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Introduction to Lean Construction Robert Blakey, Principal, Strategic Equity Associates, LLC on behalf of the

Lean Construction Institute

July 21, 2008 ASHE 45th Annual Conference

Why Lean Construction?

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Construction Productivity has gone South!

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Lean thinking has caused a revolution in manufacturing.

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“Lean Construction” encompasses all other improvements anticipated. (BIM, Integrated Design, etc.)

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What is Lean Construction? • Lean Construction changes the way work is done throughout the delivery process. – – – –

Planning Design Construction Operation

• Lean Construction includes: – Basic Lean principles (maximize value and minimize waste, etc.) – Specific techniques applicable to design and construction. – Application in a new project delivery process.

• Lean Construction is a production management-based approach to construction project delivery.

What is Lean Construction? • The facility and its delivery process are designed together. • Work is structured throughout the process to maximize value and to reduce waste. • Efforts are aimed at improving total project performance instead of individual activities. • "Control" is redefined from "monitoring results" to "making things happen."

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The Road to Understanding Lean Construction

Airplane Game / Work Flow • Release work (materials or information) from one workstation (specialist) to the next by pull versus push • Minimize batch sizes to reduce cycle time. • Make everyone responsible for product quality • Balance the workload at connected workstations • Encourage and enable specialists to help one another as needed to maintain steady work flow (multiskilling)

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Capacity Control Game / Variability • Workflow losses are real, lead to adversarial relations and can not be demonstrated by delay claims, so… • Subs protect themselves by adding contingency and holding back labor to keep utilization high. • This further reduces workflow predictability and increases project risk. • By their/our actions, we shift that risk along.

Work Flow Variability ~ Key Points • Reducing workflow variability – – – –

Improves total system performance Makes project outcomes more predictable Simplifies coordination Reveals new opportunities for improvement

• Point speed and productivity don’t matter – throughput does. • Strategy: Reduce variation then go for speed to increase throughput.

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Lean Project Delivery System

®

The Last Planner® System of Production Control

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Pull Planning Session

Percent Planned Complete (PPC) • PPC – Percent plan complete; i.e., the number of planned completions divided into the number of actual completions, usually referring to activities on a weekly work plan.

• Weekly Work Plan – A list of assignments to be completed within the specified week; typically produced as near as possible to the beginning of the week.

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Evolution of PPC

Productivity Evolution

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Target Costing

Target Costing by Project Phase

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Applying the Cardinal Rule

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Emergent Outcomes

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Big Room – St. Clair

Big Room – Prefabrication

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Courtesy of McDonough Holland & Allen PC

Courtesy of McDonough Holland & Allen PC

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Courtesy of McDonough Holland & Allen PC

Courtesy of McDonough Holland & Allen PC

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Financial/Incentive Agreement Savings

BIM for LEAN

Courtesy of DPR Construction, Inc.

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BIM for LEAN

Courtesy of McDonough Holland & Allen PC

BIM for LEAN

Courtesy of McDonough Holland & Allen PC

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BIM for LEAN

Courtesy of McDonough Holland & Allen PC

BIM for LEAN

Courtesy of McDonough Holland & Allen PC

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BIM for LEAN Scope

Design/Modeling

Architect

3D Architectural Model

Structural Engineer

3D Structural Model

Mechanical Engineer

2D Design & Documentation

Electrical Engineer

2D Design & Documentation

HVAC Contractor

3D Shop Drawings

Plumbing Contractor

3D Shop Drawings

Electrical Contractor

3D Shop Drawings

Fire Protection Contractor

3D Shop Drawings

Courtesy of McDonough Holland & Allen PC

Summary • Lean Production Principles • Workflow, Interdependence & Variability • Last Planner • Target Costing • Integrated Project Delivery Team • Relational Contracting • BIM/Technology Tools • Continuous Improvement

Courtesy of McDonough Holland & Allen PC

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Further Info • Http://www.leanconstruction.org • Http://www.leanconstruction.org/files • Contacts: – Greg Howell 303-665-8191 [email protected] – Glenn Ballard 510-530-1743 [email protected] – Robert Blakey 206-767-0898 ext. 1 [email protected]

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Lean Construction Tariq Abdelhamid, Ph.D. Michigan State University

