Lean in construction

8/12/2019 Lean in construction

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LEANENTERPRISE IN

THE

CONSTRUCTION

INDUSTRY


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ABSTRACT

Construction firms need new business modelsto meet the change in construction industryenvironment

Lean enterprise model can be applied to anyindustry

Derived from lean aerospace initiative in MIT

Matrix was created that suggested ways toimplement 6 lean tools in constructionindustry

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Construction industry

First construction companies were responsibleonly for technical aspects of design andconstruction

Now they do maintenance and financing too

This paper has also included engineering designfirms, architecture studios, constructionmanagement firms, suppliers and sub

contractors.

Every player that adds value to constructionsupply chain is somehow included.

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Traditional core competences

The construction process involves delivery of

any type of facility or infrastructure to a

customer.

Architects produce a design for the owner

The contractor executes it with the assistance

of subcontractors and suppliers

The traditional process is cost driven

Owners select contractors on lowest price

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Cntd

They select suppliers and subcontractors on

lowest price

The temporary organization of firms expires at

the completion of the project.

Each firm has its expertise and do not cross

the boundaries

Conflicts arise between the parties due to

lack of details

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Relation between firms characterized

by

Low transition frequency

Uncertainty during construction process

Communication/ information problems Win-loose relationship

Poor quality/ late completion

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Competences of current industry

Many changes took place

Project finance, project operation and project

maintenance are provided now.

Innovative delivery methods are adopted

General contract

client gives design and companies follow itand do the job.

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Design-build(DB)

Both design and construction is done

only conceptual design is given

Turnkey(T)

Both design and construction is done

The company is not paid till work is done

Suitable for building factories

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Build-Operate-Transfer(BOT)

Legal right to operate for few years

Toll gates in high waysInfrastructure that can give revenue

Build-Operate-Transfer-Maintain(BOTM)

they also do the maintenance work

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1.NO REPETITION

No two identical projects, characterized by

bring to order.

Not speculative in nature.

Speculative nature of the project adds to the

complexity.

Exceptional : wal-Mart stores

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2.ON SITE PRODUCTION

Production physically takes at the locationwhere the customer wants to have theproduct.

Raw materials are delivered to the customerdesired location and assembled on the site.

Since the locations are different, introduces

complexity. Lack of communication among the site

managers

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3.LONG LIFE CYCLE

Projects are delivered to function for a long

time

Lifecycle cost such as maintenance cost

becomes critical in design phase.

Unfortunately this is not always taken into

account as the end user differs.

Interests not aligned for cheaper design , as

the maintenance costs are very high.

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4.COMPLEXITY OF ORGANIZATION

Involves managing peoples from different

companies that dont know each other.

Not every one is expert together with time

and budget pressures.

New relationships for new projects(lack of

mutual understandings)

Lack of capacity for common learning from

experience.

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5.FRAGMENTED

Construction companies are overwhelming.

800000 companies exist in US, but 600000have a work force of only one or two

employees. Very smaller percentage of market share.

Works only on their regional area of influence

and rarely gets the project. Lack of knowledge of regulations, unions and

contrctors.

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6.NEED FOR OUTSIDE FINANCING

Construction is a very capital intensive

industry.

Projects are always expensive and often need

to advance some cash flows to get start.

In some cases it has to arrange finance for the

whole project due to cash flow problems of

costomer.

Different kind of bonds need to be secured

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Lean principles:

The economy is cyclical. There are periods ofhigh growth followed by recessions.Experience confirms this phenomenon.

Many fail and default but very few manage togo through without being affected that much.

We can design a company that is more robust

to business cycles on the basis of lean thinkingas it is behind some of these successfulstoriesin bad times.

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Lean principles:

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Lean means eliminating waste, lean means

being flexible to change and lean means doing

continuous incremental improvements.

It probably is all those three at the same time

and much more.

Lean principles:

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Toyota Production System:

Mass production system led to an incredible reductionin costs. It worked pretty well while demand was muchhigher than production capacity and every carproduced had a customer ready to buy it

Taiichi Ohno, one of the plant engineers in Toyota atthat time, started to experience and put into practicesome new ideas of production with the goal ofimproving efficiency without increasing productionvolume (that they were not able to sell).

The result of that work is what we call today the ToyotaProduction System (TPS) which was finallyimplemented in Toyota in 1962.

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TPS's goal is to reduce costs without

increasing production volume. The basis to

achieve it is the absolute elimination of waste

(Ohno, 1978).

The two pillars that support the system are:

Just in Time

Autonomation

Toyota Production System:

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APICS Definition of JIT

A philosophy of manufacturing based on

planned elimination of waste and continuous

improvement of productivity. ...

