research team studied the leading organizations in lean implementation and the projects in which the organization has been involved. The research team selected fifteen (15) successful adopters of lean, and categorized them according to their role on project delivery teams. There are four owner companies, four general contractors, four specialty contractors, one supplier, one integrated team, and one A/E. Details of organizations used in this case study are shown in Fig 2.2.
Owner
• Sutter Health • BAA • Air Products • GM
Integrated Project Team
• IPD
A/E
• Burt Hill
GC
• Messer • GS • Boldt • Walbridge
SC
TEX
• BMW • Southland
Supplier
• Spancrete
Industries • Dee-Cramer • Il Yang
Fig 2.2. Case Studies
2.4.2 Interviewing Interviewing is the most commonly used form of qualitative research. The research team prepared open-ended questionnaires. The questions included lean history, lean principles and the tools that they implemented, the flow of commitment, employee training, contractual types, performance measurement, and success/failure factors. The
25
questionnaire surveys were administered through interviews. Fig 2.3 shows the topics investigated.
Description of the Lean projects Organizational commitment statement Training Prior Lean experience
Open-ended questions for each stakeholder
Organizational and contractual structure for Lean Their ‘lean’ stories at the project level Lean principles or tools implemented Interactions with other stakeholders Success factors and challenges Metrics Lessons learned
Fig 2.3 Interview Question Categories
2.4.3 Document analysis Another qualitative research method involves using various kinds of documents (Have, 2004). The research team collected various records regarding companies’ lean implementation. The research team studied ‘natural’ documents that are produced as part of an established social practice. For instance, the research team has obtained internal documents, such as a lean implementation plan, training materials, meeting minutes, various
forms
of
schedules,
contract
documents,
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and
demonstration
project
implementation documents, as well as, external publications, such as a movie describing the implementation of a lean tool, newspaper articles, and promotional materials for public investment. Studying these documents allowed the research team to understand the internal strategies and processes for lean implementation.
2.4.4 Observation Observation refers to methods of generating data which entail the researcher directly involving herself or himself in a research setting so that they can experience and observe first-hand a range of dimensions in that setting (Mason, 2002). Esterberg (2002) argued that observation is the essential part of qualitative research. Researchers go to the natural settings in which activities takes place, and observe what people ‘really’ do in those settings. The research team visited construction sites, construction material prefabrication plants, and the head offices of stakeholders, and recorded specific observational data from participation in project implementation processes and other activities devoted to planning, controlling, and managing construction processes.
2.4.5 Evaluation of data source A major challenge for interpretive approaches centers on the question how researchers can be sure that they are not simply inventing data, or misrepresenting their research participants’ perspectives (Mason, 2002). Qualitative researchers, over many years, have been locked in debates about this question, and different qualitative approaches offer different solutions. The research team sought to draw reflexively on our own experiences and perceptions, and to see these as part of the data. The main challenge with this
27
approach is to ensure that our team is doing it in meaningful and sensitive ways, rather than imposing our own interpretation inappropriately or without justification. Therefore, we tried to record the route by which we came to our interpretations as fully and explicitly as we could.
2.4.6 Data Analysis and Validation The first step in data analysis is to generalize research findings from a review of literature, case studies, and field experiments. Then a roadmap is developed for getting on the lean highway, i.e., along the way to becoming a lean enterprise. This research focuses on the process for demonstration projects. Finally implementation issues and project roles for each stakeholder is investigated. The validity of our method and analysis is assured in two ways. The first way is to assure the validity of data generation methods. The other way is to use a technique called ‘triangulation’. This technique is conceived as multiple methods, for instance, we used a combination of interviews, document investigation, and observing. By using more than one method, we tried to assure the validity of our research analysis. One of the concerns of our project team is the generalization of the results of the case studies and experiments. Our mission is to develop a roadmap for lean implementation. Usually, the case study methodology is implemented at a time when only a small numbers of cases exist, and it is difficult to generalize the results of a limited number of cases. Therefore, for each stakeholder, our research team tried to show generalization by picking multiple cases that illustrate the range of settings, or subjects, to which our original observations might be applicable. Although this research examines various lean
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implementation strategies and tools, we found that they had several characteristics in common. However, detailed standardization of lean implementation should be avoided because each project has its own context. Hence, theoretical generalization may be adopted for this research.
2.5. Research Plan The relationships among these various research tasks are shown in Figure 2.4. The approach used was to synthesize the available literature, field trials and extensive case studies. From findings from literature review, field trials and case studies, guideline and roadmap were developed for lean implementation at project level.
Define lean principles
Define Lean Project Delivery System and differences from other types of production system
Chapter 3
Review Toyota System (TPS, TPDS)
Chapter 4
Analyze the correlation between PPC and productivity
Describing learnings from literature review, statistical analyses, case studies, and field trials
Identify differences between lean project delivery and current best practice
Identify Mura, Muri, Muda
Develop case study process and interview questions, and select participants in the case studies
Define research methodology: Case study, experiment
Chapter 5
Chapter 2
Chapter 1
Roadmap for Lean Implementation at the Project Level Research Structure
Establish structure of the report
Develop field trials process and select participants in field trials
Review organizational change (Kotter’ s model, Large Group Method)
Define lean in the construction industry
Analyze the findings from case studies (adapters, reasons, and processes to lean)
Establish roadmap for getting on the lean highway
Analyze the findings from field trials
Establish roadmap for demonstrating projects
Figure 2.4: Research Structure
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Identify implementation issues by project role
3.0 Review of the Literature What has been written about lean and related topics is a vital resource for developing an implementation roadmap. The research team drew on publications, interview-based case studies, field experiments and statistical analyses. This chapter is devoted to a review of the relevant literature and is organized under four main headings: •
Toyota (3.1)
•
Lean in Construction (3.2)
•
Organizational Change (3.3)
This is not a comprehensive review of the literature on lean, on organizational change, or on project management. Our intent is rather to use selected publications to inform and expand our investigation into effective implementation.
3.1 Toyota The term “Lean Production” was coined by a member of the International Motor Vehicle Research team to designate what the researchers saw as a new and superior type of production system for motor vehicles (Womack et al, 1990). The researchers were persuaded by the difference in comparative performance measures between Japanese, American and European companies. Subsequently, it was found that the Japanese advantage was largely because of Toyota, and many academics and practitioners now believe that the Toyota Product Development System and the Toyota Production System
30
are exemplars for a new and superior way of designing and making all kinds of products, both goods and services. More recently, lean has been viewed as a business philosophy, with application to all aspects of a business, including but going beyond product development and manufacturing. Whatever focus one chooses, the inspiration and historical origin of lean is Toyota. In this section, we describe the Toyota Production System (3.1.1), the Toyota Product Development System (3.1.2), and the Toyota Way (3.1.3). Given our focus on projects, only the literature on Toyota’s Product Development System is described in detail. We also include a brief section, 3.1.4, on organizations that have implemented lean inspired by Toyota.
3.1.1 Toyota Production System (TPS) 3.1.1.1 House of Toyota The “House of Toyota” diagram has become one of the most recognized symbols in modern industries. The concept of “House of Toyota” was developed by Taiichi Ohno and Eiji Toyota to explain the Toyota Production System (Ohno, 1988). A house is strong only if the foundation and the pillars are strong. A house is functional only if the roof is well built. The ultimate goals of TPS, ‘highest quality, lowest cost, shortest lead time’ will be achieved based on the foundation of operational stability and the two pillars of TPS: just-in-time (JIT) and autonomation (automation with a human touch, Jidoka).
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Figure 3.1.House of Toyota JIT (just-in-time) is achieved when parts reach the manufacturing line at the time they are needed and only in the amount needed. A kanban is one tool to manage and assure JIT. Kanban are usually in the form of cards used to signal (or pull) needed parts and materials from upstream workstations. Limiting the number of kanban limits the amount of inventory. Jidoka, as known as autonomation, is a Japanese term meaning automation with a human touch. Autonomation is achieved when machines are given some characteristics of human intelligence; principally the ability to shut themselves down or otherwise signal detection of an upset condition or defect. Autonomation prevents the production of defective products, avoids overproduction, and automatically stops abnormalities on the production line allowing the situation to be investigated and corrected.
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The Toyota Production System emphasizes three Ms: Muda (waste), Mura (unevenness – leveling), and Muri (overburdening). All Lean teaching emphasizes the removal of waste, but few mention the concepts of level loading and overburdening people or machines. Jeffrey Liker (2004), in his The Toyota Way, explains that Toyota’s fundamental principles and practices actually start not from muda, but from mura, and then also muri. In Liker’s opinion, mura is the most fundamental because failure to avoid unevenness causes both overburdening and non-value-adding activities.
3.1.1.2 Spear and Bowen In their article, “Decoding the DNA of the Toyota Production System (1999)”, Spear and Bowen investigated why few manufacturers have succeeded in adapting the TPS – even though almost all information about Toyota was available. They believe the reason is that the adapters missed the systemic operation and cultural background that permeates through Toyota. The manufacturers focused only on tangible tools and practices they observed during their plant visits. Such a focus made it hard for the adapters to understand the paradox of the TPS-that activities, connections, and production flows in a Toyota factory are rigidly scripted, yet at the same time Toyota’s operations are very flexible and adaptable. Toyota has a scientific method both for defining problems and establishing sets of hypotheses that can be tested. To make any changes, Toyota uses a thorough problemsolving process that requires comprehensive assessments of the current conditions and a plan for improvement, which is usually an experimental test of the proposed changes. The scientific method stimulates the learning culture in Toyota and consequently explains
33
why the high degree of specification and structure at the company affect for a learning organization. The authors suggest four rules to adapt TPS successfully. Three rules explain how Toyota sets up its operations as experiments. The last one describes how the scientific method is taught to every level of workers in the company. The four rules are: 1. How people work – the first rule governs the way workers do their work. All work shall be highly specified as to content, sequence, timing, and outcome. 2. How people connect – the second rule deals with the way the workers interact with one another. Every customer-supplier connection must be standardized and direct, and there must be an unambiguous yes-or-no way to send requests and receive responses. 3. How the production line is constructed – the third rule explains how production lines are constructed. The pathway for every product and service must be simple and direct. That path should not be changed unless the production line is redesigned. 4. How to improve – the fourth rule explains how people learn to improve. Any improvement must be made in accordance with the scientific method, under the guidance of teacher. Every activity, connection, and production path is required to be designed according to these rules and have built-in tests to signal problems automatically. This system makes TPS flexible and adaptable to changing circumstances. Another study Spear conducted (2004) further explains how Toyota has achieved one of the most successful companies in the world and why so many companies have failed to
34
adapt TPS. Again, the author suggests four lessons from Toyota. The first lesson is that direct observation is essential. The second is that proposed changes should be structured as experiments. The third is that small, simple, and frequent experiments are to be conducted to solve problems and improve productivity continuously. The last lesson is that managers coach the workers to solve the problems, not fix the problems themselves.
3.1.1.3 Shingo Shingo (1988) focused on inventory and set-up time. He considered inventory as not a “necessary evil”, but an “absolute evil” and insisted on achieving production without inventory. Based on this view of inventory, he suggested the non-stock production (NSP) method to eliminate inventory. The NSP method recognizes the interrelationship among each individual operation as it relates to the whole process while the traditional western approach tends to stress the importance of improving individual operations. The NSP addresses the real cause of problems by eliminating inventory, and reducing setup times and lead times to improve production. It views management and production as two approaches to eliminate inventory. Shingo divided management into three activities: planning, control, and monitoring. According to Shingo, Western philosophies traditionally tend to emphasize the planning function among these activities. For instance, the Deming cycle for quality control recognizes “plan”, “do”, “check”, and “action”. It does not define “control”. However, in practice most product defects occur due to improper maintenance during the control stage.
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Control is the critical function to reduce defects and machine failure in uncertain circumstances. When control is ignored in production, the main tool for production quality is an inspection, especially a sampling inspection. This means that the production may not guarantee 100 percent quality of products. 100 percent inspection for 100 percent quality is not very common in practice due to time and cost constraints. One solution TPS and Shingo insist on is built-in quality. Built-in quality during the production process is one of the principles of TPS for quality assurance without additional inspection efforts. Control is important not only for built-in quality, but also for reduced inventory by eliminating waste. Shingo considered production as a network of processes flowing, “the chain of events during which raw materials are converted into products”, and operations flowing, “the chains of events during which workers and machines work on items”. Moreover, he claimed that processes take precedence over operations. In other words, the functions of the process are established first, and the functions of operations are then determined to supplement the process functions.
3.1.2 Toyota Product Development System The literature on the Toyota Product Development System (TPDS) is quite small relative to what’s been written on the Toyota Production System. Key authors and publications include, in approximate order of publication: •
Womack, Jones & Roos’ The Machine That Changed the World, 1990
•
Clark & Fujimoto’s Product Development Performance, 1991
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•
Ward et al’s “The Second Toyota Paradox: How Delaying Decisions Can Make Better Cars Faster”, 1995
•
Womack & Jones’ Lean Thinking, 1996
•
Sobek et al’s “Another Look at How Toyota Integrates Product Development”, 1998
•
Sobek et al’s “Toyota’s Principles of Set-Based Concurrent Engineering”, 1999
•
Fujimoto’s The Evolution of a Manufacturing System at Toyota, 1999
•
National Center for Manufacturing Sciences’ Product Development ProcessMethodology and Performance Measures, 2000
•
Kennedy’s Product Development for the Lean Enterprise, 2003
•
Liker’s The Toyota Way, 2004
3.1.2.1 The Machine That Changed the World and Product Development Performance In the middle to late 1980s, MIT led an international motor vehicle research program that focused on factory production and supplier relationships. At roughly the same time, Kim Clark at the Harvard Business School was studying product development in the automotive industry. The findings of the MIT program were published in popular form in The Machine that changed the World. Under the influence of early reports from the Harvard team, some special studies were done by the MIT team on product development. Their findings and conclusions are reported, along with those of the Harvard team, in Chapter 5: Designing the Car, and can be summarized in four principles, intended to be descriptive of Japanese manufacturer’s practices as a whole:
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•
Leadership: the practice pioneered by Honda of having a shusa lead each product development project, functioning as a “supercraftsman” rather than as a coordinator, as had previously been the case.
•
Teamwork: specialists from functional departments are assigned to a project for its duration, rather than staying (organizationally) within their home department and shifting from project to project with workload variation.
•
Communication: early conflict between competing priorities and explicit commitment (signed documents) by team members to keep their mutual promises.
•
Simultaneous
Development:
concurrent
development
enabled
by
the
predictability of functions and explicit agreements regarding the design space within which solutions will be developed. The Harvard team used the expression “heavy weight project management” to differentiate the Japanese approach. Another critical feature identified was sharing incomplete information among the various functional specialists. They also reported that the Japanese had almost half as many team members on similar projects as did the Americans and Europeans. Other important findings: •
The Japanese completed product development projects 25% faster than anyone else.
•
The Japanese spent almost half the engineering hours on comparable projects.
•
The Japanese had 1-in-6 projects delayed versus 1-in-3 for Europeans and 1-in-2 for the Americans.
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•
The Japanese had a clear advantage in various other dimensions of performance, including return to normal quality in factories producing new models, return to normal productivity, time from production start to first sale, development time for prototypes, and supplier share of engineering.
3.1.2.2 Ward and Sobek The three articles of which Ward or Sobek were the lead authors were published in MIT’s Sloan Management Review (1995, 1999) and in the Harvard Business Review (1998)6. They report the findings from research on Toyota’s product development specifically, and describe more clearly and in more detail several of the practices reported in the earlier publications. For example, sharing incomplete information was noted by Clark and Fujimoto, but in their 1995 article, Ward and company show how that practice was part of a strategic approach to design, “set based concurrent engineering”7 , which is contrasted to “point based design”, in which functional specialists select options that meet their design criteria, but without consideration of other specialists’ criteria, resulting in rework and confusion. The set based strategy is to have everyone agree on the eligible options (alternatives or ranges of values), so that each specialist can move forward within that set confident that their efforts will not be wasted.
6 7
Ward et al (1995), Sobek et al (1998) and Sobek et al (1999) See Lottaz et al (1999) for a fascinating account of set based design using continuous rather than discrete values. Their account is summarized in Ballard (2000).
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Figure 3.2 Example of Set-Based Concurrent Engineering8 In their 1999 article, Sobek and company explicitly contrast Toyota’s set based design strategy with concurrent engineering, which they understand to be an improvement on traditional practice, but still within the limits of the point based paradigm. Key points of difference are that Toyota does not typically have engineers work on only one project at a time, does not typically collocate project teams, does not rotate engineers cross functionally for their first 10-20 years, does not use any different computer modeling tools than competitors, rarely uses QFD9 or Taguchi functions10, does explore broader design spaces (possible solutions), narrows sets of options more slowly and deliberately, and still completes engineering more quickly than anyone else. The authors also describe the principles of set based design more completely than in their 1995 article. 8
Reproduced with permission from p. 70, Sobek et al (1999). Quality function deployment; a tool for translating from ‘what’ to ‘how’; generally, from the voice of the customer into the language of technical specifications 10 Method for quality engineering; typically statistical evaluation of the interdependence of different variables (Taguchi, 2005). 9
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In their 1998 article, Sobek and company identify six processes used by Toyota in product development and stress the fact that these work together as a whole and are not to be cherry picked: •
Mutual adjustment as opposed to rigidly preprogrammed processes; facilitated by methodical preparation for meetings and disciplined meeting management
•
Mentoring supervisors, not facilitators or coaches, but mentors, who teach both technical and social skills through questioning, not through commanding
•
Integrative leaders. This is a return to Clark and Fujimoto’s shusa, now characterized as the Lead Designer, in line with Womack et al’s “supercraftsman”, but at odds with the idea of a ‘super project manager’.
•
Standardization of processes and skills in functional specialties to increase predictability of what will be produced from each specialist—obviously a necessity for set based design. This process involves on the job training, rotation within a functional group until management level (10+ years), then rotation across functional groups to develop a network of mutual obligation— because a highly skilled specialist will not be able to function as a mentoring supervisor in another functional group.
•
Standardization of the product development process—but at the milestone level, with substantial discretion of the project team to shape and modify.
•
Standardization of design. Functional groups maintain extensive checklists for evaluating the adequacy of a design option, but those checklists are maintained by each functional department, not by some centralized group of ‘planners’, and are continuously updated to reflect new knowledge and
41
innovations. These design standards are also expressed in terms of sets, ranges of acceptable values or sets of viable solutions, not point values, unlike most design standards. •
The authors conclude by pointing the reader to what they believe is the secret to Toyota’s success in product development; namely, recognition that “…people, not systems, design cars.”
3.1.2.3 Lean Thinking In their 1996 book, Womack and Jones provide guidelines for designing new products, along with the order taking and delivery process, and the production (manufacturing) process. They characterize effective product design as follows: •
Define needs through customer interviews
•
Dedicate people for the life of the project
•
Organize in cross functional teams
•
Use QFD (quality function deployment 11 ) to translate from the voice of the customer into technical specifications
•
Set and design to a target cost, which is defined as “the development and production cost which a product cannot exceed if the customer is to be satisfied with the value of the product while the manufacturer obtains an acceptable return on its investment”.
11
The seminal text on QFD is Akao, 1990.
42
•
Follow the heavy weight project manager model (Chief Engineer) from Clark and Fujimoto.
They differ from Sobek, Ward and their co-authors regarding staff dedication to single projects, the centrality of QFD, their interpretation of the heavyweight project manager model, their appreciation of target costing (Womack and Jones include it but Sobek et al do not) and their appreciation of the set based design strategy (Sobek et al include it but Womack and Jones do not). Womack and Jones also provide a roadmap for lean implementation, extending from processes, through projects, to the entire enterprise, and beyond the single enterprise to the networks of which it is a member as customer or supplier. Their roadmap has a 5 year time line. The phases and steps are as follows: Getting Started •
Find a change agent
•
Get the knowledge
•
Find a lever by seizing the crisis, or by creating one
•
Forget grand strategy for the moment
•
Map your value streams
•
Begin as soon as possible with an important and visible activity
•
Demand immediate results
•
As soon as you’ve got momentum, expand your scope
43
Creating an Organization to Channel Your (Value) Streams •
Reorganize your firm by product family and value stream
•
Create a lean promotion function
•
Deal with excess people at the outset
•
Devise a growth strategy
•
Remove the anchor-draggers
•
When you’ve fixed something, fix it again
•
“Two steps forward and one step backward is OK; no steps forward is not OK”
Install Business Systems to Encourage Lean Thinking •
Utilize policy deployment
•
Create a lean accounting system
•
Pay your people in relation to the performance of your firm
•
Make everything transparent
•
Teach lean thinking and skills to everyone
•
Right-size your tools
Completing the Transformation •
Convince your suppliers and customers to take the steps just described
•
Develop a lean global strategy
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•
Convert from top-down leadership to bottom-up initiatives
3.1.2.4 The Evolution of a Manufacturing System at Toyota In his 1999 book, Fujimoto proposes an evolutionary model for Toyota’s development, responding to the often noted fact that Toyota did not work from a grand plan, but rather reacted to circumstance and opportunity. In his model, the “routine capabilities” identified in his earlier book (Clark & Fujimoto, 1991) are treated as “genes” which enable the firm to adapt over time to changing conditions. Product development projects are evaluated in terms of speed, efficiency, and product integration (quality). Those projects that achieved high marks on all three dimensions are said to be those with the following “routine capabilities”: •
Supplier capabilities—allowing suppliers of components to design those components for manufacturing and assembly
•
In-house
manufacturing—application
of
manufacturing
capabilities
to
prototyping, pilot runs, and production ramp-up; all of which occur in product development before the start of manufacturing •
Overlapping product and process engineering phases to reduce lead time—which requires intensive communication and mutual trust of the upstream and downstream people
•
Wide task assignment for engineers; i.e., the opposite of over specialization
•
Heavyweight project manager system
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Perhaps the most important of Fujimoto’s contributions is the observation that organizational routines created by an emergent process are difficult to imitate, and that the difficulty is greater for product development than for manufacturing (p. 199).
3.1.2.5 Product Development
Process-Methodology and Performance
Measures/ Product Development for the Lean Enterprise In 2000, NCMS, the National Center for Manufacturing Sciences, published a report on a 2 year research project, the goal of which was “...to determine how to make substantial improvements, not just incremental improvements, in product development lead times by studying the methodologies of world class companies that had distinguished themselves by being fast to market with the highest quality products.” 12 In 2003, Michael Kennedy published Product Development for the Lean Enterprise to make the learning from that research project available and accessible to the general public in the form of a story about a company that goes through the lean transformation. The central message in both the research report and Kennedy’s book is that mindsets and paradigms are more important than tools and methods. Even cross functional teams, computer modeling, and decision support tools were found to have a limited impact on project durations. Another important finding is that the research project, though not focused exclusively on Toyota, found Toyota’s product development system to be the best performing and best structured. The NCMS report concludes with a broad characterization of the difference between Toyota’s and the other companies’ approaches to product development, finding that while everyone else was concerned with achieving
12
from http://lpdi.ncms.org/history.htm, accessed January 3, 2007
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compliance to procedures, Toyota was concerned to promote learning. Even Toyota’s fantatical dedication to process and skill standardization was understood as means to learning and continuous improvement. Other companies designed then tested, while Toyota learned through study and analysis, then designed. In Product Development for the Lean Enterprise, Kennedy tells a story about how one company changed its product development process. A major theme in that story is implementing major organizational change. The following quote is from p.231: “There are two methods for implementing major change. The common approach is what I call the ‘define and convince’ model, in which an assigned expert (or expert team) defines the change specifics and convinces the rest of the organization to follow their recipe for change. This model works best in small companies, largely because of the close link between the company’s leadership and its workers. But in large companies, this process is slow, seldom wins widespread buy-in, and often requires extensive infrastructure and procedural controls to maintain the change. The other method is the ‘participative model’, in which the leader defines the change goals and challenges the workforce to define and execute the changes. The process itself is a series of facilitated large-group sessions for convergence and decisionmaking, sandwiched around smaller group parallel activities for testing and learning. The power of this approach is the rapid assimilation of knowledge and buy-in across the organization. But it requires the leaders to trust the workers, not ‘perceived’ experts, with the details.”
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Kennedy provides a recommended reading list on participative change13 and notes the similarity between the ‘lean’ way of delivering projects and the participative change methodology itself.
3.1.2.6 The Toyota Way on Product Development In his 2004 book, The Toyota Way, Liker illustrates Toyota’s application of its fundamental management principles to its product development system, using the Lexus and Prius programs. The Lexus project represents the Toyota Production System in its full glory, developed over twenty-plus years. However, it had never faced quite the same challenge as when it decided to enter the luxury car market in head-to-head competition with the likes of Mercedes and BMW. In Liker’s account, we see more clearly than before how a Toyota Chief Engineer, in this case Ichiro Suzuki, manages a product development program, and how he functions as ‘chief designer’, how he drives the set based design strategy, and how he integrates design and engineering across vehicle systems. Suzuki began by benchmarking the competition, principally through interviews in which customers were asked why they chose to buy one brand or another, and also their reasons for rejecting competitors. Mercedes, BMW, Audi, Volvo, Jaguar, Nissan (Maxima), and GM (Cadillac) were chosen as benchmark competitors. The next step was to set targets, based on that benchmarking, for top speed, fuel consumption, noise, aerodynamics and vehicle weight. To achieve these targets, Suzuki established what he called the “YET” list:
13
See Bunker (1997), Bunker and Alban (2006), and Danemiller Tyson (2000).
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•
Great high-speed handling/stability YET A pleasant ride
•
Fast and smooth ride
•
Super quiet
YET Light weight
•
Elegant styling
YET Great aerodynamics
•
Warm
YET Functional interior
•
Great stability at high speed
YET Low aerodynamic friction
YET Low fuel consumption
Each of these paired vehicle characteristics are in tension. For example, mass had previously been used to dampen vibration, but Suzuki forced the team to explore reducing noise at its source, the engine. This is a great illustration of the target costing concept. The “YET” list imposed targets on the project delivery team that required them to go beyond previous best practice. Liker presents the Lexus project as a break though for Toyota from its conservative, risk-averse past. Looking back at Fujimoto’s evolutionary model, we might see this breakthrough as both continuous and discontinuous with the past; an adaptation of the organism’s interaction with its environment, but one enabled by its fundamental principles and practices (“genes”). Did Toyota create a “new product development process” with its Prius project? It was certainly tasked to do so by Toyota management. The goals of the Prius project were to: 1. Develop a new method for manufacturing cars for the 21st century. 2. Develop a new method for developing cars for the 21st century.
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Liker says nothing about the new manufacturing method, but identifies two changes in Toyota’s product development system; namely: 1) Use of the obeya14 (big room) for more team control of the project—though it is clear that the Chief Engineer remains the driver, and 2) Inclusion of manufacturing engineers in the concept development stage— though that practice started prior to the Prius, and appears rather to be a continuation of a long term trend to include downstream players in ever earlier upstream processes. The Chief Engineer as lead designer, target setting to drive innovation, and set based design appear to remain at the heart of the Toyota Product Development System—but now tweaked to get more horsepower from the same displacement. As of 2003, these innovations, together with innovations in the use of computer technology15, enabled Toyota to routinely develop new products in 12 months or less, roughly half the time required by competitors. Again, the changes appear to be both continuous and discontinuous. In this case, the technological challenge of developing a hybrid vehicle for production, together with the speed of delivery demanded by Toyota management, required more collaborative management, as evidenced both in the use of the obeya and in the cross functional organization used in the concept stage of the project. We might say that Toyota’s outstanding capability is the capability of reinventing itself, not in response to changes in its environment, but rather in anticipation of changes in its environment, so that it becomes an environmental force itself.
14
See Tanaka (2005) for more detailed information on Toyota’s use of the obeya.
15 But note Toyota’s technological conservatism, expressed in the principle “Use only reliable, thoroughly tested technology that serves people and processes” (Liker 2005).
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3.1.3 The Toyota Way The Toyota Production System (TPS) and the Toyota Product Development System (TPDS) are not the Toyota Way. TPS and TPDS apply the principles of the Toyota Way (Liker, 2004) to manufacturing and to product development, respectively. As was shown in the preceding section, Toyota changed its product development process to meet the challenges of the Prius. Over time, Toyota also changes its manufacturing system. These changes are fundamentally driven by the 14th principle of the Toyota Way: “Become a learning organization through relentless reflection and continuous improvement”. One reason why so many have failed to successfully imitate Toyota’s performance and success is that they are shooting at a moving target. Understanding at the level of theory and principle is the only sound basis for learning, and learning faster than competitors is the only sound basis for business success. Benchmarking and imitating current best practice is a sure recipe for staying second best. The Toyota Way is a set of management principles at the level of the business organization or enterprise. Many companies’ attempts to implement lean have been fairly superficial. One of the reasons is too much focus on tools such as 5S, JIT, kanban, and standardization. Each company faces its own problems in different environments, requiring thoughtful adaptation and application of the lean principles, not mindless imitation.
In this case, hardheaded business objectives can be achieved only by
embracing and understanding lean philosophy. Liker offers 14 principles organized in four categories: Philosophy (the foundation), Process (application of lean tools), People/Partners (developing internal and external
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people), and Problem Solving (the evolution to lean enterprise through continuous improvement) as seen in Figure 3.2.
Problem Solving (Continuous Improvement & Learning)
People & Partner (Respect, Challenge, and Grow Them)
Process (Eliminate Waste)
Philosophy (Long-Term Thinking)
Figure 3.3 “4P” of the Toyota Way (Liker, 2004) The fourteen (14) management principles of the Toyota Way are: Section I: Philosophy: Long-term thinking is the foundation of the Toyota Way. The objective and focus from the very top of the company is to add value to customers and society. This drives them to become a learning organization, one that can adapt to changes in the environment and survive as a productive organization. Without this foundation, none of the investments Toyota makes in continuous improvement and learning would be possible. • Principle 1. Base decisions on long-term philosophy even at the expense of short-term financial goals
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Section II. The Right Process Will Produce the Right Results: Toyota is a processoriented company. They have learned through experience what processes work, beginning with the ideal of one-piece flow. Flow is the key to achieving best quality at the lowest cost with high safety and morale. At Toyota this process focus is built into the company’s DNA, and managers believe in their hearts that using the right process will lead to the results they desire.16 • Principle 2. Create continuous process flow to bring problems to the surface • Principle 3. Use “Pull” systems to avoid overproduction • Principle 4. Level out the workload (heijunka) – Work like the tortoise, not the hare • Principle 5. Build a culture of stopping to fix problems to get quality right the first time (jidoka) • Principle 6. Standardized tasks are the foundation for continuous improvement and employee empowerment • Principle 7. Use visual control so no problems are hidden • Principle 8. Use only reliable, thoroughly tested technology that serves people and processes Section III. Developing People and Partners: the Toyota Way includes a set of tools that are designed to support people continuously improving and continuously developing. This suits Toyota’s employee development goals perfectly because it gives people the sense of urgency needed to confront business problems. The view of management at Toyota is that they build people not just cars. 16
See Johnson & Bröms (2000) for an illuminating contrast between ‘managing by results’ and ‘managing by means’. Toyota and the Swedish truck maker Scania are presented as examples of those who manage by means.
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• Principle 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others • Principle 10. Develop exceptional people and teams who follow your company’s philosophy • Principle 11. Respect your extended network of partners and suppliers by challenging them and helping them improve Section IV Continuously Solving Root Problems Drives Organizational Learning: The highest level of the Toyota Way is organizational learning. Identifying root causes of problems and preventing them from reoccurring is the focus of Toyota’s continuous learning system. Tough analysis, reflection, and communication of lessons learned are central to improvement as is the discipline to standardize practices. • Principle 12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu) • Principle 13. Make decisions slowly by consensus, thoroughly considering all options; implement rapidly • Principle 14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen)
3.1.4 Toyota’s impact beyond manufacturing Toyota’s impact has extended far beyond manufacturing. To cite but a few examples, lean principles and methods are now in use in healthcare, software engineering, finance, oil field development, and government operations. An indicator of the extent of lean’s
54
penetration is a set of articles in the McKinsey’s on-line publication in 2007 (McKinsey Quarterly, 2007, number 3), in which the following articles were posted: •
“Beyond manufacturing: The evolution of lean production”
•
“Toward a leaner finance department”
•
“Applying lean to application development and maintenance” (Information Technology)
•
“Better manufacturing in China”
•
“Applying lean to the public sector”
The Lean Enterprise Institute (www.lean.org) has numerous publications describing the application of lean both within and beyond manufacturing. Productivity Press, which published the vast majority of the lean manufacturing titles, has established a Healthcare Performance Press, which recently published a white paper entitled “Applying Lean in Healthcare” (Nash, et al., 2007).
3.2 Lean in Construction Lean construction as a movement arose from recognizing the limitations of current project management and applying new production management or “lean production” to the construction industry. In this section, we describe the lean construction literature. Our first topic is lean construction organizations (3.2.1), which are sketched lightly here, but described in more detail in Appendix E. We then turn to publications, starting with theory (3.2.2), then the lean project delivery system (3.2.3), followed by publications concerning
55
implementation of lean in construction (3.2.4), and ending with a brief review of previous CII research relevant to our topic (3.2.5).
3.2.1 Organizations promoting lean in construction There are an increasing number of organizations promoting lean in construction. Here three of the primary and longest lasting are described, in the order in which they emerged: the International Group for Lean Construction, the Lean Construction Institute, and Constructing Excellence. Associated with the first two, organizations active in lean construction appeared in Chile in 1994 (led by Luis Alarcon at the Catholic University of Santiago), in Brazil in 1997 (led by Sergio Antonio Itri Conte in Sao Paolo and by Professor Carlos Formoso of the University of Rio Grande do Azul), and in Denmark in 1999 (an LCI affiliate based at the Danish Technological Institute).
3.2.1.1 International Group for Lean Construction The International Group for Lean Construction, a loose association of mostly scholars and researchers, held its first conference at the offices of VTT, the Finnish Building Institute, in Espoo, Finland in August, 1993. The conference was organized by Lauri Koskela, then of VTT, and Glenn Ballard of the University of California, Berkeley. Koskela and Ballard met during the former’s time at Stanford as a Research Fellow. The research report (Koskela, 1992) Koskela produced during that time challenged the construction industry to apply the new production management principles coming out of manufacturing. At that same time, Ballard was developing what became known as the Last Planner® system of production control (Ballard & Howell, 1998; Ballard, 2000).
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Koskela’s theory and Ballard’s tools have together been an important foundation for the extension of lean into construction. Six people attended that first meeting. In July 2006, IGLC held its 14th annual conference in Santiago, Chile, organized by Professor Luis Alarcon, also a participant in the 1993 conference, and editor of the proceedings of the first three annual conferences. Attendance has increased over the years to the 80-110 range. Annual conferences rotate from Europe to Asia to South America to North America, then start over again. In the last few years, European participants in IGLC have formed a regional organization, the European Group for Lean Construction, which meets quarterly at different locations within Europe. 113 authors from 20 different countries submitted papers to IGLC 14 in Santiago. In alphabetical order, the countries were: Australia, Brazil, Chile, Denmark, Finland, Germany, Indonesia, Israel, Japan, Korea, Mexico, Netherlands, Norway, Nigeria, Palestine, Sweden, Taiwan, Turkey, UK, and USA. The IGLC 14 proceedings are organized under the following research themes, indicating the breadth and scope of inquiry. Descriptions of each of these themes, with an account of the research frontier, is provided by theme champions on the IGLC website (www.iglc.net). Papers from the proceedings of all IGLC conferences may be downloaded for free from the same website. IGLC Research Themes: •
Theory
•
Product development and design management
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•
Production system design
•
Prefabrication, assembly and open building
•
Supply chain management
•
IT support for lean construction
•
Production planning and control
•
Safety, quality and environment
•
People, culture and change
•
Implementation and performance measurement
3.2.1.2 Lean Construction Institute The Center for Innovation in Project and Production Management was formed in 1997 by Gregory Howell and Glenn Ballard to develop and deploy related knowledge. Lean Construction Institute is the dba for the Center’s work in the construction industry. Howell and Ballard had worked together for some time as project management consultants, and had proven effective at saving bad jobs. Under the growing influence of lean and the frustration of one specific South American project, they decided that what was needed was to create a lean project delivery system that would help avoid jobs going bad in the first place, and which would provide a theoretical framework that others could learn and put into practice. The driving idea was to unite theory and practice, by working directly with early adopters of lean in the mode of scientific experimentation.
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LCI originally had multiple functions, several of which have been partially or completed delegated to other organizations. Research is now primarily done through university research organizations such as the Project Production Systems Laboratory at the University of California, Berkeley. Consulting was found to be in tension with its advocacy role and is no longer provided by LCI. Education is limited to awakening awareness of new concepts and techniques, but does not extend to training. What remains as central for LCI to perform is the role of advocate and think tank. “Lean Construction is a production management-based approach to project delivery-a new way to design and build capital facilities” (LCI, 2000). Traditional project management is focused on managing activity-by-activity. The focus on activities conceals the waste generated between coupled activities by the unpredictable release of work and uncertain arrival of needed resources (Koskela, 1992). The purpose of traditional project control is to minimize the negative variance from pre-established (contracted) budgets and schedules (Halpin, 1985; Howell and Ballard, 1996). This view of traditional project control leads to contract-minded management, which monitors contract compliance and relies on managing contracts as the means to managing projects. In effect, the tendency in traditional project management is to ignore actual production altogether, as occurs in the practice of pushing work with schedules regardless of the readiness of the production system. By contrast, the focus of management in lean construction is explicitly and directly on production , starting with work flow reliability, then extending to cycle time, work-in-process, available capacity, etc. Managing the combined effects of dependence and variation is the first concern in lean construction.” (Howell, 1999)
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Generally, two main research streams have been observed in lean construction principles and practices. One is the theoretical stream with Lauri Koskela's theory of production based on the Transformation-Flow-Value concept (the TFV-concept). The other is the practical stream with Glenn Ballard and Greg Howell's production control focusing on work flow reliability. Ballard (2000) suggested a Lean Project Delivery System17 . It represents five phases in which each phase overlaps with the next using overlapping triangles (See Fig 1.1). They are project definition, lean design, lean supply, lean assembly, and use. Research in the lean community covers the phases and tools of the lean project delivery system, plus theory and implementation. LCI now has affiliates in Denmark, the U.K., Germany, Norway and Sweden, and works closely with university-based groups promoting lean practices in Brazil, Chile, and Peru. LCI holds an annual Congress, intended to assemble the best thinkers and best practitioners of lean in the world. LCI also co-sponsors, with the University of California, Berkeley’s Project Production Systems Laboratory, a Lean Design Forum, which meets twice a year. In addition, LCI periodically holds conferences on construction industry issues such as relational contracting and the scarcity of skilled construction labor. Presentations and audio tapes from the Congress, Design Forum, and special events are available at www.leanconstruction.org\files. Also available at that website are the LCI White Papers, produced from 1998 through 2001. These eleven White Papers are attempts to advance thinking about lean in the context of project production systems. A further source of information is the Lean Construction Journal, an LCI electronic journal available at www.leanconstructionjournal.org. 17
Details are described in Chapter 1.3.1.
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3.2.1.3 Constructing Excellence The lean construction movement in the United Kingdom was launched by the Rethinking Construction report (1997), which was crafted by the major buyers of design and construction services, including BAA, whose chairman, Sir John Egan, chaired the commission that authored the report. It demanded substantial performance improvement in the industry and spawned multiple initiatives, many of which have been consolidated under the umbrella of Consulting Excellence.
3.2.2 Project case studies on lean implementation previously published A number of relevant case studies describing lean implementation on capital projects have been published previously, including: •
Petroleos de Venezuela’s PARC project o Ballard, Glenn, Gregory Howell, and Michael Casten (1996). “PARC: A Case Study.” Proceedings of the 4th Annual Conference on Lean Construction, Birmingham, England.
•
Koch Refining’s Mid-Plant Project o Howell, Gregory and Glenn Ballard (1994a). "Lean Production Theory: Moving Beyond 'Can-Do'." Proc. Conference on Lean Construction, Santiago, Chile. September, 1994. o Ballard, Glenn and Gregory Howell (1994a). “Implementing Lean Construction: Stabilizing Work Flow.” Proceedings of the 2nd Annual Meeting of the International Group for Lean Construction, Santiago,
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Chile. (Available in Lean Construction, A.A. Balkema Publishers, Rotterdam, Netherlands, 1997.) o Howell, Gregory and Glenn Ballard (1994b). "Implementing Lean Construction: Reducing Inflow Variation." Proc. Conference on Lean Construction, Santiago, Chile. September, 1994. o Ballard, Glenn and Gregory Howell (1994b). “Implementing Lean Construction: Improving Performance Behind the Shield.” Proceedings of the 2nd Annual Meeting of the International Group for Lean Construction, Santiago, Chile. (Available in Lean Construction, A.A. Balkema Publishers, Rotterdam, Netherlands, 1997.) •
Nokia twin towers o Koskela, Lauri, Glenn Ballard, and Veli-Pekka Tanhuanpaa (1997). “Towards Lean Design Management.” 5th Annual Conference of the International Group for Lean Construction. Griffith University, Gold Coast, Australia. July, 1997
•
Texas Showplace o Ballard, Glenn (2000). The Last Planner System of Production Control. PhD thesis, Dept. of Civil Engineering, University of Birmingham, Birmingham, U.K., June, 2000.
•
Malling (precast concrete fabricator)
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o Ballard, Glenn, Nigel Harper, and Todd Zabelle (2003). “Learning to See Work Flow: Application of Lean Production Concepts to Precast Concrete Fabrication.” Journal of Engineering, Construction and Architectural Management, 10(1), Blackwell Publishers, Oxford, U.K. pp. 6-14. •
Terminal 5, Heathrow Airport o Arbulu, Roberto, Glenn Ballard and Nigel Harper (2003). “Kanban in Construction”. Proceedings of the 11th annual conference of the International Group for Lean Construction, Virginia Tech, Blacksburg, VA, August, 2003. o Arbulu, Roberto and Glenn Ballard (2004). “Lean Supply Systems in Construction”. Proceedings of the 12th annual conference of the International Group for Lean Construction, Elsinor, Denmark, August, 2004. o Ballard, Glenn (2006). “Innovations in Lean Design”. Presented at the University of Cincinnati, April 26, 2006.
•
St. Olaf’s College Tostrud Fieldhouse o Ballard, Glenn and Paul Reiser (2004). “The St. Olaf College Fieldhouse Project: A Case Study in Designing to Target Cost”. Proceedings of the 12th annual conference of the International Group for Lean Construction, Elsinore, Denmark, August, 2004.
•
Channel Tunnel Rail Link project (Contract 105)
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o Koerckel, Andre and Glenn Ballard (2005). “ROI in construction innovation – a lean construction case study”. Proceedings of the 13th annual conference of the International Group for Lean Construction, Sydney, Australia. pp. 91-98. •
Spancrete’s Lean Approach to Manufacturing (company case study, not a project) o Brink, Todd and Glenn Ballard (2005). “SLAM – a case study in applying lean to job shops”. Proceedings of the ASCE 2005 Construction Research Congress, San Diego, CA. pp. 1-6.
