LEAN CONSTRUCTION: THE NEW STANDARD, AND THE FACILITY LIFECYCLE PERFORMANCE BOTTOM-LINE JULIAN A. J. ANDERSON, RIDER LEVETT BUCKNALL, PRESIDENT NATALIE J. SAYER,THE BLAIR DAVID COMPANY, PRINCIPAL 1
True or False PROJECT TIME PRESSURES ARE DECREASING. OWNERS HAVE LOADS OF MONEY FOR PROJECTS. BUILDINGS ARE BECOMING LESS COMPLEX. COMPETITIVE PRESSURES ARE DECREASING. EMPLOYEE SATISFACTION IS AT AN ALL TIME HIGH. YOU CAN HAVE IT ALL - QUALITY, COST AND TIMING. 2
Lean is not WHAT WE VE ALWAYS DONE. A SINGULAR TOOL. A WORKFORCE REDUCTION METHOD. A QUICK FIX. A COST CUTTING METHOD. A MANUFACTURING PROGRAM. A PROJECT. A QUALITY SYSTEM. A PASSING FAD PROGRAM OF THE MONTH. SOMEONE ELSE S JOB. 3
Lean Spectrum? X Lean? Buzz Word Tools Pilot Projects Project Method Operating System Culture Mindset Being 4
Lean is Delivering VALUE Effectively CUSTOMERS RESPECT FOR PEOPLE CONTINUOUS IMPROVEMENT 5
Customers Internal External 6
Customer Defined Value Done right the first time Transforms Customer is willing to pay for it The customer is the only one who defines value Value is not defined by cost only. 7
Value Stream Information Flow Activity Flow Process Time Line Delivering Value to the Customer 8
What is waste? Mura Muri Muda Variation Overburden or Stress People - Process - System Defects Overproduction Waiting Not utilizing people Transportation Inventory Motion Excess processing Symptoms of waste schedule delays, safety issues, budget overages, change orders, rework, no flow, manpower spike. 9
Lean is Mindset Operating System customer value perfection Principles flow pull Toolbox value stream everyday improvement COMPETITIVE ADVANTAGE 10
Aspects of a Lean Mindset Know how the customer" defines value Understand the overall value-stream Everyday improvement to eliminate root causes Respect, engage and develop people Optimize the whole Work to stabilize, standardize and flow activities and information Eliminate waste in everything you do Pull instead of push Know your True North Never-ending journey 11
Never-ending Quest for Improvement Flow Pull Perfection 12
The Tool Box EBD CBA Spaghetti chart 13
Leadership and Culture Change Lean cannot be delegated and last Lean becomes the foundation for how you think about and do business Leadership s role is to create clear vision, build people s capability, and continuously improve. Expect and empower people to solve problems and improve work collaboratively Go to the Actual Place + Observe Actual Conditions + Collect Actual Facts Solve Problems & Improve 14
Leadership and Culture Change COACHING, CURIOSITY AND CHALLENGE 15
Leadership and Culture Change COLLABORATION AND CONTRIBUTION IN EVERY INTERACTION EVERY MOMENT OF EVERY DAY YOU CAN BUILD TRUST AND RESPECT 16
Why Lean Construction why now? PRODUCTIVITY IN US CONSTRUCTION INDUSTRY. BUILDING OWNERS WANT: BEST VALUE FOR INVESTMENT; PLAN PREDICTABILITY; PRICE STABILITY; AND IMPROVED QUALITY. CAPITAL SUPPLY. OWNERS IMPLEMENTING LEAN. COMPETITIVE ADVANTAGE. COLLECTIVE IMPROVEMENT WILL IMPROVE THE QUALITY AND REPUTATION OF THE OVERALL INDUSTRY. Source: Teicholz, Paul. Labor Productivity Declines in the Construction Industry: Causes and Remedies. AECbytes Viewpoint. Issue 4. April 14, 2004 17
To embrace this early involvement requires a mindset shift - to see money as an investment in whole, rather than control of piece. - Greg Howell 18
Lean Construction is the application of Mindset Operating System LIFECYCLE Principles customer value flow value stream perfection pull everyday improvement to CONSTRUCTION PROJECTS Toolbox Production-management based approach to project design and delivery. Changes how work is done throughout delivery process. Reliable release of work assures value delivery and waste reduction. Increases collaboration and reliability of commitments. 19
Project Traditional Projects Lean Construction Projects CPM (push) Last Planner System (pull) Command and Control Collaborate Distribute Authority Transactional Relational Shared Risk Organization Lean Construction shifts project delivery from focus of optimizing the piece to optimizing the over project and flow. Greg Howell, Lean Construction Institute 20