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APICS Definition of JIT

The primary elements of Just-in-Time are to:

have only the required inventory when needed,

improve quality to zero defects,

reduce lead times by reducing setup times, queue

lengths, and lot sizes,

incrementally revise the operations themselves,

andaccomplish these things at minimum cost.

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JIT Synonyms

IBM - Continuous Flow Manufacturing

HP - Stockless Production

Repetitive Manufacturing SystemGE - Management by Sight

Boeing - Lean Manufacturing

Motorola - Short Cycle Manufacturing Japanese - The Toyota System

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Time-Based Competition

It is not enough for firms to be high-qualityand low-cost producers.

Today, they must also be first in getting

products and services to the customer fast.To compete in this new environment, the

order-to-delivery cycle must be drastically

reduced. JIT is the weapon of choice today to reduce

the elapsed time of this cycle.

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Kanban

Manual information system to control

production. Material transportation, and

inventory

Literally means visible record or card

In the the broad sense it is a communication

signal from a downstream process (customer)

to a upstream process (producer)

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Pull Systems

Material

Information

Withdrawal of

material triggers

production

Production schedule is issued only to final assembly line.

Production schedule for each of the preceding process isdetermined by transfer of parts

Parts are pulled through the system from the end of the line

to the start

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Kanbans and Other Signals

There are two types of Kanban cards:

a conveyance card (C-Kanban)

a production card (P-Kanban)

Signals come in many forms other than cards,

including:

an empty crate

an empty designated location on the floor

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Autonomation:

Use of "intelligent" machines that can automatically stopproduction as soon as products are being produced withdefects.

This means that you don't need an operator for eachmachine, watching it work, in case products start beingdefective.

Instead you can have several machines controlled by asingle worker who will act only when a machine has aproblem


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Division of activities within the

production process

Work is divided in value-added and non-value addedactivities.

Value-added activities involve some kind of processingor transformation of the materials towards a next stepin the process.

Non-value added activities do not add value to the

product but have to be done under the presentworking conditions.

Waste is activities that can be eliminated withoutaffecting production at all. They just use resources.

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VA or NVA?

Counting - once?

- more than once?



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Advent of pull production system

In an industry where demand is higher than supply the massproduction system works well because manufacturers can "push"their products into the customers (e.g. products are scarce sowhatever you produce you will sell).

As soon as the market becomes saturated and low growth appears

the industry has to accept orders from each customer and makeproducts that differ according to individual requirements.

In this situation customers are empowered and can "pull" whateverthey want from manufacturers.



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Implementation of TPS:

Although the principles of TPS were defined inthe early 50s by Taiichi Ohno, theimplementation took almost 10 years to reach

the whole company It took further another 10 years to become

common practice among its suppliers.

It takes strong leadership commitment to beable to migrate from mass production to alean production.



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Lean thinking

Customer-focused: customer needs and expectations "pull"enterprise activities. The customer provides an orientation ("truenorth") for the full enterprise.

Knowledge-driven: critical role of people in effectuating value (fullinput from the entire workforce). Draws upon knowledge and

innovation from everyone (workers, suppliers, ... ). Eliminating waste: stresses elimination, not just reduction, of all

types of waste

Creating value: puts premium on "growing the pie", not justreducing costs, to benefit all stakeholders.

Dynamic and continuous: Pursues on-going systemic as well asincremental improvement - both innovation and continualimprovement.



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Lean across fields

Lean is not just a matter of applyingsome tools or procedures.

It is really a change of mindset, achange in how people think andwhat they value, thus a change inhow people behave.

Because lean is about beliefs andbehavior, it is applicable beyond thefactory floor to encompass theentire enterprise, hence leanenterprise is born.

We must recognize the fact thatgreater benefits can be obtainedwhen changing the wholeenterprise towards lean principlesthan just applying some practices inthe production side of business.

If you concentrate only inproduction you will get partialbenefits of the full potential.



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Transition to Lean:

The outcome of Lean Aerospace Initiative s many years of research effortscan be summarized in the development of a lean framework that could beapplied to any given industry.

The framework consists of three key interrelated products:

LEM (Lean Enterprise Model)integrates the lean principles and practices~it addresses the issue of "what" defines a lean enterprise.

TTL Guide (Transition to Lean Guide) addresses the issues ofimplementation. It defines "how" to transition to a lean state.

It provides an organizing agenda for achieving a lean transformation.

LESAT (Lean Enterprise Self-Assessment Tool). Lean transformation is along journey.This tool provides enterprise leaders a way of assessing their progress oncethey follow the TTL Guide. It helps answer the question: how much further is it tolean?