•
Toyota South Campus Facility o Lapinski, Anthony R., Michael J. Horman and David R. Riley (2006). “Lean Processes for Sustainable Project Delivery”. Journal
of
Construction Engineering and Management, ASCE, October 2006, pp. 1083-1091. Implementation of lean on projects appears to have begun with the 1994-95 PARC project at PDVSA’s Marven Refinery in Venezuela, roughly in parallel with Koch Refining’s Mid-Plants project in Corpus Christi, Texas. Lean on PARC was driven by production control and first run studies in a successful effort to overcome massive schedule problems in the last year of construction on a $1.2B project. A 28% improvement in productivity was recorded in that final year and all critical units were completed on schedule.
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The Mid-Plants project was also focused initially on production control, and succeeded in integrating materials management with lookahead planning and weekly work planning. The pipefitter crews with PPC below 50% had an average productivity 30 percent less than crews with PPC above 50 percent. Additional work was done on built-in quality which resulted in cutting the defect rate in half for piping test systems. Nokia Twin Towers was the first application of Last Planner® to the design phase of a project, followed by the Texas Showplace project. The Malling case demonstrated the beneficial application of lean concepts and methods to the design and fabrication of engineered-to-order products, in this case precast concrete elements. Terminal 5 was a laboratory for experimentation with multiple lean tools, including just-in-time deliveries, model based detailing, extensive prefabrication and preassembly, forms of relational contracting and aligning interests, and integration of materials management with production control. (See the BAA case study in the Appendix for more details.) The Tostrud Fieldhouse case was the first application of a target costing methodology adapted from Japanese product development to the design and construction of capital facilities. Even though early and partial, the application was very successful, resulting in a facility unit cost 1/3 less than comparable facilities, delivered 10 months faster. Contract 105 was part of the massive Channel Tunnel Rail Link Project, devoted to the construction work needed at St. Pancras’ Station in London to support the change in Eurostar’s terminus from Waterloo to St. Pancras, which is 11th on the register of historic buildings in the United Kingdom. Lessons learned from Terminal 5 were applied at St.
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Pancras, and in addition, even more extensive use was made of 3D modeling to integrate the design of product and process. Spancrete is a fabricator of precast concrete products, both made-to-stock and engineered-to-order. The story of Spancrete’s lean journey is told in the case study in Appendix C. This paper tells that story through the date of its publication in 2004. The Toyota South case study links lean and sustainability, a very important connection the further development of which is called for in Chapter 5 of this report. In addition to these case studies of lean implementation, there are numerous papers on the implementation of lean in construction. For example, see the proceedings of the annual conferences of the International Group for Lean Construction at www.iglc.net.
3.2.3 Relevant Previous CII Research Numerous CII research reports have been produced on topics relevant to our research. Topics include safety, quality, materials management, productivity, project control, project planning, and many more. In this section, we briefly describe some of the more recent research and explain how their findings are related to lean implementation on projects.
3.2.3.1 Craft Labor Productivity (PT 143) This study compares two strategies for improving construction labor productivity, those strategies being “the buffer strategy” and “the production planning strategy”. Increased use of buffers reduces the need to plan production in detail by introducing flexibility into the production system. Conversely, precise production planning reduces
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the need for large buffers by ensuring that the correct materials, designs, and equipment are available for craft workers. The production planning strategy proved more effective than buffers at improving crew productivity, and was effective for both piping and electrical trades. The buffer strategy is in conflict with the lean principles of zero inventory and a pull rather than push system. The lessons from lean principles suggest reducing variability of work flow to reduce the needs for buffer. The production-planning strategy is in line with the production control system which focuses on making release of works to downstream predictable. The findings from PT 143 are also consistent with the detailed design of construction operations, which may involve virtual prototyping, physical mockups, and first run studies. The crew that will do the first run of a new operation is involved in detailed planning, then the first run is used to test the capability of the operation as designed against safety, quality, time and cost targets.
3.2.3.2 Making Zero Accidents a Reality (PT 160) The research focused on short duration projects that are commonly referred to as shutdowns, turnarounds, or outages.
This research was conducted by interviewing
contractor personnel on 44 different shutdown projects.
50 percent of the projects
reported having achieved zero OSHA recordable injuries. Shutdown projects with better safety records were those that were successful in transferring workers from other projects to perform the work. There is no simple or singular solution to achieving zero injuries. Excellent safety performance is achieved through applying those practices that have shown to be effective, whether on large projects or on shutdown projects.
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While findings did not disclose any impact on safety performance when the work force was large or small, the findings did show a relationship between the level of supervision offered and safety performance. Incentivized contracts, or ones in which the contractor receives a financial reward or monetary benefit for performing work safely, were shown to be associated with better safety performances. The most notable conclusion that can be drawn from this study is that the achievement of zero injuries on shutdown projects is a goal that is achievable. For exemplary safety performance, workers for the shutdown should be familiar with the shutdown work. For best safety results, scheduling must be done in greater detail, in terms of hours as opposed to shifts or days. The benefit experienced by detailed scheduling directly applies to the planning procedure inherent within lean construction. The ability to schedule down to the most specific and useful increment of time allows for the greatest amount of flexibility and control.
3.2.3.3. Improving Capital Projects Supply Chain Management (PT 172) The PT 172 project team explored improvement of the supply chain management and elimination of quality-error related costs for construction sites. The research team focused on issues of production system design. Although numerous publications on supply chain management investigate flows and handoff of information, materials, and funds, they do not address issues of production system design. The team argued that the production system design that organizations in the supply chain
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will use is deeply related to supply chain management. Moreover, the system design affects how processes that involve multiple firms performed and managed. This research studied examples of capital projects supply chain management tools and techniques from managerial aspects: supply-based management; life-cycle costing; assembly of unique facilities from standardized modules and components; problem solving through strategic partnering; emphasis on long-term working relationships; extensive use of communication and information technology so that the value chain supports the supply chain; short and reliable cycle times from raw materials to site (and/or strategic placement of inventory in critical material supply chains); phased delivery of materials to the construction site to match installation rates; and information visibility that allows efficiencies such as risk pooling, logistics optimization, and supplier managed inventory. The research team focused on defining the flow of information and materials using Value Stream Mapping or inter-organizational process mapping to depict current and ideal states in the process of developing implementation plans. After that, the team suggested several lessons learned: reducing non-value-adding activities; implementing Just-in-Time deliveries; creating flows; procuring customer-approved materials; pulling inventories from upstreams as needed; and implementing long-term alliances with suppliers. The research suggested lean production as a system to provide one view on supply chain management. According to the research, implementation of capital projects supply chain strategies in the construction industry can provide advantages in terms of cost, time, quality, and safety. Specifically, using various techniques related in lean principles,
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such as integrating all key stakeholders in the construction supply chain, can promote organic delivery systems, and eliminate wastes of money and time caused by inefficiencies in movement of material and labor.
3.2.3.4. Lean Principles Applicable to Construction (PT 191) CII PT191 (2004) examined if lean manufacturing principles can be applied to the construction industry with similar benefits to those achieved by the manufacturing industry. Although the construction process is far different from manufacturing and lean production is more difficult in construction than in manufacturing, CII PT191 found that lean does apply to construction and recommended that it be applied. The team studied Lean principles extensively focused on construction site. PT 191 focused on construction site installation and proposed five lean principles as followings: •
Customer focus
•
Culture and people
•
Workplace organization and standardization
•
Elimination of waste
•
Continuous improvement and building quality
These principles have has numerous sub-principles, which are described in Appendix A.
3.2.3.5. Leadership in a Knowledge Era: Achieving the Learning Organization (PT 201) A learning organization is skilled at creating, acquiring, sharing, and applying knowledge, and embracing change and innovation at all levels, resulting in optimum
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performance and maximum competitive advantage. The research team suggests that EPC (Engineering, Procurement, and Construction) companies focus on leadership, champions, direction, technology balance, and resource allocation. The team also proposes that a shift to a long-term outlook on learning is necessary. Experienced based improvement will allow the organization to build upon past successes by permitting personnel to store, access, and expand upon project experiences gained throughout the organization. Building a learning organization is part of any continuous improvement process. Any firm deciding to make a lean transformation would also by definition be deciding to become a learning organization.
The matrix developed by “Leadership in a
Knowledge Era: Achieving the Learning Organization” is a valuable tool to help a firm decide how and where effort must be placed in order to reap the benefits of lean. So much of lean is based on the idea of learning from past mistakes and, perhaps more importantly, letting the appropriate person or persons within the organization learn. One can have a leaning organization that is not explicitly lean. One cannot have a lean organization that is not a learning organization. A lean organization is a learning organization.
3.2.3.6. Making Zero Rework a Reality (PT 203) Zero re-work, or do it right the first time, is a comprehensive process for management and elimination of quality-error related costs for construction sites. A Zero Field Rework checklist (CII Implementation Resource 203-2) was developed to assist in identifying areas for improvement. The research concluded that major
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management support and pre-project planning are consistent for both safety and quality activities on the projects surveyed. Worker involvement is needed in order to resolve the continuing problem of field rework. “Do it right the first time”, and building quality in process are central to a Lean principle of built-in quality. Rework is a form of waste. As in Lean, the research finds the way to eliminate rework not in inspection, but in project planning and process. The report identifies several ways to begin to identify and quantify rework. The tools developed for identifying and tracking rework over time are invaluable to lean construction. In order to identify areas which are wasteful, data must be collected and analyzed. The framework developed for tracking and the dealing with rework issues is very solid, and because of its reliance on the framework of existing safety procedures, should be easy to integrate into most firms. Eliminating rework and quality problems are a major area of concern for all lean implementations in construction or manufacturing. The development of tools to help track, quantify, and resolve these problems is invaluable to anyone who is beginning their lean construction implementation.
3.2.3.7. Work Force View of Construction Productivity (PT 215) This research identified factors that have a significant impact on construction productivity. Tools and consumables, materials, engineering drawing management, and construction equipment were cited as primary causes for concern. It was discovered that: •
Craft workers can provide insight to the root causes of productivity loss,
•
Most major concerns are addressable on the jobsite,
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•
Productivity must be examined from a behavioral aspect, and must use cost and progress reporting, and engage crafts in two-way communicating
The workforce themselves are participating in documenting the factors influencing construction productivity and the relative impact those factors have on overall job-site management. This activity involves research into the production inefficiencies and root cause analysis. Its findings also reinforce the importance of lean production control, and specifically the practice of reliable promising and the critical importance of being able to say no. If a worker or anyone lower in an organizational hierarchy cannot say no to an inappropriate request, a request that does not comply with mutually understood criteria, then they are not making a promise on which others can rely. By contrast, here is the language of reliable promising: ‘Do you have everything you need to carry out your assignment safely and effectively? If not, let’s fix it or assign work that is ready to be done.’ This study relates to lean in the aspect of decentralized decision-making and information transfer from the bottom-up. The implications of previous CII researches on Lean construction are summarized in Table 3.1.
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Table 3.1: Summary of Previous CII Research on Lean Construction Project
Implications for Lean Construction Lean production control (Reducing buffer by reducing
PT143 Craft labor productivity variability) PT 160 Making Zero Accident a Reality
Lean production control
PT172 Improving capital projects supply Lean implementation on material supply system chain management PT191 Lean principles applicable to Application of lean principles to construction site construction PT201 Leadership in a Knowledge
Learning organization
PT203 Making Zero Rework a Reality
Built-in Quality
PT215 Work Force View of Construction Get feedback from craft workers Productivity
3.3 Organizational Change Lean transformation requires more than applying tools and techniques. Application of lean at all levels, enterprise, project, and process, requires a change in organizational culture. The key literature on organizational change includes the following.
3.3.1 Kotter’s Model Kotter (1996) developed a model for managing organizational change that offers a valuable tool to construction management professionals who intend to change the culture
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of their organizations. Kotter takes a broad look at organizational change, and the forces necessary to make the change successful. Through examples of both successful and unsuccessful efforts, Kotter describes what needs to be in place in order for an organization to accept change. Kotter's model suggests a three-part framework: 1) Defrost the status quo, 2) Take actions that bring about change, and 3) Anchor the changes in the corporate culture. The first element, “defrost the status quo,” comprises four essential steps. First, leaders must establish a sense of urgency. People must have a reason, and a really good one at that, for doing something different. In Kotter's experience, 50 percent of change efforts failed right here. The second step is to form a guiding coalition. Change cannot be directed through the existing hierarchy. It must be nurtured and supported by a dedicated group of influential leaders throughout the organization. Third, leaders must create a vision. Once people accept the urgency, they want to know where they are going. Without a vision, the change effort can dissolve into a series of incompatible projects that start to look like change for change’s sake. The fourth step is to communicate the vision. Leaders must communicate the vision through their actions. The second element of the model is to take actions that bring about change, which includes three steps. This is the action element, and the first step is to empower others to act on the vision. Leaders must clear the way for employees to develop new ideas and approaches without being stymied by the old ways. The second action step is to plan for and create short-term wins. Employees want to see results within 12 to 24 months or they will give up. Short-term wins validate the effort and maintain the level of urgency. The third step arises from the second: consolidate improvements and produce still more
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change. Short-term wins must be stepping-stones to greater opportunities and bigger wins, all consistent with the vision driving the overall effort. The third element, Anchor the change in the corporate culture, is a single step. Having made effective changes, leaders must now make the changes permanent. Leaders must connect new behavior with corporate success, showing that the new ways are here to stay. Change is complex, uncertain and difficult, but it is not impossible. Kotter's model for leading change provides a framework that may be applied in any organization at any level. The success of any change initiative within an organization is directly linked to the leadership team leading the change. Liker (2004) also emphasizes the need for planning before any change is undertaken. With successful leadership and a clear plan for change, any organization can be successful at changing itself.
3.3.2 Large Group Method Large Group Methods is a group of techniques and methods that have been developed to deal with the challenges of changing a large group or large firm.
The techniques
themselves are open to interpretation and need to be chosen correctly depending on how a firm wishes to change, and must take into account several other variables depending on the group that is being studied. (Bunker and Alban, 2006) The overall goal of large group methods is to change an organization. This change must be defined. The development of the definition of the change is often the most difficult part of the process. A firm must decide where they want to go in order to be able to plot a course to get there. There are several valuable tools available to organizations
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looking to define and plot how a change should be made. Most of the below methods are overlapping. They all seek to help organizations decide where they want to go, then help them on their way to get there.
3.3.2.1 The Search Conference The Search Conference (Emery and Purser, 1996) is a rigid framework for the development of the future vision of an organization. It takes place over the course of at least two and a half days and seeks to look at where the company is now, where it has been in the past, and where it wants to go in the future. No outside experts are necessary for the facilitation of the conference. The ideal number of people involved is 35 to 40 plus people. In this model 1/3 of the time is spent on action planning, or deciding how a firm will achieve the future it has determined it wants to achieve. (Bunker, 1997) The search conference uses diverse groups that scan the current environment, examine their history as a system, assess the present situation and agree on a future. As stated above, 1/3 of the time is devoted to planning for actions that will allow them to realize the future they have agreed to and want. In this model conflict is acknowledged but not dealt with at length. The emphasis is on finding what is held in common and can be agreed to by all as the basis for the proceeding. (Bunker and Alban, 2006)
3.3.2.2. Future Search The future search is also a method to create a future vision of a company. What differentiates it is the management of the small groups which make up the future search. Small self-managed groups work. The Future Search engages people more emotionally,
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as the activities are both rational and affecting. The Future Search can accommodate from 35 to more than 100 people. (Bunker and Alban, 2006) Groups of people are organized at tables made up of stakeholders. The first step is to determine trends will affect them in the future and then determine what they will or will not do about them. The second step is to analyze the present and determine what they are proud about, and what they are sorry about within their current organization. Finally “max-mix” groups determine the common ground that can be used as a foundation to move forward. The goal of Future Search is to engage people both emotionally and rationally, as the activities are both rational and affecting. (Bunker and Alban, 2006)
3.3.2.3. Whole-Scale Change Whole scale change is a method that was developed to deal specifically with large groups of people. The number of people can range from 100 to 2,400 people. Because of the number of people involved in these events, there is heavy planning involved both in the design of the event, and the logistics needed to bring this many people together. Unlike the above methods, whole-scale change custom designs the process of each event to the particular client event. Because of this, outside experts are needed (Bunker and Alban, 2006). Whole-scale interactive events are events that do not necessarily require the physical meeting of the people involved in the meeting. Whole Scale Change is as stated above very planning intensive. The organization of such events can be stated in general terms. First, there must be some kind of assessment of the external environment and understanding of the past and present, as well as a focus on the desired direction for the future. Whole-Scale change events can include customers
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and suppliers, which make this particularly suitable to a construction environment. (Bunker and Alban, 2006) All three of the above methods seek to reach the same end, a changed organization. The changing of an organization is not something that simply happens any more than a building simply appears. There has to be a decision made and a consensus reached on how an organization should look and work in the future. After that, determining how to reach these goals is the next step. The description of the above methods is an attempt to introduce Large Group Methods to the construction industry.
3.3.3 Cultural change through supervisory practices In 2005, Productivity Press published two books that are very important for understanding lean implementation. David Mann’s Creating a Lean Culture describes how Toyota standardizes supervisory practices in tandem with standardization of work processes. While explicitly focused on factory production, Mann’s line of thought is nonetheless critical for appreciating how Toyota instills and perpetuates its culture of continuous improvement and learning through the way people are supervised at every level in the organization. Standardization of supervision extends beyond routine tasks such as checklists, walking the floor, and producing production plans. It also covers what to do in conditions of breakdown. This may be the touchstone for the presence or absence of a lean culture; namely, how supervisors/managers react when something goes wrong. Are problems pushed aside as anomalies to be explained away? Is there a search for someone to blame? Alternatively, are near misses, errors, quality defects, schedule busts, budget overruns analyzed to root causes and action taken on them? Is the learning
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communicated throughout the organization and processes changed to prevent reoccurrence? The second book is Donald Dinero’s Training Within Industry, the story of a training program developed in World War II in response to the vast numbers of unskilled people coming into the labor force—much the same as the challenge now facing the construction industry. It is now well known that methods of quality control perfected for war time production in the U.S. were brought to the Japanese through classes by W. Edwards Deming, Joseph Juran and other quality guru’s, and became an essential part of what later came to be called lean production. Until recently, it was not known that TWI was also part of the United States’ redevelopment of Japan. Toyota still uses the TWI training and sees it as essential to the Toyota Production System. TWI has three major training programs: Job Instruction, Job Relations, and Job Methods. Job Instruction teaches supervisors how to train and coach others. It starts from recognition of the fact that knowing how to do something is not the same as knowing how to teach someone else to do it. The CD in Dinero’s book (Dinero, 2005) includes an illustration of the method of instruction. Job Relations teaches supervisors how to treat people as individuals, and was included in MacArthur’s redevelopment strategy in an effort to transform Japan from a feudalistic into a democratic society. Job Methods teaches supervisors and direct workers how to evaluate and improve work methods. These
supervisory
skills—people
management,
coaching,
and
methods
improvement—are fundamental to the standardization of supervision described by David Mann, and are essential for creating the change in culture that ‘going lean’ requires.
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3.3.4 Individual Change In order to understand how organizational changes can be incorporated into a management system, it is necessary to explain how an individual can accept change. An individual’s involvement and participation in the process of change is based in psychology. There are various theories that govern the participants through the change process. These theories, or schools of thought, are as follows; behavioral approach, cognitive approach, psychodynamic approach, and humanistic approach (Cameron and Green, 2004). (a) ”the behavioral approach, which focuses mostly on observing and changing people’s behaviors to conform to the desired standards, using various punishments and rewards in order to accomplish the organization’s goals, such as performance management and coaching and skills training”. (b) “the cognitive approach, which goes below “the surface” to consider processes going on within a person’s mind and considers that change can take place if people’s thought processes can be altered. This approach proposes interventions such as the management by objectives, business planning and performance coaching”. (c) ”the psychodynamic approach, which goes one step further to consider the psychological processes and states people go through when experiencing change. In this perspective the motivation of people should not only enact cognitive schemas but also emotional processes in order to be effective and thus, the management interventions it proposes include counseling people through change, addressing emotions and understanding change dynamics”.
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(d)”the humanistic approach, which emphasizes personal growth and maximization of one’s potential. This approach builds on the psychodynamic approach, but suggests a more global understanding of people’s needs as they go through change and proposes interventions such as fostering communication and consultation, addressing the hierarchy of people’s needs and developing a learning organization”. The issues relating to any change management technique, the techniques that involve an individual of course, have to deal with the resistance to change, level of motivation, culture influence, proper communication, effective training, and an appropriate evaluation and assessment of the overall effectiveness. Each of these issues are unique to the individual involved and must be addressed throughout the entire process. Any breakdown, such as not taking into account the cultural background or effect the change will have on an individual’s culture will influence the effectiveness of the change, as well as the motivation of the individual and the required vehicle for communication. Another interpretation of how an individual can facilitate change involves the Five-Factor Model of personality (FFM) and Emotional Intelligence (EI). The FFM has components of neuroticism (anxiety, insecurity, and distress), extraversion (quantity and intensity of the activity level), openness to experience (proactively seeking and appreciation), agreeableness (the individual’s rating along the continuum of compassion to antagonism) , and conscientiousness (persistence and motivation towards goal-directed behavior). Each of these components relates to the individual’s change schemata, which are “mental maps representing knowledge structures of change attributes, and relationships among different change events” (Vakola et al., 2004).
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The next idea involves an individual’s emotional intelligence, which is the degree of adaptiveness and responsiveness an individual has over their emotions. This is paramount to facilitating change. The level of effectiveness that the change will be incorporated and followed is dependant of how well the individual’s change schemata and EI are blended with the appropriate psychological approach.
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4.0 Findings from statistical analyses, case studies and field experiments Our conclusions and recommendations are based on what we found from a review of the literature, from statistical analyses, from case studies, and from field trials. In the previous chapter, we presented our review of the literature. This chapter describes what we found from statistical analyses, case studies and field trials. Statistical analysis of the correlation between PPC (percent plan complete: a measure of work flow reliability) was done on data provided by BMW Constructors from a project they did for the BP Refinery in Whiting, Indiana. Case studies were done through interviews with four owners, one architect/engineer, five construction manager/general contractors, one integrated team, four specialty contractors, and one supplier. Because of their length, we have chosen to place the case studies in the Appendix. In this chapter, we describe only the key findings from those cases. Field trials in lean implementation were conducted by three organizations, two of which are members of the research team: Abbott (through Riley Construction, a CM on one of their projects), Dow Chemical, and Ilyang Construction.
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4.1 Statistical analysis of the correlation between PPC and Productivity PPC (percent plan complete) is a metric within the Last Planner® system of production control (Ballard & Howell, 1998) that measures the extent to which planned work is completed as planned, and hence the extent to which future work load can be predicted and preparations made for doing that work. It seems intuitively obvious that increasing PPC should increase labor productivity to some extent, but data collection and analysis is necessary to validate that causal relationship and to measure the degree of correlation between the two variables. Data was provided by BMW Constructors from BP’s Whiting, Indiana ULSD refinery project. The data consisted of weekly PPC measurements and the corresponding productivity measurements for the pipe fitter crews working in 13 different work areas on the project.18 Key findings from the study: 1. PPC and productivity were found to be positively correlated at a 95% confidence level. 2. A formula for estimating the increase in productivity from a one unit increase in PPC was produced: Prod= 0.693+0.818*PPC. 3. No correlation between the variation of work load and productivity was observed.
18
BMW Constructor’s consultant on the project was Peter Gwynn of Lean Implementation Services. Strategic Project Solutions’ SPS Production Manager software was used for production control.
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4. No correlation between the variation of work output and productivity was observed.19 5. The correlation coefficient between productivity and PPC increases if the ratio of work load to capacity lies in a moderate range. Overloading or underloading weakens this correlation. o Underloading reduces the correlation by increasing PPC and decreasing productivity. o Overloading reduces the correlation by reducing PPC, while productivity does not increase beyond the point at which load matches capacity. In other words, as more tasks are planned for a crew, when the task load exceeds the capacity of the crew, their task completion rate decreases. This need not reduce productivity, since the crew is, by definition, fully loaded with work relative to their capacity to perform work, but does reduce the flexibility to accommodate variation and breakdowns without use of overtime as a capacity buffer. The practical significance of these findings is that project managers have an additional means for improving labor productivity on projects20; namely, by improving work flow reliability as measured by PPC. Work flow variation, labor capacity, and labor
19
Findings 3 and 4 suggest that use of the Last Planner® method at least partially shielded productivity from variations in work load in each area week to week by identifying actual work load (tasks for which all constraints had been removed) available in each area in time to shift capacity to better match load. 20 Reducing work flow variation can bring other benefits besides improved productivity, but the statistical analysis only addressed productivity. Future research is needed to explore the impact of variation in work flow on safety and quality.
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productivity interact with each other. It is important for project managers to take these factors and their interdependence into account in planning and steering production. These are important findings regarding the impact of work flow reliability on productivity, but it should be noted that, according to Last Planner theorists, the primary impact was not measured in this study. When short term production plans can be taken as promises made from one trade or crew to another, as those promises become more reliable, the downstream crews can prepare and plan to do the work they know will be available tomorrow or next week. When production plans are not accurate predictors of future work load, everyone who is dependent on others for something needed to do their own work (materials, information, work space, equipment, etc.) is robbed of the ability to plan. Since the release of work from crew to crew was not examined in this study, even greater impact of production planning on productivity can be expected, and should be explored in future studies. Note also that the analysis was done on PPC measured no more than one week ahead of task execution. Another area of opportunity for productivity improvement, also needing study and analysis, is extending that window of predictability.
4.2 Case studies The case studies were very helpful in understanding why and how various companies playing different roles in the construction industry have implemented lean on their projects. After an overview and summary of the studies, findings are presented, grouped under these headings: •
Who has driven project implementations? (4.2.4.1)
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•
Why have organizations chosen to ‘go lean’? (4.2.4.2)
•
How have organizations prepared for getting lean journey started? (4.2.4.3)
•
What implementation paths have been followed? (4.2.4.4)
•
What lean tools have been applied? (4.2.4.5)
•
What metrics have been measured? (4.2.4.6)
•
What results have been achieved? (4.2.4.7)
•
What are success factors and barriers? (4.2.4.8)
4.2.1 Case study process and interview questions Interviews were used to supplement published documents to produce case studies on selected companies playing various roles on projects. In this section, we describe the interview process and questions. Interviews were conducted for the most part in person, otherwise by telephone. The interviews were informal, but started from and were directed to answering the following key questions: •
Why did your organization decide to ‘go lean’?
•
How did you go about it?
•
What happened?
•
What have you learned about implementation?
•
What would you do differently if you could do it over again?
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4.2.2 Participants in the case studies The case study population is not presented as a statistically valid sample drawn from a larger population.
There are as yet so few companies in the construction industry
practicing lean project delivery that sample sizes would be too small to support statistically valid generalizations. However, participants are recognized in the industry as early adopters of lean, and thus are a valuable source of information about implementation. Not all early adopters were included, but a substantial number volunteered to work with the researchers to develop case studies. The companies that participated in the case studies were: •
Owners o Air Products o BAA (U.K. airport owner/operator) o General Motors o Sutter Health
•
Integrated Teams o Integrated Project Delivery
•
Architect/Engineers o Burt Hill
•
Construction Managers/General Contractors o Boldt
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o GS E&C (Korean) o Laing/O’Rourke (U.K.)--included in the BAA case study o Messer Construction o Walbridge Aldinger •
Specialty Contractors o BMW Constructors (industrial piping contractor) o Dee Cramer (mechanical contractor) o Ilyang (Korean earthwork and structural contractor) o Southland Industries (mechanical contractor)
•
Suppliers o Spancrete (precast concrete fabricator)
No consulting engineers (design specialists) were included, although several have come to the attention of the research team as implementers of lean in their organizations and on their projects, but too late to include in the case studies.
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4.2.3 Summary of case study findings Table 4.1 Summary of case study findings-owners Case
Drivers
Lean Tools
Results
Company-wide lean Reduced plant shutdown
implementation; Value Stream
cycle time by 15 days at
Needs for waste Mapping, Last
Air Products
Wichita Falls plant; achieved
elimination in the Planner® System
PPC of 98%
process of project delivery Relational Terminal 5 project
contracting, 3D
Completed Terminal 5 project
vital to national
modeling, JIT, Last
on time and on budget;
interest and equal to
Planner® System
completed T5 Civils phase
company’s net worth
Value Stream
10% under budget
BAA
Mapping, On Flint Engine Plant expansion, reduced
Company-wide lean implementation;
construction time by 27%, Value Stream
Needs for waste
generated a structural steel Mapping, 3D
GM
mill order in 3 weeks and
elimination in the modeling, JIT process of project
completed construction with
delivery
zero change orders from design errors with 3D design
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Last Planner® System, 3D Need to seismically modeling, Cross
ARC project hit its target cost
functional team,
in a period of severe price
Target costing, Set
escalation for both materials
based design,
and services
upgrade health care Sutter Health
facilities in competition for scarce resources Relational Contracting
Table 4.2 Summary of survey findings-Integrated Team (IPD) and GCs Case
Drivers
Lean Tools Last Planner®
Moving money across
Results
IPD designed and built a
System, JIT, Visual
central plant in 8 months
IPD (integrated organizations for best Control, Relational team)
project level
for $600,000 under the contracting, Target
investment costing
$6,000,000 GMP
Target costing, Last St. Olaf’s College in 10 Planner® System, months less time and for 65% Steady erosion in profit Reverse Phase Boldt (GC)
the square foot cost of a margin
Scheduling, Value similar facility built in the Stream Mapping, same area (Target Costing) Set based design
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Management's Saves around 10% of rebar
recognition for waste Last Planner®
GS (GC, from large inventory;
engineering, fabrication, and System, JIT
Korea)
installation costs
internal needs for increasing profitability Last Planner® Desire to better serve System, Reverse
Reduced stress, reduced cost
Phase Scheduling,
of concrete shear walls by
Value Stream
40% and columns by 10%
Mapping, First Run
(First Run Studies), reduced
Studies, Visual
project duration by 2 months
customers; desire to reduce stress on project Messer (GC) managers; desire to reduce variation and waste Controls, 5S 5S, Logistic Plan, Client's demands and Walbridge
Value Stream
Saved $9 million over last
Mapping, Built-in
three years
internal needs - a better Aldinger (GC) way of doing things Quality
Table 4.3 Summary of survey findings-specialty contractors Case
Drivers
Lean Tools
Results Reduced cycle time; Reduced
Client's demands;
administrative waste such as
Unique position of 3D modeling, JIT
Dee Cramer being engaged in
as-built drawing; Reduced
manufacturing.
inventory
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Seeking for competitiveness; Last Planner
Increased net profit by 10 %
®System, Kanban,
and reduced safety non-
Visual Control
conformance report by 50 %
Needs for reliable Ilyang (Korea) production plan for strategic procurement plan Improved productivity in 3D modeling, JIT, ductwork installation by 41% Pursuit of continuous
Value Stream
improvement,
Mapping, Built-in
eliminate waste,
Quality, Last
and virtually eliminated rework. Southland increase accountability, Planner® System, Industries
Improved productivity in strengthen labor force,
Visual Control, 5S,
increase
Reverse Phase
communication
Scheduling, First
terminal unit fabrication/installation by 60%, with zero returns for Run Studies defects.
Table 4.4 Summary of Findings: Architect/Engineer and Supplier Case
Burt Hill
Drivers
Lean Tools
Results
Concern for future
Last
50% increase in operating
viability of
Planner®System,
profit on Last Planner® pilot
architectural/engineering Building
projects, higher design
firms; desire to be a
Information
productivity, better schedule
leader in process
Modeling, Target
and budget performance
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improvement
costing, Relational Contracting, Value stream mapping to Increased raw material initiative inventory turns, increased
Reverse negative trend semiannual process
Spancrete
throughput, improved
in profitability improvement in
productivity every work group in the company
4.2.4 Findings from case studies In this section we organize and present the case study findings under the following headings: •
Who has driven project implementations? (4.2.4.1)
•
Why have organizations chosen to ‘go lean’? (4.2.4.2)
•
How have organizations prepared for getting lean journey started? (4.2.4.3)
•
What implementation paths have been followed? (4.2.4.4)
•
What lean tools have been applied? (4.2.4.5)
•
What results have been achieved? (4.2.4.6)
4.2.4.1 Who has driven project implementations? The roles played on projects are primarily the following:
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•
Owner/owner agent
•
Manager (project/phase)
•
Design specialist
•
Construction specialist
•
Supplier
The Lean Construction Institute (www.leanconstruction.org) pursues a strategy for industry transformation that has three elements: 1) Change mental models and the terms of discussion through education; 2) Create lean companies to put pressure on competitors through the market; and 3) Help owners learn what to demand from and how to support their project delivery teams. These have happened in roughly that order, with owners now coming to the front lines and demanding and facilitating principle-based changes in practice. BAA was the first. Sutter Health is having a huge impact in its market. Air Products and GM have brought the demand for lean project delivery into the industrial sector. Owners seem to be the ones who most often initiate lean practices on construction projects, but they are often assisted by a willing or even leading project/phase manager. For example, BAA and Laing/O’Rourke on the Terminal 5 project at Heathrow Airport; GM and Ghaffari Associates on the Flint Engine Plant project; Sutter Health and its A/Es and CM/GCs, such as HGA and Boldt. Southland Industries, a design-build mechanical contractor, has also played a leadership role on Sutter Health’s lean projects. Managers can initiate within the project phases they control; e.g., Laing/O’Rourke, Messer, Boldt, Burt Hill, GS, Walbridge. When managers have financial responsibility for their phases, they do not need owner agreement. Managers tend to focus on planning
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and control functions on projects, both because they are key to successful implementation of other improvements and because those are the processes they control. However, design and construction managers can team up to do target costing (Boldt and Burt Hill), though the owner must have been persuaded to adopt that method. Integrated Project Delivery (IPD) is an example of a project delivery team banding together to obtain and deliver projects using the lean project delivery system on designbuild projects. In that role, they can function with virtually the same powers as an owner and can facilitate project-level improvements. Design and construction specialists can initiate lean practices, but typically are limited in what can be done to impact entire projects unless they are supported either by the owner, project manager, or are members of a self-formed team like IPD. When acting unilaterally on projects, they tend to work on their own production processes. For example, construction specialists may redesign installation operations for superior safety, quality, time or cost performance. Suppliers can take the initiative in shaping their services and work processes, but some have been frustrated at their inability to persuade customers to take advantage of the supplier’s lean capabilities. For example, reducing delivery batch sizes and on site inventories is a standard lean objective, but is not valued by customers operating in nonlean fashion. Indeed, some standard industry practices, such as paying for fabricated items on delivery, encourage the opposite of JIT. One of the bigger obstacles to the deployment of Lean construction is in the nature of the contract hierarchy. Most of the changes that lean construction entail cannot be accomplished within a single organization involved in a project. The cooperation of a
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number of entities is required in order for lean concepts to have substantial impact on project performance. With a few, very specific exceptions, the firms who have been experimenting with lean construction are large contractors who can demand the cooperation of the downstream entities, or large owners who specifically request that lean construction techniques be applied.
This top down approach leaves the smaller
subcontractors at a significant disadvantage in trying to apply lean construction techniques on non-lean oriented projects. The example of Dee Cramer is very telling. Dee Cramer is an HVAC contractor based in Detroit who has done a lot of work with GM. They must manufacture the large ductwork assemblies that are required for their projects, then they must install the assemblies at the project site. The manufacturing they do is extremely specialized and in most cases, no two assemblies are the same. This has led Dee Cramer to adopt many of the lean principles in its manufacturing operations. Until recently they were unable to extend these principles when working with clients who are not ready for lean. It must also be said that specialists can have an impact beyond their own specialties. Ilyang is a case in point. The manager of a general contractor was asked to participate in Ilyang's Lean meeting. The general contractor was satisfied with the reliability of production planning which Ilyang provided. After Ilyang provided the production planning, the general contractor asked Ilyang to make a presentation on their production planning method. The general contractor encouraged other subcontractors to learn Ilyang's production control system. The case of Ilyang shows an example where a specialty contractor takes the initiative in lean implementation at project level.
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4.2.4.1.1 Coordination versus Production Roles Some organizations, such as architectural firms, construction managers and general contractors, are responsible for project coordination and control, and owners obviously have substantial power over the way projects are structured. Companies that are launching themselves on the long journey to become a lean enterprise tend to start by working on processes within their own control, often using value stream mapping as a method for revealing opportunities for reducing waste. Value stream mapping is a natural starting point for companies that are more directly engaged in designing and making as opposed to planning and coordinating, and of course should be implemented in parallel with coordination and control in project implementations, or once sufficient stability has been achieved. Spancrete is an example of an industry player acting within its own house to implement lean. A precast concrete fabrication company, they structure their lean implementation around production groups producing certain types of products, both administrative and manufactured products, and use value stream mapping as the primary method. On the other hand, Southland Industries, a design-build mechanical contractor, initiated its lean implementation with Last Planner®, but subsequently applied value stream mapping to its administrative, engineering and construction processes.
4.2.4.2 Why have organizations chosen to ‘go lean’? Implementation has usually been motivated by the perception of a threat, less often by the perception of an opportunity for gain, though ‘early adopters’ tend to be more persuaded by the latter. Many innovations in lean construction have occurred on projects under such
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severe stress that changes in thinking and practice were necessary for successful project delivery. A key takeaway is the importance of systematically and deliberately creating such conditions—‘lower the river to reveal the rocks’. BAA faced unprecedented challenges on its T5 project, including the longest running public inquiry in history, as many as 37 deliveries per second to site through a single entrance, and laydown space sufficient only for one day’s inventory of materials. Sutter Health was preparing for competition for scarce resources needed to comply with a regulatory requirement for seismic upgrade of healthcare facilities in California, and, with its fellow healthcare companies in the state, has routinely been faced with 1.5 year permitting delays on hospital projects. Messer Construction reports that its project managers were stressed beyond the breaking point. Boldt, a general contractor, and Spancrete, a precast concrete fabricator, were both experiencing slow but steady erosion in their profit margins. There are exceptions. Some companies have begun the lean journey propelled by the promise of gain. The GS E&C management team recognized the huge waste of materials and inventory taking up space on sites. This led to the introduction of the Just-In-Time (JIT) process as a potential solution for their inventory problem. Ilyang initiated production control system to have a strategic procurement plan where reliable production planning is compulsory. Granting such exceptions, for the most part, organizations find it very difficult to change unless they have no choice. A sign of a lean enterprise, firmly moving along the lean highway, is that they generate that ‘necessity’ themselves, and do not wait for their competitors, customers, or the market to compel them to change and improve.
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4.2.4.3 How have organizations prepared for getting lean journey started? Implementation of lean within the case study firms was the most difficult and varied part of the whole process. Most firms looked outside their organizations for help with this step. The most popular early step in deciding on how to implement lean was to start reading academic and trade journals and joining trade groups. LCI (Lean Construction Institute) and LEI (Lean Enterprise Institute) are both organizations that offer their members a wealth of knowledge. Because lean is somewhat new to the construction industry, several of the case study participants went directly to the more mature lean manufacturing literature. In some cases, most notably GM, lean manufacturing was already being practiced in other parts of the organization. Most of the construction firms sought to hire outside help in the form of consultants or bringing people in from other lean organizations with whom the firms were familiar. Using a “Sensei”, or someone that is not within the firm to begin with is a good way to get an objective look inside the firm. Walbridge sought out the advice of several of its clients in the manufacturing sector. GS and Ilyang both sought out the advice of Toyota. One of the most common comments on the deployment of lean within an organization was to learn from one’s mistakes. Implementation strategies often change while they are moving forward. The advice of most of the companies was to keep the stuff that works, and learn from the stuff that didn’t work. Learning by doing is an important part of any lean organization.
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4.2.4.3.1. Training Training is another area where most of the firms went about it in different ways depending on the existing organization. Larger organizations tended to rely on in house training and use of existing models for lean deployment. GM and Air Products had the in house knowledge and training staff to be able to dedicate to such an undertaking. Still other firms went to other companies who had lean expertise. They then went back into their own firms and set up a “lean team.” The goals of the lean team were to disseminate knowledge through the organization and help build a lean culture. Walbridge and Boldt are good examples of this. All of the firms spoke at length about “learning by doing.” On the job training was the most effective and used training technique. Due to the variability and scope of construction there is no possible way to “teach” lean in a traditional academic sense. There were also broad comments made on the people being trained.
Most
construction people are hands on by nature, and will either resist or simply not take place in a traditional classroom training session. Learning in the field, on a construction site was by far the most popular way of training cited by most firms. Still other firms required a certain amount of training hours per year. This training could be done on the construction site or in a classroom setting with the appropriate people. Walbridge and GS both require a certain amount of training hours per year for every employee.
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4.2.4.3.2. Organizational change/ structure Leadership is critical to the success of any lean initiative. Leadership must be considered when deciding how an organization will look after lean implementation. Most of the firms in the case studies had a separate “lean team.” This lean team was usually a cross functional team taken from different levels and positions from within the firm. In some cases it was as simple as training the right people and setting them loose within the firm. Most firms however choose to have the lean team remain intact, in order to track the changes and success of the lean transformation. In all cases people who were natural leaders within the firm were the natural choices. Lean commitment was another area most firms spoke a length about. The idea that lean is here to stay, and that it is not optional was stressed. Lean commitment was most effective when it came directly from the top of an organization, and was mirrored at every other level of the firm. Commitment was seen as one of the most important success factors during and after lean implementation.
4.2.4.4 What implementation paths have been followed? 4.2.4.4.1 Project Phases Most implementations have occurred or focused on the construction phase of projects, though that is now shifting upstream into definition and design. Again, BAA was a leader in this area, and now both Sutter Health and GM are driving lean implementation in the early phases of projects, where the driving principle is value generation rather than waste reduction. A key part of the implementation is to create collaborative teams of owners, designers, builders, suppliers and other key stakeholders such as regulatory authorities.
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Other features of lean product development such as target costing and set based design also play key roles in these early project phases. 3D modeling is playing a big role on both Sutter Health and GM projects. On the side of process managers, Burt Hill, an architectural/engineering firm, is a leader in the implementation of lean in definition and design, especially as regards both production control and 3D modeling. The earlier lean is deployed in the project process, the greater the benefits that can be expected. The use of lean design tools such as target costing may result in impressive cost savings as seen in Boldt’s Tostrud Fieldhouse project. However, the opportunity for lean still exists even when lean is adopted after construction begins. For example, BMW Constructors, involved only in site installation, implemented lean production control and JIT fabrication in their piping operations on the BP Whiting Refinery project and beat their budgeted productivity by 31%. 4.2.4.4.2 Start in your own house Besides first making process outcomes predictable (stabilizing), another item of standing advice from the literature is to start with processes within your own control before trying to work on processes involving interfaces with others. The cases and experiments support that advice, suggesting that those intending to implement lean on a project start first with processes and systems entirely within their own control, then subsequently attack processes involving an interface with a single customer or supplier, then attack processes involving multiple interfaces and so involve shared control by many parties. At least one participant in the case studies, Sutter Health, reports the problems they encountered when they did not start in their own house, but went directly to their service community. Air
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Products, on the other hand, seems to be an excellent example both of the recommended practice and its benefits. Their application of lean to capital projects is but an extension of an enterprise level implementation. A general rule is suggested by these findings; namely, focus on what’s in your own control, either directly (because you have the power to design and redesign the system) or indirectly, through collaboration with others. Doing so yields better chance of success and also increases your organization’s credibility when you invite others to collaborate on improving shared processes. 4.2.4.4.3 Demonstration projects Lean Construction is something you have to see and experience. Most case studies showed that lean is most effective when a firm incorporates principles of lean into its management and production system and then develops the ideas within the framework of the firm.