Construction Management as a field of applied science has escaped canonical definition. But one typical definition is that of Clough and Sears (1994) wherein Construction Management was defined as “The judicious allocation of resources to complete a project at budget, on time, and at desired quality”. This definition captures the essence of what inspired, drove, and guided practice and research in the Construction Management field. However, the failure and inability of the conceptual models of Construction Management (time-cost-quality tradeoff, work breakdown structure, critical path methods, and earned value) to deliver on the mantra of ‘on-time, at budget, and at desired quality’ is evident to practitioners and academics alike. For example, recurring negative experiences on projects, as manifested by endemic quality problems and rising litigation, indicate that construction projects are low efficiency systems (Koskela 2000). Analysis of project schedule failures by Ballard and Howell (2003) also indicated that “normally only about 50% of the tasks on weekly work plans are completed by the end of the plan week” and that most of these planning failures were possible to mitigate by contractors through an “active management of variability, starting with the structuring of the project - as a temporary production system - and continuing through its operation and improvement.”. Koskela’s seminal 1992 report argued that Construction Management is a transformationbased philosophy where the main focus is on transforming inputs to outputs with typically no management of the transformation process itself. He further stated that the mismatch between the conceptual models of construction management and observed reality on projects underscored the lack of robustness in the existing constructs of Construction Management and signaled the need for a comprehensive theory of production management in construction. As a result of an outward-oriented search into the production paradigms that dominated and competed in the manufacturing industries, namely, craft, mass and lean production paradigms, and using the ideal production system embodied in the Toyota Production System, Koskela conceived a more overarching production management paradigm for project-based production systems. Koskela presented the ‘TFV’ theory of production wherein production was conceptualized in three complementary ways, namely, as a Transformation (T) of raw materials into standing structures, as a Flow(F) of the raw material and information through various production processes, and as Value (V) generation and creation for owners through the elimination of value loss (realized outcome versus best possible). This tripartite view of production has lead to the birth of Lean Construction as a practice and discipline that subsumes the transformationdominated contemporary construction management. In this author’s view, a profound implication of the TFV concept of production is that it changes the definition of Construction Management to the judicious allocation of resources to transform raw

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materials into standing structures while maximizing flow of material and information, and value to the customer. Koskela and Howell (2002) have also argued that the management theory that underpins Project Management in general and Construction Management in particular was fraught with shortcomings– specifically as related to the planning, execution, and control paradigms – in dealing with project-based production systems. They suggested that planning-as-organizing, the action/language perspective, and the scientific experimentation model were critically needed elements to make Project Management theory more robust and contemporaneous. The Last Planner System® developed by Ballard and Howell (1994), is a production planning and control system that allows all team members to be active participants in the process and contemporaneously results in higher production unit performance and reliable work flow (hand-offs) between production units (see Ballard 2000 for more details). Both conceptualizations, the TFV and the new PM theory, provide a solid intellectual foundation of Lean Construction as evident from both research and practice. Also recognizing that construction sites reflect prototypical behavior of complex and chaotic systems, especially in the flow of both material and information on and off site, Bertelsen (2003) suggested that construction should be modeled using chaos and complex systems theory and specifically argues that construction could and should be understood in three complimentary ways, namely, as a project-based production process, as an industry that provides autonomous agents, and as a social system. The following figure depicts Lean Construction in terms of the new production and management theories, as well as the autonomous agents and social system view of Bertelsen (2003), and completes the entire façade of new paradigms that will govern Lean Construction research and practice for years to come (Abdelhamid 2004). Figure 1 Craft Production

Lean Production

TransformationFlow- Value Theory of Production Mass Production

Value Management

Construction as a Social System

Lean Construction

Construction Industry as autonomous agents

Management Theory PLANNING Management-as-Planning Management-as-organizing

EXECUTION Classical Communication theory Language/action perspective

CONTROL Thermostat model Scientific experimentation model

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Thus far, in this discussion, no explicit definition of Lean Construction has been stated. Prior to doing that, we must talk about Lean Production. Following is a wonderful and authentic excerpt describing what Lean Production is. This description also captures the essence of Lean Construction. The excerpt is from a June 16, 2004 posting by Mr. Norman Bodek to the NW LEAN group ( http://www.NWLEAN.net/ ). Mr. Bodek is considered the godfather of the lean movement outside of Japan. He translated and published the writings of Taiichi Ohno, Shigeo Shingo, Seiichi Nakajima, and others who were the architects behind the Toyota Production System. “…..Lean is fundamentally empowering all workers to be partners in your continuous improvement efforts. You ask them to make their work easier and more interesting. You challenge them to grow every day on the job. You ask them to cut costs, to improve safety, to improve quality and reduce the time line to deliver superior products and services to their customers. And you listen, listen, listen and learn from them. Of course, we focus on the wastes but we allow everyone to participate…………..There are two barriers to advancing lean manufacturing; one is just living in the old paradigm where we don't ask workers to be involved in creative problem solving. "Keep your brains at home," was the subliminal sign over the factory's front door." And secondly is the incredible resistance to change, the "not invented here syndrome." Yes, you can "always," find reasons not to do something. Most people are experts in this. There are those that like to play the "devil's advocate," and end up doing nothing………….Ohno and Shingo both loved to say simply - "Do it!" And then leave you the challenge to figure it out for yourself. They rarely ever had a cookbook approach for you. In fact, Ohno would never let anything be written down on how to do lean. He wanted it to be a system that allowed for constant change. Sure, their disciples created the Kaizen Blitz, which became a million dollar product for them. While others have created Six Sigma another million dollar product. Somehow we just resist change until everyone is doing it then we jump on the bandwagon” So, what is Lean Construction? A simple, not simplistic, definition is that Lean Construction is a “way to design production systems to minimize waste of materials, time, and effort in order to generate the maximum possible amount of value (Koskela et al. 2002)”. Another definition, that of this author, is the following: A holistic facility design and delivery philosophy with an overarching aim of maximizing value to all stakeholders through systematic, synergistic, and continuous improvements in the contractual arrangements, the product design, the construction process design and methods selection, the supply chain, and the workflow reliability of site operations. It is critical to note that while Lean Construction is identical to Lean Production in spirit, it is different in how it was conceived as well how it is practiced. Here’s a comparison between conventional CM and Lean Construction:

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Table 1 Conventional CM

Lean Construction

We know how to TRANSFORM materials into standing structures. We expect to have scope changes and design errors during construction, which will be field-engineered by construction team. We empower managers to be the SOLE planners.

We (still) know how to TRANSFORM materials into standing structures. We design product and construction process together to avoid design errors/omissions that lead to constructability issues. We empower managers to be the FIRST planners of processes and phases and foremen and workers to be the LAST planners of operations. We treat entire project as a system and use Target Costing to achieve project cost reductions – the whole is more than the sum of its parts We push for high system throughput which is the only way to achieve global efficiency.

We assume that reducing cost in one piece will reduce cost of the entire project – the whole is the sum of its parts We push for high local productivity mistakenly thinking that this is a way to achieve global efficiency. We manage the process using schedules of costaccruing elements – the ones on which progress payments are based. We are guided by the time/cost/quality trade-off paradigm. You can only get one of the two, but not the third. We don't plan or control site production operations unless they become off targeted time and cost - we wait until problems happen then react to get project back on track. We consider VALUE delivered to the owner when product performance is maximized relative to its cost – A Value Engineering (VE) approach.

We use schedules of cost-accruing elements as INPUT to the planning and control of site production operations. We challenge the time/cost/quality trade-off paradigm by removing the sources of waste in the design/production processes to promote better and more reliable WORKFLOW. We plan and control site production operations to preempt cost-accruing elements from going off targeted time and cost. We consider VALUE delivered to the owner when product value is increased (the facility better fulfills the true needs of the owner purposes) by managing construction process value – a Value-based Management (VBM) approach (Wandahl and Bejder 2003).

References Abdelhamid, T., S. (2004). “The Self-Destruction and Renewal of LEAN CONSTRUCTION Theory: A Prediction From Boyd’s Theory”. Proceedings of the 12th Annual Conference of the International Group for Lean Construction, 03-06 August 2004, Helsingør, Denmark. Ballard, G (2000). The Last Planner System of Production Control. PhD dissertation, University of Birmingham, UK. Ballard, G. and Howell, G. (1994a). “Implementing Lean Construction: Stabilizing Work Flow.” Proceedings of the 2nd Annual Meeting of the International Group for Lean Construction, Santiago, Chile. Ballard, G., and Howell, G. A. (2003). “Competing Construction Management Paradigms.” Proceedings of the 2003 ASCE Construction Research Congress, 19-21 March 2003, Honolulu, Hawaii. Bertelsen, S. (2003a). “Construction as a Complex System”, Proceedings of the 11th Annual Meeting of the International Group for Lean Construction, Blacksburg, Virginia. Clough, R. H. and Sears, G. A. (1994). Construction Contracting. Wiley, New York, NY. Koskela, L. (1992). “Application of the New Production Philosophy to Construction”. Technical Report # 72, Center for Integrated Facility Engineering, Department of Civil Engineering, Stanford University, CA. Koskela, L. (2000). An exploration towards a production theory and its application to construction, VVT Technical Research Centre of Finland. Koskela, L. and Howell, G., (2002). “The Underlying Theory of Project Management is Obsolete.” Proceedings of the PMI Research Conference, 2002, Pg. 293-302. Koskela, L., Howell, G., Ballard, G., and Tommelein, I. (2002). “The Foundations of Lean Construction.” Design and Construction: Building in Value, R. Best, and G. de Valence, eds., Butterworth-Heinemann, Elsevier, Oxford, UK. Wandahl, S., and Bejder, E. (2003). “Value-based Management in the Supply Chain of Construction Projects”. Proceedings of the 11th Annual Meeting of the International Group for Lean Construction, Blacksburg, Virginia, USA.

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