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Ohnos implicit teachings

These concepts are, as waste, evils to avoid and eliminate

Inflexibility: the enterprise has to be able to adapt towhat customers want.

Variability: flow can not be synchronized withoutmaintaining stability. The enterprise must decide its pace.

Leadership has the key role of supporting employees andcontrolling the demand variability so the company keeps

learning in a stable and safe environment.Ultimately how fast can you learn should drive how fastyou can grow.



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Key concepts within the lean

enterprise framework:

Enterprise. Any corporate or business-unit

organization with a distinct mission, market

segment, suit of products or services,

customer base, profit/loss responsibility andset of competitors

Stakeholder. Any group or individual who can

affect or is affected by the achievements ofthe organization's objective..



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Value stream. The specific activities requiredto design, order, and provide a specificproduct, from concept to launch, order to

delivery, and raw materials into the hands ofthe customer.

Extended enterprise. In the lean enterprisecontext enterprise is understood in a holistic

way. All business along the value stream thatcontributes to providing value to a customer.

Key concepts within the lean

enterprise framework:



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Fundamental principles for creating lean

enterprise value are summarized by LAI:

Principle 1: Create lean value by doing the job right and by

doing the right job.

Principle 2: Deliver value only after identifying stakeholder

value and constructing robust value propositions.

Principle 3: Realize lean value only by adopting an enterprise

perspective.

Principle 4: Address the interdependencies across enterprise

levels to increase lean value.

Principle 5: People, not just processes effectuate lean value



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The importance of value:

Value is not fixed- it evolves with stakeholder changes inpriorities.

Understanding stakeholder value is not easy.

Stakeholders can be identified in most cases but not their

view of value which may not be in line with the value of theproduct, service or improvement provided to end users



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Reaching extended enterprise:

A generic lean enterprise process architecturegathers processes in three groups:

Enterprise Leadership Processes: guide and providedirection to the enterprise.

Life Cycle Processes: define the product life cycle Enabling Infrastructure Processes: support otherorganizational units whom they serve as internalcustomers (traditional corporate support functions).



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Overarching lean principles:



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Construction vs Lean

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WHY?

To investigate how close the construction

industry is to the lean enterprise concept.

How lean enterprise principles can be applied

to any construction industry.

How compatible is each of the construction

characteristics with each of the lean principles

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Key construction characteristics

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Key lean enterprise principles


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Key lean enterprise principles

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Construction vs. Lean matrix


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Construction vs. Lean matrix

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ALIGNED PRINCIPLES The first thing that we can notice if we look at

the top left side of the matrix is that several

lean principles are already quite aligned with

some of the construction characteristics.

These principles are customer pull, delivering

value to all stakeholders and seeking stability

of demand.

This alignment is especially strong at the

project level(long lifecycle, site production and

build to order).

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This implies that due to the nature of the


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This implies that due to the nature of the

product that the construction industry delivers

those lean principles can be easily applied and

in some cases are already satisfied (e.g. the fact

that the construction industry is build to order

means that the lean principle of customer pull is

already satisfied).

In other words, the construction industry is

really a services business (as opposed to a

product business) where most revenues comefrom special products or projects(customization)

tailored for new and existing customers.

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NON ALIGNED

Finally we can say that some of the leanprinciples, waste minimization and continuousimprovement, synchronizing flows and mutual

trust relationships) are not aligned at all inany level.

These will be difficult to apply in this industrybasically because learning takes a long time

and there are too many adversarialrelationships.

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Lean in construction

Lean construction is aimed at improving constructionperformance by eliminating wastes that do not addvalue to the customer.

operation and project levels. In conjunction with a concrete contractor, actual

concrete construction projects were observed, andproblem areas contributing to delay and other wasteswere identified.

At the project level, the lack of coordination amongsubcontractors was cited as one of the major factorscontributing to schedule delays.

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At the operation level, a systematic approachof waste identification, operation re-design,

and employee training was applied to reducewastes found in the field operation.

A case study of bulkhead installation wasused to demonstrate this approach, and a 3Danimation was created for employee training.


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3D Animation:


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Some of the lean principles that are related to

the construction industry are improvements

such as the construction planning process,construction supply chain, and downstream

performance (Howell, 2007)


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Lean Construction at the Operation


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Level

Observations work procedures,resources and

monitoring

Case study- bulk head framework installation

and removal

A case study to demonstrate the process of

identifying waste, redesigning work

procedures, and retraining employees

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A bulkhead is a temporary formwork strip

Generally used by the carpenters and generallaborers

Carpenters install as one piece to reduce theprocessing time

However, this makes bulkhead removal

difficult and time consuming In other words there is a coordination issue

between the two teams.