This means that companies must develop internal processes and process
controls. These concepts applied to construction must have a place or project to be applied to. Learning by doing and learning from failure was a common comment on how a firm went about a lean transformation. The project or projects that lean is applied to must demonstrate the validity of lean both inside and outside the firm. No change ever goes as planned, and lean construction is no different. Concepts can look great on paper, but must ultimately be tested in practice, which often means on projects. The use of a project as a demonstration serves all of the above stated needs. It starts with the demonstration to managers who did not apply lean within an organization. Important is also the demonstration to the stakeholders that these concepts can be applied
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to construction. This is of particular use for larger contractors who must have the buy in from upper-level on-site management. The demonstration of these concepts and the opportunity to improve upon them in real life are lean at its most basic. The ability of management to realize this and to be able to facilitate and troubleshoot these changes is critical to the overall success of lean construction. For example, Boldt uses previous lean projects to get buy-in from clients as well as from their own people, especially managers who have not yet applied lean. Ilyang distributed documents on lean experiences in demonstration projects to get buy-in from their internal organization. Ilyang managers made a strong commitment after successful implementation on two pilot projects. At Ilyang, the number of construction managers who want to apply Lean to their projects are increasing. Currently twelve projects are implementing Lean. Demonstration projects not only get buy-in but also provide feedback on methods and tools used in the projects. GS and Ilyang both modified their Lean manual to take their culture into account. The demonstration project also seeks to get buy in from line level workers. These are the people who are most responsible for “getting the work done”. These people are often very suspect of any changes that are forced upon them. The demonstration project should seek to demonstrate the usefulness of lean for these people especially. Lastly, but by no means least important, demonstration projects develop internal advocates and allow lean champions to emerge.
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4.2.4.4.4 Use contracts to align interests to pursue lean goals Lean pursues improvements at the system level and tries to avoid sub optimizing at lower levels. To that end, it benefits greatly from commercial relationships among the various members of a project delivery team that allow money to move across organizational boundaries in search of the best project-level investment. This was not found to be an element in all cases studied, but was critical for two of the four owners (BAA and Sutter Health) and also for Integrated Project Delivery (IPD). An alternative approach is to leave contracts substantially unchanged, but agree among the participants to ‘put it in the drawer’. If the relational contracts now emerging prove to effectively align interests in pursuit of the lean ideal on projects, the superior strategy would seem to be to use such contracts to facilitate lean implementation on projects. In addition, both IPD and Sutter Health noted that periodic meetings by principal sponsors help to avoid hindrances caused by contracts.21 4.2.4.4.5 Improve performance through long-term alliances The first attack as stated above is to improve the contractor’s planning reliability using the contractor’s production control. Once you improve your planning reliability using the production control system, you have to improve suppliers’ planning reliability and reduce their lead time. There are multiple methods to improve a supplier’s reliability. One of musts is to nurture contractor-suppler relationships.
21
This issue of project governance is explored further in the appendix on Relational Contracting.
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Long-term alliances are preferred to competitive bidding. IPD showed a good example of long-term alliance by working as a team. IPD provides even stronger relations than other alliances by sharing costs and profits. GS was a special case where a general contractor has its own rebar fabrication as well as rebar engineering. The idea of owning its own arm came from the fact that GS does not have control over rebar suppliers. It is an extreme case. It ensures reliable delivery to sites, but there is a financial risk. GS justified its investment in that GS has enough demand for rebar. We see Toyota examples where a buyer partly owns its supplier. For example, when a researcher visited the “Gihuchache” plant located in Nagoya, Japan, an hour away from Toyota, a manager stated that Toyota had an ownership stake in the company. He went on to state that it helps to improve loyalty and reliability to Toyota. 4.2.4.4.6 Implementation practices Our research topic is lean implementation on projects. Here are the implementation tools successfully used in the cases studied and in the field experiments: •
Sharing project objectives and stakeholder values with the entire project team.
•
Providing reminders of project objectives and values.
•
Creating and sharing a clear, crisp explanation for why change is needed and why the change proposed is the right one—an elevator speech.
•
Managers asking different questions to signal the reality of change; e.g., not “How many work packages did you get out today?”, but rather, “What plan failures have you learned to avoid repeating this week?”.
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•
Coaching
•
Experiential learning exercises such as the Airplane Game
•
Visual reminders of objectives and principles; posters, signs, inserts on documents, pocket cards
•
Team building
•
Reliable promising
•
Collaborative planning
4.2.4.5 What lean tools have been applied? Figure 4.1 shows lean tools identified in the case studies. The Last Planner® System (LPS, production control system), reverse phase scheduling, value stream mapping, JIT delivery, and 3D modeling are tools used in high frequency. Other tools include 5S, target costing, visual control, relational contracting, and cross functional team. Figure xx presents lean tools identified through literature survey. Tools identified from literature are similar to those identified in the case study. It is noted that 3D was not reported as a lean tool in the literature while the research team recognized that 3D is an important tool which enables to implement lean. The following sections are on the tools that are unique in project production system.
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6, 16%
11, 29%
3, 8%
Last Planner Value Stream Mapping JIT Delivery 5S
0, 0%
Target Costing Poka Yoke
3, 8%
Visual Control 3D
3, 8%
5, 13%
7, 18%
Figure 4.1: Lean Tools from Case Studies 4.2.4.5.1 Production control (The Last Planner® System) Production control, as distinct from project control, appears to have been introduced into construction with the Last Planner® system (Ballard, 1994; Ballard & Howell, 1998). Production control was used in the following case studies/field trials: •
Abbott
•
Air Products
•
BAA
•
Boldt
•
Burt Hill
•
Dow Chemical
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•
GC Construction
•
Ilyang
•
IPD
•
Messer
•
Southland Industries
•
Sutter Health
Key characteristics of production control include: •
Its objective is to achieve handoffs between specialists when needed to deliver value to the customer
•
Measures the extent to which handoffs occur when planned
•
Conforms to the rules for managing in conditions of uncertainty; namely, to plan in greater detail as the forecast period shrinks
•
Empowers organizational members at every level to “stop the line” rather than allow defects to flow downstream; specifically, defective assignments
•
Transforms scheduled tasks, what SHOULD be done, into what CAN be done through identification and removal of constraints, challenging those responsible for specific constraints to notify the team immediately if they lose confidence that constraints can be removed in time to supported scheduled work
•
Methodically identifies problems and defects before they occur
•
Serves as a means of stabilizing processes so they can be improved
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•
Applies quality criteria to potential assignments; namely, definition, soundness, sequence, and sizing
•
Gets an explicit commitment to completion of daily/weekly work plans, after screening for conformance to quality criteria
•
Requires and promotes reliable promising
•
Makes the best match of capacity and load achievable in given conditions
•
It is proactive, rather than reactive; does not wait until work is completed to identify and act on negative variances between DID and SHOULD
Reverse phase scheduling22 is a collaborative planning method used to set the goals to be achieved by production control; namely, the handoffs between specialists. Following the principles of managing in conditions of uncertainty 23 , project schedules are produced beyond milestone level detail phase-by-phase, by those responsible for doing the work in each phase. Following a Last Responsible Moment strategy (Ballard & Zabelle, 2000), the phase scheduling technique is used to develop a more detailed work plan that specifies the handoffs between the specialists involved in that phase. These handoffs then become goals to be achieved through production control. Pull techniques and team planning (interactive scheduling) are used to develop schedules for each phase of work, from design through turnover. The phase schedules thus produced are based on targets and milestones from the master project schedule and provide a basis for lookahead planning. A pull technique is based on working from a target completion date backwards, which causes tasks to be defined and sequenced so that 22 23
This section on reverse phase scheduling is drawn primarily from Ballard & Howell (2004). All forecasts are wrong. The further into the future a forecast is made, the more wrong it is. The greater the detail in which a forecast is made, the more wrong it is. (March, 1988)
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their completion releases work; i.e., achieves a handoff. A rule of “pulling” is to only do work that releases work requested by someone else. Following that rule reduces the waste of overproduction, one of Ohno's seven types of waste. Working backwards from a target completion date eliminates work that has customarily been done but doesn't add value. Team planning involves representatives of all organizations that do work within the phase. Typically, team members write on sheets of paper brief descriptions of work they must perform in order to release work to others or work that must be completed by others to release work to them. They tape or stick those sheets on a wall in their expected sequence of performance. Planning breaks out in the room as people begin developing new methods and negotiating sequence and batch size when they see the results of their activities on others. The first step of formalizing the planning and the phase schedule is to develop a logic network by moving and adjusting the sheets. The next step is to determine durations and see if there is any time left between the calculated start date and the possible start date. It is critical that durations not be padded to allow for variability in performing the work. We first want to produce an 'ideal' schedule based on average duration estimates, a practice recommended by Goldratt in Critical Chain (p. 45, Goldratt, 1997). The team is then invited to reexamine the schedule for logic and intensity (application of resources and methods) in order to generate a bigger gap. Then they decide how to spend that time: 1) assign to the most uncertain and potentially variable task durations, 2) delay start in order to invest more time in prior work or to allow the latest information to emerge, or 3) accelerate the phase completion date. If the gap cannot be made sufficiently positive to absorb variability, the phase completion date must slip
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out, and attention turns to making up that time in later phases. The key point is to deliberately and publicly generate, quantify, and allocate schedule contingency. The primary rules or principles for production control are: •
Drop activities from the phase schedule into a 6-week (typical) lookahead window, screen for constraints, and advance only if constraints can be removed in time.
•
Try to make only quality assignments. Require that defective assignments be rejected.
•
Track the percentage of assignments completed each plan period (PPC or ‘percent plan complete’) and act on reasons for plan failure.
Most attempts to implement lean on projects have started with engaging participants in production control. One argument for doing so, provided in RT191, is that projects are structured and executed through rules and agreements of the participants, unlike a factory in which flows and responsibilities can be fixed by machine layout and conveyance systems. Taking another perspective, the standing advice from experts in lean is to first stabilize the production system before trying to optimize. Production control can be understood as the means for stabilizing project production systems because it increases the extent to which work plans accurately predict future states of a project. For example, GS, a Korean construction contractor, tried to implement just-in-time (JIT) delivery to reduce the inventory of rebar on site, then realized through several pilot projects that JIT delivery cannot be achieved without first stabilizing demand; i.e., without improving the predictability of future events, and hence the time when deliveries will be needed.
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4.2.4.5.2 3D modeling 3D modeling has been an important part of several lean implementations; e.g., the Terminal 5 project, Channel Tunnel Rail Link Contract 105, Camino Medical Center, and GM’s Flint engine plant project. Computer modeling is transforming design from a process of document production into a process of model building, a type of collaborative assembly. 3D modeling was used in the following case studies/field trials: •
Air Products
•
BAA
•
Burt Hill
•
General Motors
•
IPD
•
Southland Industries
The past practice of “roughing in” mechanical and electrical work, and letting the contractors deal with the collisions and design problems in the field was eliminated. On a weekly basis all of the design work was run through a collision identification process, and design problems could be identified before a contractor began work. 3D modeling also facilitates JIT material delivery on sites. The materials that were needed for construction were known in their entirety prior to the start of construction. This let the contractors know exactly what they would need to be able to complete any
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part of the project. There was no need to have extra materials on hand in case changes had to be made. 4.2.4.5.3 Target costing Target costing in the construction industry is the practice of constraining design and construction of a capital facility to a maximum cost. It is an appropriate practice for all clients with financial constraints (maximum available funds or minimum ROI requirements) that a capital facility project must meet in order to be considered successful by that client. Target costing was used in the following case studies/field trials: •
BAA
•
Boldt
•
Burt Hill
•
Messer
•
Southland Industries
•
Sutter Health
It has been customary for designers to work with clients to understand what they want, then produce facility designs intended to deliver what is wanted. The cost of those designs has then been estimated, and too often found to be greater than the client is willing or able to bear, requiring designs to be revised, then recosted, and so on. This cycle of design-estimate-rework is wasteful and reduces the value clients get for their money. Cost has been an outcome of design. Target costing is a management practice that
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seeks to make cost a constraint on design and client purposes/stakeholder values the driver of that design, thereby reducing waste and increasing value. Target costing can be understood as one application of a production-oriented business management philosophy that self-imposes necessity as a driver of continuous improvement and innovation. 24 Perhaps the most famous articulation of this philosophy was Toyota’s Taiichi Ohno’s recommendation to ‘lower the river to reveal the rocks’; i.e., to periodically reduce the buffers of inventory, capacity, time and money that absorb waste-causing variation in order to stress the production system and reveal where it needs improvement (Ohno, 1988). Applying artificial necessity on capital facility projects can be done by 1) reducing the amount of money made available for design and construction of facilities with prespecified functionalities, capacities and properties; 2) increasing the minimum acceptable ROI, or 3) increasing the valued facility attributes required beyond what current best practice can deliver for a given cost. Far from squeezing designers, suppliers and builders ever harder, the enlightened client provides commercial incentives and organizational structures that enable and encourage innovation in practices and streamlining of processes. When they assume financial risk, designers, suppliers and builders can apply target costing to their own projects. The first steps in target costing are to set, then design to a maximum cost. “Can a facility be designed and constructed that allows the client to achieve their purposes within the limits of their constraints?” That is the question to be answered during the project 24
See Jeffrey Liker’s The Toyota Way for a thorough description of this business management philosophy.
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definition phase. If the answer is negative, the project should not be funded. If the answer is positive and the project is funded, the next challenge is to actually design to that amount of funding, to the project target cost, and not to exceed it.
Figure 4.2 Target Costing in Construction Boldt was the pioneer, at least in the United States, in adapting target costing from its origin in product development (Cooper & Shagmulder, 1997 and 1999) to capital projects. The first project, the Tostrud Fieldhouse Project, achieved very positive results, completing in 10 months less and for 2/3 the square foot cost of a similar facility built two years before in the same city (Ballard & Reiser, 2004). Sutter Health requires the practice of target costing, which they call “target value design” in its Integrated Form of Agreement, developed specifically to facilitate lean project delivery. Their pilot project, the Acute Rehabilition Center, reached its target cost with a small reduction in scope, despite enormous price escalation for materials and services during execution. Leadership for that effort came both from Sutter Health and
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from HGA, the project architect/engineer. Boldt and Southland Industries are among the companies actively involved in developing target value design on Sutter Health projects. 4.2.4.5.4 Set based design Set based design was used in the following case studies/field trials: •
Abbott
•
Boldt
•
Southland Industries
•
Sutter Health
‘Set-based engineering’ has been used to name Toyota’s application of a least commitment strategy in its product development projects (Ward et al. 1995, Sobek et al. 1999). That strategy could not be more at odds with current practice, which seeks to rapidly narrow alternatives to a single point solution, but at the risk of enormous rework and wasted effort. It is not far wrong to say that standard design practice currently is for each design discipline to start as soon as possible and coordinate only when collisions occur. This has become even more common with increasing time pressure on projects, which would be better handled by sharing incomplete information and working within understood sets of alternatives or values at each level of design decision making; e.g., design concepts, facility systems, facility subsystems, components, parts. Toyota’s product development process is structured and managed quite differently even than other Japanese automobile manufacturers. Toyota’s product development: •
Develops multiple design alternatives.
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•
Produces 5 or more times the number of physical prototypes than their competitors.
•
Puts new products on the market faster than their competitors and at less cost.
Toyota’s superior performance may result from reducing negative iteration more than enough to offset time ‘wasted’ on unused alternatives. Negative iteration occurs as a result of each design discipline rushing to a point solution, then handing off that solution to downstream disciplines in a sequential processing mode. Whether or not one has the time to carry alternatives forward, would seem to be a function of understanding when decisions must be made lest we lose the opportunity to select a given alternative. We need to know how long it takes to actually create or realize an alternative. Understanding the variability of the delivery process, we can add safetytime to that lead-time in order to determine the last responsible moment. Choosing to carry forward multiple alternatives gives more time for analysis and thus can contribute to better design decisions. 4.2.4.5.5 Relational contracting Relational contracting seeks to give explicit recognition to the “relationship” between the parties to the contract.
In essence, responsibilities and benefits of the contract are
apportioned fairly and transparently, with mechanisms for delivery that focus on trust and partnership. At a project level in construction, this can improve working relationships between all project stakeholders, can facilitate efficient and effective construction, can enhance financial returns and can minimize the incidence and make easier the resolution of conflict. (Cooledge, 2005)
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Relational contracting was used in the following case studies/field trials: •
BAA
•
Boldt
•
IPD
•
Messer
•
Southland Industries
•
Sutter Health
Relational contracting seeks to align the interests of all of the contracting entities on a construction project. This alignment of interests seeks foster cooperation between the various entities on a construction project thru the use of legal and organizational tools to help these entities work more closely together. Cooperation, especially between prime and sub-contractors, is difficult on the construction site. The competing interests of the entities on a traditional construction project lead to sub-optimization of the contractors. The contractors, all independent, do what they can do help themselves, even if that means more work for the next guy. There is very little incentive for contractors to make small changes to their processes which could result in big gains for the other contractors. The small cost is bore by the one contractor, and the gains are realized by another. With contractors either unable, or unwilling to make small cost, huge benefit changes, the goal of cooperation between contractors is distant. IPD (Integrated Project Team) was an integrated team using relational contracting. Three major contractors, or Primary Team Members (PTM’s) were bound together to
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share both the risk and profit of the project as a whole. This structure, among other things, lead to a much closer relationship between the team members. An important and notable part of this structure was the sharing of financial information across the project team. The information was not shared in order to be able to blame problems on each other; this would have been waste as all contractors realized rewards as well as risks. The sharing of information allowed all of the team members to look at the project as a whole, and to optimize the project as a whole. 4.2.4.5.6 Cross-functional teams Cross functional teams were used in the following case studies/field trials: •
BAA
•
Boldt
•
Burt Hill
•
IPD
•
Messer
•
Southland Industries
Sutter Health Cross Functional Teams are the organizational unit for all phases of the Lean Project Delivery System. All stakeholders need to understand and participate in key decisions. However, it is not possible for everyone to meet continuously and simultaneously. Some division of labor is required. In general, the appropriate pattern to follow is alternation between bigger alignment meetings and work by individuals or by smaller teams on the tasks identified and agreed in those meetings.
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Facility systems and subsystems offer natural groupings for the formation of cross functional teams. For example, a Foundation team might consist of the structural engineer, foundation contractor, key suppliers, etc. In addition, representatives from Superstructure, Mechanical/Electrical/Plumbing/Fire Protection, Interior Finishes, and other teams would participate. In the design phase, the natural division is between product and process design, but the trick is to counteract the developed tradition of producing them separately and sequentially. Information technology can be helpful by making the state of both more visible, e.g., through shared, integrated models. Nevertheless, having representatives of each relevant specialty assigned to each team will always be essential. 4.2.4.5.7. Value stream mapping (VSM) Value Stream Mapping (VSM) is a visualization tool to show the stream of value. It helps users understand and streamline work processes. To understand where value is added in a production process, one must first learn the steps or phases a product goes through to reach a finished state. Mapping out all of the steps of a production process allows one to focus on eliminating or minimizing steps that do not add values. VSM allows each party involved in the construction process to understand where value is generated. Value stream mapping was used in the following case studies/field trials: •
Air Products
•
BAA
•
Boldt
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•
Burt Hill
•
Messer
•
Southland Industries
•
Sutter Health
•
Walbridge Aldinger
Many companies including owner companies use value stream mapping to identify where non-value-adding activities are located. For example, GS E&C, a general contractor, implements value stream mapping to identify muda in the engineering and procurement process in parallel with JIT and Lean production control on sites. Walbridge uses value stream mapping for construction processes as well as supporting process such as procurement, which they initiated after one of their customer demonstrated its usefulness. 4.2.4.5.8. Just-in-time (JIT) material delivery The term ‘Just-In-Time’ (JIT) suggests that materials be brought to their location for final installation only when they are needed. The ultimate objective of JIT production is to supply the right materials at the right time and in the right amount at every step in the process. Case studies tell us that JIT requires reducing demand variability and fabricator lead time. It also requires collaboration between installer and fabricator. Many companies including GM and Southland Industry use 3D design for collaboration between installer and fabricator. Production control was used in the following case studies/field trials: •
Air Products
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•
BAA
•
Boldt
•
Dow Chemical
•
GC Construction
•
Ilyang
•
Messer
•
Southland Industries
4.2.4.5.9. 5S 5S is a systematic approach to achieve total organization, cleanliness and standardization in the workplace. 5Ss are 1) Separate/Scrap, 2) Straighten, 3) Scrub, 4) Standardize, and 5) Sustain. The objective of 5S is to increase efficiency at the micro-level such as reducing time in finding a needed tool by keeping the workplace neat, orderly and accessible. It can also eliminate wasted steps or long reaches that may be hazardous. Many organizations in our case studies testified that the results were dramatic and increased pride and morale although it is easy to implement. Companies such as Walbridge Adlinger use 5S process and require it to be used on construction sites and at their yard. 5S was used in the following case studies/field trials: •
Air Products
•
Dow Chemical
•
Messer
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•
Southland Industries
•
Walbridge Aldinger
4.2.4.5.10. Visual control Visual control provides information to guide everyday actions. Traffic signals and signs are the most common examples. Many organizations in our case studies use visual control for daily management. For example, Ilyang used hardhat visual control where each color indicates distinct work division and level of management. It helps managers to identify tasks and the numbers of workers on the task in each location. Some companies posted a signboard describing standard procedures and safety issues on the site so that workers can easily understand and follow them. Walbridge Adlinger used the logistical plan which capitalizes on visual controls to help organize current and planned work on the site. Production control was used in the following case studies/field trials: •
Air Products
•
Dow Chemical
•
GC Construction
•
Ilyang
•
Messer
•
Southland Industries
•
Walbridge Aldinger
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4.2.4.6 What has been measured? It is important to measure your lean system to see if you are on the right track. As mentioned earlier, lean is not a destination but a journey. No specific metrics are required for organizations pursuing lean. What measure to use depends on value. No specific metric to measure how your organization or your project is lean is found in the course of the research. However, the research team found several measures were used by organizations in the case study. Most organizations that applied production control (a.k.a. the Last Planner® System) on their projects measure PPC (percent plan completion) to measure production planning reliability, which leads to work flow reliability. Some organizations have developed their own metrics to measure their lean performance. For example, Walbridge developed a metric called the “Lean Olympics”, a score card which evaluates the lean performance of each project. Based on project performance, each project is given a silver, gold or platinum rating. The best measure of progress is the rate of organizational learning. The universal metric in lean system is the rate of organizational learning in that lean is a journey. Examples may include repetitiveness / frequency of failures in planning, input of new ideas. Some metrics are available that are relevant to lean production system. Examples include rate of delivery on time, on budget, and defect rate. It is important to rethink current metrics being used in the context of lean.
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4.2.4.7 What results have been achieved? •
13% reduction in total installed cost on BP’s Whiting Refinery project, in large part from a 24% increase in piping productivity by BMW Constructors25
•
Sutter Health’s ARC project hit its target cost in a period of severe price escalation for both materials and services26
•
The civil phase of BAA’s Terminal 5 project was completed on time (the first major U.K. civil project to do so in the last 40 years) and under ran its budget by 10%, a savings of $125 million.27
•
Southland Industries improved its HVAC installation productivity by 24.5% on Sutter Health’s Camino Medical Center project, largely as a result of 3D modeling and the extensive and precise prefabrication and preassembly that enabled, supported by just-in-time deliveries and material handling innovations such as wheeled carts for moving ductwork.
•
GM cut 24 of 85 weeks off its Flint plant project, with zero change orders.28
•
Spancrete has achieved substantial improvements in performance29: o Throughput increased from 565,898 cu. ft. to 1,134,966 cu. ft. o Direct labor hours per unit of output decreased from .174 to .162 o Raw material inventory turns increased from 17.14 to 25.15
•
Laing/O’Rourke’s Malling precast concrete subsidiary increased its revenues from 130,000 pounds sterling per week to 330,000 pounds sterling per week, with
25
March, 2006 presentation to RT 234. Ballard (2006), “Rethinking Project Definition in terms of Target Costing”.. 27 Ballard (2006). “Innovations in Lean Design”. 28 ENR, 10/10/2006, pp. 28-32. 29 Brink & Ballard (2006). 26
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no increase in staffing or equipment, while doubling its productivity on precast floor elements and achieving a 280% increase in productivity on its shear walls.30 •
CORBER (Costain, Laing/O’Rourke, Bachy, and EMCOR Rail), the joint venture responsible for Contract 105 at St. Pancras Rail Station, part of the Channel Tunnel Rail Link project implemented digital prototyping, kanban inventory replenishment in site stores, first run studies, and production control for a benefitto-cost ratio of 6.4 ($6,067,154-to-$947,105), a net savings of $5,120,409, and a 6.4% budget under run31.
•
IPD designed and built a central plant in 8 months for $600,000 under the $6,000,000 GMP.
•
Walbridge Adlinger saved 9 million dollars over the last three years. It includes the owner savings and the direct/indirect savings. WA passed back to the owner 65% of total savings.
•
GS saves around 10% of rebar engineering, fabrication, and installation costs.
•
Ilyang got awarded USD 27 million aqueduct construction project from a general contractor because the general contractor pursues lean construction. The general contractor asked to have a long-term alliance with Ilyang for the same reason. Ilyang increased its net profit ratio by 10 percent last year and decreased safety accidents by around 50% after they adopted lean.
30 31
Ballard, Harper & Zabelle (2003). Koerckel & Ballard (2005).
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•
In its first attempt at target costing, Boldt delivered a field house (athletic facility) for St. Olaf’s College in 10 months less time and for 65% the square foot cost of a similar facility built in the same area during the same time period.32
•
Burt Hill improved operating profit by 50% on its first three lean pilot projects.
4.2.4.8 What are success factors and barriers? A commitment and leadership of management and cultural and behavioral change are two most important factors for the successful lean implementation. When stakeholders are reluctant to adopt learn, understand and implement lean, the lean implementation in the project can not be achieved successfully. Many interviewee mentioned commitment and leadership of the management contributes to establishing a sense of urgency. Making everyone stakeholder is in the category of establishing a sense of urgency. The finding is in line with Kotter’s experience (Kotter, 1996) that 50 percent of change efforts failed in this step. Stakeholders should understand that lean implementation is a journey, not a destination. Many interviewees said that training is critical to the success of lean implementation. It is noted that many perceive that learning by doing is as important as class-room training. Some interviewee mentioned that enhancing partner’s lean capability is important. Other factors include standardization, information sharing, contractual problems, and confusion with existing control system.
32
Ballard & Reiser (2004).
130
Success Factors and Barriers
Commitment Culture/behavior change
3% 3%
Leadership 3%
3%
Training
24%
3%
Enhancing partner’s capability
3%
Information sharing Learning from failure
7%
Making everyone stakeholder 7% 21%
Standardization Confusion with existing system
10%
Contractual problems
13%
Others o
Figure 4.3 Success factors and barriers Basic finding: No one is a helpless victim of fate. Everyone can act within the limits of their own power to create more value and less waste.
4.3 Field Trials 4.3.1 Field trial process The field trials have been implemented to validate tools and implementation strategies identified during the study. Researchers were involved as a consultant in each experiment and data was collected.
4.3.2 Summary of field trials Three organizations participated in the field trials: Abbott, Ilyang, and Dow Chemical. Details of the field trials are described in Appendix B.
4.3.2.1 Abbott & Riley 4.3.2.1.1. Project and Tools
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•
Projects: AP39 Global pharmaceutical research and development center (process and equipment building system)
•
Tools: Last Planner® system
•
Abbott is an owner company and Riley is a general contractor who applied the Last Planner® system in this field trial.
4.3.2.1.2. Results and lessons learned PPC data was collected for each week. PPC ranged from 54% to 94%. Positive impacts include: - Forced to think about what should be completed each day - Better understanding of causes for not completing tasks - GC Tradesmen bought into and knew what was expected - Good success and participation from internal GC tradesmen - Looking to implement full system on future projects
On the other hand, some negative impacts were noted: - Time-consuming job - Limited success in getting participation by subcontractors - Subcontractor tradesmen were suspicious of system and concern over results - Need to have some experience to recognize gaming of the system - Difficult to define measurable quantities for some activities 4.3.2.2 Dow Chemical 4.3.2.2.1. Project and Tools
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•
Projects: Project Daytona in Midland Michigan (Industrial project)
•
Tools: Relational contracting, Last Planner® system, pre-assembly, supply plan, visual control/error proofing, and waste reduction (movement)
When it became apparent that Project Daytona in Midland Michigan would not be able to be constructed within the time frame needed by the business the project team looked in the application of Lean Principles. The project team put together a Lean Execution Strategy in which tools mentioned above were applied.
4.3.2.2.2. Results and lessons learned The following results were achieved even though detailed quantitative data was not available. •
The team met the startup turnover sequence i.e. met the schedule reduction target of seven months.
•
The project has worked over 535,000 injury free hours
•
Currently on budget even with equipment and labor inflation that we are seeing across the US
•
Contractor productivity numbers are equivalent to their best projects in spite of this project doubling their annual workload in our facility
•
Contractors were able to meet their commitments for routine maintenance and turnarounds (concern from owner management team due to the size of this project in comparison to annual volume of work handled in “normal times). The concern had been the project would be forced to use all the contractor resources to make the schedule. Due to the planning efforts the project team never was forced to add people to try and make up schedule.
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4.3.2.3 Ilyang 4.3.2.3.1. Project and Tools •
Projects: Seoul subway construction and Busan subway construction (heavy civil construction)
•
Tools: Last Planner® system
Ilyang is a specialty contractor in earthwork and structural work. The Last Planner® system was applied to two similar heavy civil constructions. Experiments have been implemented through three phases: 1. The first phase involved calculating PPC of week work plan. Reasons for failure were identified through all three phases. However, Last Planner®(i.e, the shielding process) was not implemented during this phase. 2. The shielding process through extensive constraint analysis was implemented on the course of commitment planning. In the second phase, costs were assigned to each assignment in the weekly work plan. 3. The shielding process was implemented as in the second phase. However, cost information is excluded from the weekly work plan. 4.3.2.3.2. Results and lessons learned PPC data was collected for each phase. PPC climbed from 50% to 90%. The experiment showed that the Last Planner® improved work flow reliability (i.e., improving PPC) in tunneling projects. However, the study indicated several barriers. Four actions have been proposed to improve PPC and the work flow reliability: •
Removing cost information from the weekly work plans,
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•
Coupling plan-generating teams with field engineers and foremen,
•
Overcoming the mentality of saying “Yes” to the boss all of the time
•
Training foremen to plan.
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5.0 Conclusions and Recommendations This research has included a review of the literature, statistical analysis of the relationship between production control metrics and productivity, case studies of early adopters and field trials of selected lean tools by three research team members. In this chapter, conclusions are drawn from the various sources evaluated in the research, both regarding implementation strategies and the roles of different members of project delivery teams in implementation. Section 5.1 provides general guidelines for starting your lean journey. Section 5.2 summarizes key learnings about organizational change. Section 5.3 lists in some detail the steps and methods involved in implementing lean on capital projects. Section 5.4 describes the different roles of project team members in the implementation of lean. The chapter ends with Section 5.5, in which recommendations are made for future research.
5.1 Starting your lean journey Lean is a journey, not a destination. Becoming a lean enterprise means never ending pursuit of the lean ideal. We have chosen to treat implementation on projects as a way station up the lean highway on ramp. The journey starts, not on projects, but in your own house, educating yourself and your people about lean, applying lean principles and tools such as 5S and value stream mapping to processes within your direct control, and preparing your people for the changes to come. For a company or part of a company that does its business through projects, the second milestone is demonstration projects, which
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are carried out in order to learn how to apply lean principles and tools to the delivery of projects, to develop internal advocates, and to begin the process of developing partners in your supply chains. The third milestone is the engagement of all your own people in process improvement and deployment of standard processes throughout the organization, including standards for projects. Organizations enter the lean highway at the fourth milestone, itself necessarily a launch rather than a completion; namely, beginning the never ending process of structuring the supply chains in which the organization and its projects participate to pursue the lean ideal, and extending those supply chains progressively to ever more distant tiers of suppliers.
LEAN IDEAL Lean Journey
Integrate supply chain
Standardize processes
Launch demonstration projects
Start in your house
Figure 5.1: Starting your lean journey
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5.2 Guidelines for organizational change Any organization attempting to make a fundamental change in its structure or behavior can benefit from following what has been learned about organizational change. The following guidelines were drawn from the literature on organizational change, the recorded experience of lean organizations outside the construction industry, and the case studies and field trials carried out during this research: •
Learn by doing. Don’t over-theorize. Though lean is essentially a change in thinking, changing practice can change thinking, enabling more fundamental changes in practice, and so on in a virtual cycle.
•
Start with your own work, whether that be direct production or production management. Start on processes within your control. These may not involve an interface with a supplier or customer.
When ready, extend to systems that
interface with others. •
Bring an external consultant (sensei) to guide your Lean journey when you start, to help with both strategy and training.
•
Change the company culture by changing management practice. Classroom training may be necessary, but will not be sufficient. A key to cultural change is for supervisors to serve as mentors.
•
Learn from failures. For example, one general contractor failed on a demonstration project where most work was executed by second-tier subcontractors. Since the general contractor did not have direct control over second-tier sub-contractors, they had difficulties communicating production plans,
138
which is critical for lean production control. Their solution was to help a subcontractor (first-tier subcontractor) have ‘lean’ capacity. •
Measure your lean system to see if you are on the right track. Most organizations use PPC to measure their production control system. Some organizations have developed their own metrics to measure their lean performance.
•
Stabilize the target production systems by making work flow predictable before attacking waste (muda). One general contractor started its lean journey by applying JIT to reduce material inventory on site. But they found it difficult to implement JIT delivery without stabilizing workflow.
•
Start with demonstration projects to adapt concepts and techniques to your situation, to provide proof of concept, to develop competence and confidence, and to build internal advocates and external partners. Protect demonstration projects from the normal demands of the organization—treat them like babies learning to walk and talk.
•
Strive for early wins to celebrate and maintain momentum
•
Create a sense of urgency.
•
Facilitate and coach collaborative behaviors.
•
Provide consistent leadership.
•
Structure evaluations and rewards to encourage desired behavior. Reward teamwork and learning, not command and control and fire fighting.
•
Don’t ask people to add more to their load. Take something away; stop doing what no longer makes sense.
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5.3 Implementing lean on projects The lean ideal is to provide a custom product exactly fit for purpose delivered instantly with no waste. Based on what we have learned from the literature, from case studies, from field trials, and from statistical analyses, the following actions seem to be necessary in order for projects to effectively pursue that ideal. The ability of individuals and organizations to follow this roadmap will vary with position and circumstance, but to the extent possible, the following should be done to implement lean on projects: •
select partners or suppliers who are willing and able to adopt lean project delivery
•
structure the project organization to engage downstream players in upstream processes and vice-versa, and to allow resources (money, personnel, schedule float, etc.)
to move across organizational boundaries in pursuit of the best
project-level returns •
do target costing: define and align project scope, budget and schedule to deliver customer and stakeholder value, while challenging previous best practice
•
encourage thoughtful experimentation; explore adaptation and development of methods for pursuing the lean ideal
•
celebrate breakdowns as opportunities for learning rather than occasions for punishing the guilty
•
do set based design: make design decisions at the last responsible moment, with explicit generation of alternatives, and documented evaluation of those alternatives against stated criteria
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•
practice production control in accordance with lean principles such as making work flow predictable and using pull systems to avoid overproduction
•
build quality and safety into your projects by placing primary reliance on those doing the work of designing and making, by acting to prevent breakdowns, including use of pokayoke techniques, by detecting breakdowns at the point of occurrence, by taking immediate corrective action to minimize propagation, and by acting on root causes in order to prevent reoccurrence
•
implement JIT and other multi-organizational processes after site demand for materials and information is sufficiently reliable
•
use First Run Studies: on processes that transform materials, use to design and test process capability to meet safety, quality, time and cost criteria
•
use computer modeling to integrate product and process design, to design construction operations in detail, and for use by the customer in facilities management
These can be organized in a roadmap specifically for projects, grouped by the phases of the Lean Project Delivery System (Figure 3.1), preceded by a pre-project phase in which the organizational and contractual structure of the project is created.
Table 5.1: Roadmap for implementing lean on projects Pre-project Phase33 Structure the project contractually and organizationally for
33
Terms in italics are defined in the Glossary.
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pursuit of the lean ideal, using relational contracts and cross functional teams. Project Definition Phase Align ends, means and constraints Set targets for scope and cost based on aligned ends, means and constraints Set other targets for experimentation and learning Design Phase Make work flow predictable through reliable promising and lean production control Follow a set based design strategy Design to target scope and cost Design product and process simultaneously; design for sustainability and constructability, including safe and defectfree fabrication and assembly Produce product specifications, fabrication instructions, installation instructions and system specifications from an integrated database Supply Phase Make work flow predictable through reliable promising and lean production control
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Prefabricate and preassemble Apply appropriate lean tools and methods in fabrication shops; e.g., 5S, value stream mapping, point of use materials and tools, cellular manufacturing Fabricate at the last responsible moment to reduce the risk of design change Produce assembly packages by kitting fabricated materials with commodities not maintained in site stores Deliver assembly packages to site just-in-time Assembly Phase Implement the principle of providing materials and tools at the point of use through site stores and assembly packages. Maintain commonly used and relatively small items (safety equipment, small tools, consumables, fasteners, etc.) in site stores. Replenish using kanban or vendor managed inventory. Do first run studies to improve the safety, quality, time and cost of operations (placing concrete, pulling cable, setting equipment), involving craft workers in operation design, testing and improvement. Achieve Built-in quality through preparation, detection, correction and prevention.
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Get feedback on the effectiveness of production management and suggestions for improvement
from craft workers
through surveys and interviews. Apply other appropriate lean tools and methods in site assembly; e.g., layout for minimal travel time and 5S. Use Phase Use commissioning and start up to verify delivery to requirements Transfer information (model, as builts, equipment manuals) to operators for use in operations and maintenance Conduct a post occupancy evaluation to verify understanding of the purpose of requirements and the fitness for purpose of design and construction. Collect feedback from members of the project delivery team and other stakeholders on lessons learned.
5.4 Implementation Issues by Project Role Organizations play multiple roles on project delivery teams: owner, owner agent, A/E (process manager), consulting engineers (design specialists), CM/GC (process manager), construction specialists, and suppliers. Each of the organizations playing these roles has different opportunities and face different challenges. Power to implement the project roadmap is distributed roughly in the following order: •
Owner
144
•
Owner agent
•
Process manager (design and construction)
•
Specialist (design and construction)
•
Supplier
5.4.1 Owners and Owner Agents Clearly owners, and to a large extent, their agents face the least obstacles to selecting partners or suppliers, to structuring projects contractually and organizationally, and to doing target costing. Public owners often face legal constraints on taking these actions, motivated by the desire to avoid even the hint of wrong doing in the award of public funds, and the desire to ‘spread the wealth’; though the effectiveness of alternatives to traditional design-bid-build structures has increasingly led governmental agencies to explore and embrace these alternatives.
5.4.2 Process Managers Those who function as process managers, for the entire project or for one or several project phases, can have a great deal of power to select their own partners and suppliers, and to structure contracts and relationships, especially when they take on financial responsibility for their work. Process managers tend to have less discretion regarding target costing, though they certainly can set stretch goals within their areas of responsibility to encourage innovation beyond best practice. Managers of the design phase have some freedom to do set based design, though that can be limited by owners who do not appreciate its potential benefits.
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5.4.3 Design and Construction Specialists Design and construction specialists usually have little opportunity to select their fellow team members, though they often can select their own suppliers and may be able to team with other specialists, or even with process managers, as illustrated most notably by the IPD case study. However, specialists, in fact all role players, can encourage thoughtful experimentation and celebrate breakdowns as opportunities for learning. All role players can also practice production control, though specialists are limited in their ability to coordinate with others who are not committed to practicing production control in accordance with lean principles. Other role players, including design specialists, are very limited in their ability to do or make set based design happen if the design phase manager is not supportive. Design specialists can, of course, practice set based design within their own disciplines, and within the limits set by the need to coordinate with other specialists. Building quality and safety into projects occurs first in the design phase, then in construction, so all role players can do this. Just-in-time deliveries and detailed design of fabrication and installation operations obviously belong to constructors, both managers of the construction phase and construction specialists. However, design for constructability must occur in the design phase, so everyone can contribute. Indeed, digital and physical prototyping best occurs in the design phase, otherwise it may be too late to make the changes in design and the preparations for building necessary to act on what is learned through prototyping.
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Table 5.2: Implementation by Project Role Owner
Owner
Process Manager
Agent Select partners
Design
Construction
Specialist
Specialist
Supplier
Can act
Can act
Can act with
Can choose
Can choose
Can choose
or suppliers who
unilaterally,
with
owner approval
with whom to
with whom
with whom to
are willing and
within the
owner
on projects. Can
work, both
to work, both
work, but have
able to adopt lean
limits of
approval
choose with
those who hire
those who
a vested
project delivery
the law.
whom to work,
them and those
hire them and
interest in
but have a vested
whom they
those whom
developing
interest in
hire.
they hire.
'lean'
developing 'lean'
customers
customers. Structure the
Can act
Can act
Can act only
Can encourage
Can
project
unilaterally,
with
when they have
and respond
encourage
organization to
within the
owner
financial
positively to
and respond
engage
limits of
approval
responsibility for
opportunities,
positively to
downstream
the law.
a project or a
but cannot
opportunities,
players in
phase of a
dictate
but cannot
upstream
project.
structure or
dictate
processes and
commercial
structure or
vice-versa, and to
relationships
commercial
allow money to
relationships
move across organizational boundaries in pursuit of the best project-level returns
147
Cannot act.
