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"Manufacturers Need to Look at Lean Construction" (c) Dennis Sowards, Industry Week, May 5, 2008

Lean started in manufacturing and has helped many companies achieve greater productivity and reduce costs. However, there is one opportunity that most manufacturing plants ignore regarding applying Lean and it is now a great potential for increasing profits and being more competitive. That is Lean Construction.

Plant management often views the construction phase of a new plant start-up or the remodel of an existing facility as a necessary evil. While the facility is under construction, no revenue is coming in and many dollars are being spent. Some self-manage the construction process while other plant managers look to a general contractor and/or a construction manager to keep costs down and meet schedule. All plant managers feel limited in how much they can reduce costs and schedule without impacting quality. In fact, the traditional thinking in construction is that one can only get two of the three factors of construction: quality -- low cost -- fast schedule. If you want it built right and fast, you must pay more. It is analogous to the mistaken thinking that higher quality always cost more. The quality guru Philip Crosby proved the fallacy of that. Now Lean is proving that you can build for less, faster and still maintain quality.

Everyone talks about improving productivity in construction and many think it will come by new technology and better project management software. Others preach working smarter not harder but only give pep talks for solutions. The answer to improving construction productivity is not just in more software, technology or motivation but also in Lean.

In the construction world, waste is rampant. One study found that 57% of the crew's time on construction jobs is waste. Many in construction including plant managers accept waste as a way of life. Lean attacks waste just as effectively in construction as in manufacturing. Lean applications in construction are still in its infancy but already there are successful examples to validate its benefits. The common Lean tools most often used in construction are: the 5S's, Kaizen, Value Stream Analysis and Kanban. A new tool has been developed specifically for managing projects in a Lean way.

Boldt, a general contractor, headquartered in Wisconsin reported these results on its first four pilot project using Lean techniques:

The Grunau Co., a mechanical contractor also in Wisconsin, conducted a Kaizen event in its tool room and realized a savings of about $40,000 in the utilization of tools.

The Lean Construction Institute has developed a tool specific for applying Lean to project management. It is called the Last Planner System (LPS). The 'Last Planner' in construction is the field supervisor who assigns work to the crews. Effective planning leads to effective execution. The LPS out-performs traditional project management methods by:

• Reducing variability common among construction work so that the work flows from the completion of one task to another.
• Making work ready to be performed so crews can finish a task without interruption, rework or remobilization.
• Holding weekly coordinating meetings where last planners (supervision) make commitments to each other in support of the schedule. Planning is most effective when there is reliability in the commitments of the various work groups and trades.
• Managing the project through monitoring the plan's completion rate (PPC) rather than the progress compared to schedule (effort). This creates a learning process by investigating plan failures. PPC is the percent of plan work actually completed in the measuring period, usually one week.

In 2001 the Lean Construction Institute published research that found, on projects where PPC was greater than 50%, companies averaged a productivity factor of 85% (meaning the projects averaged 15% under budget). Jobs with PPC less than 50% averaged a 1.15 productivity factor (15% over budget). While the research did not explain why the cut-off was at 50%, the data support the logic that if more of the work is completed as planned, the crews will be more productive.

Customers are beginning to recognize the value of Lean in the facilities they are building, and are demanding that contractors use Lean approaches. The Construction Users Roundtable (CURT), an organization made up of the major manufacturing, production and utility companies in the USA, has recently published the following regarding Lean:

CURT's Key Agents of Change: Education is key; There needs to be a shift in everyone's way of thinking; LEAN targets the best workforce, forms solid relationships and builds trust; Owner's must be the agents of change and must demand change; and LEAN must become the new culture of the industry.

In referencing Lean activities, CURT "replaced the phrase 'LEAN Construction' with 'LEAN Project Delivery' to emphasize how this management approach was not limited to construction. Rather, it encompasses an alternative method of project delivery that uses LEAN concepts and principles to guide a combination of new and existing techniques for contracting, design and supply chain management, and off-site and job-site assembly coordination."

Joe Gionfriddo, the Global Construction Process Owner for The Procter and Gamble Co., sees LEAN Project Delivery as valuable because it:

• Provides a win-win opportunity from Owner through Construction to Manufacturing. (Owner, Architect, Designer, Purchaser, Constructor and Manufacturer)
• Helps define the supply chain and work process that we want to succeed with improving and eliminating losses. It helps establish a global Project Delivery supply chain.

He sees the main challenge for both manufacturing and the construction industry to be a significant behavior change. He says, "There is not one silver bullet. LEAN Project Delivery is a journey of continuous learning, piloting, testing, assessing and improvement. It is not an overnight process change."

Manufacturing can realize lower construction costs and faster time to production when LEAN Project Delivery is applied.