This post is the first in a series of blogs written on Lean-related topics that the DBIA Western Pacific Region has developed to help its membership understand what Lean is and how we can leverage Lean in the integrated nature of design-build projects to deliver even better projects. You may already have an understanding of Lean, or you may not even have heard of Lean. Our goal in these series of blogs is to develop a fundamental understanding of Lean as it applies to design and construction and to challenge our design and construction professionals to look for ways to create value through more effective collaboration, elimination of waste, and continuous improvement. Let’s start our Lean journey with a short assessment of where we are as an industry.
The Construction Industry - Current State
Our industry is confronted by challenging times. The quadrennial American Society of Civil Engineers 2017 Report Card on American Infrastructure gives the nation’s infrastructure an overall grade of D+. The report card estimates $4.59 trillion will be necessary to invest in our infrastructure by 2025 to meet our needs. To complicate matters, there is an expected funding gap of more than $2 trillion. It is unrealistic that our nation will be in a position to create an additional $2 trillion in funding over the course of the next few years to address these needs. So that begs the question “Is more funding the answer, or is the solution using the available funding in a manner that yields greater value?”
McKinsey published a study in 2017 titled Reinventing Construction: A Route to Higher Productivity. McKinsey shares that while construction-related spending accounts for 13 percent of the world’s Gross Domestic Product, there is a $1.6 trillion annual gap of additional value that could be realized if the construction industry were to simply match the productivity growth rates of the manufacturing and service sectors (Figure 1).
To compound matters we have an aging workforce and shrinking craft labor pool. We cannot expect to meet the world’s infrastructure and building needs with past practices. We need to take a fresh look at how to better deliver our design and construction of projects. Which takes us to Lean and a Lean mindset.
Lean – What is It?
The origin of Lean is in the manufacturing sector and specifically the Toyota Production System. While we do not design and assemble cars, Lean is directly applicable to design-build. Let’s look at some of the fundamentals and how they relate to design and construction.
Firstly, the foundation of Lean is built on respect for people. People design and build buildings. How do we leverage the centuries of cumulative experience on projects to the benefit of the project and to add the most value?
Value is central to everything in Lean. Identifying the value stream is key. Specifically, we need to start with understanding what the customer values. What is important to the customer? What are they willing to pay for? Things the customer does not value and is unwilling to pay for constitute waste. Our industry is laden with waste and there is ample opportunity to do better and create more value for our customers and in turn their internal customers on a project. Learning to see waste is the first step.
Once the value proposition is understood, Lean allows us to apply systems to enhance the flow of production. This could be flow of information and progression of a design package, flow of material and labor in a pre-fabrication environment, or production on-site with trade contractor material, equipment, and labor. The greater the reliability and predictably of flow, the better the production rate. We will learn in future blogs more about the Last Planner® System and how it can be used for production planning to effectively identify and manage handoffs between the more than a dozen design disciplines and multitude of trade contractors on a project to better enhance flow of work. While we are very good at our own disciplines and areas of expertise, we collectively do a poor job of integrating across these disciplines. This is where much of the waste occurs in design and construction.
Let’s discuss in greater detail one of the biggest impediments to value generation in our industry - waste. Waste is defined by dictionary.com as “an act or instance of using or expending something carelessly, extravagantly, or to no purpose.” There are 8 wastes in any production system. Let's look at each of these in the context of our project delivery process with examples:
Overproduction - oversizing space, overly conservative structural connections, oversized mechanical or electrical systems, excess material and subsequent waste stream to handle
Waiting - Waiting on information during design, waiting on permits, waiting on inspections, waiting on earlier trades, waiting on material
Unnecessary Transport - moving material or earthwork multiple times
Over-processing - requests for information, unnecessary submittals, unnecessary contract terms, unnecessary and untimely reporting
Excess Inventory - ordering more material than needed "just in case" we need it
Unnecessary Movement – wasted motion by craft labor; “measuring twice, cutting once” (in an ideal world, we should be able to measure once and cut once getting it right the first time)
Defects - rework, design and coordination errors and omissions
Unused employee creativity - not leveraging means and methods input into the design solution, not sharing ideas because it's not my job and the environment does not encourage it
Doubtless you have experienced and witnessed examples of waste on your projects regularly and most probably on a daily basis.
The Business Case for Lean – The Owners’ Perspective
In 2016, Dodge Data and Analytics conducted a study of 81 owners in the United States with large construction portfolios asking them to share the characteristics of the best project they had ever delivered as an owner and those of their typical projects. The results of the study showed that projects using Lean practices with high intensity were 3 TIMES as likely to finish ahead schedule and 2 TIMES as likely to finish under budget. How do we make that performance level consistent? We can achieve this by integrating the Lean practices shown to have the greatest impact based on the greatest degree of difference between best and typical projects shown in the chart below (Figure 2).
Future blog posts will address each of these Lean practices in more detail.
In 2017, a joint working group was developed with members from DBIA and the Lean Construction Institute to explore how best to develop awareness and greater Lean adoption as part of design-build project delivery. As part of this effort, a cross-map was developed between the DBIA Design-Build Done Right: Best Design-Build Practices published by DBIA in 2014 and Lean practices. It is available at this link.
Progressive Design-Build and Lean
As the Design-Build community moves towards greater use of progressive design-build, the opportunities to integrate Lean into the way we design and deliver projects are significant. Design-build delivery is projected to represent 44% of the non-residential construction market by 2021 based on a study by FMI published in June 2018 (Figure 3).
With this market share, the potential to reach a tipping point in the way we deliver our projects using Lean is within our grasp.
Now that you have some knowledge, what are you going to do about it?
“The man who moves a mountain begins by carrying away small stones.” - Confucius