Do target
Can act
Can act
Can act only
Can encourage
Can
costing: define
unilaterally,
with
when they have
and respond
encourage
and align project
within the
owner
financial
positively to
and respond
scope, budget and
limits of
approval
responsibility for
opportunities,
positively to
schedule to deliver
the law.
a project or a
but cannot
opportunities,
customer and
phase of a
dictate
but cannot
stakeholder value,
project.
structure or
dictate
while challenging
commercial
structure or
previous best
relationships
commercial
practice Encourage
Cannot act.
relationships Can act
Can act
Can act within
Can act within
Can act
Can act within
thoughtful
within their
within
their own sphere
their own
within their
their own
experimentation
own sphere
their own
of control.
sphere of
own sphere
sphere of
of control.
sphere of
control.
of control.
control.
control. Celebrate
Can act
Can act
Can act within
Can act within
Can act
Can act within
breakdowns as
within their
within
their own sphere
their own
within their
their own
opportunities for
own sphere
their own
of control.
sphere of
own sphere
sphere of
learning rather
of control.
sphere of
control.
of control.
control.
than occasions for
control.
punishing the guilty Do set based design
Can act
Can act
Can act only
Can encourage
Can
Can encourage
unilaterally,
with
when they have
and respond
encourage
and respond
within the
owner
financial
positively to
and respond
positively to
limits of
approval
responsibility for
opportunities.
positively to
opportunities.
the law.
a project or a phase of a project.
148
opportunities.
Practice
Can act
Can act
Can act within
Can act within
Can act
Can act within
production control
within their
within
their own sphere
their own
within their
their own
in accordance with
own sphere
their own
of control.
sphere of
own sphere
sphere of
lean principles
of control.
sphere of
control.
of control.
control.
control. Build quality
Can act
Can act
Can act within
Can act within
Can act
Can act within
and safety into
within their
within
their own sphere
their own
within their
their own
your projects
own sphere
their own
of control.
sphere of
own sphere
sphere of
by ....
of control.
sphere of
control.
of control.
control.
control. Implement JIT
Can act
Can act
Construction
Can support,
Can
Can encourage
and other multi-
through
through
manager can act
but is not
encourage
and respond
organizational
contract
contract
either with owner
directly
and respond
positively to
processes after site
provisions
provisions
approval or when
involved in the
positively to
opportunities.
demand for
and through
and
they have
implementation
opportunities.
materials and
assuming
through
financial
information is
risk
assuming
responsibility
sufficiently
risk
reliable Use First Run
Can act at
Can act
Construction
Can support,
Can act
Can support,
Studies: on
the project
with
manager can
but is not
within their
but is not
processes that
level.
owner
require/encourage
directly
own sphere
directly
approval.
construction
involved in the
of control.
involved in the
specialists to act.
implementation
transform materials, use to design and test process capability to meet safety, quality, time and cost criteria
149
implementation
Use 3D
Can act at
Can act
Design manager
Can act within
Can act
Can support,
modeling to
the project
with
can
their own
within their
but is not
integrate product
level.
owner
require/encourage
sphere of
own sphere
directly
approval.
design specialists
control.
of control.
involved in the
and process design, to design
implementation
to act.
construction operations in detail, and for use by the customer in facilities management Do post
Can act
Can act
Can act with
Can act with
Can act with
Can act with
occupancy
unilaterally,
with
owner approval.
owner
owner
owner
evaluations
within the
owner
approval.
approval.
approval.
limits of
approval.
the law.
5.5. Recommendations for Future Research This research revealed the need for future research on a number of topics and questions, some larger and some smaller.
5.5.1 What should owners demand of their service providers? This research has provided some answers to the question: What should owners demand of their architectural/engineering/construction service providers in order to take advantage of the lean revolution in project delivery? However, more specific guidance is needed. Further, the question should also be addressed: What should owners do to help their service providers meet those demands?
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5.5.2 Enabling pull by reducing lead times and extending the project window of reliability Most work in manufacturing or construction is done by a number of different specialists at least partially sequenced in time. Mass production and traditional construction project management have pushed work from one specialist to the next in accordance with a production schedule, without regard to the readiness of the downstream specialists to do that work. In opposition, the mantra from lean manufacturing is to ‘flow where you can and pull where you must’. The advice to have work flow from one specialist to the next applies when we can balance successive specialists so they can each do work within a target amount of time chosen to meet the demand for work completion. In construction, this can be done within many operations and between some operations (e.g., in the parade of finishing trades through rooms in a building), but frequently cannot be done when the nature of work changes with project progress. In these cases, where work cannot flow continuously without intermediate buffers, the best we can do is have the ‘customer’ specialist pull work from the ‘supplier’ specialist(s), thus assuring customer readiness and minimizing the buffers in the production system. Two connected advances are needed to enable use of pull as a technique for advancing work through networks of specialists: 1) Reduce the lead times for acquiring what is needed from upstream suppliers of all sorts, both on project and off project, and 2) Extend the window of time within which readiness is sufficiently predictable to make pulling economical. Research is needed in both these areas. Value stream mapping has proven effective in reducing lead times and the Last Planner® system of production control has proven effective in extending the project
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window of reliability; i.e., improving the extent to which short term production plans accurately predict future states of a project. These could be starting points for further advances.
5.5.3 Links between Lean and Safety The causal link between lean project delivery and safety warrants further research. There are several reports of improvements in safety with the implementation of lean principles and techniques. The most comprehensive and compelling report is from the Danish contractor, MTH, which experienced much lower accident rates on its projects implementing lean production control than on its projects that did not—approximately in the ratio 1:3 (Thomassen 2002). At that time, only one business unit in the company was pursuing lean. A recent update 34 reveals that the entire company has improved its accident rate to roughly the same level as the initial lean projects, as lean practices have been implemented widely throughout the company—but it must be noted that the causes of improved safety have not yet been analyzed in detail. In the case study, GS integrated safety into their Lean production control system. Special safety efforts are made on selected activities, which is feasible due to the reliable work planning.
5.5.4 How to better incorporate facility use and running costs into capital facility planning? It is well known that there is an order-of-magnitude progression in costs as we move from design costs to construction costs to running costs to actual use of a facility (Saxon,
34
Personal communication from Esben Misfeldt of MTH to Glenn Ballard; not yet published.
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2005), but capital planning routines seem to be based primarily on the first cost ROI. We expect that this is complicated in many companies by the organizational fracturing of responsibilities for these different costs; namely, capital, operations and maintenance, and business use of facilities. Money cannot always flow across organizational boundaries in search of the best system-level investment. Decisions rather tend to be made that sub optimize at local levels. Other possible complicating factors or inadequacies in budgeting for capital facilities also need to be examined such as lack of generally accepted methods for incorporating non-quantitative outcomes.
5.5.5 How to better achieve Built-in Quality? We are not satisfied that current quality management practices in the industry adequately incorporate the principles and methods for building in quality that we see in lean manufacturing. One of many issues is what has been called value flowdown. Value can be understood to originate on a project in the definition of customer and stakeholder purpose; flow down into description of the characteristics of the project (product/process) that is expected to enable realization of those purposes; flow from that into technical specifications (e.g., through the use of QFD or similar tools), flow from that into design, flow from design into the different instruments created for translating the design into a physical facility; namely, product specifications, fabrication and installation instructions, and system specifications; and finally flow into physical production and commissioning. We suspect that there is considerable loss of value at the handoffs (to use a plumbing analogy, value leaks out at the joints) and that quality management systems that rely on assessments against the immediate standard are not adequate to prevent that loss. In
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addition to inspecting against requirements, we must be able to inspect against purpose; i.e. everyone acting in the project must understand the reason for a requirement and be able to trace it back to customer value. Additional aspects of built-in quality that we think need to be strengthened in construction are the use of pokayoke (fool-proof) mechanisms, better methods of detecting defects at the point of origin, better methods of finding and correcting defects wherever they may have migrated before detection, and better understanding of fitness-for-use requirements in handoffs between specialists, both design and construction. To our knowledge, no comprehensive data collection and analysis has been done to explore the relationship between lean project delivery and quality performance. The probability of a causal connection is supported, however, by numerous anecdotal reports, especially involving the practice of first run studies; i.e., involving craft workers in detailed design and field testing of operations (Saffaro, et al. 2006). Boldt, DPR and Southland Industries are among the companies experimenting with built-in quality within the context of lean project delivery. They are being driven by Sutter Health’s commitment to lean project delivery and the contractual requirement for a “built-in quality plan” in their new, relational form of contract.
5.5.6 Demand Variability and its Consequences in Construction In manufacturing, variation is considered to be the devil (Hopp and Spearman, 2000). Its manifestations and implications need to also be better understood in construction. One important type of variation is variation in demand, which arguably causes enormous
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waste of capacity, as production systems are structured to try to match peaks and are unable to use all that capacity when in demand troughs. Two specific research questions could be good starting points: 1) What is the impact of variation in owner demand on the capacity utilization of process managers? And 2) What is the impact of variation in process manager demand on the capacity utilization of design and construction specialists?
5.5.7 Tolerance management The move into model based design enables more extensive prefabrication and preassembly, but that in turn places more stress on the management of tolerances. Current computer models have clumsy mechanisms for what if'ing tolerance build up and for assisting decision making regarding where slack is best located in a physical system. This belongs to the more general research topic of buffers, i.e., slack in systems to absorb variability. Buffers such as inventory, time and capacity are becoming well understood, but there are buffers also in product design, e.g., dimensional buffers. A recent PhD thesis (Milberg, 2006) reports research on dimensional tolerances, and has helped reveal the inadequacy of current ACI (American Concrete Institute) specifications for tolerance management, which has started a process of improving those standards. This may be only the tip of an iceberg. Architects and engineers may have too little understanding of tolerances or the process capabilities resident in current practice.
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5.5.8 Building to a Model This is another issue related to computer modeling; namely, how to better use models in construction planning and execution. Researchers are currently looking at a relatively simple application--how to coordinate framing and mechanical rough-in, which includes agreement on which walls must be completed prior to running duct work, and learning how to minimize such instances through better design choices. More expanded and extensive research is needed on this issue.
5.5.9 Set Based Design The practice of set based design is from Toyota's product development system. In brief, it is a strategy for executing design in which options, evaluation criteria, evaluations, and selection decisions are explicitly described. The idea is to apply all applicable design criteria from the beginning of design, rather than bringing them into play sequentially, and to make design decisions at the last responsible moment, using all available time and capacity within that limit, in order to produce a better design. One of the critical elements is learning how to express the design criteria for each interdependent specialist so sets of alternatives can be specified and understood. Common practice now seems to be to over specify, thus unnecessarily restricting downstream choices.
5.5.10 Lean, Green and Technology: positive forces driving the construction industry Lean and green fit nicely together, as a systematic methodology for achieving objectives and the most global set of objectives, respectively. The difficulty and uniqueness of
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design and construction challenges posed by sustainability goals requires collaboration among specialists of all kinds, and that collaboration requires lean production planning and control methods. Building Information Modeling (BIM) and other forms of technology are also a positive driving force in construction and belong with ends (sustainability) and means (lean) as the sharpest tool set currently available. How to integrate the positive forces now driving the construction industry; namely, the methodology of lean project delivery, the global objectives of sustainability (green), and tools (technology)?
5.5.11 How lean can mitigate negative forces in the construction industry Lean should be explored for its potential to mitigate negative forces in the construction industry, which include: •
Slow/negative growth in long term productivity
•
Scarcity and turnover of craft workers and engineers
•
High percentage of construction (physical) waste in landfills
5.5.12 Confirmation and analysis of critical relationships A number of relationships that are regarded as critical from a lean perspective require more detailed analysis and evaluation.
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•
Confirm and explore implications of the observation that as projects become increasingly dynamic, traditional project management becomes increasingly inadequate.
•
Extend analysis of the correlation between work flow reliability, as measured by metrics such as Percent Plan Complete, and performance dimensions such as productivity.
5.5.13 Effective Lean Implementation As lean ripples through the construction industry, there will be eventually be sufficient data to support statistical analysis of the effectiveness of alternative implementation strategies, enabling a more rigorous methodology than the case study approach used in this research.
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Appendices A. PT 191 Lean Construction Principles There are numerous lists of lean principles. We reproduce here the list from the CII Research Team 191 Research Report. 1.0 Customer Focus 1.1 Meet customer requirements 1.2 Define value from the viewpoint of the customer (project) 1.3 Use flexible resources and adaptive planning 1.4 Cross train crew members to provide production flexibility 1.5 Use target costing and value engineering 2.0 Culture/People 2.1 Provide training at every level 2.2 Encourage employee empowerment 2.3 Ensure management commitment 2.4 Work with subcontractors and suppliers 3.0 Workplace Organization/Standardization 3.1 Encourage workplace organization and use 5S 3.2 Implement error-proofing devices 3.3 Provide visual management devices 3.4 Create defined work processes 3.5 Create logistic, material movement, and storage plans
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4.0 Waste Elimination 4.1 Minimize double handling and worker and equipment movement 4.2 Balance crews; synchronize flows 4.3 Remove material constraints, use kitting, reduce input variation 4.4 Reduce difficult setup/changeover 4.5 Reduce scrap 4.6 Use total productive maintenance 4.7 Institute just-in-time delivery 4.8 Use production planning and detailed crew instructions, predictable task times 4.9 Implement reliable production scheduling, short interval schedules 4.10
Practice the last responsible moment, pull scheduling
4.11
Use small batch sizes, minimize work-in-process inventory (WIP)
4.12
Use decoupling linkages, understand buffer size and location
4.13
Reduce the parts count, use standardized parts
4.14
Use preassembly and prefabrication
4.15
Use preproduction engineering and constructability analysis
5.0 Continuous improvement and built-in quality 5.1 Prepare for organizational learning and root cause analysis 5.2 Develop and use metrics to measure performance, use stretch targets 5.3 Create a standard response to defects 5.4 Encourage employees to develop a sense of responsibility for quality
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B. Field Trials in Lean Implementation on Projects Three members of our research team 234 conducted field trials in lean implementation on their projects: B.1 Abbott/Riley Construction B.2 Dow Chemical B.3 Ilyang
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B.1 Abbott/Riley Construction The following presentation tells the story of Abbott’s field trial of the Last Planner® system in cooperation with Riley Construction, construction manager on an Abbott project at its Chicago headquarters.
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164
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166
167
168
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B.2 Dow Chemical Introduction When it became apparent that Project Daytona in Midland Michigan would not be able to be constructed within the time frame needed by the business the project team looked in the application of Lean Principles. The amount of time needed to be cut out of the conventional project execution strategy was seven months with only seven months left before the needed Return To Operations date. The planned execution strategy had been design, bid, build. As there was no way design work could be completed to support this drastic schedule compression something different had to be done. The project team put together a Lean Execution Strategy that would shorten the schedule, reduce waste, be constructed safely and satisfy management that they would not just be “throwing money” at the problem by using excessive overtime.
Contract strategy The current strategy of design and then lump sum bidding would not allow the team to meet the needed completion date. The need to overlap design and construction led the team to seek a relational contract with a contractor that could be clearly aligned with the team’s goals. To alleviate management concerns with this approach the team put together a criteria package (see the following table) and interviewed and received proposals from four potential contractors.
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Contractor selection criteria package Score - on scale 1, 3, 9 RFP REQUIREMENT
Relative Weight
EVALUATION CRITERIA
Price - crew mix & composite rates
1. Costs
35.00
Direct/Indirect Ratio compared to other bidders. Capable of developing & working with Fee at Risk Indirect Labor Rate compared to other bidders. S. Total
A
B
0.35
0.00
0.00
0.00
0.00
0.00
0.00
35.00
0.35
Quality of Schedule - amount of detail
0.00
0.00
Quality Program
5.00
0.05
Cost Tracking/Productivity Program
5.00
0.05
S. Total
10.00
0.10
Evaluation Comments Did not request estimated hours.
Look at placing productivity index- good productivity tied to incentive.
Manpower Histogram including subs - tied to the schedule
2. Schedule
Contractor has current capacity to perform this project. 3. Manpower, Organization, and Workload
Contractor's ability to expand or contract resources over a short period of time.
Organization Plan
S. Total
Quality of Safety Program
0.0
0.0
0.10
Ability to meet Feb 28 deadline
10.00
0.10
Contractor has capability to provide needed resources from outside the area
10.00
0.10
Past Performance of Superintendents scheduled to work on project; Qualifications of Field Staff/Supervision; Project Scheduler: Experience, Yrs of Constr Scheduling Exp, Understanding Duration of tasks & interrelationships; QA/QC Manager: Experience, Yrs
30.00
0.30 0.00
10.00
0.10
15.00
0.15
10.00
0.0
0.0 Safety Coordinator: Project Experience & Yrs Construction Experience; Safety Coordinator: # of similar jobs(complex, tight schedule, congested) & results in role w/co
4. Safety Historical Safety Performance S. Total Total Score
Fully meets Requirements Mostly meets Requirement Unacceptable
Rosalie to recheck Col H & I
25.00
0.10
#VALUE!
#VALUE!
100.0
#REF!
#VALUE!
#VALUE!
#VALUE!
#VALUE!
9 3 1
Bids were evaluated on hourly rates applied to the estimated work breakdown the Project Steering Team developed as well as the fitness to complete criteria in Attachment A. The job was awarded as a Time and Material contract as the total size of the job i.e., tons of steel and feet of pipe would not be able to be determined until late in design and well after fifty percent of the construction needed to be completed. Past studies and the owners experience identified two key areas that lead to waste in this type of contract scenario: •
Excessive overlap of design and construction
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•
Time and Material Contracts that can lead to low construction productivity.
To mitigate these risks, the team needed to develop a more detailed schedule. This led to the decision to use the reverse phase schedule that was broken down to the individual team member commitment and the ability to track whether the commitments were kept. The need for this type of owner/contractor legal agreement became very apparent as the team worked through the project.
Not only did it save the time needed to complete
the design, bid the work, evaluate the proposals and award the contract, it also helped in the execution of the project. Due to the amount of work to be completed by a variety of contractors and the limitations of the available space, the team had to balance the project needs over individual contractor needs. With the elimination of the incentive (lump sum on only their portion of the project) to maximize their own efficiency at the potential expense of others, the contractors helped achieve the project goals by actively participating in the daily work flow planning sessions.
Work flow – pull To maximize field productivity with the design and construction overlap one of the requirements was the use of the Last Planner System from Strategic Project Solutions (SPS) for work flow planning. This system was used to effectively align design deliverables with what the field needed to eliminate construction idle time errors and interferences. The reverse phase schedule was developed during a two day planning session held at the jobsite.
Included in this session was Design Engineering,
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Construction
Management,
Construction
Contractors,
Manufacturing,
Project
Management and two consultants from SPS. This process assured buy in and allowed all parties to understand what the others could contribute to the benefit of the project. Meeting outcomes were: •
A defined construction sequence
•
A defined engineering deliverable sequence
•
A project database that allowed the team to use SPS software to monitor performance and pinpoint areas of concern
•
Defined who would do what
After the initial construction schedule was developed weekly Production Planning sessions were held via net-meeting with the construction leaders in Midland and the design team in Houston. The meeting agenda was a review of the previous week’s Production Plan, discussion of why any item was not completed, a plan to get the item completed and the generation of the next week’s Product Plan. This process allowed the project to peak at over 350 onsite workers and every one of them knew what they would be working on for the next week and would have the materials, tools and equipment to efficiently complete their work. This process really aided the project communications as each week was an open discussion on what was needed and what could be delivered with both the contractor and design team making suggestions and developing a better work sequence.
Several
examples of the team working together to benefit the project regardless of who would traditionally do the work:
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•
New supply lines in an existing pipe rack were designed and installed by the construction contractor and as-builts were entered into the design model. Traditionally design would send a crew to measure, design and produce drawings; the contractor would attempt to install, field fit and send back as-built drawings
•
Contractor was informed of a price increase on piping and design was able to produce a 90 percent Material Take Off ahead of schedule to beat the price increase.
•
Instead of the owner and contractor both engaging a materials management organization, we decided to use only one organization for all items regardless of who ordered.
Construction workflow planning meetings were daily and focused on the next days work plans, from all contractors, and how they could be accomplished safely and efficiently. The team named this The Focus Meeting. This daily meeting allowed the team to maximize the sharing of space and equipment and eliminated problems with multiple contractors needing access to the same space at the same time. It also enabled our materials to be set in the location they would be needed at and not be in someone else’s way. The contractors were very open to modifying their work plans to best suit the project schedule.
Preassembly To try to make as much work flow parallel and to minimize the number of workers onsite the team used preassembly where ever possible. Exterior walls were changed from
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masonry to pre-cast concrete and all piping was shop fabricated using three local shops and our preferred supplier.
Supply plan The work flow plan also forced us to rethink our supply plan. Dow has a preferred supplier of prefabricated pipe with contract terms already negotiated on price and delivery timing. As the delivery terms would not meet our needs almost all early installed piping and over fifty percent of the total piping had to be fabricated by the construction contractor.
The fabrication contract also does not specifically deal with the exact
sequence of the pipe fabrication and delivery. To minimize the waste associated with inventory the design team and the mechanical contractor used the reverse flow schedule to generate a need by date for all piping spool pieces. This information was communicated to the piping fabricator and after their review and agreement to meet the schedule the fabricators performance against the scheduled was reviewed and tracked. This ended up being a weekly meeting with design, construction and the fabricator where any shortages or errors were identified and a plan to address was developed. This information was also shared at the entire team Production Plan Review meeting so any additional problems could be corrected. On a tight schedule just in time has to be right and this process helped make sure we met the construction schedule with the correct pipelines at the right time. On owner furnished equipment the need dates from our planning session were truly need dates to be able to fit into the structure as it was erected. Because of this, the team needed to work with the owner purchasing department and the vendors to stay on
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schedule. This also meant early design, steel fabrication and erection were completed with preliminary vessel design data. To make sure this would not produce rework, the design team worked with the vendors to ensure the final vendor design was identical to the original design drawings received from the vendors.
Visual control/Error Proofing The team used several examples of visual controls on safety status, project milestones and for error proofing processes. An example is shown of the gasket board the team used. Instead of a written specification for each line, the workers could get a visual image of the proper gaskets for the system they would be working on. Examples are in the following pictures. Visual images
Movement To minimize the waste involved in excess movement and to aid in housekeeping (5S) inventories of pipe and steel were scheduled on a two day look ahead and laydown areas were discussed in the daily Focus meeting to make sure the next day’s inventory was stored where it was needed and was not in another work crews way. The contractors
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were not allowed to have more than two days worth of materials on the work site. Due to the speed of this job and the difficulty of getting materials delivered at the speed they were needed, the two day inventory rule didn’t prove to be a problem. The team was also able to utilize the warehouse building and the truck docks as a staging area for instrumentation. High value control valves were brought to the site in a semi trailer that was then parked at one of the warehouse truck doors. See the following picture. High value control valves
Results •
The team met the startup turnover sequence i.e. met the schedule reduction target of seven months.
•
The project has worked over 535,000 injury free hours
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•
Currently on budget even with equipment and labor inflation that we are seeing across the US
•
Contractor productivity numbers are equivalent to their best projects in spite of this project doubling their annual workload in our facility
•
Contractors were able to meet their commitments for routine maintenance and turn-arounds (concern from owner management team due to the size of this project in comparison to annual volume of work handled in “normal times). The concern had been the project would be forced to use all the contractor resources to make the schedule. Due to the planning efforts the project team never was forced to add people to try and make up schedule.
By following the plan, did not need to bring in extra people, work everyone extra, etc.
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B.3 Ilyang Construction This field trial shows that the production control system or the Last Planner® System was applied to a specialty contractor which is specialized in earthwork and civil work. Ilyang’s lean journey is one of the cases studied for this research. This section describes the first lean experiment for Ilyang where one of the authors served as a consultant. The experiment was conducted on two subway construction projects. The study was on tunneling and open cut process for both projects. Project Description Locatio Project
Outline of Project n
Seoul Subway # xx
Method
- Tunnel : 738M
- Tunnel :NATM35
- 2 Station : 527M
- Station : Open Cut
- 3 Vent tunnels :143M
- Blasting
Seoul, Seoul
KyungN - Tunnel: 1,490M
- Tunnel : NATM
Busan Subway am,
- 1 Station : 225M
- Station: Open Cut
- 2 Vent tunnels : 97M
- Blasting
# xx Busan
35
NATM, New Austrian Tunneling Method, NATM is a flexible method of tunnel excavation and support which is adaptable to varying ground conditions from hard rock to soil.
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Description of Activities Major Assignments and Resources Project Main activity
Equipme
Title
Assignments
Materials
Labor nts
-
Earth
Work
: -Blasting
196,097M3
-Steel Arch Rib
- ANFO
- Excavator
-Blasting
- Rock Bolt
- Bit
-Dump
Team
- Shotcrete
- Shotcrete
Truck
-Boring Team
1,369EA
- Wire-eash
- RockBolt
- Crane
-Shotcrete
- Steel Arch Rib :
-Average
- Wire-Mesh
- Drill
labors
861 EA
weekly
- Steel arch
- Fork left
- Carpenters
rib
- Dozer
- Ironworkers
-
Earth
Anchor
:
742EA Seoul Subway # xx
-
Rock
Bolt
:
- Shotcrete : 6,460 M2
assignments : 114
- Lining : 12,150M3
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-
Earth
Work
:
Anchor
:
101,154M3 - Blasting -
Earth
- Steel Arch Rib
- ANFO
- Rock Bolt
- Bit
- Shotcrete
- Shotcrete
- Wire-eash
- RockBolt
-Average
- Wire-Mesh
weekly
-Steel
251EA -
Rock
Bolt
:
Busan
Steel
-
-
Team
Arch
# xx
Jumbo
Rib :1,457 EA
Dump
Boring
Team
Truck
-
Shotcrete
- Crane
labors
- Fork left
- Carpenters
- Dozer
- Ironworkers
arch
- Shotcrete : 15,141 assignments :
Blasting
-
Drill
3,357EA Subway -
- Excavator
rib
M2 107 - Lining : 27,144M3 - Water Proofing
During the case study, the Seoul subway project was two months behind schedule, and the Busan Subway project had incurred the enmity of the people due to the blasting. Such conditions lead to unreliable work flow.
IMPLEMENTATION OF LAST PLANNER® Projects use three types of plans: master schedule, phase schedule, and commitment schedule. A master schedule and phase schedule needs to be approved by a client. A master schedule is a schedule that covers from the beginning to the end of the project. A phase schedule evolved from a master schedule entails detailed activities. An approved phase schedule is evolved into three-week look-ahead schedule and a weekly work plan. Case studies have been implemented through three phases:
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1. The first phase involved calculating PPC of week work plan. Reasons for failure were identified through all three phases. However, Last Planner®(i.e, the shielding process) was not implemented during this phase. 2. The shielding process through extensive constraint analysis was implemented on the course of commitment planning. In the second phase, costs were assigned to each assignment in the weekly work plan. 3. The shielding process was implemented as in the second phase. However, cost information is excluded from the weekly work plan.
1ST PHASE A kick-off meeting was held and co-facilitated by the authors. The participants agreed that PPC (Percentage Plan Completion) on the weekly work plan and reasons for noncompletion will be traced and recorded but the Last Planner® will not be implemented for a month to see how the Last Planner® improves their planning system. It is worthwhile describing the organization of the contractor. Management staffs in the project office are grouped into three departments: construction department, project control department, and administration. It is interesting that project engineers are segregated into project control department and construction department. All planning processes including weekly work scheduling are in charge of the project control department. The project control department keeps asking the construction department for schedule updates because all field engineers are in the construction department.
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The planning system did not need to change during the 1st phase because projects issue the weekly work plan already. In the first phase, weekly work scheduling was performed using spreadsheets filled by the project control engineer together with the site engineer in the construction department. They had a three-week look-ahead schedule. The PPC (percent plan complete) and reasons for non-completion was tracked and published weekly. The PPC on Seoul subway project was 62% and PPC on Busan subway project was 63%. Incomplete prerequisite work and lack of materials were the major reasons for failure.
2ND PHASE Ad-hoc meeting and training sessions were held and co-facilitated by the authors for implementing the Last Planner® in Jan 2005. The key outcomes were (1) releasing assignments that meet the five quality criteria, (2) developing and updating constraints, (3) assigning and tracing costs to each assignment. The third outcome came from top management in an attempt to bring an earned-value method to the level of operation for tighter cost/schedule control. Subsequent to the meeting and training sessions, the production control team added a column on constraint analysis to the weekly work plan and look-ahead schedule. A weekly meeting was used to address the status of constraints, and to discuss how to resolve them. The PPC on the Seoul subway project was 79% and the PPC on the Busan subway project was 75%.
3RD PHASE
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As the Last Planner® system was applied, the PPC continued to increase in value, until it reached around 85% during the 8th week. However, the PPC did not surpass the level of 85%. An ad hoc meeting was again held for overcoming the 85% limit. At the meeting, participants pointed out that the cost/schedule variance analysis at the level of operation was the obstacle. The engineers at the project control department admitted that quality assignment criteria are often sacrificed to earned-value. (i.e., they tend to release assignments with high earned-value rather than assignments that meet quality criteria). However, the project manager was concerned over the case where the PPC is high but still behind schedule and still overrun. The solution was suggested that the impact on total float and duration can be measured and updated weekly36. The consultant explained to the project manager that cost variance analysis at the level of operation might cause problems that impeded work flow by making earned-value a priority when deciding which assignments to release to the field, thus preventing quality assignments (Kim 2002; Kim and Ballard 2000). The outcomes of this meeting were (1) to remove cost data in weekly work plan, (2) to trace total float change every week. During the third phase, the PPC climbed to 85% on the Seoul subway project and 84% on the Busan subway project. The reasons for the non-completion are presented in Table 3.
36
In addition to the impact on total float, we intended to do cost analysis at higher level than the operations level. But it did not work due to the problems of data collection in the course of this study.
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Assignments 120
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
115 105 100 95 90 85 80 st
1 Phase
nd
2 Phase
PPC
PPC
Assignments
110
rd
3 Phase
Assignments 120
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
115 110 105 100 95 90 85 80 st
1 Phase
nd
2 Phase
PPC: Seoul Subway Project PPC: Busan Subway Project
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rd
3 Phase
Assignments
PPC
PPC
Reasons for Plan Failure Reasons for Failure
Prerequisite
Appruval
Material
Equipment
Changing Plan Weekly Total
Seoul
Busan
Seoul
Busan
Seoul
Busan
Seoul
Busan
Seoul
Busan
Week01
3
6
22
18
20
15
3
3
1
0
91
Week02
7
4
12
19
17
15
2
3
0
0
79
Week03
7
5
16
9
22
13
1
3
0
1
77
Week04
5
7
9
13
15
14
3
1
0
0
67
Week05
5
2
10
9
13
14
0
2
1
0
56
Week06
2
3
8
11
9
10
1
3
0
0
47
Week07
3
3
6
9
11
11
2
1
0
0
46
Week08
1
2
8
7
5
12
1
1
0
0
37
Week09
2
2
7
6
5
7
0
2
0
0
31
Week10
2
1
4
8
5
8
1
2
0
0
31
Week11
1
0
5
4
7
8
0
1
0
0
26 22
Phase
1st Phase
2nd Phase
3rd Phase Week12 SUM
1
2
5
6
2
4
0
2
0
0
39
37
112
119
131
131
14
24
2
1 610
TOTAL
76
231
262
38
3
CONCLUSIONS The experiment showed that the Last Planner® improved work flow reliability (i.e., improving PPC) in tunneling projects. However, the study indicated several barriers. Four actions have been proposed to improve PPC and the work flow reliability: •
Removing cost information from the weekly work plans,
•
Coupling plan-generating teams with field engineers and foremen,
•
Overcoming the mentality of saying “Yes” to the boss all of the time,
•
Training foremen to plan.
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Appendix C. Case Studies
C.1 Air Products C.2 BAA/LOR (Lean construction in the United Kingdom) C.3 General Motors C.4 Sutter Health C.5 Integrated Project Delivery C.6 Boldt C.6 GS Construction C.7 Messer Construction C.8 Walbridge Aldinger C.10 BMW Constructors C.11 Dee Cramer C.12 Ilyang C.13 Southland Industries C.14 Burt Hill Architects & Engineers C.15 Spancrete
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C.1 Air Products Case Study Background Air Products serves customers in technology, energy, healthcare and industrial markets worldwide with a unique portfolio of products, services and solutions, providing atmospheric gases, process and specialty gases, performance materials and chemical intermediates. Air Products is unique in the role it plays in Lean Construction. Due to the specialized nature of the facilities that they use, Air Products has an in-house design team. This places Air Products in the very unique position of being both an Owner and an Architect/Engineer.
Lean initiatives Air Products began an organization wide push toward what they called a “High Performance Organization” because of increased competition in a commodity market. Based on more competition from all over the world, Air Products saw that they had to become more competitive in every sector of their business. organization wide “Continuous Improvement” program in 2001.
They instituted an Their Continuous
Improvement program is best described as developed from a Lean perspective. The two main groups within Air Products were previously working with different quality and performance programs. The “Gas” division was working more with lean theory, and the “chemical” group was working more with a six sigma approach to production. The Continuous Improvement program sought to take the best tools from
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each of the schools of thought and combine them into a company wide program. Both of these schools of thought can still be seen in the Continuous Improvement program today.
Lean Preparation Training for Air Products Continuous Improvement program is intensive and ongoing. Air Products has a stated goal of training 2% of its employees in lean techniques such as value stream mapping other topics selected by Air Products as important. This training is very intensive and the sole responsibility of the people who are trained is to make sure that the Continuous Improvement movement is kept moving forward. Air Products selects the people for the Continuous Improvement training based on several factors.
The first and most important factor was that the people be high
performing and leadership type people. Air Products chose to select the people based on past performance of the employee, and the placement of the employee within the organization. These 2% of employees are then sent out into the organization to train others and uses the skills that they have been taught. This leadership training program is in line with one of Toyota Principles, “Develop People Who Live Your System and Culture and Develop Exceptional Team Associates”.
Lean Projects One of lean projects was a project in Wichita Falls, Kansas. The project site was a large chemical plant.
The majority of the work revolved around the replacement and
integration of control systems throughout the facility. The work scheduled would also
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require a shutdown of the plant, so other maintenance tasks were scheduled to take place at the same time. The use of the Last Planner® System (LPS) on the project was highlighted. The fact that the entire facility would be shut down in order for the work to be completed required that the project take as little time as possible. The use of the LPS required that the work plan be as detailed as possible, and that it be planned by the people who would be doing the work. The planning was done in such a way as to allow the plant to be brought back online in phases. This required that work be completed in the order in which the facility was to be re-started, not in the order which the work was easiest to complete. Air Products identified 6 phases to the commissioning of the plant. They then developed a “stair step” approach to the 6 phases of the commissioning of the plant. This allowed the various work sections to be completed, and re-started, as the work was completed, and before the completion of the project as a whole. The development of the work plan was done with all stakeholders present in one room. The use of “post it” notes was the preferred organization tool. The various contractors would develop “post it” notes which represented tasks, or more accurately, hand offs to the next phase in the construction process. In the end, the project was very successful. They were able to post a 98.8 percent planned complete. They said that the first project was a learning experience, and that the second project was easier.
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Lean Principles Applied: Value Stream Mapping Air Products makes extensive use of value stream mapping. They make a very big point of stressing it in their training program. The use of value stream mapping is organization wide. The value stream mapping technique they use draws very heavily from lean theory. The use of value stream mapping at Air Products was heavily stressed. Based on the demonstration and the available literature, this is probably the single most important tool that Air Products uses. Several representatives within the organization said exactly that.
Last Planner® As stated above, the Last Planner® System (LPS) has been deployed on several construction projects within Air Products. The LPS was deployed uniquely by Air Products. As stated above, the use of “post it” notes on which individual activities, or handoffs were recorded was the easiest and most logical way Air Products found. Beyond the use of meeting facilitators, the majority of the day to day planning and production scheduling were done exclusively by the contractors. The first use of the Last Planner® system is detailed above, and the following uses of the system were very successful.
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Lean Metrics Currently PPC was the only metric that Air Products uses for lean construction implementation. AP mentioned that they need to develop lean metrics to measure their performances.
Lessons Learned Air Products has a very strong Continuous Improvement Program that has been developed over several years. The biggest obstacles that they faced in implementing lean principles were mostly due to people within the organization that were unwilling to change. The prior use of lean techniques and an active Six Sigma program within Air Products can also be seen as a barrier. The combination of the two programs was difficult, and resulted in some confusion among employees.
Clear guidelines and
leadership were necessary for the two programs to be adopted into one, all encompassing philosophy. The strong training program, although there from the beginning of the initiative, was hampered at the beginning by the choice of the employees that underwent training. Air Products had to re-evaluate how they decided who to train, and how to disperse the accumulated knowledge across the organization. Within the Construction group, lean principles are relatively new. Several new programs within the design group were cited. The design group was in the beginning stages of trying to apply Last Planner® and other lean tools within the
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Construction/Design group. The changes within the design group were being developed and guided by the leadership of the group.
Success Factors Air Products gave several examples of what had worked well for them, and what had not worked so well. The biggest piece of advice that they had to offer was that you had to have strong leadership leading the change within the company. They cited several examples where initiatives within the company failed or were set back due to the failure of leadership to stress and monitor the changes within the organization. They also had a lot of information on what exactly they did to be able to change the behavior of people within the organization. Air Products seemed to take training very seriously.
They did not take an
“organization wide” approach to training, but sought out individuals within the organization who they thought could lead the change from within the organization. They then trained them extensively in all areas of their Continuous Improvement Program. This training was a very exhaustive and ongoing approach to spreading knowledge across the organization.
Recommendations for those considering implementing lean in construction Air Products was very clear with the advice that they gave to others seeking to deploy lean within their organizations: Use the huge amount of knowledge that is out there in
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order to make lean your own. They cited several examples of lean theory that had been adopted from all industries.
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C.2 BAA/LOR Case Study (Lean construction in the United Kingdom)37 Background The United Kingdom has seen an increase in the application of lean in construction since the mid 1990’s. The impetus for these efforts was “Constructing the Team” by Sir Michael Latham of 1994, and “Re-Thinking Construction” lead by Sir John Egan’s Construction Task Force, both reports sponsored by the UK Government. In response to the poor outcomes of construction projects (cost, time and fitness-for-purpose) “Constructing the Team” proposed a need for better partnering and collaboration amongst project stakeholders. “Re-Thinking Construction” focused on the benefits of a production management approach to construction including a roadmap for industry transformation. These efforts resulted in numerous bodies being formed that have since been integrated into Constructing Excellence where best practice ideas are explored and shared among industry stakeholders. BAA’s Terminal 5 project at Heathrow Airport has been central to the development and implementation of lean construction in the United Kingdom. This report starts with a case study on T5’s Civil Phase. In July of 2005 Marcus Agius, chairman of BAA, said with some pride that the construction of Terminal 5 at Heathrow airport was already 60% complete and that the giant £4.2bn ($7.9b) scheme was on time and on budget. He hailed the precision with which the terminal is being delivered as a remarkable achievement. Terminal 5 is now, in
37
Strategic Project Solutions contributed greatly to the case study on BAA/LOR. The management consulting firm was consultant both to BAA and to LOR during and after the T5 Civils Phase.
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August 2007, nearing completion, and is still on time and on budget. These are accolades to which few other projects, either large or small in scale, can lay claim. The extension to the Jubilee underground line was plagued by striking electricians and opened nearly two years late, the Millennium Dome was grossly over budget for a host of reasons (including numerous design changes) and the new Scottish Parliament building complex was 10 times over budget. T5, as the new terminal is known, is a larger and more complicated project than any of these schemes, and was preceded by a decadelong planning battle, which has itself led to changes in the planning system for major projects. When complete, the terminal will be the largest freestanding building in the UK, covering an area equivalent to 52 football fields at the western end of Heathrow. However, the huge structure of the T5 building is just the most visible part of a construction project that covers an area the size of London’s Hyde Park. As work goes on fitting out the terminal building, there is just as much activity beneath, where a new railway and tube station are being built alongside a multi-storey car park for 4500 cars. Connected to T5 by tunnels are two satellite aircraft stands, each one the size of the existing Terminal 4. Last year 67m passengers used Heathrow airport, the biggest international aviation hub in the world. By 2012, BAA estimates that the number of passengers passing through could have grown to 80m per year. T5 will be occupied exclusively by British Airways, allowing it to vacate space in the other terminal buildings. The following quote is from the Royal Institute of Chartered Surveyors, October 2005
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http://www.rics.org/Builtenvironment/Engineering/Civilengineering/terminal_velocity_biz0905.html:
“After a 46 month public inquiry that heard 700 witnesses give 30 million words of evidence recorded on 80,000 pages of transcript, ground was broken for Heathrow’s new Terminal 5. Terminal 5 is a massive $7.9 Billion, 625 acre expansion to London’s Heathrow Airport. When fully complete in 2011, T5 will provide Heathrow with an additional 60 aircraft stands – about a quarter of which will cater for the new Airbus A380. Over the life of the project around 60,000 people will be involved in the building of T5. A total 37 million hours both on and offsite will be invested in T5. The purpose of the T5 program is to increase Heathrow’s capacity from 60 million passengers per year to 90 million. The delivery of Terminal 5 is mission critical for both BAA (the owner of Heathrow) and the U.K. Government. Firstly, at the time of ground breaking, BAA’s market value was approximately $8.5 billion and the program value $7.9 billion. Secondly, from the U.K. Government’s perspective, T5 is vital as other countries were vying to have the first port-of- call into the European Continent for air travelers.” The civil phase of the program consisted of 3,500 craftspeople and a 2,500 person support team, working on 80 concurrent projects. During the peak of the civil phase, around 15,000 cubic meters of concrete was placed each week. Due to the location of the project site, only one entrance / exit could be established. The site is surrounded by operating runways on two sides and Heathrow’s other terminals (T1, T2 & T3) on the third side. Through this access point, deliveries to site occurred every 30 seconds. Post 911 security was also an issue as Heathrow is one of Europe’s primary terrorist targets.
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The location of the site limited onsite inventory of materials and equipment to one day or less. In addition, start of construction onsite began before design was complete. In order to ensure maximum flexibility when dealing with its supply network, BAA elected early on to craft an agreement that 1) is based on cost-plus with “ringfenced” profit margins, 2) does not expose suppliers to excess risk and 3) focuses suppliers on working towards the interest of all stakeholders. In fact BAA is itself taking the huge financial and operational risks associated with the construction process. "This is the key to the whole scheme running smoothly to schedule and to budget," says Tony Douglas, managing director of the T5 project for BAA, adding that the government and other procurers of complex projects should take note.” (RISC October 2005)
Lean Initiatives The prime contractor on T5’s civil phase was Laing O’Rourke, who engaged Strategic Project Solutions as management consultant. Together with BAA, they defined, designed and implemented a production system that would ensure realization of the project schedule while working to reduce cost. To accomplish this, the following process (roadmap) was adopted.
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Process roadmap for Terminal 5 Civils
Production System Definition In order to determine the best possible approach for the design of the production system, it is necessary to define the challenge. Strategic Project Solutions worked with the program stakeholders to map supply chains and value streams, and to determine the quantities of materials and resources required (demand) for the civil phase. As mentioned above, the T5 civil phase consisted of eighty concurrent projects, 3,500 craft workers supported by 2,500 engineering and administrative personnel. Because of the lengthy public inquiry process, start onsite occurred prior to the completion of design.