Level

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Waste can be reduced by revising the process

of the upstream team,

This new procedures involves cutting of

bulkhead into two parts

Significance is that though time for installation

is increased,time required for removing is

drastically reduced

damages to concrete are reduced.


Level

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Training in the Construction industry :


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EFFECTIVE TRAINING

Effective training is very important to reducethe resistance to change by improvingemployees understanding of new work

procedures. The 3D animation was used to train

construction workers on the new workprocedure, and this training method proved to

be very effective in explaining new ideas andencouraging changes.

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INDUSTRY EXAMPLES

Challenges present in implementing lean

philosophy.

Examples give the perspectives of contractor,

developer and the owner.

Global contractors reduce costs by organizing.

Real estate companies trying to create value.

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SKANSKA USA BUILDING Inc

Giant Swedish contractor.

Puts into practice some concepts close to thelean enterprise.

Creates value to all its stakeholders. We respect the diversity of our backgrounds

as we work together to support the success of

our clients, the growth of our company, theempowerment of our people and the interestsof our shareowners.

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CONTINUED

The company is organized in a decentralized

and integrated approach.

The rational is conspicuous as construction is a

local business.

The concept of integration helps them in

establishing a strong brand name.

The organization of its USA building also

follows this principle.

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ORGANIZATIONAL STRUCTURE

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CO


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CONTINUED

Vertically,

Composed of 14 operational divisions across the US.

Operate quite independently.

Horizontally, Composed of several functions.

Enable infrastructure processes.

Human resources, legal, communications. These activities lead by headquarters with a minimum

number of people.

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CONTINUED


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CONTINUED

Accounting and IT are centralized in a separatecompany.

Centers of excellence enabling the expertise of the

company to be shared by employees. Availability of virtual networks with employees for

communication.

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EMPOWERMENT OF THE INDIVIDUAL


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EMPOWERMENT OF THE INDIVIDUAL

Inline with lean principles.

Employees encouraged to have individual

initiative to call other divisions to satisfy

customer requirements. Eg allowing an employee at CBE to contact his

counterpart in MAS directly.

Ensures the maintenance of client focus. Very fast communication.

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KNOWLEDGE SHARING


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KNOWLEDGE SHARING

Organizational structure enables the flow oftechnical knowledge through COE.

Assigning of employees to primary and

secondary virtual networks.

Primary networks contribute instantly to

secondary networks.

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THE NEENAN COMPANY


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THE NEENAN COMPANY

Based in Colorado.

Major real state developer, contractor.

Competitive pricing, on-time delivery and high

quality.

Manage site selection and land acquisition.

Collaboration of architects with construction

teams to ensure value to customers.

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DEFINING VALUE TO THE CUSTOMER


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DEFINING VALUE TO THE CUSTOMER.

Collaborative design process to identify scope,price and needs.

Consultations with all the stake holders.

Neenan can conceptually design and estimate anentire project from start to finish.

Guaranteed costs and timelines in just 21 days

unique approach to design and construction

which is to work together as one team to satisfythe goals of the integrated real estate team.

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CONSTRUCTION PROCESS FLOW


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CONSTRUCTION PROCESS FLOW

Neenan Reliability Planning System (NRPS).

Specifically designed to identify and avoid

potential break downs, speed progress and

eliminate wasted effort.

Contains all the major project milestone

phases and activities.

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BAA


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BAA

Based in United Kingdom Considered as the world's leading airport

company.

It owns and operates 7 airports in UK All their airports serve around 120 million

passengers.

UK's principal developers of infrastructure

One of the construction industry's largestcustomer.

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CONTINUED

Have revolutionized the way they spend theirmoney and the construction industry

Made the construction companies to adopt

sweeping changes in the way that majorprojects are handled.

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CONCLUSION


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CONCLUSION

Two approaches for applying lean to theconstruction industry, at the

project level and

the enterprise level. Greater benefits can be achieved by applying

it at the enterprise level.

The lean enterprise model allows constructioncompanies to operate with very limitedoverhead.

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CONTINUED


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CONTINUED

The construction industry is a service businesswhere most revenues come from special

projects (customization)

Tailored for new and existing customers.

The key is to understand specific customer

needs as opposed to general customer needs.

Lean implementation requires strongleadership.

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CONTINUED

Lean has a weak tie to the bottom line fromthe top management.

Companies top management only has a

superficial view of lean.

Their continuous support and commitment to

lean is absolutely essential for the

transformation to happen.

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CONTINUED

Lean imposes a tremendous culture change onContractors.

Identification and elimination wasteful internalprocesses.

With an uncertain economy, contractorspressurized to do things better, faster, andsmarter.

Creating an efficient organization can mean thedifference between success and failure for aconstruction company.

Lean in construction

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