Why do Projects Excel? The Business Case for Lean! Bevan Mace October 5, 2016

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Does this sound familiar?

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The Business Case for Lean PROJECTS with HIGH LEAN INTENSITY are MORE LIKELY to complete AHEAD OF SCHEDULE & UNDER BUDGET

3X

2X

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Lean Construction Tenets

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Research Overview Owner Satisfaction/ Project Performance (Dodge) Objectives: 1. Benchmark owner satisfaction & project performance (value) 2. What is the impact of lean?

Integrated Lean Project Delivery (UMN) Objective: 3. How and why does integrated lean succeed?

Survey: 81 Owners/ 162 projects

Case Study: 10 Owners/ Projects

Industrial 15% Institutions 46%

Government 15% Developer 12% © Lean Construction Institute

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Satisfaction vs. Value Performance from Approval of Capital Project (% of Best/ Typical Projects) Completed Ahead of Schedule

Completed Under Budget

46%

24% 10%

6% -17%

-21%

Completed Behind Schedule

-49% -61%

Best Project

Completed Over Budget

Typical Project

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Total (n=81)

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Build the Team Timing of Key Stakeholder Engagement Best Projects:

42%

Typical Projects:

76% engage key stakeholders before or during conceptualization

25%

42% don’t engage key stakeholders until design development or later Typical

22%

Best Performing

15% 9%

17% 11%

9%

9%

7%

3% Pre-business case

16%

3% Business case validation (pre-design)

During conceptualization (0-15% design)

During schematic design (15-30%)

During design development (30-60%)

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4%

During construction End of construction documents documents or later (60-90%) (100% CD)

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Learn as a Team Methods with Most Degree of Difference Between Usage Part-time co-lo more common than full time

LPS more common in construction than in design Typical Projects

Best Performing Projects

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Total (n=81)

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Support the Team Top Project Delivery Methods on Typical and Best Projects (20% or more usage on either) 38%

Top Contracting Types on Typical and Best Projects 44%

41%

44% 38%

31% 22%

23%

20%

19%

14%

11% 1% Construction Design-bidManagement build at Risk

Integrated Project Delivery

1% Design-Build

Typical Project

Lump Sum

Guaranteed Maximum Price (with or without shared savings)

Cost Reimbursable With Target and Shared Risk/Reward

Best Performing Project

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Perform as a Team Percentage Reporting the Highest (4/4) Team Dynamics Ratings 68%

61%

54% 40%

10% Perception of Team Chemistry

11%

9% Integration of Project Team Members

Commitment of Team Members to Same Project Goals

Typical Project

5% Timeliness of Decision Making Related to Issue Resolution

Best Performing Project

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Succeed as a Team Correlation of lean intensity to outcomes (% likelihood on best projects)

2X 3X

Completed Ahead of Schedule Low Lean Intensity

Completed Under Budget High Lean Intensity

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Common Project Myths… 1. Delivery matters less than choosing the right people – behaviors can’t be dictated by a contract 2. IPD contracts are too complicated, Lean tools are too rigid 3. IPD only works on large complex healthcare projects – Teams new to IPD and lean are at a disadvantage 4. Owners aren’t getting best value – or – Owners are getting value but the team is not making profit 5. IPD and IPD-lite are essentially the same; financial incentives and release of liability are no big deal

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Tactical Takeaways for Projects • Set targets: Establish business case & define goals at c-suite • Build the team: Contract key stakeholders early to align & validate targets/ goals • Learn as a team: Train and provide on-going coaching/ support for key lean methods • Support the team: Contracts should support a good team culture and adoption of lean practices (not thwart) © Lean Construction Institute

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Learn More www.leanconstruction.org/learning

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Order publications to assist you and your team on your Lean Journey: www.leanconstruction.org/publications Connect with your local LCI Community of Practice: www.leanconstruction.org/local-communities/ Access tools: www.leanconstruction.org/learning/getting-started-with-lean/ © Lean Construction Institute

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