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Additionally, during the public inquiry process agreements were made with the local community to limit the flow of construction traffic from the hours of 7:00 AM to 9:00 AM and 4:00 PM to 6:00 PM. During these times delivery of equipment and materials to and from the site was not permitted. The location of these projects resulted in one entrance / egress with a delivery to site every 30 seconds. The T5 site is surrounded by two operational run-ways, existing terminal buildings and a road and rivers that needed to be diverted. Being unable to re-locate existing operational terminals and runways, BAA allocated the area where the roads and twin rivers were located as the point of entrance and exit. Because of the need to relocate the road and twin rivers, only a single point could be established. The majority of work occurred after 9-11 resulting in intense security measures compounded by the fact Heathrow is a known major terrorist target. Space for storage of inventory onsite equaled one day or less. To better understand the demand and potential behavior of the supply system, materials were classified in three categories:
• Made to stock – Suppliers produce based on forecasted market demand • Made to order – Suppliers produce standard products upon receipt of an order • Engineered-to-order – Engineering must be completed prior to producing the order
High risk engineered-to-order materials were targeted for the most thorough analysis including the use of supply chain and value stream mapping.
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Value stream mapping suppliers The production system was designed to mitigate variability as much as possible and to use appropriate buffers to address any remaining variation. Based on the information obtained in the definition phase, a production system was designed based on three key elements:
1. Use of logistics centers and site stores to shield the site from outside variability (that which came from outside the T5 program) and to allow “pulling” of materials “just-in-time” to the site 2. Application of digital prototyping to integrate and validate design, to plan and simulate operations, to create detailed bills-of-materials, and to drive numerically controlled fabrication equipment.
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3. Implementation of SPS|Production Manager to plan and control workflow, material flow, and the flow of resources from raw materials supply, through fabrication and preassembly, to final assembly at site.
Logistics Centers & Site Stores Two logistics centers were used to shield the site from external variability and to allow “pulling” of materials “just-in-time” to the site. Each logistics center served a certain purpose. Colnbrook logistics center managed receiving and delivery of raw materials for in situ concrete structures, for precast concrete, and also for fabrication, preassembly and site delivery of rebar. Heathrow South logistics center provided pile cage fabrication, and receiving and delivery of miscellaneous materials such as lumber, plywood, etc. Initially the plan was to use nine site stores know as market places for management of consumable items and small tools and equipment. Due to space constraints onsite the program was able to deploy only one. In response, a secondary system of distribution was created between the one market place and multiple site stores serving specific work areas. This secondary system used the same methods and principles, including periodic milk runs and small batch deliveries. In consequence, 2500 workers were provided consumables and small tools with a 98% order fulfillment rate from a facility, the market place, less than 3500 square feet in area.
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Overall logistics center design and flows
Colnbrook Logistics Center
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Colnbrook rebar preassembly area
Site Stores & Marketplaces The production management system, supported by daily production control meetings and weekly forecast meetings for site and supply, was used to pull materials from engineering through fabrication, delivery and site installation.
Site stores inventory control
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Digital Prototyping In order to mitigate variability resulting from inaccurate engineering or associated bills of materials, digital prototyping was implemented.
T5 Lean Metrics • BAA reports an 8%-9% overall savings from planned expenditure for the civil phase while achieving all major milestones on or ahead of schedule • BAA also reports an additional savings for the subsequent T5C civil phase
Beyond Heathrow T5 Civil Phase The approach and accomplishments of the Heathrow T5 civil phase has become a model for other organizations considering the lean journey. Based on the experience of T5, Laing O’Rourke has made lean a key element of their business philosophy, embedded in their company vision:
• “We will be the company of first choice for all stakeholders, • We will challenge and change the poor quality image of construction worldwide, • With leanness and agility we will adopt work processes to compete with world leading businesses”
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They have used lean to improve project outcomes and as a basis for differentiating themselves in the market. Through this approach they have secured the position of being the UK’s largest privately owned construction firm employing over 23,000 employees worldwide with offices in UK, Germany, India, Australia and United Arab Emirates. It has allowed them to secure high profile projects such as the upcoming London Olympics and new Dublin Airport. Laing O’Rourke’s approach at Heathrow T5 provided the basis for GS E&C’s rebar production system outlined in this report and has been the impetus for numerous other project innovations within and beyond the UK construction sector.
Lessons Learned Improving project outcomes is a sociotechnical challenge. Lack of leadership is often attributed to less than effective implementation. This is based on a false assumption that change can be driven from the top down through mandates and announcements. However, the top down mandate approach can result in unnecessary resistance. Additionally, solutions that are not linked to a desired benefit, do not address a specific challenge or do not take into consideration stakeholder requirements, will be difficult to implement. Another fallacy is thinking that people can be trained by sitting in classrooms rather than learning by doing. Education creates awareness and works towards understanding. Training enables further understanding and begins to develop capability. Education and training supported by experience results in competency.
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It is important to recognize that people implement what they help to create. Stakeholders responsible for operating new approaches must be involved in the definition of the problem or the opportunity and provide input into the selection and design of the solution. Additionally it is important to remember that, if there is not agreement on the problem chances are there will not be agreement on the solution. When new approaches are being implemented, people go through a personal transformation process starting with denial, then resistance, then exploration, and finally commitment.
Phases of change
Leaving conflicting legacy systems (e.g. software, compensation, etc.) in place will inhibit implementation of new approaches and delay progress.
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Project objectives are often at odds with service provider objectives Owner operators are looking to satisfy a business, political or social need and in so doing better serve their customers. Service providers are looking to achieve a return on investment for undertaking the project. Service providers do this by optimizing the utilization of their resources. If the commercial model does not align project objectives with service provider objectives then, service providers may be forced to find ways to ensure their return on investment by locally optimizing their solution. The symptoms of local optimization include; over or under staffing the project, building excessive inventories or using time to level production. The Heathrow T5 agreement addressed this issue by placing the risk with BAA, the owner and enabling the suppliers to deliver based on project objectives while ensuring adequate return on investment enabling project optimization and mitigating local optimization.
Recommendations for those considering Lean in Construction 1. Consider projects as temporary production systems that deliver end-user customer benefit. Design, deploy and continuously improve the project to effectively deliver enduser customer benefit. 2. Understand that enhancing end-user customer benefit through improving projects effectiveness is a sociotechnical challenge – avoid mandating an approach or making announcements but rather get stakeholders involved in the process (definition of the challenge and creation of the solution). Once the solution has been determined and agreed, put people to work where they can learn by doing. Remove conflicting legacy systems. Facilitate individuals as they progress through the personal transformation process.
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3. Create the environment by aligning service provider compensation with project objectives. Avoid placing risk with those that are not best suited to manage it.
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C.3 General Motors Case Study Background General Motors Corp. the world's largest automaker, has been the global industry sales leader for 75 years. Founded in 1908, GM today employs about 327,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 33 countries. GM's largest national market is the United States, followed by China, Canada, the United Kingdom and Germany. GM is also a major builder of facilities in which to manufacture its automobiles and parts. As an owner, GM is trying to get the construction industry to move more towards lean construction. They have seen the effects within GM and they are trying to gain the same benefits from the construction industry.
Lean initiatives: Why the company adopted lean In the early 1980’s GM realized that Toyota had a different operating system that was uniquely effective and GM either had to learn something about it or be buried by it. They then went to develop a joint venture with Toyota at the plant at Fremont, California. They started production in 1984, trying to learn from Toyota at this joint venture operation. GM then sent the people from all over GM to the plant to learn about lean and bring the ideas home to other GM plants. They had limited success, most notably were materials management and the shift from push manufacturing to pull manufacturing.
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In 1996, commensurate with the launch of 4 new assembly plants GM created the GM Global Manufacturing System (GMS) and began deploying it throughout GM’s manufacturing operations. In 2003 it was decided to take GMS beyond the factory floor and into the support functions. They wanted to try and apply lean techniques to the support functions of GM, not just the manufacturing processes. GMS is comprised of 5 principles and 33 elements that together create a lean operating system. The focus of this paper is on this application in the construction business.
Lean Preparation The first thing that GM did was to value stream map two core processes – the Project Planning Process and a portion of the Project Management Process. They then tried to identify the waste involved within the processes. This was a huge undertaking. The goals were to try and derive the same benefits that lean had brought to manufacturing. GM has internal training for their capital projects group, but they do not train their contractors or suppliers. They believe that it is the responsibility of the construction firms to apply lean within themselves.
GM stated that they specifically look for
contractors who are already applying lean principles to construction and they try and give more work to the companies who are successful at doing this. Two most recent and successful projects involving lean principles and practices are detailed in the next section. It is important to note that both projects were designbuild projects that both had a guaranteed maximum price (GMP).
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Lean Projects Two of the most successful and most studied projects at GM are the Lansing (Michigan) Delta Township, or LDT plant, and the addition to an engine plant in Flint, Michigan. Both of these projects were detailed in an October 10, 2004 ENR (Engineering News Record) cover story. GM’s major innovation on both of these projects revolved around the use of 3D modeling of the entire project. This is not to be misunderstood. The entire project, down to pipe hangers and bends in duct work were designed prior to the start of construction. The design process was dominated by the collaboration of all of the engineers and contractors involved in the construction process. This level of collaboration before construction was necessary. The projects were modeled, in their entirety, prior to being built. The plans were then locked, and all of the contractors on the job were required to build exactly what had been designed. There were to be no changes made during construction as they would most likely affect other work further down the line. This lead to “as-built” drawings being produced before the project began. All of the overlaps and possible problems were worked out, in the 3D model, prior to building. The 3D modeling process allowed several of the contractors involved to prefabricate materials, to specifications, off-site. HVAC contractors could build entire duct assemblies offsite, show up on the day they were scheduled to perform the work, and simply attach the assembly where it was supposed to fit into the larger plan. The time saved in pre-fabricating components also resulted in less time needed on the construction
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site. This in turn led to less equipment and personnel being needed on the construction site.
Lean Principles Applied 1. Value Stream mapping Representatives of GM repeatedly stated the value of using the Value Stream Mapping tool. They continually apply it to all internal processes and try to drive the waste identified out of the value stream. The value stream mapping of their core processes led to the application of lean to the construction process at GM. The waste identified within the construction process was seen as a major source of possible savings for GM. Again, Value Stream Mapping was the most cited lean technique when talking about with representatives of GM about lean construction.
2. 3D design development as a lean enabler Lean and 3D design development were often used interchangeably by people within GM. Representatives of GM were continually noting that the detail and processes involved in developing 3D designs were often enablers for other lean principles. Within GM Capital Projects there is a culture of “Before 3D” and “After 3D”. GM has placed a great deal of emphasis on the effect of 3D design within the construction process. They rely heavily on the detailed designs and collaborative design efforts that 3D allows.
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GM decided that all design would be done in 3D following the successful deployment of process equipment design in 3D. The process equipment that was going to be housed in the buildings would be designed completely using 3D design techniques, and so would the buildings. The benefits that are derived from the 3D design processes are numerous. First, the design is a complete design. The past practice of “roughing in” mechanical and electrical work, and letting the contractors deal with the collisions and design problems in the field was eliminated. On a weekly basis all of the design work was run through a collision identification process, and design problems could be identified before a contractor began work. This resulted in what GM called an “as-built” drawing prior to the construction of a building. Enforcing that the contractors were installing equipment and doing work according to plan was very important. It was not an option to change the plan in the field. The plans had already taken into account all of the other trades and work that had to be done and the structure was to be constructed exactly as it was designed. There were very few changes to the plans, and where there were changes to the plans they had to be very carefully considered. This approach to design let the contractors take advantage of several lean principles. The first was JIT, or just in time delivery of materials for the projects. The materials that were needed for construction were known in their entirety prior to the start of construction. This let the contractors know exactly what they would need to be able to complete any part of the project. There was no need to have extra materials on hand in case changes had to be made.
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Lean Metrics The only metric GM currently track that is lean related, is the percentage of new major projects that use 3D Design and BIM (Building Information Modeling). GM has made this its new common process. GM had previously tracked mandatory training supporting its lean GMS (Global Manufacturing System), first to executives, then to managers, and then to all employees. There was an 8-hour GMS Overview course, an 8-hour course on VSM (Value Stream Mapping), and an 8-hour course entitled Simulated Work Environment. The latter is a mini assembly line where people are assigned tasks to build small wooden vehicles and go through improvements on flow and workplace organization to physically see the lean affects. Each executive was also required to initiate a VSM workshop on one of their core processes, to promote the application of lean beyond manufacturing, to the rest of the enterprise. Select manager-level employees also receive extensive additional training to assist its full-time GMS Integration Center staff in facilitating VSM workshops.
Lessons Learned GM representatives said that they have no obstacles or barriers to the implementation of lean construction. They said that the contractors are facing the obstacles. They cited the reluctance of contractors to learn and apply lean thinking and principles to projects. They summed up their difficulties in trying to push lean construction as external. They said that the hardest thing for them to overcome was contractor reluctance to learn, understand and implement lean.
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Success Factors •
Having enough fortitude to go out and understand the forms of waste and apply the tools that you have available applying these things to value stream
•
Having qualified contractors who understand lean principles.
•
Helping contractors build their lean capability. GM has conducted symposiums with contractor executives to promote awareness of lean construction and 3D Design and encourage them to pursue their own path. Our engineers have also worked with some of our architect/engineer firms to develop the expertise in 3D BIM (Building Information Modeling)
Recommendations for those considering implementing lean in construction GM’s advice for companies who wish to go lean was to seek out and find experts on the subject, and then learn from them. In their words, there are experts on lean out there, and contractors need to be able to go out and find them. Their other piece of advice was to make lean your own. There is no lean manual that is to be followed to the letter. Each contractor needs to look at the tools that are available and apply the tools where they think they can reap the most benefits within their individual firm. There is no right answer for every contractor, and the contractors themselves need to be able to recognize this.
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C.4 Sutter Health Case Study Sutter Health began with a bang, announcing its commitment to lean delivery of its capital program March 23-24, 2004 in a 225 person meeting with representatives of its design and construction services. With the help of consultants, they held a series of these meetings devoted to education and discussion. In early 2005, both Sutter Health and its supplier community realized that no one could tell them step-by-step how to do lean construction. Suppliers realized, however, that Sutter was offering to pay them to experiment with ways of improving performance, and was open to making changes needed to assure supplier profitability under new conditions, roles and responsibilities. A group of these Sutter Health service providers asked the Project Production System Laboratory at Cal to be a ‘learning laboratory’ for them, as they collectively experimented with lean methods. That learning is now actively underway, with four major hospital projects launching in Summer 2007; each of them exploring lean methods such as target costing (target value design in Sutter speak), set based design, cross functional teams, built-in quality, the integration of lean methods with nD computer modeling, and the application of Last Planner® in every project phase.
Background Sutter Health is a healthcare organization composed of affiliates, which comprise 26 hospitals in Northern California, as well as numerous ambulatory treatment, medical office, administrative and logistical support facilities serving over one hundred
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communities in Northern California, Oregon and Hawaii. Key people leading Sutter Health’s facilities development:
•
Bob Mitsch, VP, FPD
•
Dave Chambers, Planning
•
Dave Pixley, Project Management
•
Morri Graf, Project Controls
Why did Sutter Health decide to ‘go lean’? The initial driver for Sutter Health’s lean journey was the California regulatory requirement that health care facilities be seismically upgraded to assure capability of continuing in service after an earthquake. That requirement not only created an aggressive time line for completion of their $6 billion capital program over 8 years, but placed Sutter Health in competition for resources with other healthcare companies obligated to meet the same requirement. The ultimate driver was the desire to improve performance in the delivery of capital projects. The Director of Project Management of facilities development had experienced success with collaborative approaches on projects that he directly managed. He was after stability across the capital program; he didn’t want to have to balance disasters with successes. Will Lichtig of McDonough, Holland & Allen, outside counsel for Sutter Health, had a personal connection to the Lean Construction Institute and brought together Sutter and the Institute’s thinking and methods of applying lean to construction.
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History of Lean Implementation Timeline •
Fall 2003 Pixley, Graf & Lichtig attended a Lean Construction Institute workshop on lean and contracting
•
Sutter Health engaged Lean Project Consulting
•
Exploratory workshops with the Eden Hospital project
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MasterMind discussed lean readings. Members signed Manifesto
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March 23-24. 2004 Lean Summit-issue of Manifesto
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March 25, 2004 1st meeting of the Executive Leadership Group, about 45 of the leaders of each service provider.
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May, 2004 Launched 5 pilot projects to implement Last Planner®
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10/15/04 1st Vendor Forum: Collaborate, Really Collaborate
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11/22/04 FPD/Vendors Strike Force meeting
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12/8/04-2nd Vendor Forum: Reliable project delivery system
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Early 2005: Sutter Health project managers’ lean self assessments
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Early 2005: David Long, Senior Project Manager, appointed Sutter Health FPD’s Lean Coordinator
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3/22/05 Construction Documents Strike Force meeting
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3//31/05-3rd Vendor Forum: Target value design
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Early 2005 realization by suppliers that Sutter was offering to pay them to experiment with ways of improving performance, and was open to making
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changes needed to assure supplier profitability under new conditions, roles and responsibilities. •
Mid-2005: Another turning point-Dave Pixley’s challenge to have all Sutter Health projects on the Last Planner® system by July 4, 2005.
•
2005-6: Fairfield and Camino Medical Office Building projects—successful lean project delivery implementations
•
2007: Launch of 4 new hospital projects, each employing the Integrated Form of Agreement and all lean methods recommended by academics and consultants, including a Plan Validation phase in which key members of the project delivery team help Sutter Health validate and improve their business plan for the project
Shortly after the Lean Construction Institute workshop, Sutter Health’s Facility Planning & Development engaged Lean Project Consulting38 and also formed a small group of people from their service providers —people who were important in making change happen in the community—people who ultimately signed the Manifesto, including Rick Linsicombe (Ellerbe Beckett), Dave Martino (SOM), Kyle Roquet (Skanska), Dave Chambers (chief architect for Sutter), Dave Pixley, Frank DaZovi (Turner), and Lowell Shields (Capital Engineering). This group functioned as a MasterMind. They read and discussed 5 documents on lean over a 5 week period in the 1st qtr of 2004, such as Spear & Bowen’s “The DNA of the Toyota Production System”.
38 Lean Project Consulting’s charter was to make Sutter project managers better consumers of lean project delivery, but to rely on vendors as experts.
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Lean Project Consulting facilitated exploratory workshops at Sutter Health’s Eden Hospital project, exploring with that project team how they might collaborate and work with each other differently. Several meetings were held on this project, but the response was not good and the project stalled. At this time, Lean Project Consulting also began developing the Manifesto, which was presented to the MasterMind with a proposal that it be sent out with an invitation to Sutter Health project managers and to their service providers to attend a Lean Summit. In May 2004, implementation of the Last Planner® System was started on pilot projects, selected for type, location and involvement of key vendors (service providers). 5 projects were selected: •
Davis medical office building: Construction Manager/General Contractor-Turner (At this time, Turner had about 1/3 the total capital program.) Architect – Boulder Associates who handles a significant portion of Sutter's medical office building design. Sutter Project Manager: David Long. Kickoff mtg held in May 2004. Completed 7/05. Last Planner® system implemented successfully.
•
Modesto 8 story bed tower: Construction Manager/General Contractor-Skanska. Sutter Project Manager-Bruce Russo (contractor to Sutter Facility Planning & Development). On going. Last Planner® system implemented successfully.
•
Delta: Construction Manager/General Contractor-HMH Builders. Sutter Project Manager: Tom Mucha. Then in mid-construction and in trouble. Completed Fall, 05. A Last Planner® system failure, but changed mood of team and some behaviors.
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•
Roseville
emergency
department:
Architect/Engineer-HGA.
Construction
Manager/General Contractor-Unger Construction. Sutter Project Manager-David Long. Kickoff for the pilot on both Roseville projects occurred 6/16-19/2004. Completed 8/05. David Long: “a complete Last Planner® system failure”. Some value out of phase scheduling, but balance of Last Planner® system not adopted by Unger. •
Roseville parking structure: Design-Builder --HMH Builders. David Long: “a partial success and, with the other pilot project at Roseville, set the stage for successful implementation on future Roseville projects; e.g., the Bed Tower Project."
In parallel with the pilot projects, Lean Project Consulting began to conduct training of FPD project managers. A part of each Facility Planning & Development monthly meeting was devoted to training. There were also weekly Friday morning conference calls, involving assignments such as keeping promise logs and readings. Three Vendor Forums were held to create a sense of community and to get shared understanding of basic ideas. 10/25/04-Collaborate, Really Collaborate. 12/8/04-Reliable project delivery system. 3/31/05-Target value design. In the first Vendor Forum, most of the discussion was around commercial issues, which service providers presented as obstacles preventing changes in practice. In an effort to overcome and help shift away from that focus, an FPD/Vendors Strike Force meeting was held 11/22/04. Subsequently, in the 2nd Vendor Forum, Will Lichtig made a presentation on Sutter’s contractual basis for its delivery model, which successively shifted the primary focus off commercial issues.
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By the end of the third Vendor Forum, Sutter was getting feedback that folks were tired of going to meetings. Scheduled forums were cancelled and vendors were encouraged to participate in the 9/2005 Lean Construction Institute Congress. A Construction Documents Strike Force meeting was held 3/22/05 to figure out how to produce construction documents differently. Sutter Health found that subcontractors were not saying in public what they were saying in private; i.e., that they should do the detailed drawings—though on the Mills project, subcontractors actually did produce the CDs. Another component originally envisioned was an Executive Leadership Group that met regularly—original and subsequent signatories to the Manifesto. This group met originally at dinners after the Vendor Forums. David Long: “These dinners may have been more effective than the Vendor Forums.” Ultimately these evolved into the Lean Coordinators’ monthly meetings, which resulted from actions taken after the CD Strike force meeting to understand why subs weren’t speaking up. At about the same time, Sutter Project Managers began saying “We’re tired of being talked at.”, the response to which was “Then how are you going to lead yourselves?”, which led to Sutter Project Managers being asked to do a self assessment of their awareness and competence with lean in the beginning of 2005. According to David Long, “Project managers were mostly resentful. Few were prepared to be proactive. Project managers wanted to be ‘…given the tools’. ‘We still don’t understand why we need to change.’” A turning point in acceptance came from a combination of failures of traditional practices and success of new. Also leaders converted and spoke up.
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•
After a reverse phase scheduling session on Project Manager Oren Reinbolt’s job, he declared it valuable. Oren’s standing among his peers made this a key event.
•
David Long’s success at Davis Medical Office Building.
•
Folks at Roseville saw value in reverse phase scheduling.
•
Steve Hunter of Turner Construction and Dean Reed of DPR Construction reported success to Sutter Health’s FPD Project Managers meeting.
•
Budget busts disclosed breakdowns in current practice. Lubor Mrazek and Oren openly discussed ways to reduce cycle time for estimating.
•
There were also comments about projects where reverse phase scheduling revealed critical oversights.
On projects that did not fail, nay sayers dominated. Because of the previous educational efforts and engagement, breakdowns could now be seen as failures of a traditional approach to project management, as opposed to simply triggering efforts to do more of the same, or to punish the innocent and move onto the next project. The lean context gave Project Managers an alternative to being helpless victims of fate. Oren made a new request of Turner to have estimators at every meeting. This stresses current capabilities and capacities—an ever more visible consequence of the transformation to lean project delivery. Previous behavior of Construction Manager/General Contractor project managers was to be a “carrier pigeon”, shuttling messages back and forth between project teams and the doers/decision makers. One thing becoming evident is that Construction Manager/General Contractors have neither enough competent estimators nor enough competent doer/managers.
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What Lean Principles and Methods were Applied? The fundamental principles adopted by Sutter Health were expressed in the 5 Big Ideas, developed with help from Lean Project Consulting, and signed by representatives of Sutter Health’s service providers as shown below.
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Lean methods used on Sutter Health projects include relational contracting, target value design (target costing), set based design, built-in quality, Last Planner®, reverse phase scheduling, visual controls and cross functional teams. Figure C.4.1 is from the Fairfield Medical Office Building Project, on which Boldt Construction was the Construction Manager/General Contractor. This example of visual controls shows how the team performed in its efforts to control cost within budget. It is apparent that the cost estimate declines from beginning to end of the project, contrary to the more common increase over time as estimators react to additional design detail. This is in part a function of better conceptual estimating, facilitated by the inclusion of builders on the design team, which applied the method and tools of target value design.
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Estimate History
Another key method employed on Sutter Health projects is relational contracting. Will Lichtig developed an “Integrated Form of Agreement” intended to facilitate pursuit of the lean ideal—deliver the project while maximizing value and minimizing waste. The Agreement was formed around the Five Big Ideas and is summarized in the following figure.
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The Integrated Agreement on 1 Page The following is excerpted from Lichtig’s presentation to the American Bar Association (Lichtig, 2005):
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What results were achieved? The following is a Lessons Learned report from DPR Construction on its experience at a Sutter Health project, the Camino Medical Office Building, where DPR was the Construction Manager/General Contractor. The project was completed in May, 2007. The report illustrates not only the results achieved on that project, but perhaps an even more important result—the drive for continuous improvement. There is no Toyota in the construction industry. Everyone is learning through doing and trying things out. One remarkable consequence of Sutter’s challenge to its service providers is that
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competitors are sharing the results of experiments. A culture of learning is replacing the traditional culture of knowing. Further testimony to the demonstrated value in successful implementation of Lean ideals is the fact that numerous companies in the Sutter Health vendor community have themselves gone through a “Lean transformation”, intending to operate their own companies in a Lean way and delivering all of the projects they do, whether or not with Sutter Health, on a Lean basis.
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C.5 Integrated Project Delivery (IPD™) Case Study39
The IPD case study was constructed from multiple sources: •
Notes and presentation slides from a meeting between IPD representatives and CII Research Team 234 in Orlando February 9, 2006
•
An interview by University of Cincinnati Assistant Professor Cynthia Tsao and her graduate student Jilei Wang with the leaders of Westbrook Mechanical Contractors: Owen Matthews, Clay Harem and James Roberts
•
Matthews and Howell (2005)—a description of IPD and its connection to relational contracting
•
A summary of Matthews and Howell (2005) produced by Jilei Wang.
Why did your company decide to ‘go lean’? Westbrook is a 55-year mechanical contractor in Orlando, Florida. During their history, no matter whether they worked as a subcontractor or a general contractor, they noticed that the promises of cooperation and teamwork never reached their expectations. They found that the traditional contractual structure causes four systemic problems: z
Good ideas are reserved and the opportunity for innovation is lost. Each of the trade contractors hides their best ideas in order to get an advantage in bidding.
39
IPD is trademarked by Integrated Project Delivery
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z
The contracting structure hampers cooperation and innovation. Pages of subcontracts were mostly remedies and penalties for noncompliance. These contracts stood in the way of cooperation and innovation across trade boundaries.
z
Lack of coordination. Some projects had no planning systems linking the various subcontractors.
z
Pursuit of local optimization. Each subcontractor tried to optimize its own performance at the expense of both other subcontractors and the client.
In seeking answers to these problems, they have been working for years with other design professionals and construction practitioners trying to find a better way to deliver projects. The owners of a number of design firms and construction firms have met for breakfast twice a month to develop a solution and have built a relational contracting method, the Integrated Project Delivery or IPDTM, for their business.
“It provides opportunities to improve our company as a whole in terms of both quality (i.e., quality of the product) and efficiency (i.e., production efficiency). It certainly allows us to maximize our most limited resource – people. It makes sense for us to try to utilize lean whenever and wherever we can.” (James Roberts, VP, Westbrook Mechanical Contractors)
How did they go about it? To ‘go lean’, Westbrook and several other contractors formed an IPD team which is aimed at maximizing value and minimizing waste at the project level. The IPD is actually a relational contracting method employing two principles to govern the team relationship.
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1. All primary team members (PTMs) are responsible for the provisions of the prime contract with the client. This single contract binds the IPD team to the client. It defines the scope, schedule and cost of the project. One entity signs the prime contract. 2. All PTMs share the risk and profit for the project performance. With a ‘pact’, all PTMs bind themselves to each other and to the fulfillment of all the requirements of the prime contract, sharing together in the cost and profit in accordance with a pre-established formula. Each member is reimbursed for all verifiable direct costs; profit is calculated at the end of the project and divided based on the formula.
With IPD’s relational contracting method, the goal of “one for all and all for project” seems to be achievable.
What is IPD? “It is helpful to distinguish between IPD Inc. and the IPD process. Within IPD Inc., each team member is a shareholder. It does not matter if the Client wrote in ‘Westbrook’ or ‘IPD Inc.’ because the contract means the same to our team members. On Westbrook-led projects, team members enter into a partnering agreement. On IPD Inc. projects, we automatically share all project responsibilities. IPD Inc. is set-up as a non-profit company because we distribute the profit of each project. An Architecture-EngineeringConstruction (AEC) industry problem today is that we always look at what could possibly happen legally and then begin to write language to avoid potential problems. With IPD, we do have a contract with the Client and it is a proper contract. Since all IPD
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team members are bound to the contract, we are not worried about a team member backing out.” (Owen Matthews, CEO, Westbrook Mechanical Contractors).
“We apply lean to construction project management. Traditional project management is riddled with incentives that encourage local optimization, and general contractors (GCs) protect themselves from the resulting problems with contract language. This has a huge impact on specialty contractors like Westbrook, especially in terms of schedule because schedules are usually not realistic to begin with. There are likely other less obvious examples of the impact of prioritizing local optimization, but they may be difficult to quantify. Regardless, whenever the relationship between project participants becomes adversarial on the job site, it is going to have a negative impact on the overall project. PTMs are like mountain climbers. If one team member makes a mistake, we all pay for it. If somebody falls, we pull him up. We do not just let him fall down the mountain.” (James Roberts)
Key provisions of the IPD agreement: •
The primary team members each agree to be bound together accepting full responsibility for all of the terms and conditions of the prime contract, sharing together in the cost and profit in accordance with a pre-established formula. Each member is reimbursed for all verifiable direct costs that he incurs. Profit is calculated at the project level at the end of the project and divided based on the formula.
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•
Each of the primary team members provides a certificate of insurance in the form and amounts as indicated in the prime contract.
•
Each primary team member agrees to open their books pertaining to this project to the other primary team members and to the Client.
How does IPD align incentives? •
If one primary team member makes a mistake each will pay for it
•
Cost reductions anywhere are shared among those in the Partnering Agreement and with the Client
•
An overrun on the project will reduce the gross profit available for distribution
How do you determine the positions of the team members? “We establish team positions early in a project and based on the nature of the project. Each project is different. Typically, the architect will lead the design process, and he will hire all consultants. Since the OUC North project was mechanically and electrically intensive, the architect just needed to “box” the house with mechanical and electrical equipment. Then, it made more sense for the mechanical engineer to take the lead role in design development.” (James Roberts)
How was the formula determined for profit distribution? “We developed a formula that distributes profit based on direct costs. All PTMs brought in their accountants to develop a formula that seemed fair to everyone. We have a formula that weights labor, materials, equipment, and subcontractors differently. Labor
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has the greatest amount of risk. For any contractor, the more labor he has on the project, the larger percentage of profit he gets. That works well. We use the same formula for each project. We distinguish materials and equipment differently. For us, ‘materials’ is something like mechanical pipe; ‘equipment’ includes large pieces of machinery that we will need to purchase for the project. If somebody wants to replicate this, they just have to develop their own system that works for them. In a traditional project, the GCs or the construction manager puts a small 3% to 5% fee on all their costs, most of which are from subcontractors. This ends up amounting to a very large sum of money. The IPD approach is unique and challenging in that the GC is not getting mark up on the large trades like electrical, mechanical and plumbing. As a result, he has to get a larger percentage on his direct materials, labor, equipment and other subcontractors to make up for that the difference. It really took some work to make sure that the GC would be sufficiently compensated in the IPD process. The profit distribution formula must be adjusted based on the nature of project. For example, in a power plant, there might be a lot of big pieces of machinery. In that case, the weight of equipment should be adjusted to make the formula fair to everyone.” (James Roberts)
What specific lean tools and methods were used? •
Don’t locally optimize—make decisions that add value and are for the overall good of the project.
•
Last Planner
•
Reverse phase scheduling; pull versus push
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•
JIT deliveries
•
Visual management
•
LRM—taking action at the last responsible moment
•
Target costing
What happened? The IPD adds value in the design process by encouraging good ideas and collaboration. This plays a big role in reducing project costs and enhancing the “value engineering” process. Effective solutions can be devised very quickly without worrying about who will pay for it. In addition, it facilitates cooperation, innovation and coordination. Since all the primary team members have a common goal, they work in harmony instead of becoming separate warring factions. Some examples of success: z
The use of the Last PlannerTM brought projects in under schedule.
z
Many innovations occurred during the project process.
z
Shared manpower occurred throughout the project and between all trades.
z
Problem solutions to changes and omissions were quick and efficient.
z
Redundant effort and expense were avoided.
z
Job site safety improved—there has never been an accident on an IPD project..
z
Rental equipment was shared.
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“When we first started focusing on prefabrication, it was hard to bring everybody on board, even within our own company. The idea was very tough to sell. Our field guys were used to doing all the pipe and welding together and doing all the work in the field. It took us a month to get our field guys to bring work from the field into the shop. However, after they saw the modified work, they saw how much easier it was for them to do their jobs.” (Clay Harem, Project Manager, Westbrook Mechanical Contractors).
“It was hard for the GC to let go since they would not be in control as before. The GC wanted to direct the show. On the OUC North Plant, it was actually the mechanical company driving the project. Although they were not in charge, the GC had a good team on the OUC project and did an excellent job.” (Clay Harem).
North OUC Plant results “The goal was to design and construct a 60,000-ton chiller plant with a $6 million budget. The demolition of two existing buildings on the site was not completed until January 7, 2004. There was also a 6-week delay due to Orlando’s architectural review board – the Downtown Development Board (DDB). This project was built in the commerce section of Orlando, so the plan had to be reviewed by both Orlando’s Building Department and the DDB to make sure it fit within the master plan developed for that area. The reviews were a little frustrating and impacted our work. We had to accommodate this disruption into our schedule and restructured the process so that we could still meet our plan. The
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Trading Ponies for Horses
The general contractor backfilled and compacted to an elevation 30" below grade and the site was turned over to the Team Member responsible for the electrical construction who laid 1 mile of 4" conduit without the need for any excavation. Seeing the entire grid laid out “above ground” as it were afforded the opportunity for accurate layout and verification. The GC then came back in and backfilled to grade using fire hoses to wash fine aggregate in and around the conduits. This innovation saved two weeks off of the schedule. Howell & Matthews (2005)
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reviews impacted us financially as well. They asked for architectural modifications to the building which resulted in $200,000 of additional work. We had to work the schedule and budget issues out with our customer and were able to expedite the project by getting the city to split the permit. We are most proud of this project because of the quality of the finished product. Although we finished the construction in a very short amount of time, we did not compromise the quality of the project. As a matter of fact, we believe that the bar has been raised in terms of quality and were awarded the Gold Brick Award for Quality for this project.” (James Roberts).
North OUC Plant
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PROJECT SCHEDULE: •
Contract Date
12/30/2003
•
Design Development (DD) Complete
01/26/2004
•
Demolition Complete
01/07/2004
•
Permit Issued
04/14/2004
•
Work Begins on Site
05/04/2004
•
Plant Ready to Operate
07/28/2004
This schedule performance was possible due to the relationships amongst team members which fostered a common team commitment to the project.
PROJECT BUDGET: •
GMP
$6,000,000
•
Final Price
$5,400,000
•
IPD savings against GMP
$600,000
The GMP was set after the DD documents were complete and reflected the IPD team’s best value engineering. The savings of 10% was realized during construction.
How did it work out for the IPD team member companies? •
Margins may have been average for most, but more predictable.
•
More fun, more rewarding professionally.
•
Got paid for everything done except up front work.
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What you have learned from implementation? “It was pretty tough to sell the Last Planner System to everybody, especially people that are unfamiliar with how it works. The LPS makes things tough and you have to be flexible by getting people on board slowly so they can see the value of it. When you hold team members accountable, they do want to perform. The difficulty lies in getting them to do the paperwork, their jobs, and keeping their commitments.” (Clay Harem)
z
Some companies are still used to the old self-preservation concepts instead to accepting the IPD concept.
z
It needs time for old habits to die away. Not everyone is suited to work in the IPD environment. Those assigned to work on IPD projects must be carefully selected and prepared for the new rules.
z
With IPD, the value engineering is very strong and effective. This offers powerful benefits for the client but the benefits to the IPD team is difficult to quantify. The IPD only benefits from cost savings after the budget is developed.
z
Working with non IPD members to expand the team.
What would they do differently if they could do it over again? “We would have probably selected a different GC as our initial team member to begin with. They were honest people and trustworthy, and from a business standpoint, they have been great partners. However, they did not share the same vision as us and they did not share the same values in the design-build approach to project delivery as we did.
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They were purely Construction Managers (CMs) who indicated the desire for more design-build work. The warning sign in hindsight was that they were never really committed to IPD from the beginning. We had hoped that since we knew them as individuals, we could trust them, so we were willing to take that gamble because they fit in every other way. However, the GC made negative comments during IPD meetings. Whenever we sat down and discussed potential business opportunities that did not fit the traditional mold, we started getting negative comments from the GC like, “No, the customer would not buy that.” or “No, you cannot sell that to a customer.” Their comments were more negative than constructive or positive.” (James Roberts).
How do you plan to further improve the IPD process? z
Invest time in marketing.
z
Capture lessons learned, standardize and document processes, and educate.
z
Streamline administrative processes.
z
Can reduce effort involved in tracking costs?
z
Formalize the operating procedures.
z
Develop metrics to improve performance.
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C.6 Boldt Construction Background The Boldt Company is made up of three separate divisions: Boldt Consulting Services, Oscar J. Boldt Construction and Boldt Technical Services. Boldt described its business in 2005 as 30% Healthcare, 20% Commercial and Industrial, 20% Power and Industrial, 20% education, 10% Pulp and Paper. Paul Reiser, Vice President, Production and Process Innovation, describes Boldt as having 7 regional offices, each with dozens and sometimes hundreds of projects running out of each office. Mr. Reiser also described his firm as being in different states of lean implementation. He said that some parts of the company were not using any lean principles at all. Some projects were using Last Planner® successfully and some were at the cutting edge of lean implementation using target costing, and similar advanced lean principles.
Lean initiatives In 1998, Paul Reiser, a vice president at The Boldt Co., began his search for ways to increase productivity at his Appleton, Wis., general contracting company. He found "lean construction management," an approach to building that uses factory-based manufacturing principles to streamline operations and increase customer satisfaction. Boldt was not in a "crisis" state when it approached the Lean Construction Institute, but was looking for a way to increase job site productivity.
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Mr. Reiser expects that competitive edge to come from promising and delivering projects faster and better than competitors, ultimately increasing the amount of work that Boldt does without increasing its resources. Those kinds of outcomes should arrive very soon, he says. A 20-year industry veteran, Reiser was attracted to Lean's principles for three reasons, "First, Lean is simply systematically applied common sense. Second, it is counterintuitive. Unlike anything I've seen before, it causes us to rethink how we manage work. And, finally we saw it as an opportunity to deliver high value facilities to the marketplace in shorter time."
Lean Preparation Boldt started lean implementation in 1999. They started with the introduction of the Last Planner® System (LPS). Boldt started small with 5 projects. They saw some success and then expanded it soon to include over 20 projects. By 2002 there were over 200 projects within Boldt using lean principles. These projects were geographically located close to there headquarters in Wisconsin. Between 1999 and 2002 Boldt describes its training as widespread and dealing almost exclusively with Last Planner®. The Last Planner® training was very concise, dealing only with the Last Planner® system and stressing the importance of reliability of commitments, and reliability in general. Boldt describes the spread of the LPS among its central offices in Madison and Milwaukee as “organic”. They began using Last Planner® on every project in this area. The Last Planner® system became engrained within the organization.
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Until recently, this was the extent of their lean implementation. Then people within the firm began asking about other lean principles and applications. They began to ask about the theory behind last planner, and how they could understand more about lean in general. It is an example of learning by doing. Boldt then began more training.
The training was again, based around the
Wisconsin area. They brought approximately 30 of their construction managers and superintendents in for a 3 hour training session. This training session detailed some of the underlying principles of lean, the different types of waste, value stream mapping, pull scheduling and production management. The hope was for a deeper understanding of the lean principles that were being applied. On the job training is the preferred method for Boldt. Sub-contractors are simply asked, and obligated through contracts, to comply with the lean principles on its job sites. Sub-contractors especially seem to be able to pick up lean principles like the LPS through the act of participating in projects that employ the use of such lean principles. Learning by doing are the words that come up most often when looking into how lean was implemented at Boldt.
Lean Principles Applied Boldt started their lean journey by applying the Last Planner® at the production level first, then moves to upstream in the supply chain such as target costing. Last Planner®
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The LPS as a project control seems like common sense. At a weekly meeting, the various foremen of a project get together and plan for the week ahead. At the meetings, the foremen make a commitment to do what they say they are going to do. This may again seem like common sense. PPC (percent planned complete) and reasons for failure are the end product of this production control tool. The production commitments of every crew are judged against the actual production completed. If there are 100 different production commitments made during a week, and 80 of them are met, then you have a PPC of 80%. You then have to go back and decide why the other 20% of commitments were not met. This is where root cause analysis comes into play.
Were the commitments
reasonable at the time they were made? Was there a problem getting the materials needed to complete the particular commitment? What was the ultimate reason that this commitment was not kept? Once the problem, or root cause is identified, step are taken to make sure that the same mistake will not be made in the future. The idea is to continuously improve in making accurate forecasts of what can be completed in a given time period. Because of the interrelated nature of construction work especially, forecasts made at the beginning of a job usually affect the whole job. If a commitment by an electrician to wire a room is missed, then the crew installing the dry wall in that room cannot start on time. This effect cascades through the construction schedule. An important piece of the LPS is the make-ready process. Make-ready is best described as the criteria for making sure that an “activity” or assignment is ready to be
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started. A list of these make-ready assignments is the pool from which the front line supervisor (last planner) assigns new assignments. The key to make ready is making sure that the activity is ready in all ways to be started. This includes the availability of labor, equipment, materials and anything else “required” for the activity to be started. For instance, if an activity is ready to begin, and scheduled to begin, but an important piece of equipment was absent, that activity would not be considered to be an assignable activity. The resources that would be taken up by this activity would be put to other uses until everything required for that activity was ready and waiting for the construction work to start. The use of Last Planner® and make ready are not easily separated, they are interdependent on each other. In order for Last Planner® scheduling to work efficiently, a make-ready process must be in place. In order for a make ready process to be utilized, a Last Planner® system should be in place. These two subjects are also closely related to the next subject, Pull scheduling. Pull Scheduling Pull scheduling as used by Boldt, is an important process. The first thing they do is decide what one milestone, or act finishes the job. They then take that and place it on its desired completion date. Then work backwards from the finish. As described by Boldt: “Working from a target completion date backward, tasks are defined and sequenced so that their completion releases work.” Essentially, you have to look at the entire scheduling process backwards, from the completed project, to the first permit required to break ground. When looking at a construction schedule in this way, it is much easier to see how lead times affect the
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construction process. When laying the schedule out it would become clear that in order to break ground on a construction site, first you must have the permit in hand to do this. It is also easier to schedule for the application of the permit, and make sure that it is done in time to start construction on schedule. The same applies to materials deliveries and long lead time items necessary for the finished project. In general it is much easier to look ahead in time than it is to look backward. This “unnatural” way of looking at a schedule makes it easier to look backward, by instead looking forward. Boldt defines the following as the steps involved in developing a pull schedule:
1. Define the phasing of the work. 2. Determine completion dates for the phases. 3. Using team scheduling and stickies on a wall, develop the network of activities required to complete the phase working backward from the completion date. 4. Apply durations to each activity with no contingency or float in the estimates. 5. Re-examine logic to try to shorten the duration. 6. Determine the earliest practical start date. 7. Decide what activities to buffer or pad with time contingency. z
Which activity durations are most fragile?
z
Rank order by degree of uncertainty.
z
Allocate available time to the fragile activities in rank order.
