Lean Construction? – If not now, when

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The Lean Construction Journal in the 2009 white paper pegs percentage of non-value added activities or waste in a typical construction 55% to 65%. White papers Creating Value: A Sufficient way to eliminate waste in Lean Design and Lean Production goes on to say, [“skapaverðmætiogaðeinsgildierbestaleiðintilaðdragaúrsóuníhönnunogsmíði”19459005]

Needless to say, the construction industry is badly broken and needs to be decide. How does the industry rise up and meet the challenges of customer demand for higher quality, improved profitability, and the lack of skilled workers? The first step is to cast aside not invented here syndrome and embrace the time-tested manufacturing solution -The Toyota Production System-often called Lean.

Why should construction managers even believe Lean as a way to improve their business? Here are some eye opening facts about the US construction industry

  • 60% to 85% of construction time is often waiting or fixing failures
  • The average construction worker operates at 40% efficiency
  • Critical shortage in qualified and skilled workers
  • ROE construction pales in comparison to all other US industries
  • Customers are frustrated with the poor, conflict, excessive change orders and scheduling delays

These are some of the same or similar issues Japanese companies such as Toyota faced in 1950. Lean construction can help remediate dire situations described above. While Lean is no silver bullet, lean construction offers significant improvements to the problems facing the construction industry. If construction companies want to thrive in the 21st century it should go towards Lean Thinking.

Why so much garbage?

Why so much garbage? Construction is so fragmented. Many times subcontractor work disregarding how they do affect the work of other subcontractors. We call this “throw over the wall” mentality. One functional departments (in this case a subcontractor) completes its part of the project and throws it over the wall to the next division (subcontractor) who throws it back over the wall because it is not right. This mentality sub-optimizes your entire project to create a quality and schedule problems.

Lean thinking is a new way to manage the building. Many people object because they believe lean manufacturing technology and has no application in the “unique” as the construction industry. Lean Improvement objective is to maximize value and eliminate waste using technologies such as one-piece flow, Just-in-time delivery and inventory reduction.

There is a small but growing movement to apply lean principles to be implemented. Using lean principles effect really means to apply them to the project. This transformation involves mapping your building process, determining the optimal work flow and establish a pull system. How do you create a pull system? As a developer you can start by looking at what the finished project should be, and then work backwards, identifying each previous step. Downstream processes to determine what the upstream process will be and when they should take place. Take this picture of the project will help you manage your work flow. You should also look at creating value stream or process map of work processes as well as support the project process. Process as work organization, food, payroll, accounts payable, purchasing, tool and material handling are good candidates for mapping.

Need for Change

Construction is broken five facts below show why the industry needs to change

  1. If takes six months to build a house, then 85 percent of the time is spent in two activities: waiting for the next trade show, and fixing mistakes
  2. Clemson Professor Roger Liska analysis of the productivity of the construction industry and found that the average construction worker operates at only 40 percent efficiency.
  3. Critical lack of qualified, skilled workers are expected to only get worse.
  4. Despite the construction boom of 2006, Business Week’s 2007 Investment Outlook Report present the return on equity (ROE) for all US industry was 17.9 percent, while return on equity for the construction industry was only 9.7 percent.
  5. Industry customers are frustrated with the poor, conflict, excessive change orders in volume and dollar value, timing delays and litigation.

Adding Value

Lean construction focuses on identifying and delivering products or services that the customer / owner attaches great value. Customers often emphasis on

  • no or limited change orders
  • High labeling meets the requirements / information
  • On-time delivery of the project

To learn what specific value client, the contractor must effectively communicate, then work with the client to achieve these desired results. While it may be easier to take this idea in a negotiated level, it also works in a very competitive offer on the market.

Although there are fewer options offer market than in a negotiated environment, there are still numerous ways contractors can add value to the construction process for owners to cost contractors little or nothing. Simply by eliminating conflicts and achieve better communication and collaboration, developers can dramatically increase the value for the owner.

Return

When contractors focus on providing maximum value to customers, they usually find that the margin increased. This is not surprising, since in almost all industrial cheapest products usually produce the smallest margin. Therefore, if developers compete on price, the contractor is forced into a low margin industry sectors. Industry data supports the belief that a highly competitive bid to mention profitable. Second, where the slope of the construction is to reduce waste, this means lower costs. The developer is under less pressure to lower its margins. Toyota was able to almost immediately double its productivity. When you consider that the average construction worker is working at only 40 percent efficiency, the construction industry should expect progress. Before blaming the employee should be noted that research Roger Liska revealed that the majority of lost efficiency was due to poor management to 20 percent results from waiting materials or supplies, 20 percent results from inefficient business processes and 15 percent results from the work rules or congested work areas.

Lack of skilled workers

Another challenge the industry faces is the lack of skilled workers. If the industry wants to attract employees, it will change the perception that construction is undesirable. Again, lean construction is an important tool in the struggle. When there is a shortage of workers, there is a tendency to reduce the job to find more workers. To make this work, tend demands to revise down so lower skilled workers can be considered. While this works in the short term, it creates a boring jobs to highly skilled workers do not want. Further, this approach tends to reduce productivity and increase pressure on wages because wages reflect productivity. Throwing money at a problem is never a solution, while wages are a factor in the equation. The emphasis on increased productivity so highly skilled workers can be attracted and risen. This is not an illusion due to lean manufacturers have already proven that this concept works.

Although there are no panaceas, Lean offers significant improvements to the problems faced by the construction industry. Those contractors who want to thrive in the 21st century should go towards lean thinking to improve their processes.

Power of Lean in Construction

Lean construction is a systematic application of lean thinking to the design and construction of buildings that make what customers and users will-provide value. Over the past 50 years, lean thinking has revolutionized some parts of production and is now facilitate significant improvements in the way services institutions like hospitals, banks, etc. are meeting customer requirements.

Adopting Lean Thinking requires sustained work over several years. There are no instant solutions. For most people, the slope requires changes in the way they think and behaviors that support their actions. There are many things that lean organizations that can be copied – in collaboration, supply chain management, value stream analysis, flow, etc. – but they are only to tilt when they are doing a deficit intent . It does Lean Thinking about how the organization works.

Not all construction companies take waste is a prerequisite for doing business. They reduce or eliminate it using Lean tools and techniques. Some examples of companies with Lean principles and tools to overcome the poor quality, poor delivery and less than stellar profits are: Boldt Construction, Linbeck Construction, Mortenson, Sutter Health, Veridiana homes, and Walsh Group

Resolution

Lean process improvement is not a new concept, but it is relatively new to construction. There are many skeptics who believe Lean is a manufacturing technology and is not suited to the construction industry. Many aspects of the Toyota Production System and other lean tools can and should the construction process.

Courageous, out-of-the-box construction organizations like Boldt, Turner Construction, and Messer construction along with others, are leading the way by showing that lean process improvement can reduce waste in construction with results mirroring other industries.

Lean principles hold promise for reducing or preventing harmful activities, costs and inefficiencies in the construction industry, to create a system that provides value to customers.

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