Is the team comfortable that the available buffers are sufficient to assure completion within the milestone? If not, either re-plan or shift milestone as needed and possible.
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Target Costing Target costing is the idea that a building should be built to the budget specified. Another way to put this is that it is the idea that a client could come to a builder with a sum of money and have a project completed for that dollar amount. The key to target costing is the value delivered to the customer. Traditional design process involves a “rough” design process. The product of the process is a building which is then taken and estimated in the traditional way to come up with the cost to build the building. If the project is over budget, extensive re-work and changes must be made to the design in order to bring the project back into budget. These changes and re-work, under lean thinking, are pure waste. On a technical level, these changes can possibly undermine the original design ideas and assumptions. Both of these aspects combine to “remove value” from the ultimate customer, the building owner. Ideally, every dollar spent by the customer on design would go into the design of the building, not the rework and changes. This is the idea behind Target costing. Boldt has applied this method in several situations and has had some success. According to Boldt, the most important part is getting everyone involved in the design process as soon as possible. This includes the architect, the general contractor, the sub-contractors
and most importantly, the customer.
Getting a good idea of the
expectations of the customer is key in beginning the process of target costing. The value of the building, as defined by the owner, can vary greatly from what the general contractor of architect might consider value.
Letting the customer describe and
contribute to the ultimate definition of value on each project is very important to lean construction.
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According to Boldt, in order for target costing to work, multidisciplinary design teams are necessary. This is not easy in the traditional design-bid-build building process, as the construction people are brought in after all of the decisions on the design are made. This leaves little leeway for the most qualified building cost estimators (general contractor)to exercise any control over the design, and therefore the cost of the project.
Lean Projects Boldt has applied the LPS to their projects successfully, and many reports in LCI (lean construction institute) community found Boldt’s successful implementation of the LPS as a production control system. Recently Boldt’s lean application moves toward upstream. As a lean design method, Boldt tried to apply the concept of target costing in their projects. Boldt has employed target costing in on several Design Build projects, one of which was the St. Olaf College Fieldhouse. The college was given a donation which was specifically earmarked for the construction of an new fieldhouse. There was no more money that that which was donated, so staying within budget was a necessity. At the same time, the college wanted to maximize the value of the gift, and get all that they could from their investment into the new building. Boldt started out by holding the contract for the architect. This made the architect ultimately responsible to the general contractor, and therefore, the contractor could have more input into the design process. A multidisciplinary team was formed that included electrical and mechanical contractors, general contractor representatives, college
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representatives, structural representatives and architectural representatives. The goal of the team was to come up with the project that would bring the most value to the customer. On the second day of the design conference, target costs were handed out by Boldt based on schematic designs. Each of the sub-contractors were asked to meet or beat the target costs that they were handed. As little design as possible was done to this point in order to leave leeway for the sub-contractors to look opportunities to build in value. Although the ultimate cost of the project was about 1% below what was budgeted, lessons were learned, and soon after changes in the process were passed on to other projects.
Lean Metrics Mr. Paul Reiser mentioned that they use PPC as a lean metrics. But they don’t have any other measures than PPC. He believes that other lean metrics such as delivery on time rate, cycle time can be used once work flow demand becomes reliable (i.e., high PPC). But it is time for Boldt to concentrate on work flow reliability.
Lessons Learned Barriers or Challenges •
Failure of management commitment
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Boldt has cited several obstacles to lean implementation. Number one on the list would be people in an organization who are unwilling to change. A common theme emerges when reading or speaking with representatives of Boldt, that theme is: Lean is voluntary, and not to be forced upon people. The reason given for “failure” of lean of projects was the lack of a commitment from the stakeholders on a project.
The lack of commitment from upper level
management was specifically cited for the failure of projects where lean principles were applied. In these instances the people in charge of the projects, project managers or superintendents, were said to be not buying into the idea of lean. They clearly did not want to change, and therefore did not really ever give lean a chance.
•
Contractual problems
Another major obstacle to lean implementation is the contracting process itself. If a contractor is brought in after the design of a project is completed, there is no opportunity to apply lean concepts like target costing. Paul Reiser also said that he believes there is opportunity for lean concepts to be used on every project. However, the opportunity increases if contractors are involved early. Mr. Reiser said that LPS can be applied to almost every type of project successfully.
Success Factors •
Commitment and Leadership
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Boldt firmly believes that commitment is by far the most important success factor with respect to lean implementation. The people in charge of the project, and the company, must be behind the idea of lean, and be willing to change. There has to be clear understanding and support for any change within a company, and lean in no exception. Leadership is also extremely important. The people in charge must be willing to lead the change within the company. The leadership must also know how and when to apply their knowledge and oversight.
As detailed above, the ability to learn from
mistakes is important. It is extremely important for leaders to recognize when a mistake has been made, and react accordingly. Leadership must be willing to deal with the successes, as well as the inevitable mistakes.
•
Learn to Fail
Learning from your mistakes is very important. Lean principles in general emphasize this point. Mr. Reiser makes the point that you really have to learn how to fail. You cannot really move forward and learn anything without making mistakes. The important thing is to learn from your mistakes, and take that knowledge forward. Mistakes and failures should be opportunities to look at what went wrong and analyze the process that led to the failure.
There is no complete ready-made recipe for your organization.
Applying what you learned from the failure in the future is the key to being able to move forward in any undertaking.
•
Overcoming Problems by making everyone a Stakeholder
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Key in getting everyone committed to the overall goals of this project was a profit sharing incentive plan. When the project was completed, all of the various stakeholders would share from a “pool of profits” that would not be distributed until the project was finished. He used this reasoning to get agreement early on that all of the different unions in Paper Machine Rebuild project would work together to get the job done ahead of time, and under budget. He cited specific examples of different unions and sub-contractors getting together ahead of time to plan the need for scissor lifts, and only getting as many as they needed. This was contrary to the industry practice of every sub-contractor handling its own equipment needs. The cramped quarters of the rebuild site made minimizing equipment necessary. The sub-contractors agreed to share from a pool of scissor lifts. Such arrangements helped to keep the project on track and on budget, but they could also help to reduce the total crew sizes needed at peak times. Again, the construction site was small, and everyone who was there who wasn’t absolutely necessary was just getting in the way.
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C.7 GS Engineering & Construction Background GS E&C in Seoul, Korea, was established in 1969 and has since expanded into largescale development and public projects, making them a world-wide general contractor. In 2005, GS E&C had robust sales in all five sectors, their $5.631 billion was up 39.1% from the year before. With a diverse business portfolio, that includes civil engineering ($0.73 billion, 13%), plant ($1.037 billion, 18%), environment ($ 0.312 billion, 6%), architecture ($ 2.202 billion, 39%) and housing ($1.350 billion, 24%), the opportunity for growth is ever-apparent. To successfully manage an organization with this amount of diversity and potential for growth, an efficient management system is necessary. Since 1997, GS E&C has utilized the Project Management System (PMS), which is an integrated project management system based on the Earned Value Management System (EVMS), to control profit and loss. This system has also assisted in the analysis of company processes through the use of schedule and cost controls. Subsystems covering marketing, design, construction, sales, finance, personnel, and general affairs were all integrated to form PMS, which has been used at all construction sites.
Lean Initiatives The GS E&C management team has recognized the huge waste of materials on construction sites. As an example, the on-site processing of rebar has caused a vast amount of cuttings, and the stockpiling of rebar on construction sites has created
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opportunities for rust and theft. In order to improve the inventory management, the company considered the development of an advanced inventory management system, which could reduce inventory. At the beginning stage of the system development, the only concern was effective inventory management. This led to the introduction of the Just-In-Time (JIT) process as a potential solution for their inventory management. The JIT implementation task force team was organized to adapt JIT into the GS E&C operational procedures. However, JIT is based upon workflow reliability, and GS E&C experienced difficulties with its incorporation into the PMS, due to low work reliability. In order to adapt JIT successfully, GS E&C had to develop an expanded project management system, which covered not only procurement, but also human resources, equipment, subcontractor, safety, environment, payment, and various others. On the matter of inventory, the current PMS was not suitable or beneficial for the field management. Their PMS mainly covered the information regarding profits and losses, which although a main concern of the home office, is rather impractical for field management. Therefore, GS E&C needed a system to support the field office inventory management while performing their construction processes.
Lean Preparation Organization Since June 2005, in order to implement the Total Project Management System (TPMS), GS E&C has expanded its existing PMS organizational scheme to include the management of two teams: the TPMS planning team and the JIT Implementation task
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force team (TFT). The new organization sets up goals as the general process innovation, including the procurement of materials. Moreover, the head office of each department, which are civil engineering, plant, environment, architecture, and housing, have their own TPMS teams for implementing TPMS. Besides TPMS, GS E&C has the Process Innovation team in charge of the improvement of work process at the corporate level. GS E&C has also recognized the importance of the innovation of the whole construction process. As a result, they have started the Process Innovation task force team, and have charged them with corporate level innovation of process. The responsibilities of the team include defining the Process Innovation and eliminating the barriers for TPMS.
Training GS E&C has established the training courses and have regularly trained and tested the basic concept of TPMS, TPS, and Lean Construction to all of their employees, including executives through online instruction. The implementation of TPMS in each department is reflected in the performance evaluation of the department head. The criteria used for measuring performance are the number of implementation sites, the level of application, and the adaptation of the basic TPMS concepts. GS E&C also emphasizes the implementation of TPMS in monthly meetings and construction site visits, and now all employees have a general understanding of TPMS and Lean Construction. One of the key training agenda is TPMS. One day training session consisting of eight hours training on lean construction and TPMS was given to 1,848 their employees and 300 employees of their subcontractors.
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Total Project Management System (TPMS) The PMS has historically been utilized by both field office and head office managers. Usually, they used the PMS to control profit and loss within each work process. The TPMS extends the area so far from the PMS system by incorporating JIT, quality, environment, safety and technological information, and the support objects that include field managers (or foremen) and subcontractors. TPMS is the integrated construction business management system for construction field offices, through digitization of project information, and the ultimate goal is the cost reduction through the use of construction process innovation (see following figure).
Connection through Mobile Field Portal In/Out stock, Resource
Daily Work Check
Daily Work Mgt.
• Standardization of
TASK and Schedule • Development of TASK/Human Resource Mgt. Tool
Const. info.
JIT
• In/Out Stock Mgt.
• Inventory Mgt..
Cost Innova tion
Inspection
Incorporation of Information Process Innovation GS E&C TPMS
Daily Work Management and JIT are the two main bodies of TPMS, and these concepts are connected through the Field Portal for the incorporation into the supply
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chain of a project. TPMS builds the foundation of knowledge by incorporating materials, human resources, equipment, quality, environment, safety, and technological information. This foundation provides for the Daily Work Management System, JIT and all other information the field management needs, which can be integrated within the Field Portal through mobile equipments like a PDA. The head office creates and distributes the incorporated set of information for each project, which allows the field manager to input materials, human resources, and equipment properly for a construction site according to the information in real-time through the use of TPMS.
Daily Work Management The Daily Work Management, which is the core of TPMS, allows a field manager to manage the daily work processes, which were unable to be monitored or evaluated in the typical PMS application. Therefore, Daily Work Management, which has relatively high Percent Plan Complete (PPC), became the essential base for the TPMS, and it allows field managers and subcontractors to create measurable values of workflow reliability. The number of activities in a typical master schedule are about 200~300, which are insufficient to define the work processes for the variety of projects, and the average PPC for a typical master schedule is only 40 percent. In order to standardize the work process and increase workflow reliability, GS E&C breaks down construction process into the categories: activity, detailed activities, and task. •
“Activity” is scheduled a month after the project planning. Usually 500~1,000 activities are defined by an estimating firm for a project.
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•
“Detailed Activity” is the minimum unit of resource management and is scheduled a month before the activity. 8,771 of detailed activities are standardized and registered in TPMS.
•
“Task”, the minimum unit of work, is scheduled daily through daily work management. 46,122 of tasks are standardized and registered in TPMS. The material and costs are linked with the task, and they are automatically calculated in the TPMS whenever the task is completed.
The three levels of work defined above, link the daily process management tool to the master schedule, and allow the field manager may manage daily works systemically. BS E&C scheduled about 200 employees to work on the systemization of work for seven months. As a demonstration of this process, the subcontractors complete a work activity and input this into the TPMS directly, through the use of mobiles and screen boards in field offices, and then the field managers of GS E&C have the opportunity to confirm the action. Whenever any conflictions occur among subcontractors, personnel of GS E&C mediate them and help subcontractors.. TPMS may help subcontractors to understand the importance of work reliability through the PPC analysis of daily work management and provide the criteria for evaluation of subcontractors. The concepts of “Shielding” and the “Make Ready Process” in Last Planner® System were introduced into the daily work plan system in order to increase PPC. The transparency of payment may be secured through daily work meetings discussing the completion of daily work and payment, which is updated automatically according to completion of work.
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JIT GS C&E established two systems for JIT: •
Rebar Processing Plants and
•
GS-BAS (Bar Bending Automation System)
Rebar Processing Plants GS C&E established two rebar processing plants in both the Seoul and Pusan areas, in Korea, in 2005 and they have supplied rebar to 15 GS E&C construction sites. The rebar was distributed through a JIT process and the plan is to expand this operation for all construction projects company-wide. The goal of the rebar processing plants is to minimize the amount of loss due to rebar waste, meet the exact specifications of the reinforcing process, eliminate the space for inventory loading and field working, and manage the material effectively. The construction sites, estimating firm, which is a subsidiary, and the rebar processing plants cooperate through the rebar processing plant operating system, which is called an Extended BAS. The rebar processing plants have the yearly capacity to produce 280 thousand tons of rebar with the order from job sites. Through the implementation of the JIT material delivery system, rebar losses can now be kept below 1%, saving the company at least $4 billion a year.
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GS-BAS (Bar Bending Automation System) The GS-BAS systematizes all processes related to reinforced concrete work, which represents 20~30 percent of the cost for most construction projects. This integrated CAD system lowers cost by minimizing rebar consumption and raises work precision. In 1997, GS E&C began, and was completed by 1998, to develop an automated program for calculating material quantities and preparing detailed shop drawings, a job that had been done by hand up until that time. This system automates shop drawing preparation, material quantity calculation, procurement, and on-site project management. The GSBAS has raised both the quality and productivity of on-site rebar work.
Implementation on Projects GS E&C started its lean journey by adopting JIT to rebar fabrication and installation. However, GS realized that JIT material management cannot be realized without improving plan reliability. It lead to adopting the Last Planner® System (LPS). In Apr, 2005, GS E&C implemented the Last Planner® System (LPS) on three (3) pilot projects, which are the “Xi” apartment project, the Seoul Ring Road project, and the GS Caltex Alkylation Plant Project. Those projects were selected to test Project Flow system of Strategic Project Solutions, Inc. (SPS) in housing, civil, and plant projects. Since 2004, GS C&E has adapted TPMS on 16 construction sites. Currently 110 projects are using TPMS. During the pilot projects, the interconnection of the existing master schedule management system and new daily work management was tested. The PPC rose to over
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70 percent of daily work plan. Then GS integrated rebar JIT system with the Last Planner® System (LPS).
Lessons Learned GS has identified several barriers and success factors that companies must take into account for proper and successful implementation of lean applications.
Barriers •
Difficulty of Defining Daily Work Load and Low PPC: Only the works which “can” be completed should be input in the following day’s daily work plan and the work must be completed as planned. However, subcontractors who do not have experience with a daily work plan may suffer by not defining the daily workload, which will result in a low PPC on the daily schedule. In order to prevent the unfavorable result, GS E&C personnel and the engineers of subcontractors may analyze the reason for uncompleted work and propose an alternative during the daily work meetings. The daily work meeting is very useful, especially for complex projects, like plant projects. The responsibility of each stakeholder might be defined through the daily work meeting.
•
Complaints from Suppliers/Subcontractors: There were external complaints at the beginning of the rebar JIT process through the rebar processing plants. Subcontractors believed they lost their jobs in the rebar production sector. As time went on, however, the suppliers and subcontractors noticed the benefits of the JIT
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process. The suppliers/subcontractors have raised their unit prices and been satisfied with the increased profits. GS E&C has allowed higher unit price of installation by way of compensation for reduced rebar waste. •
Complaints from Internal Organization: GS E&C personnel also opposed the adaptation of the rebar JIT process at the early stages. They expected more workload with the direct rebar prefabrication.
Success Factors •
Leadership of Management: the leadership of CEO has been critical for the implementation of the TPMS. It has been possible to overcome various kinds of barriers such as, the establishment of an estimating firm, rebar processing plants and the matter of the organization, including new teams and executives for TPMS, with the solid leadership of the CEO, and a fervent believer of the systemized processing.
•
Paradigm Shift: The shift away from traditional thinking is essential. The push system in traditional construction should be changed to the pull system, in which successors are the customers of predecessor. Moreover, the daily work plan, work leveling, and phase scheduling concepts are important.
•
Task Standardization: The agreements of the customer, general contractor, subcontractor, and supplier, regarding the standardization of process.
•
Real-time Information Sharing: the information regarding which tasks have been done and what can be done the next day should be shared on real-time.
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GS noted that the first two factors, which are leadership and paradigm shift, are major success factors.
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C.8 Messer Construction Case Study40 Background Messer Construction Co. is a full-service commercial construction manager, designbuilder, general contractor, program manager, and developer. We are a company of builders, with more than 750 construction leaders and innovators. Our long-term, sustainable success lies in the quality of our construction professionals. We believe in growth-from-within, and invest in career planning & development to lead construction innovation within the industry. The company was organized and has continuously operated since 1932. Our first office opened in Cincinnati, Ohio. Now Messer has offices in Columbus, OH, Dayton, OH, Indianapolis, IN, Louisville, KY, Lexington, KY, Knoxville, TN, and Nashville, TN. Messer’s impressive client base includes hospitals and medical facilities, education facilities (K-12 & higher education), aviation, arts & entertainment, religious, historic renovations, non-profit, industrial and commercial organizations throughout Ohio, Indiana, Kentucky and Tennessee. In 2007, Messer will put in place more than $700 million of commercial construction. Messer is a 100% employee-owned company. As employee-owners, we take pride in being a true corporate citizen in each of our markets where we work and live. We invest in our communities because we care. We invest because vibrant
40
This case study was based primarily on a series of interviews with Bill Krausen, a senior executive in Messer Construction.
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communities are good business. We invest because the customers we serve deserve our support in their community priorities and endeavors. During 2006, Messer and Messer leaders contributed more than $850,000 in our regions to help create vibrant communities where we live, work and raise our families. Deloitte, a Big 4 accounting firm, named Messer Construction Co. the 9th largest private company in Greater Cincinnati and Northern Kentucky. Ohio Business Magazine ranked Messer as 35th in its Top 100 Private Companies in Ohio. In 2004, Messer was honored with an unprecedented back-to-back "Build America" Award for the Ohio Judicial Center, home of the Ohio Supreme Court in Columbus. Year after year, Messer has won top honors for Safety and the Association of General Contractors (AGC) Awards for “Build Kentucky” and “Build Ohio.” Engineering News Record ranked Messer: •
TOP 25 Government and Healthcare Work
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TOP 50 Construction Managers At-Risk
•
TOP 100 Design Build Firms
Lean initiatives Why did Messer decide to 'go lean'? Several reasons: 1. Too much variation exists in project management performance. We tackle part of this through leadership development where we are making sure that our project leaders understand how to influence others to meet the common goals by understanding first
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how others perceive them as leaders and what they do within our relationships that either supports that or prevents it. The other part was needing to adopt tools that best support this leadership position - lean tools fit very well into this vision. 2. Lack of confidence in plans and schedule. Too many conversations including the words "we hope to..., we think that..., we might be able to..., we'll see if...". We need to be able to be better with our promises and predictions. 3. Lack of consistency. Too many people plan and manage their projects in different ways - some more effective than others. We're not against autonomy, but rather sharing of best practices in the process and letting people adapt those best practices to their own style. 4. Lack of commitment from others. Too many broken promises, from both the lack of understanding of the key elements of a commitment and from having the confidence to enforce accountability. 5. Stress level of our project managers. This needs to be fun - it's why we all do it. We need to create an environment that supports successful performance leading to people feeling good about the work they do and to have the motivation to come back the next day and do better. 6. Growth of our leaders. More knowledge and better tools lead to building our intellectual capital and improving performance. 7. Most importantly...value to our customers. We must find ways to provide more for less. Lots of other industries seemed to have figured this out. Instead of joining the ranks of mediocrity where the belief is that we are all victims of the game we all choose to play, we're going to take a leadership role in proving that it can be done.
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Lean Preparation (history of implementation) How did we go about it? It started with complete commitment of the senior managers of the company. We are all committed and take personal responsibility for making sure that it happens. We started (almost 15 years ago) with changing our culture from “command and control” to “participative” management. We taught everyone how to use some basic tools to do this. Four years ago we adopted the Last Planner system and drove it through every project. Then, back of house support functions starting adopting lean tools that work for them. We moved in the last two years to adopting advanced lean tools which we are currently in the midst of studying. Lean has now risen to be part of our business planning We are now actively selling lean to subcontractors as we enter new areas. For example, we recently made a presentation in one of our newer regions to the subcontractors association breakfast meeting—over 100 people attended and it was very well received. We are using reverse phase scheduling with designers as part of the preconstruction phase. We are using lean on all of our projects – at risk and not-at-risk. I am not aware of anyone who has rejected lean, whether designers or subcontractors, once they see the impact it has on meeting the goals.
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Lean Principles Applied Initially Last Planner and associated methods such as reverse phase scheduling were the focus of our lean implementation. We are now working on what we call our advanced lean tools, which include: •
Visualization on the job site
More use of models to aid in planning and problem-solving
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Communication boards—how are we doing against the plan
Color coded progress toward schedule milestones
Progress toward meeting safety goals and recognizing those that contribute at the highest level working safely
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•
Daily huddle meetings of the total project—many of them run by foremen o Create connection between managers and craftworkers – open communication. o Discuss the goals from the previous day. o Discuss the goals for today. o Invite suggestions on how to improve. o Assure that there are safe plans of action for every activity. o Share company information. o Recognize performance.
•
5S on sites
•
Value stream mapping—one major initiative on subcontractor payment. Found that 2/3-3/4 of all subcontractor checks get held up. We got rid of unnecessary forms and adopted a master insurance certificate. We take care of insurance and bond requirements at pre-award. A smaller value stream mapping initiative is underway on our recruiting process and on our equipment/tools management process.
•
First run studies (noted below in “Metrics”)
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Capturing best practices and developing standard work processes all of which are housed in our “Center Of Excellence” knowledge bank accessible by all Messer people.
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Messer Standard Work Practice
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•
Lean leadership team: 20-22 people representing every region and every department in the company. The team meets every month to share best practices, provide education and to discuss future opportunities for improvement. The team is the central communication network for Lean at Messer.
Lean Metrics (measures of success) What happened? Beyond the traditional challenges of change, we have moved greatly towards accomplishing the reasons "why" listed above. We have had many comments from project leaders that the stress is now easier to manage. Project leaders are also saying that lean helps them deliver projects in a way that better helps them to meet the client’s goals. People are genuinely embracing lean tools and we're moving more and more towards lean thinking, as opposed to “doing lean”. People are more engaged, we're getting better commitments from subs, suppliers, designers and our customers, there's more trust, more ownership, better communication, we're better at predicting, we're more confident, there's less stress and most importantly, many of our customers are telling us how much they like the lean processes - they are seeing the value it brings. We are no longer selling internally. We’ve gone from advocating a change in old planning processes to seeking out excellence in the newer planning processes. Ultimately, for this to be successful, it must have an impact on the most important people on the construction team – the builders. We have heard many positive comments from our craftworkers in the daily huddle meetings. We’ve had Foremen in training sessions, when talking about their experiences, making statements like “there is no way we would have ever gotten that project done without lean”.
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We are beginning to capture hard numbers as a result of lean implementation. One area we get hard numbers is in the reduced cost from redesigning our construction operations using First Run Studies and by comparing schedules from previous phases of work completed for a repeat client. Some metrics captured to date: •
In cases where we working with repeat clients and the opportunity to build additions that are similar in scope to the ones previous, we’ve seen significant improvement in the schedule to complete. On a recent major office building expansion, we were able to complete the project 2 months earlier than the previous project, which was smaller and less complex.
•
On this same project, using first run studies, we were able to reduce the total cost for the concrete shear walls by 40% and concrete columns by 10% from the previous project.
•
On a recent parking garage, we used first run studies to improve the costs of the perimeter concrete crash walls which were running significantly over budget. After the study and recommendations were made, the work shortly came within the budget and ultimately was performed 25% below budget.
•
On a recent hospital project, we used first run studies to improve how we were sequencing interior concrete shaft walls whereby assuring that we would be able to meet a very aggressive budget for that work.
We are also tracking PPC (percent plan complete) across the company. We maintain trend charts on each project, we collect these in the corporate office and are now trying to relate the PPC metric to safety and other performance goals.
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Lessons Learned (Obstacles, Barriers) What advice do you have for others who are on the lean launch pad? Get commitment at the top first, educate the entire company, train in the use of the tools, move from mandating change to finding ways that people can internalize lean's value - that it works for them, find ways to measure success, engage the stakeholders - all of them - not just upper managers!, and finally celebrate the success and take it to the next level. For us it is critical to involve everyone, including craft workers and line supervisors. We don’t want a forced, top-down process reengineering. We want people to feel like they have value, that they are adding value and that they have full support in their efforts. Most people did not see inadequacies in our previous practice. There seem to be levels: •
Level I: Believers—this stuff works.
•
Level II: Bandwagon approach—success stories inspire back-of-house folks.
•
Level III: Now starting to be creative in the use of lean tools; e.g., two similar projects (same client, same designer, same design, different locations) being done simultaneously have done reverse phase scheduling with sets of subcontractors, including competitors, before work took place.
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C.9 Walbridge Aldinger Background Walbridge Aldinger has a long and distinguished history covering over 90 years of service in the construction industry. They provide a variety of contract services: Integrated Program Management, Full-Service Turn-Key, Process Engineering and Technical Services, Construction Management, General Construction Contracting, and Design-Build. Walbridge representatives described their firm as industrial, commercial, and heavy civil. They estimated that approximately 10% of their business was design-build, 40% construction management/program management, and 50% hard bid type work. Walbridge is ranked by ENR as Number 1 in automotive construction and Number 2 in manufacturing construction in the US, which put Walbridge in a special position to adopt lean principles through strong relationships with their customers.
Lean initiatives Walbridge began its lean journey when they recognized the improvement opportunities of Lean production. Several of their clients in the manufacturing industry, requested that Walbridge begin to apply lean principles to their construction processes in order to derive cost savings from these projects. These clients were also deploying lean tools within their own companies and provided coaching for Walbridge and their lean initiatives.
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Walbridge joined LCI (Lean Construction Institute), LEI (Lean Enterprise Institute), and began looking at how lean could be applied to Walbridge. They also hired a consultant who was familiar with lean manufacturing.
This consultant, and
Walbridge’s working relationships with their manufacturing clients, shaped what would become Walbridge’s lean implementation.
Lean Preparation Walbridge adopted lean practices starting in 2000 drawing from several models. With this in mind they have developed an extensive training program that deals with the concepts that they have found to be most successful within Walbridge. The overall Walbridge training program mandates 30 hours per employee, which includes management of construction, safety and other topics.
All employees are
required to complete an 8-hour “Lean Fundamentals” training program.
There are
additional training programs that specifically cover value stream mapping, kanban, quality control, lessons learned, and other topics. Walbridge also has Lean outreach training programs for project teams, A/E firms, suppliers, and subcontractors. Walbridge describes its lean program as an integral part of its overall operating system applied enterprise wide. According to Walbridge, as of 2006 all construction projects had at least some lean concepts being deployed. Commitment within Walbridge starts with top management. When originally developed and deployed, non-leadership employees were designated as Lean Champions responsible for the implementation of lean tools and methods on projects. To improve results, Walbridge realized that leaders would need to drive the program at every echelon
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throughout the organization.
Senior project leaders are now designated as Lean
Champions responsible for overseeing and deploying Walbridge’s lean initiatives. Also included in the lean management at Walbridge is the lean construction steering team, a cross functional team made up of twenty-five (25) people drawn from the groups throughout the corporation.
They are responsible for developing and
implementing new ideas within Walbridge’s lean program. Walbridge has two dedicated Lean Managers who can be described as coaches tasked with, among other things, lean implementation and auditing. These lean managers are grown from within the ranks Walbridge.
Lean Projects Almost all Walbridge projects apply Lean practices. Project Leaders assess relevant application of the lean tools and principles that can best be deployed on a particular project. The level of lean implementation is judged internally in what Walbridge calls its Lean Olympics.
Lean Principles Applied Visual control / Logistical Planning Walbridge places great emphasis on Logistical Planning as a method to eliminate 9 forms of waste and improve the flow of work on a job site. The Logistical Plan capitalizes on visual controls to help organize current and planned work on the site. Logistical planning is a dynamic activity that provides effective communication and coordination, improves
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material management, and minimizes work interruption. The following is a generic site logistics plan developed by Walbridge: The site logistics planning is a very straightforward way to let everyone who looks at a plan knows where they should be, and not be. It has been a very popular tool for Walbridge with their clients to reduce possible conflicts and confusion often associated with construction sites.
Project stakeholders are updated anytime a site
logistics plan changes.
Site Logistics Plan
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Value Stream Mapping Walbridge implemented value stream mapping as a first step to Lean improvement. Walbridge applies Value stream mapping to identify all the steps in a process showing how the product or service is being changed from activity to activity.” Walbridge applies six distinct steps: 1. Define the Current State Map 2. Identify waste and Opportunities for Improvement 3. Formulate a Future State Map 4. Create a Work Plan to the Future State 5. Define Measurable(s) to gage performance 6. Analyze Cost Savings
Value stream mapping is a way to visually represent the steps necessary for a process. The process is then analyzed, looking for the steps in the process that actually add value to the finished product. The idea is to be able to identify steps in the process that do not add any value to the process. An example of a value stream map produced by Walbridge is shown below:
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Value Stream Map After developing a value stream map, identifying the parts of the process that do not add value to the finished product is necessary.
Once these non-value-added or waste
activities are identified, the goal is to try to reduce or eliminate them.
5S Process Walbridge defines the 5S’s as: 1. Separate/Scrap 2. Straighten 3. Scrub 4. Systematize 5. Sustain/Standardize
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The examples given for each are unique to Walbridge and their interpretation of the 5S process drawn from manufacturing.
5S Description
5S Example
1 Separate/Scrap
Separate like materials and equipment and remove or dispose of that which is no longer needed.
2 Straighten
Put material into bundles or racks so there is order. Equipment locations can be outlined to show where it is to be stored.
3 Scrub
Broom swept areas. Put trash in designated trash bins. Clean equipment.
4 Systematize
A system is in place to communicate the 5S expectations on a regular basis. The 5S audit process is done regularly. The labor forces understand the expectations and follow them. The system goes into “autopilot”.
5 Sustain/Standardize
Develop standards for 5S expectations and audit those standards on a weekly basis.
Walbridge management and staff place great value on the 5S process and require it to be used on all construction sites and at their yard.
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Quality control using Lean principles Walbridge uses a Quality Control Plan modeled on the USACE Contractor Quality Control (CQC) program consisting of 4 phases: 1) Submittal 2) Pre-installation 3) Initial Inspection 4) Follow-up. The Quality Control Plan “builds in quality” during each step of construction/installation to ensure work complies with contract documents. The process verifies specified materials are used and installation is acceptable to produce the required end product.
It encompasses approval of submittals, subcontractor
installation activities, inspections, and tests. Effective quality control eliminates the waste of defect and rework by identifying and correcting deficiencies early upstream in the construction process. To assure quality, the Quality Control Program must be applied in unison with safety, lean practices, effective leadership, and other elements of the Job Site Quality Plan. Pre-installation coordination meetings are held for each definable feature of work. In-process inspections apply the Toyota principle of genchi genbutsu – go see for yourself in the workplace. As work progresses, the WA Quality Control Program flows into the defined Project Close-Out Plan and helps minimize the traditional punch list.
Lessons learned database Walbridge has developed its own internal computer database to capture Lessons Learned. This database is a repository of knowledge gained from all of their projects. At any time an employee may go to the database and choose to search for similar projects and
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implementations of lean. This database aims to be able to spread knowledge gained on one jobsite across the firm.
Lean Metrics Walbridge has developed several metrics for measuring the effectiveness of its lean program. The most cited of these measures was the one percent savings program. This program seeks to save Walbridge and its customers at least one percent on the operating budget through the elimination of waste and process improvement. The savings are broken down into three different categories -- direct, indirect, and owner savings. Walbridge developed a metric called the “Lean Olympics” which evaluates the lean performance of each project. Projects are reviewed monthly and awarded bronze, silver, gold or platinum rating based on an internal Walbridge-developed checklist.
Lessons Learned The lessons learned by Walbridge are numerous. They continually cite the leadership of the firm and its lean champions as imperative to the success of any lean program. Walbridge recognizes Lean performance requires behavioral change which can be challenging. Walbridge representatives had specific examples of where they thought that an idea or process had been ingrained within the organization, only to find out that that particular process reverted to where it was prior to the implementation of lean. They cited re-training, leader involvement, and constant “auditing” as ways of controlling and ultimately changing the behavior.
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Other lessons learned include the ability to take an existing tool and to make it your own. They cite several examples where they had to take an existing lean “tool” and make it their own, changing it so that it would be effective within their organization or a particular project. Last Planner® was such an example. Walbridge found the PPC element was not successfully implemented at Walbridge and took additional resources to complete, whereas the look-ahead schedule offered a useable tool to help subcontractors plan work details. They said that education, leadership, and commitment are important success factors in lean implementation. •
Education; Walbridge cites education being the first success factor of any lean program.
•
Leadership; Without strong leadership, any initiative, however good it is, will fail. This is another very strong point within Walbridge.
•
Commitment; Commitment was also cited as key to the success of any lean implementation. Walbridge encourages stakeholders to continuously improve and understand that lean implementation is a journey toward perfection, not a destination.
Suggestions for those considering implementing lean in construction For any organization wishing to adopt lean thinking, Walbridge suggests starting with something simple. Their advice was to start with a small change and see how that works out. They said that once a few people within the firm see that lean can work, you can
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start to leverage that buy-in from various people to start to implement more changes within the firm and maybe even outside the firm. The key is to start simple. The other piece of advice given was to prepare the firm for a journey. Lean implementation will not be quick. The key to being able to successfully implement lean in any firm is the ability to look at lean as an on-going process that will take some time before results were either seen or realized.
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C.10 BMW Constructors Introduction The huge BP refinery in Whiting, Indiana was the birthplace in 1912 of the thermal cracking process, which doubled the yield of gasoline from a barrel of crude oil, while also boosting its octane rating.
ULSD Project
With the addition of a new Distillate Hydrotreater (DHT), BP's refinery in Whiting, Ind.,
will produce additional supplies of ultra low sulfur diesel (ULSD) fuel
that meet or exceed all on-road diesel regulations. The new DHT unit, a $130-million dollar capital investment, will have the capacity to produce about 36,000 barrels per day of the ULSD product.
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Approach BMW Constructors teamed-up with Strategic Project Solutions, Inc. (SPS) to implement lean construction principles, techniques, and tools within BP and the Regional Contracting Alliance (RCA) for the construction phase of the ULSD project. The decision to implement lean was driven largely by the challenging nature of the construction plan (an independent benchmarking firm assigned a very low probability of achieving schedule and budget), and to exemplify how the adoption of lean solutions can benefit BP with future capital projects at Whiting, such as its upcoming multi-billion dollar expansion related to the Canadian Oil Sands. The production management solution integrated various systems including: •
Use of digital prototypes (3D models) to collaboratively plan workflow at both strategic and production levels.
Team planning
•
Use of P3 at the strategic project level, with the team continuously reviewing and updating the remaining of the plan throughout the project (as opposed to just ‘capturing progress’)
•
Use of SPS|PM Production Controller to plan and control at the production level
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Production control meeting
SPS|PM screen
The technical solution was supported by: •
Extensive input into the planning process at all levels from people responsible for doing the work
•
Weekly workflow coordination meetings
•
Detailed production plans coupled with daily production control
Proactive constraint management including continuous identification and recording of workflow constrains, recording commitments to remove constraints prior to them interrupting workflow, and following-up on the status of removing constraints The production management solution enabled the project team to ‘go slow to go fast’. Teams did not start field execution of a work package unless they were confident that: 1) the work can and will flow according the detailed workflow plan, 2) the work can flow uninterrupted from start to completion, and 3) starting the work is consistent with a collaboratively developed and continually updated strategic workflow plan.
Benefits •
“Drove a lot of frustration out of the job,
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•
Foremen had time to plan the job and to ensure materials were available. Heard a lot less griping and negative noise in and around the break / lunch area”, BP Project Executive
•
“Reduced interferences causing downtime among craft disciplines resulting in waiting for access, tools, materials, equipment and engineering” RCA Senior Project Manager
Results •
Under cost budget 13%
•
Improved labor productivity by 24% compared to similar ULSD projects
Lessons Learned •
Implementation is HARD work requiring a massive leadership effort
•
“It is a system that, in my opinion, runs flat in the face of the construction / mechanical culture of NWI. I include our BP folks as well as contractors. This is why ‘it takes a bit to get folks on board’. It also requires management (BP) commitment to STICKING IT OUT, because the folks actually constructing can revert back to the ‘good old ways’ really easily.” BP Construction Manager
•
Success requires development of a robust implementation strategy and sufficient implementation support
•
Implementation is a long-term journey – not an event
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Recommendations •
All production planning should be carried-out collaboratively by those responsible for executing the work
•
Include support groups such as scaffolding, warehousing, delivery, material handling, and logistics personnel in production planning sessions
•
Use the 3D model as support tool, or best available design documents, to assess options and develop production sequences during planning sessions
•
Limit planning sessions to 1 – 1.5 hours
•
Develop and issue a printed flow chart for each production work stream. Field people will often refer to these valuable tools
•
Sequence and chart material handling and logistics processes in the same manner as direct field construction. Balance material handling capacity / flow with installation capacity / flow
•
Conduct periodic interface commitments sessions. Issue the commitments document for use as field guide for the upcoming work period
•
Firmly require field crews to either follow their detailed work sequences or replan as necessary, especially early in the construction phase of the work. Set the requirement early
•
Allow plenty of time and allot sufficient personnel resources for workflow planning, including collecting, organizing, and entering work stream information in the production management system prior to beginning work on work streams. Small investments in structured workflow planning and control can yield significant returns in the form of improved field productivity
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•
Utilize construction staff personnel for planning facilitation; utilize clerks for data entry and data management
•
Celebrate and recognize achievements and milestones
•
Do not start a planning session with a preliminary plan (schedule or budget) from a manager, the owner or staff. Start with a blank slate
•
Do not let dominant personalities control work sequence development. Loud doesn’t equal optimum. Everyone has an equal say in the planning process. Over 95% of workflow conflicts can and should be resolved by group-consensus in favor of what’s best for the project as whole
•
Do not get discouraged if a work stream or work plan is agreed to be discarded after time is spent on its development.
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C.11 Dee Cramer Case Study Background Dee Cramer is one of Michigan-based suppliers in heating, cooling and ventilation. Since 1937, Dee Cramer have been committed to excellence. Excellence in design, workmanship, competitive pricing and customer service. Due to its computer aided design capabilities, Dee Cramer professionals can create heating, cooling and air-exchange systems in detail and to exact specifications, moving quickly from the drawing board to construction site. Within the Construction Industry Dee Cramer describes itself as “the air guys”. Most of their work is in the traditional Design-bid-build contract environment. On most large construction projects they are 2nd or 3rd tier sub-contractors.
Lean initiatives Dee Cramer’s answer to the question of why did you apply lean was very simple and clear: “We recognize it as a way to cut costs, improve our profitability and stay competitive.” Due to their unique position of being engaged in both fabrication and construction, Dee Cramer has been familiar with lean techniques for a while. Their manufacturing facility is most familiar with lean ideas and processes. While the terminology they used was not easily identifiable as lean, the ideas they were trying to get across were definitely
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rooted in lean philosophy.
Dee Cramer consider themselves fabricators rather then
manufacturers. To them a manufacturer produced the exact same item over and over. Dee Cramer has an ongoing “process improvement” program both within their shop and on construction sites. More emphasis was placed on the in-house process improvements within their manufacturing operations. The process improvement program was made up of 13 different initiatives within the firm. Each initiative was developed, implemented and measured by an internal group of people ultimately responsible for the process that was to be improved. That is to say that the people who were doing the manufacturing or construction work were the ones that were responsible for coming up with the process improvement ideas, and then implementing them. According to representatives of Dee Cramer, one of the ongoing process improvement initiatives was based around materials handling. Because of the size and complexity of the ductworks that Dee Cramer manufactures, delivers and installs on construction sites, this is not surprising. The fabrication process alone is heavily reliant on computer aided design. On the construction site, Dee Cramer cited a two week look-ahead schedule process improvement program. This program was developed by Dee Cramer Foremen. The two week look-ahead program is an attempt to try and systematize the planning and scheduling of work that is to be completed within the next two weeks at a crew level. The implementation of this program is still on-going, but according to representatives of Dee Cramer, the outlook for this program is very good.
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Lean Preparation Dee Cramer indicated that they were heavily reliant on “hands on training”. They cited the smaller size of the firm as the major reason for this. They indicated that they could much more effectively train employees in the field and on construction sites. One example of Dee Cramer’s process improvement is the two week look-ahead schedule.
Representatives of Dee Cramer said that training for the program was
conducted by a handful of employees familiar with the process. These employees would travel to the various project sites and help the foreman develop look-ahead schedules. The people doing the training were also foremen within Dee Cramer. This resulted in a very in depth and complete training by people most familiar with the processes and problems that might come up during the development of the look-ahead schedules.
Lean Projects Dee Cramer’s formal introduction to Lean Construction was thru General Motors projects that they were a part of. General Motors had demanded from the beginning that all contractors involved with the projects apply both lean techniques and 3-D computer modeling prior to construction. 3-D modeling of a potential project is the process of completely designing, down to the last duct hanger, the entire project before construction starts. All potential conflicts between different contractors are identified and rectified using a 3-D model of the project. This is said to produce “as builts” of the project before the project even begins. The idea
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behind 3-D modeling is to keep the designs completely accurate and to work the problems thru in the computer model, as opposed to on the construction site. According to Dee Cramer, they have been using 3-D modeling for longer than most people. All of the units that have to be manufactured by Dee Cramer must be 3-D modeled prior to being built. Prior to the GM projects, Dee Cramer would have to develop 3-D models of the equipment they were going to produce anyway. This usually meant taking 2 dimensional designs and then, in house, developing 3-D designs in order to manufacture the units necessary. The development of the complete 3-D model prior to construction allowed Dee Cramer to be in a position to take full advantage of the process. However, Dee Cramer emphasized that they are not completely reliant on computer aided design. We just use them wherever possible as it cuts production costs. In some instances it is not practical. Dee Cramer said that during the construction of the GM facility that they were using Just-in-time delivery of materials. They were able to forecast very accurately, how much material would be needed, and have just that amount of material available to the crew on site. The 3-D modeling also reduced the need for changes to be made on the construction site. This was described by Dee Cramer as the source of the majority of the problems that they would usually have to deal with on a more traditional project. When dealing with one of a kind manufactured items that are not produced on-site this represents a major cost and time saving measure. The GM projects that Dee Cramer participated in are now looked at as examples of cutting edge construction technology and project management.
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Lean Principles Applied: JIT Just in time delivery was a lean tool that Dee Cramer liked to be able to take advantage of whenever they could. Dee Cramer manufactures the larger air handling equipment that they use. Due to the size of the equipment, having it sit around a construction site is either not possible, or not advisable. Dee Cramer said that they try as much as possible to use just in time delivery methods. They also said that is very difficult with most projects. They cited the GM projects as examples of when everything goes correctly. They said that during work at the GM projects the manufacturing was being done 1-2 days before the units were to be installed. In some cases, the units were manufactured and installed in the same day. Dee Cramer cited their position as a sub-contractor as a major inhibitor to being able to push just in time further. Construction scheduling changes are always difficult to deal with.
Look Ahead Schedule Dee Cramer is in the process of training its entire foremen to complete a two week lookahead schedule. The two week look-ahead schedule is a way for foremen and other planners to be able to look at what is scheduled in the next two weeks, and what is likely going to be done in the next two weeks. The overall goal of this program is more reliability in the planning that Dee Cramer does. It is in line with the Last Planner®
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System (LPS). Dee Cramer recognizes that the work flow reliability is a pre-requisite to JIT.
Lean Metrics Dee Cramer’s Process Improvement program is an internal program that grew out of their desire to continually improve the way they do business. The program is made up of line people who are part of the processes that are to be improved. That is to say the process improvement ideas come from the people who are most familiar with the process. The ideas are not forced onto employees from above. The Process Improvement program also develops ways to measure the effectiveness of the programs that they initiate. Although no data was able to be obtained, the representatives of Dee Cramer assured us that the measurement of the improvements was ongoing and the responsibility of the group that initiated the changes.
Lessons Learned The single biggest obstacle that Dee Cramer faces in its lean journey is the place they occupy in the overall hierarchy of construction.
They are usually 2nd or 3rd tier
subcontractors. This puts them in place where they are usually reacting to changes that are not of their own making. While process improvement is possible, the biggest gains that could be made are well outside of the sphere of influence of Dee Cramer. However, they mentioned that they still can apply some lean principals to projects within a scope allowed where the owner is not ready. Hopefully they will eventually "see
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the light" and implement it on future projects. Some owners are not sophisticated enough to ever be ready. In that case lean principals must be promulgated by the entity delegated by the owner to be in overall charge of the project (i.e. architect, engineer, construction manager, general contractor) Dee Cramer said that there is a golden rule: “He who has the gold makes the rules.” It is from a specialty contractor’s perspective. This was the summarization of lean projects that Dee Cramer had participated in. Dee Cramer cited owners who demand lean projects as the single biggest help for lean deployment. As stated above, Dee Cramer is in a unique position of being more than ready to be able to take advantage of the lean process, especially 3-D modeling. All that is needed is more participation and involvement in the construction process by the owners of the buildings that are being built.
Recommendations for those considering implementing lean in construction Dee Cramer was very cautious about making changes to its organization. They cited several programs that were great ideas, but never really got off the ground because the perception within the firm was that these process improvements were being “forced” on the employees. Instead, Dee Cramer ties to get a grass roots movement within the organization. They are very careful not to be seen as forcing anything onto employees, and prefer to let the process improvement gains speak for themselves. The two-week look-ahead schedule was an example of this.
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C.12 Ilyang Construction Case Study Background Ilyang Construction is a global leader in the specialty contracting of earthwork and structural projects. Ilyang Construction was founded in 1976. Since its foundation we have played an integral role in building a foundation for a nation. Across the nation, Ilyang has constructed highway, opened tunnel and built seaports, golf courses and airports to foster economic development. Ilyang Construction has annual sales in the range of 900 million USD, which ranks it third among similar businesses in Korea. By being a large specialty contractor in both earthwork and structural work, Ilyang has created a unique situation. They function as the coordinator, much like a general contractor, of the work in those phases, coordinating both their own subcontractors and other specialty contractors. While Ilyang has its own work force for earthwork, they usually hire their sub-contractors for structural work, as a second-tier subcontractor. In this way, Ilyang can be the leader of Lean initiatives and implements Lean ideals while being a subcontractor.
Lean initiatives The motivations for implementing the Lean philosophies were both financial and organizational, meaning Ilyang desired more efficient productivity, and controls. 1) Their market became very competitive, as a company seeking for management competitiveness as well as technical competitiveness.
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2) The production plan was not reliable. Ilyang encountered frequent changes, from internal & external needs, and was prevented from having a strategic material procurement plan, because a reliable lookahead production plan was not created. 3) The potential for a strategic procurement plan, such as an alliance with a supplier, seemed to be required during times of such inflation on materials, for example: gas, h-beam, rebar, etc. 4) The home office did not have the necessary insights pertaining to each project site. The problems of each site were hidden from management.
WS, a managing director at Ilyang, remarked, “Every project site submits its annual progress schedule and cost schedule. They look beautiful, but the sad thing is that we cannot rely on the schedules from each project site. So, when the head office makes a case flow schedule, we refer to cash flow diagrams from previous projects. I know many other companies tell you the same story.” JH, an assistant project director at the head office, stated “such frequent work schedule changes prevent the home office from having a strategic procurement plan. Sometimes, either the managing director, or my boss, complains to me about the inability of having a strategic procurement plan. The question remains as to what is the root cause for the problems. It comes from a lack of reliability with the work plan from the project sites.” Additional noted deficiencies with the previous system: 1) They have had trouble in production scheduling; the GC changes work orders frequently to optimize cash flow, based on their schedule of values with the client.
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2) Ilyang needs to develop its own production plan, taking into account the whole picture of the project. 3) Prices for major construction materials have gone up in recent years. 4) Need to have a consistent and reliable lookahead schedule to have a strategic procurement plan.
Lean Preparation The level of commitment by Ilyang came from a strong top-management commitment, which was gained after two pilot projects were tested successfully. The successful elements of those pilot projects are addressed below. Elements of successful Lean preparation: 1) External consulting: had a consulting contract with the SUNY-Research Foundation. 2) Organization: had a Lean task force team, which consisted of three fulltime engineers, and was supported by a senior managing director. 3) Training stage one: a numerous project managers and 10 project engineers were trained for pilot projects on Lean, Lean construction, and plan reliability (i.e. Last Planner®). In addition to that training, every manager was given the opportunity to receive training at Toyota Motor Company, in Japan. While the expense was significant, the CEO and Managing Director felt it was worth the investment. 4) Promotional vehicle: Had two projects described in papers presented at International Group for Lean Construction conferences.
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5) Lean implementation manual: with the help of the SUNY research team, Lean Task Force Team, and managers from early winners, which incorporated the lessons learned, and Ilyang culture. 6) Implementation: organization-wide.
Lean Projects Ilyang’s mission statement has set Lean implementation as a top priority in their 5-year vision (2003-2008). However, the extent of Ilyang’s implementation of the Lean principles into their projects has been limited. Since the head office only recommends their projects implement the Lean strategies, cooperation is still on a volunteer basis. If any project wants to adopt it, the head office will provide a manual, as well as training. As of Sept 2006, Ilyang had twelve projects that are targeting Lean implementation.
Lean Principles Applied Ilyang pursue the Last Planner® System as a strategy for production control. The following steps are main processes for their LPS. a. LPS: takes on a role of leading specialty contractor b. A Six-week lookahead schedule: with GC and other SCs. Identifies constraints, uses “post-it” and invites GC and Engineers (or owner’s representatives) to the meetings. c. Daily meeting: checks on constraint removal, the pervious day’s and next day’s activities.
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d. A Constraint removal strategy: using Organizational Hierarchy Constraint Analysis e. A Weekly plan: to release constraint-free tasks f. Metrics (PPC and PCR) and learning process
Kanban Ilyang has adopted a kanban system to facilitate LPS and to ensure safety plan. Each task resulting from weekly plan requires a distinct card (kanban). Each card indicates the scope of task and major safety accidents on the task in history is described. Each foreman is required to pick up the cards under his/her responsibility and announce accidents before job begins. After job is completed, he/she is required to return the cards to the office. Kanban eliminates the efforts to measure and check the progress because task is clearly defined in the course of production control.
Kaizen Ilyang encourages employee to make suggestions from employees in routine team meeting. Ilyang gives financial rewards by offering incentives for suggestion. In this regard, Ilyang has a 1% cost reduction program which offer bonuses to successful project sites annually.
Visual Management 1) Colored Hardhat
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Ilyang used hardhat visual control where each color indicates distinct work division and level of management. It helps managers to identify tasks and the numbers of workers on the task in each location.
2) Safety and Standard Procedure Ilyang made a handbook of safety and standard procedure for more than 50 construction processes. Experienced construction managers and engineers participated in the process. It helps reduce time for planning preparation and variability of processes. They posted a signboard describing standard procedures and safety issues on the site so that workers can easily understand and follow them.
Lean Metrics Since, the Lean construction implementation tool was the Last Planner®, performance was measured in Percent Plan Complete (PPC). The metric of the Last Planner®system is a Planned Percentage Completion as a measure of the performance of the planning system, and as a tool for learning from plan failures (Ballard, 1994). PPC is a measure of workflow reliability because the production plan of upstream production units is one source of information regarding workflow to downstream production units (Ballard, 2000). In addition to PPC, PCR (Percent Constraint Removal) is also used in Ilyang. PCR is a metric to measure the performance in the make-ready process (i.e., constraint analysis). PCR is the measurement of how successfully the make-ready process has been performed.
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Lessons Learned 1) Having a reliable work plan: The lookahead planning should be extended to incorporate all scheduled activities foreseen within a three to six week window. All participants are required to cooperate with, and contribute to, the overall planning and controls. Lee, a project manager at a pilot project site (highway construction project) remarked, “Three months after we started Last Planner®, we recognized that our ability to improve work flow reliability was limited. By not extending to outside the organization, such as a general contractor, there was always an ad-hoc work practice or priority changes, which resulted in changes to our work plan. This issue was brought to the attention of the SUNY Research Foundation, and they suggested that we include a member of the general contracting firm and the relevant specialty contractor into our work plan meetings. This action extended our LP (Last Planner®) system across the entire organization.” Lee continued, “their first reaction when we asked them to participate in our work plan meeting, was not positive. They (the general contractors) said, “Why should we help you with your work? It is your job.” However, later they realized the benefit of having a reliable work plan, from Ilyang, and provided them with a reliable work plan also.
2) Having a good channel of communication that reduces the number of correspondents needed to coordinate and remove constraints: By having the GC and Engineer at the table,
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during the time of production planning, there is a reduction in fire-fighting, in lead time necessary to get approval, and to coordinate a planning of the start of projects. WS, a managing director, explained the other benefits. He said “One of our clients (the GC) appreciates what we are doing, and asked for training on those successful procedures. He also encouraged other SCs to adopt Lean. Even though there are no concrete results, some SCs are interested in having long-term alliances with us, this was stimulated by our Lean system.”
Conclusions Ilyang’s decision to pursue Lean principles was driven by the CEO’s commitment and his personal vision. This organization is a good example of a specialty contractor leading the way for Lean implementation in projects. They started a production control system within their organization. Later, they extended that system to upstream participants, including the general contractor. They started with improving workflow reliability as their Lean implementation strategy, which was in line with Toyota’s recommendations. Once they became comfortable with the production control system resulting in improved work flow reliability (i.e., lengthened lookahead planning window), their lean journey extended to other lean tools such as kanban.
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C.13 Southland Industries Case Study Background Southland Industries was formed in 1949 as Southland Heating, a small residential design-build group in Southern California. The company grew in size as it ventured into the larger commercial projects market in the 1970’s. Today, the design-build-maintain specialty contractor, with over 1500 employees, provides services that include HVAC, plumbing, process piping, controls and automation, and fire protection. Southland is one of the 10 largest mechanical contactors in the nation and Contracting Business’s 2001 Commercial Contractor of the year.
Southland focuses on facilities with complex
mechanical systems that use significant amounts of energy on a 24*7 basis. These include: healthcare (hospitals and medical office buildings), hospitality (hotels and casinos), advanced technology (biotechnology, pharmaceutical, manufacturing, data centers
and
semiconductor
fabrication)
and
campuses
(education,
commercial/institutional, and federal facilities). Southland has its corporate office in Irvine, CA, and operating divisions in Southern California, Northern California, Nevada, and the Mid Atlantic region. Each division provides full services with planning and development, mechanical engineering, construction, and service groups. Though spread across the nation, the same corporate philosophies and company wide standards are instilled throughout the organization through frequent corporate training, common company systems, quarterly operational lessons learned meetings, and monthly manager’s meeting in each regional office.
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The integration of design and build processes has allowed Southland Industries to rapidly deliver cost effective, high quality solutions. “Building Customers for Life”.
Southland’s core purpose is
Southland has five core values that add definition to its
company culture: 1. Passionate, dedicated, entrepreneurial PEOPLE are our most important resource. 2. INNOVATE to create opportunities and solutions 3. Safely deliver QUALITY 4. Professional and personal INTEGRITY 5. PROFIT as a vital measure of success, growth, and prosperity
Lean Initiatives (why did we ‘go lean?) Continuous improvement.
Most companies decide to change because they must
change—they are experiencing lower margins, are burning out their people, their clients demand it. With Southland’s culture of innovation, the drive to continuously improve the standard methods of construction and design was natural. Lean practices reflect many improvements that Southland was trying to implement in their products: added value, increased productivity, and higher levels of planning.
Strengthen our labor force. Labor is the highest risk for all self performing construction companies.
Levels of construction activity cycle with the economy.
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Keeping a
consistent level of work and therefore work force, is very challenging. The economics and demand for work is uncontrollable, but the way it is planned and scheduled is manageable. A steady flow of work is necessary to be able to keep the right people in the right seat on the bus. Many regions have also experienced a shortage of labor resources, making the steady flow of work a great priority to be able to attract the best resources of labor.
Eliminate waste.
Rising costs for raw materials have affected all levels of the
construction industry. If we are able to eliminate unnecessary material costs, our clients will be able to get better value.
Increase communication. Clear communication is key to a strong team. Southland wanted to improve communication on all levels.
Increase accountability.
If commitments are made, they should be completed as
promised. Most of the activities that constructors perform rely on others to perform before them. If predecessors are not met, cost and schedule overruns are inevitable. Southland wanted to improve their reliability of delivering on time and under budget.
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Lean Preparation (what’s the history) Southland Industries has been incorporating lean philosophies for about ten years, and joined the Lean Construction Institute in 1998. Southland felt they shared the same philosophy on how to perform work while able to enhance their core values already in place. In 1999, goals and an action plan were developed by the corporate managers. The use of the Last Planner System was implemented with 1 and 3 week look aheads, tracking PPCs and observing variance issues. Standard protocol bottlenecks were identified and corrective actions on how to reduce these issues were encouraged. Lean’s philosophy of continuous improvement was in line with Southland’s core purpose of “Building Customers for Life” and the “Continuing Improvement Process.” Southland uses the CIP by setting up a system designed to add value by gradually and continually improving any process with constant review. The Last planner system has been incorporated into the biannual training meetings since July 1999. Participation in the Lean Construction Institute has given Southland the opportunity to share experiences with others, learn the latest progress in the lean movement, and expose key employees to the lean culture. Each Southland division has applied lean in a different way. This case study focuses on the Northern California Division. In 2001 they implemented a division specific lean plan. The Northern California division has +250 employees with offices in San Francisco and San Jose. They have dedicated sheet metal, HVAC piping, process piping, and plumbing fabrication shops. The number of employees and size of the offices, combined with the innovative and young mindsets, created an ideal location to take lean to the next level. A series of various training courses were started. The courses ranged
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from guest speakers from other lean companies, last planner implementation, 5 S training, book assignments, and Sutter’s 5 Big Ideas. Not all projects implemented lean practices, but all had or intended to implement at least one or two of the following tools: pull schedules, 1-week lookaheads, 3-week lookaheads, PPCs, value stream mapping, and target costing.
Lean Principles Applied (how did we do it?) From this point, becoming a “lean enterprise” was the goal, new ideas were encouraged, and all opinions were welcome.
We knew a culture could not be
forced and implemented overnight, so it was, and still is, a slow progression.
The Northern California
division continued to implement the tools as
mentioned above, and changed people’s mindsets at the field, shop fabrication, and management levels. The photographs opposite show examples of some lean management principles applied in the Northern California division.
Lean methods in action
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Continuous Process Flow Southland wanted to create a continuous flow of work and to increase productivity in both fabrication shops and field installation. Shown opposite are photographs of the step by step process of how pre-fabricated pipe racks are mobilized and installed on the jobsite. In the pre-assembly stage, the duct was fabricated in the shop in 20-25’ sections. The pipes, of different systems, are attached to unistrut to create racks of pipe, which can be easily attached to the hangers on the jobsite. These racks of pipe are stacked on top of each other, in backwards order of installation, and set on wheels to be easily moved to the jobsite. The cart of pipe racks are placed in baskets and picked to the designated floor of installation by crane. The racks are wheeled to the first installation location, raised using a hi-jack, and then attached to the previously installed hangers. Similar to the pipe pre-fabrication, the ductwork is fabricated and sectioned into 20-25’ lengths. Each section is tagged, cleaned and end sealed. Wheels are attached to one section and the other sections are then stacked on top of each other in reverse order of installation. The flow of work, from raw material through fabrication and installation moved in a quick pace, never sitting still and arriving at the jobsite for installation at the last responsible moment. This efficient work flow eliminated waiting time, extra material handling, and excess inventory in both shop and field.
Piping module installation
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Visualization Control Terminal Unit Prefabrication Our Terminal Unit prefabrication process is an example of the use of multiple principles. We started doing prefabrication on our terminal units about 4 years ago because we saw this installation as a repetitive process with opportunities for improvement if we did it on a production line instead of in the field. Initially, we brought the same method of installation from the field into the shop. The use of a production line process increased our productivity by 50% in fabrication. It also provided us with a controlled environment for quality control, process optimization, and standardization. After performing the task in the shop for a couple projects, we gathered team members from two of the most current projects to capture lessons learned on the process. We mapped the entire process from design though installation and found that there were areas in the process that were repetitive, had risk for quality control issues and information that was lacking or incorrect. We used this information to redefine the process and built tools that automatically transfer information between the engineer and the unit manufacturer, pipe kit manufacturer, and controls manufacture; more information on prefabrication is then added by the detailer and foreman. The end result is a single page pull schedule and fabrication matrix and QC labels for the shop to use for scheduling, fabrication, QC, and delivery. The new process has provided us with zero defect returns or modifications due to inaccurate information or damaged components. We have increased our productivity by 60% across the entire process. We are continuing to review and improve the process at
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regular intervals after a batch of projects has been completed. Moving forward, we would like to balance the work flow into a one piece flow process, however we are challenged with the limited project need throughout the year, and the varied time frames needed by each trade to complete their work. Only one field hand was available and used per trade, thus we found that small batches are currently more effective over one piece flow; however if the manpower was balanced thus that each component of the prefabrication were completed in equal time, a large batch would become very efficient.
Value stream map used for setting up a lean terminal unit Duct Fabrication Spooling Sheets The production of duct spooling sheets resulted from applying visualization in the sheet metal fabrication shop. The standard production of shop drawings was to mark up the engineered 2-D drawings by hand, produce hand drawn details, and then fabricate off of the detail drawings. This method proved inefficient in clearly communicating all the
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information to the fabricators.
Constant communication and meetings between the
detailer and fabricator were necessary to work out all the problems. A streamlined system was needed, so changes were made: after coordination with all trades, a 3-D drawing is produced. After approval, spool sheets are produced from the same 3-D program for each section of duct. This creates a roadmap for each section of duct breaking it down into parts for easy assembling instructions. Each spool sheet shows a list of fittings, a 2-D drawing with key dimensions and section numbers, and a 3-D isometric which identify offsets and elevations that a 2-D drawing would be unable to show,
The spool sheets provide a quality control mechanism and eliminate re-
fabrication based on human error. Because the pre-assembled sections are fabricated in the shop, less labor is spent in the field producing a safer environment. In combination with the delivery and installation methods implemented above, Southland has been able to streamline the duct fabrication, terminal unit fabrication, delivery and installation process using lean techniques.
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Sample spool sheet
See for Yourself to Understand the Situation Project Managers are encouraged to go to their job sites and stand in one location for one hour just observing: produce a list of any trades being wasteful with time, production, how it could be done better.
Target Costing Design decisions should be made based on the business case of the client, a combination of facility use and available budget. With Southland’s early involvement during the design phase, it has been easy implementing targetcosting as a standard activity. The
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owners’ budget is broken up into the sub trade amounts to be used as their base target budget. Separately, the sub trades produce an estimate based on assumptions during conceptual design and discussions. This has proved to be the most difficult task: creating a baseline scope on very little information, typically only the general zones of occupancy use are known. A series of regular meetings, these can be as often as once a week to once a month, depending on project need, are held to discuss design options and the impact they have on other trades’ scope. The group is encouraged to optimize the whole to increase value and decrease overall costs. If a cost goes up in one area of the budget, an equal or greater cost must go down in order to stay within the overall target. As design progresses, more concepts and costs become concrete and construction planning can provide opportunities in productivity and inter-trade coordination that results in further savings. Results have shown that the owners have been able to receive a building that is within budget and schedule and sometimes have the opportunity to add value and scope to their base building while maintaining the original targeted budget. Through these exercises it was found that an active and decisive owner is crucial in evaluating decisions, that open-minded team members are necessary to have a truly collaborative team, and that all team members need to keep the same goal in mind: to increase value while reducing costs.
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Budget Project Estimate Original Budget
Cost
Contingency Transfer
Added Scope
Added Scope
6 7 6 5 6 5 5 7 7 6 6 6 7 7 6 6 7 6 6 7 6 6 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 /2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7 / / / 1/ 2/ 3/ 1/ 4/ 2/ 3/ 5/ 4/ 6/ 5/ 6/ 7/ 7/ 8/ 9/ 10/ 11/ 12/ 10 11 12
Time
Chart showing the fluctuating cost estimate to meet the owner’s budget
Pull Systems Deliveries from the fabrication shop to the roughly two dozen projects scattered around the bay area were sometimes incomplete due to poor planning, lack of fabrication time, or some form of miscommunication. The field foremen were already planning with their look ahead scheduling, so we took it a step further and added last planner to our delivery protocols. The method of the one week lookahead schedule was utilized in the shop using a large dry-erase board on the main shop delivery wall. The days were divided into morning, midday, and afternoon deliveries, the contents per timeslot included: material content, foreman, and jobsite. This clearly stated when, who, and where things were being delivered, eliminate confusion of contents and setting clear goals of delivery. This simple lookahead tool enabled the deliveries to be predictable, eliminate additional or
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unplanned deliveries, and most importantly, allowed the field personnel to plan their installation around the targeted receipt of deliveries. Just-in-time deliveries allow the warehouse to ship the material exactly when needed and so to eliminate inventory on the jobsite. We delivered the duct or pipe the very same day it is to be installed.
Relentless Reflection and Continuous Improvement In 2004, a lean construction committee was formed in Northern California with a core group of managers and department supervisors meeting a couple times a year to train employees in the teachings of lean. Soon, employees attending these meetings started introducing buzz words of “5S,” “muda,” “value stream mapping,” and “pull schedules” to all levels of management and departments. In addition to using the language, we started leading through example, gradually implementing the lean methods discussed into our projects when possible. Since 2006, these meetings have increased to a mandatory monthly meeting, but instead of training classes of “what is lean?”, it has transformed into discussion meetings on “why do we do it this way, what can be improved, how do we become more lean, and what works for us?” We started discussing lessons learned on the projects that had implemented lean tools, with that information we reflected on how to improve each lean activity to be more effective by adjusting the tools to fit the division’s needs. The monthly meetings are also used as a forum to update the group on the latest lean seminars and training attended by team members.
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Definitions of the 3 “Levels of Lean” were established to categorize the current construction projects. This provides a way to measure how “lean” our division is. Level 3 is the lowest level of lean project; the only source of lean implementation would be from Southland, there is no influence from the owner or general contractor, so all lean tools are internal, though still providing value to the customer. Minimal lean tools are used: last planner system, pre-fabrication and pre-assembling, mechanical and plumbing 3D CAD and just-in-time delivery. Level 2 projects have a general contractor driving lean to other subcontractors, but the owner may not be on board.
The internal lean methods are used to affect
schedules and construction planning benefiting the entire project team. Minimum lean tools in Level 2 include Level 3 tools plus: 3-D CAD drawings using Navis Works clash detection, and complete fabrication section drawings with spooling sheets. Level 1 is the highest level of lean project: the entire construction team, led by the owner representative, uses lean methodology. All lean tools are used in Level 1, which include Level 2 tools plus: shared tools and equipment with other trades, ongoing team training on 5S, 7 wastes, last planner and constraint analysis meetings with entire team, and pull scheduling. Goals will be set to encourage the goal of becoming 100% Level 1 on all projects. Our division is in the midst of establishing a realistic goal based on current status, industry demands, and field cooperation.
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Lean Metrics (measure of success, what happened?) The most important metrics are of those that are not tangible or measurable with numbers. The monthly meetings act as a catalyst to continue to push the implementation of lean throughout all facts of operation: field, fabrication, fabrication, and management. The implementation of a continuous process flow for the duct fabrication and installation was able to improve the installation productivity by 41% while using 33% less crew size than originally man-loaded. Rework of ductwork, fabricated by the sheet metal shop, has been almost entirely eliminated.
This method also added
immeasurable ‘soft’ benefits: the team was able to trust each other by meeting commitments, creating a safer and more methodical
and
reliable
working
environment, and supplying immediate solutions to problems found earlier in the process.
Field Staff Impact
The new process of terminal unit prefabrication has provided us with zero defect returns or modifications due to inaccurate information or damaged components. We have increased our productivity by 60% across the entire process and continue to review these after a batch of projects has been completed to modify the process and adjust as needed. Commitment to continuous improvement drove Southland to become a “DesignBuild-Maintain” company. The latest addition of maintain to the design-build model, has allowed Southland to learn the design or installation impacts on the operation of a facility.
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Southland has been able to understand what systems work most efficiently, which systems tend to fail, and what components of design are necessary or extraneous. These lessons learned have created immense value to the design and build aspects of Southland. The lean methods have spread to non-lean clients and other subcontractors through working with them in a collaborative spirit on projects. Southland has become an asset to projects by engaging other companies’ project team members in training classes like the introduction of pull schedules, 5S, and value stream mapping. Southland has introduced the last planner to other companies, simply by posting or submitting our one week and three week lookaheads, thus creating more accountability between the team members.
Lessons Learned (what did we learn, obstacles, barriers?) Successful implementation of lean is required to start from top corporate levels then filtering down to the divisions, then to projects. The backing of lean at the higher management levels can only provide the intent and influence on company members, but an action-oriented core group of middle management will be the force for actual implementation of lean on a company wide level. Lean is further driven by contractors and owners that require this on their projects. Ultimately a lean, decisive owner is vital in successfully running a lean project; an owner who provides an environment for all the parties to collaborate and hold each other accountable.
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Setting goals in manageable increments are necessary and reporting back on lessons learned is mandatory. Implementation of lean principles is easier on design build work when the project team is picked early. Early involvement allows Southland to help develop lean systems like last planner, constraint analysis, and target costing for each project and apply these to the design, the construction and maintenance activities. Southland has encountered many of the typical obstacles facing lean implementation. New last planner users see the method as doing more paperwork and do not want to invest the time to learn something new. The learning curve is intimidating but once it is taken, most personnel cannot go back to the traditional way of planning. Another obstacle is the “this is how I’ve always done it” mentality.
The
construction industry consists of a variety of personalities and many feel that methods that have worked for them will always work for them. Employees need to be innovative or willing to learn new techniques to see the benefits of lean. Southland Industries, as a whole, has been using lean methods for ten years and are now becoming close to a company-wide lean enterprise. It has been a slow process to alter people’s mindsets to think lean, but if persistent with our goals, only benefits can emerge. The lean wheels are turning and we are now getting to the downhill part of the lean learning curve.
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C.14 Burt Hill Case Study Background With a focus on sustainable design, technology integration, and energy management, Burt Hill is an international design firm providing award-winning innovation and exceptional service across a broad range of markets. We are a full-service organization ready to assist our clients in all aspects of the building process:
•
Architectural Design
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Programming
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Master Planning
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Interior Design
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Sustainable Design
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MEP Engineering
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Landscape Architecture
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Civil Engineering
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Construction Services
•
Creative Services
Having twelve offices in the United States, Dubai, and India, Burt Hill is among the world’s largest architecture, engineering, interior design, and landscape architecture companies. Our clients benefit from the expertise of over 800 professionals. For each
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project, a multi-disciplinary team is chosen from this talented group to analyze and respond to the client’s unique needs. This ensures that every Burt Hill building is not only attractive, but also effective and appropriate.
While these professionals have
expertise in diverse areas, they share a common goal: designing facilities that will meet our clients’ needs and contribute to their success. Burt Hill has been delivering on that promise for the last seven decades. Since the firm’s establishment in 1936, we have designed a vast range of projects both large and small, valued collectively at more than $50 billion.
With this legacy of technical
expertise and our superior service to clients, Burt Hill has become a leader in the design of facilities for higher education, K-12 education, healthcare, science and technology, corporate / commercial, and residential and destination development markets.
Why did Burt Hill start down the lean path? Pete Moriarty, Burt Hill CEO, met Greg Howell of the Lean Construction Institute in Europe in 1999. On his return, he told John Brock ‘this is something up your alley’ because of John’s experience and role with project management. John began attending LCI events, beginning with the Intro to Lean, and the Lean Congress in 2000. Others, including Tim Schmida, who was the Principal in Charge for Alliance Hospital, the first of a series of pilot projects, and Mark Dietrick, CIO, who has led the development of Building Information Management (BIM), Web Portals, and other technology joined in. Training and on-project consulting was done in the offices, through Glenn Ballard of LCI.
Staff also attended the Introduction to Lean seminars.
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John, Mark, and others became involved in LCI as participants and presenters, sharing the experiences and results of the Burt Hill pilot projects that followed, in LCI forums. Pete was aware of industry problems, of industry reports on waste and productivity performance, and wanted Burt Hill to be at the front edge of trying to improve the industry; to be a leader in process improvement. He set the goal for Burt Hill to be 100% BIM-enabled by 2009 which he believes is vital for the company’s future viability.
Value added to Burt Hill Projects As the training progressed, the firm piloted Lean approaches on various projects with successful results.
The pilot projects were characterized by increased Collaboration
through BIM (teams working in the same model), Web Portal (sharing consistent project information), Programming & Planning Workshops, team meetings facilitated with the Lookahead Schedule, as well as significantly improved schedule and budget performance through the use of Pull Schedule and Target Cost approaches. Success was identified as Value Added to our projects including: •
High Percent Plan Complete (PPC) of at least 70% to 80% range typical after implementation.
•
Client Construction Budgets maintained – through Target Cost approach.
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•
Client Schedules maintained- through pull schedule and look-ahead schedule approach.
•
Greatly improved productivity and ability to focus on more high value aspects of the design project.
•
High collaboration and an informed design team and client throughout the process.
•
Lean approaches yielded positive results – right out of the box, even before they had mastered the techniques., resulting in a low risk experience.
Burt Hill pilots projects included: •
Alliance Hospital – Collaboration Tools & Techniques, Pull Schedule, Last Planner
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UPMC Laboratory – Collaboration Tools & Techniques, Pull Schedule, Last Planner
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WVU Hospitals – North West Pavilion – Collaboration Tools & Techniques, Pull Schedule, Last Planner, Target Cost (Burt Hill retained Boldt Construction as a cost consultant to Burt Hill), Builder, Web Portal
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WVU Hospitals Cancer Center – Collaboration Tools & Techniques, Pull Schedule, Last Planner, Target Cost, Builder Alliance, Web Portal
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Passavant Hospital – Collaboration Tools & Techniques, BIM
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1000 Park – BIM, Last Planner
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This replacement hospital complex included a new three-story 52,000 square foot professional building a new 294,000 square foot hospital and a new 47,000 square foot nursing home.
The Cancer Center Expansion project will renovate 17,000 square feet of the existing Mary Babb Randolph Cancer Center, as well as create a new 70,000 square foot, fourstory addition which will contain two floors of Cancer Center space, two shell floors for future expansion, and provisions for a future conference center.
A facility Master Plan for expansion on outpatient services as well as a comprehensive renovation program for the 472,000square-foot facility. Projects underway at this time include expansion of radiation oncology with an additional linear accelerator, MRI addition, a new cardiac catheterization lab, as well as expansion for upgrades
Since the initial pilots, over 50 BIM projects have been produced or are in production, and the use of our collaboration tools is becoming common on Burt Hill projects. John, Mark, and others became involved in LCI as participants, and presenters, sharing the experiences and results of Burt Hill pilot projects in LCI forums.
What was done? Pete got something started which was taken seriously in the company, with periodic reports to the firm’s Executive Committee and Board of Directors.
Lean efforts were
initially focused on project coordination and control, with implementation of Last Planner on pilot projects.
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In 2007, Burt Hill is taking steps that will further integrate Lean into the organization:
•
We are now at a point in our evolution, where we are creating the tool sets, and training that will help us drive a more complete roll out of new tools and processes.
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Project Desktop (a web-based project portal that will have Lean tools such as the Last Planner system built in) is being developed in coordination with new software upgrades that are planned.
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Firm-wide commitment to Design Management training – at three levels, with a development of a “certification” of Burt Hill project managers. o Basic Training – will include Contracts, Project Planning, Communication, and Accounting interface. o Intermediate – Lean Approaches, New tools, Target Cost, Pull Scheduling, o Advanced – Additional Lean, tools including Set Based Design, Big Room collaboration techniques in the offices, and BIM advancements.
BIM Recent years have seen increasing industry awareness about Building Information Modeling (BIM), a digital design process that changes design from its historical, document-based process to an intelligent, model-driven one.
Building information
models record, organize, and link the knowledge created throughout development of the design so that it is more usable, accessible and transparent. Burt Hill’s involvement in this area represents the next logical step in the firm’s longtime commitment to the effective use of technology in delivering value to our clients through knowledge-based design.
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As a firm, we have taken an aggressive approach to the adoption and exploitation of BIM tools, which we recognize as offering more integrated, intelligent and efficient design and documentation. Senior management has established an ambitious direction for the firm and committed the resources necessary to achieve them – including hiring a full-time BIM-implementation manager to assist project teams as they move to the information modeling process and to coordinate efforts across the firm. Every one of our offices has one or more active BIM projects. Through these pilot efforts, our staff are developing the methods, content, and experience to support our entire organization’s shift to intelligent modeling. The design software industry recognizes our pro-active stance, deep knowledge, and technical ability by seeking us as partners for beta testing, development and critique of their emerging products. The building information model is quite simply a digital representation of the real building. Using the software our designers assemble components like walls, windows, floors, furniture, and so on to construct a realistic model of the final design. More importantly, they also manipulate the associated non-geometric information that is vital to successful projects, such as cost, manufacturer, options, or other parameters. Working this way is the primary benefit of BIM: rather than assembling 2-D symbolic graphics, our designers work in a data-rich three and four dimensional environment. We have found this workflow better leverages the talents of our design teams, and more closely aligns their design efforts with the eventual realization of the project. Of course the adoption of any new technology, method, or tool presents challenges. We have learned important lessons about the distribution of the work effort (generally concentrated earlier in the project) and the staff required (typically a smaller,
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but more knowledgeable team) for a successful BIM project. The adoption of this technology has prompted changes in the way we train employees, assign staff to projects, and manage our work to ensure that we continue to deliver successful designs. These efforts have been particularly important during the early period, and have proven worthwhile as we see our projects built and our clients satisfied. We remain convinced that Building Information Modeling is not only invaluable, but inevitable, and we remain committed to staying at the forefront of its adoption. BIM technology fits perfectly with our firm’s emphasis of delivering value through knowledge-driven design because it reduces the low-value tasks like coordination and drafting in favor of tasks with more knowledge investment. It is these tasks which ultimately offer more satisfaction for our employees, better value to our clients, and more significance for our work in the built environment.
Rough Time-line: •
Late 1980’s-mid 1990’s: Industry leader in using 3D CAD for Visualization and high-end Design Representation.
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Mid-Late 1990’s: Early adopter of “Object Based 3D Design” for integrating 2D documents, schedules and quantities from 3D models.
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Early 2000’s: BIM becomes a serious industry movement; Burt Hill is positioned as a leader. A CAD Innovation Group was formed and initiated BIM pilot projects in several offices. A strategy of learning by doing was adopted, which allowed champions to emerge, and involved every office although not via a central mandate.
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•
Current: Industry leader in transforming entire practice using BIM processes. Burt Hill now has a formal BIM implementation plan with a Board mandate for 100% adoption by 2009. Industry leaders in integrating BIM with analytical and simulation tools being used to enable “Performance Based Design” processes to meet sustainability objectives.
This BIM group has done the best of the three initiatives thus far. Experiments showed that internal benefits were sufficient to warrant moving forward. Better documents were produced. More time was available for design because there was less rework. Also able to say that better design interface was achievable between architecture and engineering, and also able to better predict impacts on building performance and sustainability.
Three levels of improvement from BIM were identified: 1. Improve how we design, draft and document 2. Improve collaboration and enhance our services. 3. Change our business possibilities. How to take this data and bridge the gap with construction and how to get into facilities management?
Early successes have led to having the entire organization behind the BIM initiative.
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BIM used for “Performance Based Design
BIM used for Collaborative Discipline Integration
BIM used for Interactive Project Review
Integrated Practice initiative There is currently much momentum in our industry related to integration of design and construction.
Many studies have been done that quantify the inefficiencies of our
fragmented industry related to lack of information sharing between project participants – most significantly between design and construction disciplines precipitated by the traditional design-bid-build model.
Many owners are becoming aware to these
inefficiencies and are beginning to demand a more efficient approach that integrates design and construction encouraging much higher levels of collaboration and information sharing via alternative forms of agreements such as design-build and alliance contracts. BIM is a tool that enables a much easier and comprehensive information exchange -potentially for the life-cycle of a project -- and is therefore very supportive of the Integrated Practice concept. Many within the AEC industry are aware of this industry changing dynamic and are beginning to explore alternative forms of agreement that can enable higher levels of
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design and construction integration enabled by BIM information sharing. We believe that it is important to be at the head of the curve related to this and have been participating in industry events that are helping to define new agreements that address the concerns of all project stakeholders. In the interim, we are looking for opportunities to push integrated practice on our current BIM projects, placing supplemental data sharing agreements in place so that we can begin to address the challenges and explore the opportunities related to working more collaboratively with construction. A current project in Boston has a LEED Platinum goal. We see we need to bring all tools and partnerships to the table. Now using Revit MEP that integrates IES, analytical software. Burt Hill appears to be way ahead in using analytical software to understand how buildings will perform. Can do early, conceptual design modeling building location, orientation, etc.
Jim Summers, from the Boston office, is managing the BIM implementation effort.
What advice do you have for others starting down the lean path? Begin with Introduction to Lean training. training.
Pilot the techniques with LCI assistance and
Appoint in-house leaders. Measure and report progress to leadership.
Initiatives like Last Planner, Target Cost, etc. will provide productivity gains that are as significant as BIM.
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The BIM initiative has gone very well, so we probably would not change how we did that if we were to be starting over. The Project Management initiative is not at the same level, though it is not clear why. There are probably more cultural challenges with Project Management.
It is frustrating, since we even have data linking lean Project
Management with profitability. May need the same CEO-level mandate. We have a COO mandate for the Basic training. We are seeking a CEO mandate – and Principal support. We are exploring ways to link Project Management tightly with our BIM implementation team to speed up our development. That team consists of “techies” who are green on Project Management, but have demonstrated an ability to integrate new tools into our practice. We have developed 4 practice groups to better align technological initiatives to practice: 1.
Content expertise - BIM
2.
Document standards-transition period
3.
Design management group
4.
QC-feedback loop
The dilemma - for Architects and Engineers, PM is like a medicine, that the patient does not want to swallow --- it requires management skills that are not taught in Design and Engineering schools. These skills are not the motivation for individuals seek careers in the design professions.
Mid level Project Managers cannot be effective or successful in
an environment that does not support even basic management. Advancement of the
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profession in Design Management will require both a better offering from the PM perspective, and more acceptance by firm leaders.
It feels like we are at a crossroads.
Independent Program Management and Design Management disciplines and consultants have been emerging to manage what the process of the design professions.
We need to
seek out the right techniques, people and leadership to innovate our design practice. To work through these issues, we are: •
Seeking individuals who embrace Design Management and Lean principles as a discipline.
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Building new tools using current technology
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Building a network of champions who will help advance development and provide instruction and coaching in our studios.
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Strengthening our training programs.
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Aligning employee evaluation and compensation systems with our Lean goals.
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C.15 Spancrete Case Study41 Background Spancrete is a manufacturer of precast concrete products based in Waukesha, Wisconsin, with five precast fabrication plants, two concrete pipe plants, and one machinery plant in various locations in Wisconsin and Illinois. Spancrete employees more than 500 people and produces both custom and standard products, and thus its different production facilities can be characterized as job shops or as batch flow shops (more on this in the next section). In early 2003, in response to declining profit margins, Spancrete began implementing SLAM, Spancrete’s Lean Approach to Manufacturing . Among the many challenges of taking a company lean, Spancrete struggled with how to apply the models and lessons from Toyota to their own situation. How can rules and tools developed for assembly lines and worker-paced flow lines be applied to Spancrete’s production-to-order of standard and custom products? They decided to rely primarily on value stream mapping, which has proven effective not only in achieving substantial improvements in the way work is done, but even more important, is causing a cultural revolution, transforming Spancrete into a learning organization (Senge, 1990).
Lean Initiatives The guiding philosophy of Spancrete’s lean implementation is to provide top down vision and support, but to generate changes and improvements bottom up. Spancrete divided the entire company into manageable groups; e.g., Wet Cast Waukesha, Pipe Specialty Green
41
This case study is drawn in part from Brink & Ballard, 2005.
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Bay. They developed an implementation schedule, choosing to start with direct production in order to force upstream support groups to keep pace, trained everyone in the first group42, then selected a core team to be the instrument for improving processes within that group, consisting of everyone from executive level to the plant floor, picking laborers who seemed to ‘get it’ during training. Core team formation takes 1-2 days, including training in value stream mapping (also done internally), after which the team members collect data for two weeks , then meet to map the current state process in a long one day session. Soon thereafter, if no additional data collection is needed, the core team identifies areas of opportunity for improvement and develops a roughcut future state map of the process, plus an implementation plan. They meet again two weeks into the implementation plan to take stock and replan as needed. Every quarter, each core team revisits its processes and uses value stream mapping to make further improvements.
Core Team with process map on wall
42
Training consists of a 3-4 hour class on basics of lean, 3 hours presentation and 1 hour simulation, taught by Spancrete personnel.
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Lean Projects The first core team project was done in Waukesha Wet Cast, beginning in late February, 2003. Data collection revealed that laborers spent on average 3 hours a day looking for tools, and team members proposed to apply 5S, including the use of tool shadow boards on the shop walls so tools would be readily available and more often returned to their proper location after use. The manager of Wet Cast resisted a 5S solution for fear that if tools were readily available, workers would steal them. After much argument and education, the manager had to be released. He simply was not able to embrace the new philosophy. His release opened the floodgates for worker enthusiasm and ideas for improvement. In short order, the core team cleaned up the work area, set up tool shadow boards, and organized cabinets for supplies with a person responsible for keeping them stocked. A helper who had only recently come to work for Spancrete made a naïve suggestion: ‘Instead of stringing extension cords all over the floor, which takes time and also poses a tripping hazard, why not drop down cords from the ceiling?’ That resulted in reel stations for electrical power cords routed over ceilings and walls, soon followed by compressed air, oxygen and acetylene, the gases used in cutting torches.
Job shop versus flow shop at Waukesha Wet Cast Waukesha Wet Cast has 10 form beds serviced by a concrete batch plant, with concrete delivered to the form beds by two small tractors with 2.5 cubic yard buckets. Beds, batcher and tractors constitute the machines in the production system. Some form beds
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are made of wood and some from steel. They are different maximum sizes. Some forms are flat and some are vertical (for cylindrical columns). Some are made for rectangular columns, some for beams, some for decks. The type and size of products produced in a single day vary widely, making it uneconomical to dedicate labor resources to production cells/flow shops. Even so, Spancrete has demonstrated the applicability and benefits of lean techniques to job shops. Techniques successfully applied include value stream mapping, pull mechanisms applied to processing, reductions in batch sizes, 5S, raw material inventory control with kanbans, point of use storage (e.g., supply cabinets, drop down cords), reduction in changeover time, and total productive maintenance (TPM).
Tool Shadow Board in Waukesha Wet Cast after 5S
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Waukesha Wet Cast Results 5S implementation was just the start of a stream of innovations in Waukesha Wet Cast. As of July, 2004, their cost per cubic foot of product was down 27% from the February, 2003 baseline, labor productivity was up 67%. SLAM was off to a good start.
Impact on the company as a whole Despite its partial implementation and the inevitable difficulties such as recalcitrant managers and fixed habits, SLAM has already had an enormous impact on the entire company. Consider the improvements in production from 2003 to 2004: •
Throughput increased from 565,898 cu. ft. to 1,134,966 cu. ft.
•
Direct labor hours per unit of output decreased from .174 to .162
•
Raw material inventory turns increased from 17.14 to 25.15
On the ‘soft’ side of the ledger, it is widely agreed that Spancrete is a better place to work. The change in culture is something a visitor can feel. Everyone seems to have a story to tell about how something was improved, from choosing to use two tractors to deliver concrete to form beds as a means of reducing cycle time and labor delays, to reducing material inventories in the warehouse, to revealing to management that for lack of an ‘expensive’ repair43, the yard crane had been unable to turn left for the last five years!
43
Analysis revealed that a simple, inexpensive modification to a hydraulic cable fixed a problem that workers had lived with and worked around for years.
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Lean Principles Applied Many lean principles and tools have been applied at Spancrete: •
value stream mapping
•
pull mechanisms applied to processing
•
reductions in batch sizes
•
5S
•
raw material inventory control with kanbans
•
point of use storage (e.g., supply cabinets, drop down cords)
•
reduction in changeover time
•
total productive maintenance
•
visual workplace
•
standardizing work
Lean Metrics Lean metrics include: •
labor productivity
•
inventory turns
•
throughput rates
•
employee satisfaction
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Lessons Learned Bearing in mind the warning against unthinking imitation, nonetheless others can learn from Spancrete’s example. Other precast concrete fabricators come first to mind, especially those that provide engineered-to-order products and routinely have a broad mix of products in production. Indeed, job shops producing all types of products can beneficially apply the Spancrete approach, whether or not they serve the construction industry. Beyond that come projects as a type of production system designing and making a single, unique product. Granting that uniqueness, even so projects repeat processes, even when the products of those processes differ one from another; e.g., processes for pulling wire, placing concrete, reviewing submittals, evaluating change orders, planning production, selecting specialty contractors, and so on. Mapping those processes can reveal opportunities for eliminating waste, and better yet, can be a social instrument for engaging project members at every level in the improvement and learning process.
Keys to successful implementation include: •
a leader of the lean implementation effort solely dedicated to that task
•
the strategy of providing top down vision and support, but making changes from bottom up. This is an effective way of empowering employees, but senior managers, including the facilitator of the implementation effort, must be able to put their egos aside and support changes even when they think they have a better idea.
•
Value stream mapping, which is an effective tool for bottom-up identification of waste and opportunities for improvement.
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•
Teams as the organizational unit of change, drawn from all hierarchical levels and various functional departments. This promotes communication and learning across both horizontal and vertical levels within a company.
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D. Statistical Analysis of the Correlation between PPC and Productivity This appendix D reports the process and findings of a statistical analysis of the correlation between PPC and productivity. 134 sets of weekly production data from a pipe installation project were collected to conduct the test.
D1.0 Overview of the Project The data source project was a major expansion for the BP Refinery in Whiting, Indiana— the ULSD (Ultra Low Sulfur Diesel) Project. With the addition of a new Distillate Hydrotreater (DHT), the refinery can produce additional supplies of ultra low sulfur diesel fuel that meets or exceeds all on-road diesel regulations. The new unit has the capacity to produce approximately 36,000 barrels per day of the ultra low sulfur diesel product. Construction started in March 2005 and completed in May 2006. According to the project managers for BMW Constructors, the piping contractor on ULSD, this is the first time the crews used the Last Planner System. Ballard (2000) developed the Last Planner® System (LPS) to help increase the predictability of work flow. LPS stabilizes the work environment through team conformance to rules; e.g., to
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only assign tasks from which all constraints have been removed, thus shielding direct production of each component function from upstream variation. Once that shield is installed, it becomes possible to move upstream in front of the shield to reduce inflow variation, and to move downstream behind the shield to improve performance. The concept, function and application of LPS can be found in (Ballard 2000).
D2.0 Description of the Working Area and Crews Production data were collected from two sources. The first source was productivity data recorded by the contractor. A spreadsheet with ten Working Areas’ production data was provided to the researchers. It included each working area’s start and end working period, PPC (Percent Plan Completed), the number of weekly planned tasks, the number of weekly completed as planned tasks, actual working hours, and earned working hours. The second resource is from the online database of the management consultant, Strategic Project Solutions (http://www.strategicprojectsolutions.com). This database has detailed recording of every task ID, description of work content, predecessor and successor, members of each team, duration, actual starting time, actual finish time, planned starting time, planned finish time, and current status (planned, executed, or completed). PPC is used in the Last Planner® System (LPS) to measure the reliability of work flow. PPC is calculated by dividing the number of tasks actually completed according to the plan by the number of tasks that were planned to be completed. PPC measures the release of work from one crew to the next as predicted by a work plan. Partial completion does not count because incomplete work does not release follow-on work. Similarly,
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work that was completed but was not planned to be completed does not count because the specialists in the next step might not have been able to predict its release and plan accordingly for it. The weekly production data for ten working areas (Area A-H, J &K) were collected. The work consisted of process and utility piping installation. The pipe size ranged from 1/2" to 30" diameter and from standard weight to schedule 80. The work content was primarily carbon steel construction with stainless steel and chrome in some areas. For the most part, the work was similar in level of difficulty with the exceptions of area J, H and K. Area J is mostly large bore piping (18" to 30" diameter piping with a high percentage of chrome alloy) to overhead fin fan coolers. Areas H and K are pipe rack areas with a lot of straight run piping. (personal communication from Rick Tuttle, BMW Constructors, Inc, December 1, 2006)
Table D.1: Summary of the amount of production data collected from a pipe installation project No. of weeks
No.
Working Area
Period
(1)
(2)
Start (3)
End (4)
(5)
1
A
6-Nov-05
5-Feb-06
14
2
B
6-Nov-05
26-Mar-06
18
3
C
25-Dec-05
2-Apr-06
13
4
D
29-Jan-06
19-Mar-06
8
5
E
29-Jan-06
16-Apr-06
11
360
6
F
25-Dec-05
16-Apr-06
16
7
G
15-Jan-06
9-Apr-06
12
8
H
15-Jan-06
12-Mar-06
9
9
J
27-Nov-05
9-Apr-06
20
10
K
2-Oct-05
8-Jan-06
13
134 weeks’ production data (see Table D.1) were collected. Productivity44 was calculated by dividing weekly earned hours by actual hours. All crews were made up of union craft workers. Crew sizes fluctuated from approximately 8 to 12 workers depending on the amount of available work in each area. The contractor developed a standard work process for the piping work. All working areas utilized the standard process. Crowding was not an issue for any of the ten working areas, all of which were outdoors. As far as defect rate, welders were tested before being placed in production and the contractor had a negligible weld reject rate and less then 3% rework for the entire project. There was negligible overtime work.
D3.0 Limitations of the Data The limitations of the data collected are:
44
Strictly speaking, performance factor was calculated, not productivity, but the ratio of estimated to actual productivity (performance factor) is often used as proxy for productivity in the construction industry.
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The production data is based on working areas, not crews fixed in composition. Some changes in productivity may have resulted from changes in the specific workers assigned to a work area each week. 1. Data was available only for a single trade. Consequently it is not possible to evaluate the impact of improved plan reliability (as measured by PPC) on the productivity of following trades. 2. This is the first time the crews used the Last Planner® system. There might be a certain level of inaccuracy in terms of understanding and application of LPS. A certain level of inaccurate data recording may also exist. That might also distort the correlations among the variables found in the study. 3. Several large industrial piping projects were underway in the area at the time of the ULSD Project, but BMW Constructors did not need to work overtime in order to complete their project work successfully, and chose not to pay overtime as an incentive to attract and retain skilled workers. This may have reduced the overall skill level of their workforce, which would make their productivity improvement even more impressive. 4. The estimates for work load and capacity were based on the number of tasks assigned and completed, as opposed to quantities of work product to be installed. There could be some imprecision in those estimates from differences in the labor content of tasks.
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D4.0 Data Analysis and Findings The production data of Working Area A-G were studied together because according to the project managers, those seven working areas were comparable; i.e., those working areas have 1) similar type of work, and 2) similar composition and skills of workers. After discussing with the project managers, two data points with zero productivity recorded were removed. The statistical analysis was conducted on 90 sets (work weeks) of productivity data of those seven working areas. The findings are discussed below.
D4.1 Testing an Hypothesis LPS can help improve overall productivity when there are hand-offs between crews of different trades. If the construction process is regarded as chains of production units or specialists, the higher the PPC, the more reliable the output from upstream units and the better downstream players can match their resources to the expected workload and avoid waste of resources. By better managing the release of work between system participants, project managers can increase the predictability of work load throughout the production system. With predictable work load, project managers can better match capacity to load and thus improve productivity. The Last Planner approach can also help a crew improve its own productivity. For example, using the screening, sizing, and sequencing tools in LPS, the crew doing Last Planner should have higher productivity because of the impact of planning and preparation on performance; i.e., reduction in delays, rework, and generally in non-valueadded time. Since the level of PPC can be taken as an indicator of the extent to which
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Last Planner is being effectively implemented, higher PPC should result in better productivity performance. The theoretical analysis of the relationship between PPC and productivity is clear. But there was previously no published analysis of the correlation between PPC and productivity. Therefore, one goal of this case study is to collect production data from a real project and use the data to test if there is a correlation existing between PPC and productivity. The hypothesis for this case study is:
Hypothesis: A correlation exists between PPC and Labor Productivity Labor productivity in the Working Areas was measured by:
Productivity =
EarnedHour ActualHour
Three Main Groups (Working Area A-G, H&K, and J) The ten working areas were divided into three groups: Group A: Working Area A-G Group B: Working Area H&K Group C: Working Area J
Within each group, the type of work, difficulty of work, skill level of crew, and crowding of work area were similar. Group A has 90 sets of PPC and Productivity data, Group B has 22, and Group C has 20 (see Table D.2).
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Table D.2: Correlation analysis of PPC and Productivity for the three main Groups Group
Working
Total data
Type of work
Correlation Coefficient
area
points
A
A-G
90
General
0.246*
B
H,K
22
Straight run piping
C
J
20
Large bore
0.292 -0.156
** Correlation significant at 0.01 level.
D4.1.1 Group A (Working Area A-G, 90 data points) The scatter plot between PPC and productivity for Group A is shown in Figure D.1. The X axis is the weekly PPC and Y axis is the weekly productivity. Visually, Figure D.1 shows a slight trend that while PPC increases, productivity also increases.
Figure D.1: Scatter Plot between Productivity and PPC
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Table D.3: Correlation analysis for Group A (Work Areas A-G) Correlations PROD PROD
PPC
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
1 . 90 .246* .019 90
PPC .246* .019 90 1 . 90
*. Correlation is significant at the 0.05 level (2-tailed).
The correlation coefficient analysis of Group A is listed in Table 3. The correlation coefficient is 0.246 at 0.05 significance level. Interpretation of significance level, drawn from Bryman and Cramer (2005), is provided below.
“The test of statistical significance tells us whether a correlation could have arisen by chance (i.e. sample error) or whether it is likely to exist in the population from which the sample was selected. It tells us how likely it is that we might conclude from sample data that there is a relationship between two variables when there is no relationship between them in the population. Thus, if correlation is significant at 0.01 level, there is only one chance in 100 that we could have selected a sample that shows a relationship when none exists in the population. We would almost certainly conclude that the relationship is statistically significant. However, if the significant level is 0.1, there are ten chances in 100 that we have selected a sample which show a relationship when none exists in the population. We would probably decide that the
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risk of concluding that there is a relationship in the population is too great and conclude that the relationship is non-significant.”
Bryman and Cramer (2005) also discuss how to interpret the correlation coefficient values as below:
“What is a large correlation? Cohen and Holliday (1982) suggest the following: 0.19 and below is very low; 0.20 to 0.39 is low; 0.40 to 0.69 is modest; 0.70 to 0.89 is high; and 0.90 to 1 is very high. However, these are rules of thumb and should not be regarded as definitive indications, since there are hardly any guidelines for interpretation over which there is substantial consensus.”
“A useful aid to the interpretation of a correlation coefficient i) …the coefficient of determination ( r 2 ). This is simply the square of the correlation coefficient r multiplied by 100. It provides us with an indication of how far variation in one variable is accounted for by the other. Thus, if r=-0.6, then r 2 =36 per cent. This means that 36 per cent of the variance in one variable is due to the other. When r=0.3, then r 2 will be 9 per cent. Thus, although an r of –0.6 is twice as large as one of –0.3, it cannot indicate that the former is twice as strong as the latter, because four times more variance is being accounted for by an r of –0.6 than one of –0.3).
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Accordingly, Table D.3 shows that there is a positive correlation of 0.246 existing between PPC and productivity for Group A. This indicates that Productivity and PPC are positively correlated.
D4.1.2 Group B (Working Area H&K, 22 data points) The scatter plot for PPC and productivity of Group B is shown in Figure D.2. We can see a positive correlation between PPC and productivity in Figure D.2. The correlation coefficient analysis between PPC and productivity for Group B is listed in Table D.4. The correlation coefficient is 0.292. 7
6
5
4
3
HKPROD
2
1 0 -.2
0.0
.2
.4
.6
.8
1.0
1.2
HKPPC
Figure D.2: Scatter plot of PPC and Productivity for Group B (Work Areas H&K)
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Table D.4: Correlation analysis for Group B (Work Areas H&K) Correlations VAR00030
VAR00033
VAR00030 1 . 22 .292 .187 22
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
VAR00033 .292 .187 22 1 . 22
D4.1.3 Group C (Working Area J, 20 data points) The scatter plot of PPC and productivity of Group C is in Figure D.3. There is no correlation between PPC and productivity observed in Figure D.3. The correlation coefficient analysis between PPC and productivity for Group C is listed in Table D.5. The correlation coefficient is –0.156. 2.5
2.0
1.5
1.0
JPROD
.5
0.0 .5
.6
.7
.8
.9
1.0
1.1
JPPC
Figure D.3: Scatter plot of PPC and Productivity for Group C (Work Area J)
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Table D.5: Correlation analysis of PPC and Productivity for Group C (Work Area J) Correlations JPPC JPPC
JPROD
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
1 . 20 -.156 .510 20
JPROD -.156 .510 20 1 . 20
According to Table D.2, the correlation coefficient between PPC and Labor Productivity is 0.246 significant at 0.05 level for Working Area A-G. Therefore, the result of hypothesis testing is that a statistically significant positive correlation exists between PPC and Labor Productivity.
D4.2 The Regression Equation of Productivity and PPC A statistical analysis of the correlation coefficient of each pair of variables was conducted and the result is shown in Table D.10. The definition of each variable is also listed in Appendix B. It was found among all the production variables, only PPC is significantly correlated with productivity. A linear regression was also carried out between Productivity and PPC. We obtained the equation:
Productivity = 0.693+0.818*PPC
Eq. 1
This means that every rise of one unit of PPC predicts a rise on productivity of 0.818 unit. The analysis of variance shows that the regression result is significantly different from zero (F=5.681, confidence value = 0.019 (significant). Figure D.1 shows the linear regression line of Productivity and PPC.
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D4.3 Other Findings D4.3.1 The relationship between Work Load or Output Variation and Productivity If the flexibility of capacity is given, the variation of work load or output does not necessarily impact labor productivity.
The variation of load on each Working Area = SD(number of weekly planned tasks)/Average number of weekly planned tasks
Eq.2
(Where SD is Standard Deviation of the sample data.)
The variation of construction output from each Working Area = SD(number of weekly completed tasks)/Average number of weekly completed tasks
Eq.3
Table D.6 Variation of load, output and productivity Working
Average SD of
Ave
SD(Load)/ SD of
Area
prod
Load
Load
Ave(Load) Output Output Ave(Output)
A
1.13
19.32
47.08
0.41
24.75
50.08
0.49
B
1.43
52.28
67.24
0.78
66.54
96.41
0.69
C
1.17
51.73
116.62 0.44
49.20
118.23 0.42
D
1.66
55.39
68.75
0.81
52.73
54.50
0.97
E
1.78
41.10
86.00
0.48
51.84
99.00
0.52
F
1.18
103.50 157.19 0.66
123.01 175.88 0.70
G
1.13
60.90
72.44
94.92
0.64
371
Ave of SD(Output)/
102.83 0.70
Correlation
--
--
0.288
--
--
0.341
Coefficient with Ave Prod
The average weekly productivity of each Work Area is also calculated. The results are summarized in Table D.6, which shows that there is no significant correlation between variation of load and average productivity. Also, there is no significant correlation between variation of output and average productivity. The correlation coefficient tables and scatter plots are in Tables D.11 & D.12 and in Figures D.10 & D.11.
D4.3.2 PPC and Productivity Correlation as Work Load Changes Of the three main groups, Group A shows a significant positive correlation between PPC and productivity. The data in Group A was analyzed in greater detail to find out how PPC and productivity are related as the work load changes.
First, work load was defined as Tkplachr:
Tkplachr = number of Weekly tasks planned/ Weekly Actual hours
Eq. 4
Tkplachr was used as an indicator of overloading or underloading. For the following analysis, first all the data sets were divided into clusters according to the value of
372
Tkplachr. Second, the correlation coefficient between productivity and PPC was tested within each cluster. The results are shown below.
Table D.7: Correlation analysis of PPC and productivity in the clusters within Group A No. Total
Cluster
# of data
Cluster
Range of the
Correlation
data
points in
Centers
cluster (# of
Coefficient
points
Cluster
tasks planned/actual hours)
1
90
Group A-1
84
0.22
[0.01,0.77]
0.258*
Group A-2
6
1.41
[0.91,2.51]
-0.401
Group A-1-1
71
0.17
[0.01,0.29]
0.254*
Group A-1-2
13
0.48
[0.36,0.77]
0.255
Group A-1-1-1
39
0.11
[0.01,0.20]
0.202
6
Group A-1-1-2
32
0.23
[0.20,0.29]
0.334
7
Group A-1-1-
45
0.30
[0.20,0.77]
0.316*
2 3
84
4 5
71
2+A-1-2 *Correlation significant at 0.05 level.
SPSS statistical software was used in clustering, which involved the following three steps:
373
Step 1: Find the most widely spaced initial cluster centers. In this case, there exist Cluster 1 with a center of 0.01 and Cluster 2 with a center of 2.51.
Step 2: Assign each data point to its closest cluster center and update the cluster center. For example, the first set of data has 0.05 tasks planned per actual hour. Its closest cluster center is 0.01. So it belongs to Cluster 1. The updated cluster center is 0.03 ((0.01+0.05)/2). This process was repeated until all data sets had been assigned and the cluster centers updated.
Step 3: Repeat Step 2 until there is no more change in cluster centers.
The results are summarized in Table D.7. It is found that the correlation between productivity and PPC increases when the work load rate lies in a moderate range.
The clustering processes are explained below:
D4.3.2.1 Cluster A-1 and A-2 As result, Group A was divided into Cluster A-1 and Cluster A-2 (see Table D.7). Cluster A-1 has 84 data points, average is 0.22 tasks planned/actual hour, and the range is [0.01, 0.77]. Cluster A-2 has 6 data points, average is 1.41 tasks planned/actual hour, and the range is [0.91, 2.51] (see Figure D.4 and also Table D.13 and Figure D.12).
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0.01
0.77 0.91
2.51 Range of the cluster (# of tasks planned/actual hours)
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6
84 (0.258*)
6 (-0.401)
Figure D.4: Correlation analysis of PPC and productivity in clusters A-1 and A-2
D4.3.2.2 Cluster A-1-1 and A-1-2 Since the productivity and PPC correlation in Cluster A is significant, we continue to divide Group A-1 into two clusters: Cluster A-1-1 and A-1-2. Cluster A-1-1 has 71 data points, average is 0.17 tasks planned/actual hour, and the range is [0.01,0.29]. Cluster A1-2 has 13 data points, average is 0.48 tasks planned/actual hour, and the range is [0.36, 0.77] (see Figure D.5, and also Table D.14 and Figure D.13).
0.01
0.77 0.91
2.51
0.29 0.36
Range of the cluster (# of tasks planned/actual hours)
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6
84 (0.258*)
71 (0.254*)
6 (-0.401)
13 (0.255)
Figure D.5: Correlation analysis of PPC and productivity in clusters A-1-1 and A-1-2
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D4.3.2.3 Cluster A-1-1-1 and A-1-1-2 We continue to divide Cluster A-1-1 into two clusters: Cluster A-1-1-1 and A-1-1-2. Cluster A-1-1-1 has 39 data point, average is 0.11 tasks planned/actual hour, and the range is [0.01, 0.20]. Cluster A-1-2 has 32 data points, average is 0.23 tasks planned/actual hour, and the range of tasks is [0.20, 0.29] (see Table D.15 and Figures D.13 & D.14). 0.01
0.77 0.91
2.51
0.29 0.36
Range of the cluster (# of tasks planned/actual hours)
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6
84 (0.258*)
71 (0.254*)
39 (0.202)
6 (-0.401)
13 (0.255)
32 (0.334)
Figure D.6: Correlation analysis of PPC and productivity in clusters A-1-1-1 and A-1-12
D4.3.2.4 Combine Cluster A-1-1-2 and A-1-2 We combine Cluster A-1-1-2 and A-1-2 to see how the correlation between Productivity and PPC changes when the capacity utilization is in a moderate range, not underloading
376
or overloading. Here we have 45 data points, the average is 0.30 tasks planned/actual hour, and the range is [0.20, 0.77] (see Table D.16 and Figure D.15).
0.01
0.77 0.91
2.51
0.29 0.36
Range of the cluster (# of tasks planned/actual hours)
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6
84 (0.258*)
71 (0.254*)
6 (-0.401)
13 (0.255)
45 (0.316*)
Figure D.7: Correlation analysis of PPC and productivity in the clusters within Group A
Table D.17 and Figure D.15 shows that the correlation coefficient between Productivity and PPC increases to 0.316* in a moderate capacity utilization range. On the other hand, the Productivity and PPC correlation is not as strong when there is overloading or underloading.
377
D4.3.3 PPC and Work Load Rate The correlation coefficient between PPC and work load (Weekly Tasks Planned/Actual Hours) is –0.313 at 0.01 significant level. The correlation coefficient between PPC and another measure of work load, Weekly Tasks Planned per Worker per Week, is –0.282 at 0.01 significant level (see Tables D.8 and D.9).
Table D.8: Correlation between PPC and work load (Weekly Tasks Planned/Actual Hours) Correlations PPC PPC
TKPLACHR
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
1 . 90 -.313** .003 90
TKPLACHR -.313** .003 90 1 . 90
**. Correlation is significant at the 0.01 level (2-tailed).
Table D.9: Correlation between PPC and work load (Weekly Tasks Planned per Worker per Week) Correlations PPC PPC
TKWORKW
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
1 . 90 -.282** .007 90
TKWORKW -.282** .007 90 1 . 90
**. Correlation is significant at the 0.01 level (2-tailed).
Figure D.8 is the scatter plot of PPC and work load (Weekly Tasks Planned/Actual Hours). It shows when work load increases, PPC decreases. This trend is not strong when
378
Weekly Tasks Planned/Actual Hours is lower. But it gets stronger as work load gets higher than a certain level. The graph shows that when Weekly Tasks Planned/Actual Hours increases beyond 0.3, PPC decreases quickly.
Figure D.8: Scatter plot of PPC and work load (Weekly Tasks Planned/Actual Hours)
Weekly Tasks Completed
Actual Hours
-0.074 -0.130 -0.313** Weekly Tasks Planned/Actual Hours
PPC
0.246*
Productivity 0.317** -0.093
Weekly Tasks Planned
Earned Hours
Figure D.9: Path model for labor productivity
379
Figure D.9 shows the Path model of labor productivity performance. It shows that PPC is positively correlated with productivity. Since PPC is a measure of plan reliability, when we improve PPC, productivity increases. Therefore, in order to improve productivity, project managers should devote management effort to improving PPC.
D4.3.4 Statistical Analysis Tables and Figures Table D.10: Correlation analysis of 17 production variables
PROD
PROD
PPC
TASKPLAN
TOTALCOM
COMNOPL
COMPLAN
PPC
TASKPL TOTALC COMNO COMPL AN
OM
PL
AN
Correlation
1
.246*
-.093
-.074
-.064
-.051
Sig.
.*
.019*
.384*
.486*
.551*
.630*
Correlation
.246*
1
.136
.297**
-.021
.369**
Sig.
.019*
.*
.203*
.005*
.843*
.000*
Correlation
-.093
.136
1
.923**
.495**
.951**
Sig.
.384*
.203*
.*
.000*
.000*
.000*
Correlation
-.074
.297**
.923**
1
.679**
.948**
Sig.
.486*
.297*
.000*
.*
.000*
.000*
Correlation
-.064
-.021
.495**
.679**
1
.444**
Sig.
.551*
.843*
.000*
.000*
.*
.000*
Correlation
-.051
.369**
.951**
.948**
.444**
1
Sig.
.630*
.000*
.000*
.000*
.000*
.*
380
CNOPLTPL
CNOPLTCO
CPLANCOM
ACTUHR
EARNHR
TKPLACHR
TKPLAERH
TKCOMACH
TKCOMERH
NWORKER
TKWORKW
Correlation
-.011
-.057
-.268**
-.043
.487**
-.249**
Sig.
.921*
.591*
.011*
.687*
.000*
.018*
Correlation
-.122
-.316**
-.196
-.049
.570**
-.280**
Sig.
.253*
.002*
.064*
.649*
.000*
.008*
Correlation
.146
.301**
.202
.022
-.543**
.281**
Sig.
.170*
.004*
.056*
.834*
.000*
.007*
Correlation
-.130
.433**
.501**
.580**
.238*
.596**
Sig.
.220*
.000*
.000*
.000*
.024*
.000*
Correlation
.317**
.450**
.413**
.477**
.195
.507**
Sig.
.002*
.000*
.000*
.000*
.065*
.000*
Correlation
-.043
-.313**
.338**
.194
.169
.181
Sig.
.686*
.003*
.001*
.067*
.111*
.087*
Correlation
-.154
-.113
.115
.088
.127
.060
Sig.
.149*
.291*
.282*
.410*
.235*
.574*
Correlation
-.037
-.203
.347**
.295**
.323**
.239*
Sig.
.729*
.055*
.001*
.005*
.002*
.023*
Correlation
-.140
-.055
.093
.100
.153
.062
Sig.
.192*
.609*
.387*
.350*
.152*
.565*
Correlation
-.131
.433**
.499**
.577**
.233*
.593**
Sig.
.219*
.000*
.000*
.000*
.027*
.000*
Correlation
-.042
-.282**
.291**
.160
.145
.147
Sig.
.696*
.007*
.005*
.132*
.173*
.166*
381
Table D.10: Correlation Coefficient Analysis of 17 Production Variables (Continued) CNOPLT CNOPLT CPLANC ACTUH EARNH TKPLA
PROD
PPC
PL
CO
OM
R
R
CHR
Correlation
-.011
-.122
.146
-.130
.317**
-.043
Sig.
.921*
.253*
.170*
.220*
.002*
.686*
Correlation
-.057
-.316**
.301**
.433**
.450**
-.313**
Sig.
.591*
.002*
.004*
.000*
.000*
.003*
-.268*
-.196
.202
.501**
.413**
.338**
.011*
.064*
.056*
.000*
.000*
.001*
-.043
-.049
.022
.580**
.477**
.194
.687*
.649*
.834*
.000*
.000*
.067*
.487**
.570**
-.543**
.238**
.195
.169
.000*
.000*
.000*
.024*
.065*
.111*
-.249*
-.280**
.281**
.596**
.507**
.181
.018*
.008*
.007*
.000*
.000*
.087*
1
.793**
-.773**
-.142
-.115
-.133
.*
.000*
.000*
.183*
.278*
.212*
.793**
1
-.962**
-.199
-.204
.031
.000*
.*
.000*
.060*
.053*
.769*
-.962**
1
.151
.192
-.018
TASKPLAN Correlation Sig.
TOTALCOM Correlation Sig.
COMNOPL Correlation Sig.
COMPLAN Correlation Sig.
CNOPLTPL Correlation Sig.
CNOPLTCO Correlation Sig.
CPLANCOM Correlation -.773**
ACTUHR
Sig.
.000*
.000*
.*
.156*
.070*
.869*
Correlation
-.142
-.199
.151
1
.809**
-.348**
382
EARNHR
Sig.
.183*
.060*
.156*
.*
.000*
.001*
Correlation
-.115
-.204
.192
.809**
1
-.295**
Sig.
.278*
.053*
.070*
.000*
.*
.005*
-.133
.031
-.018
-.348**
-.295**
1
.212*
.769*
.869*
.001*
.005*
.*
-.032
.050
-.045
-.204
-.238*
.464**
.765*
.638*
.672*
.055*
.025*
.000*
.034
.147
-.139
-.323**
-.268*
.950**
.751*
.168*
.193*
.002*
.011*
.000*
.015
.076
-.074
-.167
-.202
.381**
.892*
.482*
.490*
.118*
.058*
.000*
-.146
-.201
.151
.999**
.808**
-.352**
.171*
.057*
.155*
.000*
.000*
.001*
-.115
.027
-.015
-.320**
-.275**
.977**
.281*
.798*
.885*
.002*
.009*
.000*
TKPLACHR Correlation Sig.
TKPLAERH Correlation Sig.
TKCOMACH Correlation Sig.
TKCOMERH Correlation Sig.
NWORKER Correlation Sig.
TKWORKW Correlation Sig.
*Correlation is significant at the 0.05 level (2-tailed). **Correlation is significant at the 0.01 level (2-tailed).
383
Table D.10: Correlation Coefficient Analysis of 17 Production Variables (Continued) TKPLAE TKCOM TKCOM NWORK TKWOR
PROD
PPC
TASKPLAN
TOTALCOM
COMNOPL
COMPLAN
CNOPLTPL
CNOPLTCO
CPLANCOM
ACTUHR
RH
ACH
ERH
ER
KW
Correlation
-.154
-.037
-.140
-.131
-.042
Sig.
.149*
.729*
.192*
.219*
.696*
Correlation
-.113
-.203
-.055
.433**
-.282**
Sig.
.291*
.055*
.609*
.000*
.007*
Correlation
.115
.347**
.093
.499**
.291**
Sig.
.282*
.001*
.387*
.000*
.005*
Correlation
.088
.295**
.100
.577**
.160
Sig.
.410*
.005*
.350*
.000*
.132*
Correlation
.127
.323**
.153
.233*
.145
Sig.
.235*
.002*
.152*
.027*
.173*
Correlation
.060
.239*
.062
.593**
.147
Sig.
.574*
.023*
.565*
.000*
.166*
Correlation
-.032
.034
.015
-.146
-.115
Sig.
.765*
.751*
.892*
.171*
.281*
Correlation
.050
.147
.076
-.201
.027
Sig.
.638*
.168*
.482*
.057*
.798*
Correlation
-.045
-.139
-.074
.151
-.015
Sig.
.672*
.193*
.490*
.155*
.885*
Correlation
-.204
-.323**
-.167
.999**
-.320**
384
Sig.
EARNHR
TKPLACHR
TKPLAERH
TKCOMACH
TKCOMERH
NWORKER
TKWORKW
.055
.002
.118
.000
.002
Correlation
-.238*
-.268*
-.202
.808**
-.275**
Sig.
.025*
.011*
.058*
.000*
.009*
Correlation
.464**
.950**
.381**
-.352**
.977**
Sig.
.000*
.000*
.000*
.001*
.000*
Correlation
1
.554**
.993**
-.210*
.459**
Sig.
.*
.000*
.000*
.048*
.000*
Correlation
.554**
1
.499**
-.329**
.912**
Sig.
.000*
.*
.000*
.002*
.000*
Correlation
.993**
.499**
1
-.173
.375**
Sig.
.000*
.000*
.*
.104*
.000*
Correlation
-.210*
-.329**
-.173
1
-.327**
Sig.
.048*
.002*
.104*
.*
.002*
Correlation
.459**
.912**
.375**
-.327**
1
Sig.
.000*
.000*
.000*
.002*
.*
*Correlation is significant at the 0.05 level (2-tailed). **Correlation is significant at the 0.01 level (2-tailed).
385
Table D.11: Correlation between average productivity and SD(Input)/Ave(Input) for work areas A-G Correlations AVEPROD
SDAVEIN
AVEPROD 1 . 7 .288 .531 7
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
SDAVEIN .288 .531 7 1 . 7
Table D.12: Correlation between average productivity and SD(Output)/Ave(Output) for work areas A-G Correlations AVEPROD
SDAVEOUT
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
AVEPROD 1 . 7 .341 .454 7
SDAVEOUT .341 .454 7 1 . 7
Table D.13 Correlation between Productivity and PPC in cluster A-1 (with 84 data sets) Correlations PPCA184
PRODA184
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
PPCA184 PRODA184 1 .259* . .017 85 85 .259* 1 .017 . 85 85
*. Correlation is significant at the 0.05 level (2-tailed).
386
1.8
1.7
1.6
1.5
1.4
AVEPROD
1.3
1.2
1.1 .4
.5
.6
.7
.8
.9
SDAVEIN
Figure D.10: Scatter plot for average productivity and SD(Input)/Ave(Input) for work areas A-G 1.8
1.7
1.6
1.5
1.4
AVEPROD
1.3
1.2
1.1 .4
.5
.6
.7
.8
.9
1.0
SDAVEOUT
Figure D.11: Scatter plot for average productivity and SD(Output)/Ave(Output) for work areas A-G
387
6
5
4
3
PRODA184
2
1
0 .2
.4
.6
.8
1.0
1.2
PPCA184
Figure D.12: Scatter plot of productivity and PPC in cluster A-1 (with 84 Data Sets)
Table D.14: Correlation between productivity and PPC in cluster A-1-1 (with 71 data sets) Correlations PPCA11
PRODA11
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
PPCA11 PRODA11 1 .254* . .033 71 71 .254* 1 .033 . 71 71
*. Correlation is significant at the 0.05 level (2-tailed).
388
6
5
4
3
PRODA11
2
1
0 .2
.4
.6
.8
1.0
1.2
PPCA11
Figure D.13: Scatter plot of productivity and PPC in cluster A-1-1 (with 71 data sets)
Table D.15: Correlation between productivity and PPC in cluster A-1-1-2 (with 32 data sets) Correlations PPCA112
PRODA112
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
389
PPCA112 1 . 32 .334 .062 32
PRODA112 .334 .062 32 1 . 32
6
5
4
3
PRODA112
2
1
0 .2
.4
.6
.8
1.0
1.2
PPCA112
Figure D.14: Scatter plot of productivity and PPC in cluster A-1-1-2 (with 32 data sets)
Table D.16: Correlation between productivity and PPC in clusters A-1-1-2 + A-1-2 (with 45 data sets) Correlations PPCAF PPCAF
PRODAF
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
1 . 45 .316* .034 45
PRODAF .316* .034 45 1 . 45
*. Correlation is significant at the 0.05 level (2-tailed).
390
6
5
4
3
PRODAF
2
1
0 .2
.4
.6
.8
1.0
1.2
PPCAF
Figure D.15: Scatter plot of productivity and PPC in clusters A-1-1-2 + A-1-2 (with 45 data sets)
391
Table D.17: Variables for correlation coefficient analysis
Variable PPC
Measurement number of weekly completed according to planned tasks/number of weekly total planned tasks
Productivity
weekly earned hours/ weekly actual hours
Taskplan
number of Weekly planned tasks
Totalcom
number of Weekly total completed tasks (including completed according to plan and completed not according to plan)
Comnopl
number of tasks Weekly completed not according to plan
Complan
number of tasks Weekly completed according to plan
Cnopltpl
number of tasks completed not according to plan/ number of tasks Weekly planned
Cnopltco
number of tasks completed not according to plan/ number of tasks Weekly completed
Cplancom
number of tasks completed according to plan/ number of tasks Weekly completed
Actuhr
Weekly Actual hours
Earnhr
Weekly Earned hours
392
Tkplachr
number of tasks Weekly planned/ Weekly Actual hours
Tkplaerh
number of tasks Weekly planned/ Weekly Earned hours
Tkcomach
number of tasks Weekly completed/ Weekly Actual hours
Tkcomerh
number of tasks Weekly completed/ Weekly Earned hours
Nworker
number of workers per week
Tkworkw
number of tasks per worker per week
D5.0 CONCLUSIONS The following findings emerged from this case study:
1. The hypothesis is valid: Productivity and PPC are positively correlated at a statistically significant level; and 2. A regression equation between productivity and PPC was derived for this case study. Prod= 0.693+0.818*PPC
These findings prove that work flow variation from plan does impact labor productivity. Increasing work flow reliability as measured by PPC can plausibly be understood to be
393
the result of improving the quality of assignments, meaning that constraints have been removed and prerequisites arrive when needed, which in turn results in better labor productivity. One unit of PPC increases causes 0.818 unit of productivity increase. Thus in order to improve labor productivity, it is important to improve work flow reliability in the planning process.
There are other observations from the case study: 1. No correlation between the variation of work load and productivity was observed,
2. No correlation between the variation of work output and productivity was observed.
These observations suggest that following the LPS at least partially shielded productivity from variations in work load in each area week to week by identifying actual work load (tasks for which all constraints had been removed) available in each area in time to shift capacity to better match load.
3. The correlation coefficient between productivity and PPC increases if the ratio of work load to capacity lies in a moderate range. Overloading or underloading weakens this correlation. a) Underloading reduces the correlation by increasing PPC and decreasing productivity. b) Overloading reduces the correlation by reducing PPC, while productivity does not increase beyond the point at which load matches capacity. In other words, as
394
more tasks are planned for a crew, when the task load exceeds the capacity of the crew, their task completion rate decreases. This need not reduce productivity, since the crew is, by definition, fully loaded with work relative to their capacity to perform work, but does reduce the flexibility to accommodate variation and breakdowns without use of overtime as a capacity buffer.
Work flow variation, labor capacity, and labor productivity interact with each other. It is important for project managers to take these factors and their interdependence into account in planning. These are important findings regarding the impact of work flow reliability on productivity, but it should be noted that, according to Last Planner theorists, the primary impact was not measured in this study. When short term production plans can be taken as promises made from one trade or crew to another, as those promises become more reliable, the downstream crews can prepare and plan to do the work they know will be available tomorrow or next week. When production plans are not accurate predictors of future work load, everyone who is dependent on others for something needed to do their own work (materials, information, work space, equipment, etc.) is robbed of the ability to plan. Since the release of work from crew to crew was not examined in this study, even greater impact of production planning on productivity can be expected, and should be explored in future studies. These findings are predicated on the conditions of the case study examined, which included the ability to shift workers from one work area to another each week.
395
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Lean Implementation at the Project Level Research Team *
Glenn Ballard, University of California, Berkeley (academic co-chair) Carlos E. Braga, Petrobras Steve L. Campbell, CDI Engineering Solutions John Y. Chen, Bechtel Group, Inc. Stephen P. Eisel, E. I. du Pont de Nemours & Co., Inc. Harold L. Helland, Abbott Scott S. Hill, Air Products and Chemicals Inc. Jinwoo Jang, State University of New York – ESF
*
Yong-Woo Kim, University of Washington (academic co-chair) Min Liu, University of California, Berkeley Greg Knutson, M.A. Mortenson Company Walt Norko, P.E., US Army Corp of Engineers Robert C. Schulz, Dow Chemical Company Lawrence J. Stival, Air Products and Chemicals Inc. Jerry Theis, General Motors Corporation (industry co-chair) David J. Tweedie, Fru-Con Construction Company Roger Webb, Baker Concrete Construction, Inc. William Wells, Rohm and Haas Company
Past Members Steve Morse, Walbridge Aldinger Company (industry co-chair) Everett Chatham, Rohm and Haas Company Michael J. Cook, E. I. du Pont de Nemours & Co., Inc. Cynthia Lee, E. I. du Pont de Nemours & Co., Inc.
*
Principal authors
Editor: Rusty Haggard, CII
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