Progress Measurement Challenges Wide variation in the definition of Lean in Construction. No two projects are identical. Lack of consistent measurement methods. Many of the pioneering projects and companies have not recorded their stories. 21
Pioneering Lean Construction Projects Data from Pioneers Push Paradigm Shift, ENR, 9/19/2011, Nadine M. Post, McGraw-Hill Sutter Health Eden Medical Center Newsroom, Project Highlights $320M Sutter Health Hospital 230,000 ft2. 130 Beds, Bay Area, OSHPD. 11 Party Integrated Form of Agreement 2007, broke ground July 2009. Target Value Design (TVD), BIM, Lean. Keys given July 13, 2012. Move day December 1, 2012. On time. On budget. At 70% Complete 333 RFIs vs. ~ 3000 traditionally. 26 Owner initiated Changes vs ~ 400 traditionally. As of July 2012 $2.2M of $5.8M left in contingency. Sutter Health Eden Medical Center Reprinted courtesy of Engineering News-Record, copyright The McGraw Hill Companies, Inc., September 19, 2011, All rights reserved. 22
Pioneering Lean Construction Projects Texoma Medical Center UHS Denison, TX 2007-2009 UHS Lean Project Delivery Guide Published 2011 What They Wanted at the Start $94 Million - $4 million cost reduction. Deliver in 17 Months 11/2009. No punch list. No injuries. No RFI s. No Change Orders. No Rework. What Happened at the End $97.9 Million: $1.7M Savings Pool/$7M Value Adds. Delivered 1st wk 12/09 (In spite of 87 Rain Days). No punch list at owner turnover. 4 minor recordable injuries. 190 RFI s (40 early steel pkg./most confirming). $1.4M Change Orders ($1.1 Owner Driven). Rework greatly minimized through collaborative efforts. From UHS Lean Project Delivery Guide, Appendix 1 Why Lean? Presentation by Universal Health Services William Seed 23
Pioneering Lean Construction Projects Plagued With Lawsuits, UCSF Adopts Lean Construction, ENR 06/27/2012, By Kathie Sutin in St. Charles, Mo. University of California, San Francisco - Capital Programs 2004 Michael Bade arrives to 4 or 5 previous projects in court or mediation. 2006 California legislature allows Best Value which acts as an enable for Lean Project Delivery. 2010 Completed $254M Cardiovascular Research Building, 10 weeks early Completed $123M Regeneration Medicine Building, on-time Both used Lean techniques. 2014 Projected Completion of Medical Center at Mission Bay $1.5B, projected early and $200M under budget Lean techniques utilized. Public projects have different contractual issues; Lean can still improve the delivery 24
Side by side Comparison: Non-Lean Client ThyssenKrupp Steel and Stainless USA, Mt. Vernon, Alabama Baker Concrete Supplier Additional Results: Safety 65% than 2009 Co. Averages. 75% Framework Rental. 28% Equipment Rental. 68% EOJ OT. 17.4% Total Cost Difference. 19% Duration. 12% Productivity. Data and image used with permission from David MacNeel, case study originally presented at LCI 14th Congress 2012 25
Other Projects and News Dining hall renovation 5 weeks early SkyHouse high-rise Orlando, FL Company-wide Cafeteria staff perfected processes Safety Stand-Down on Lean Construction Sept. 2012 Better served students Faster completion and millions less cost compared to conventional construction. Improved quality. Less shouting. Lean construction methods let tower rise fast in downtown Orlando, Spear, Kevin, Orlando Sentinel, March 10, 2013 26
FMI Productivity Report 2012 U.S. Construction Industry Use of new technologies like building information modeling and Lean construction practices increasing. 42% Respondents used prefab productivity 10%. 35% Respondents used IPD 19% reporting significant productivity increase. BIM and IPD use increasing use increasing productivity. 72% Familiar with Lean. 30% lack of clarity as to what Lean is. 44% used formal Lean practices. Top Challenges to Productivity: Poor quality plans/specs. Slow responses from teams. Poor coordination Owners, GC, CM. Unrealistic schedule demands. Lack of available/qualified field managers. 27
Pioneering Lean Owners Driving IPD in capital projects. UHS Moving toward full IPD on projects over $5M Are choosing partners based on Lean experience. Want more qualified Lean partners across the country. Want Design and AEC teams to focus more on total lifecycle costs. 28
Regions of Most Lean Construction Activity in US Since 2005 Lean in Construction has been gaining momentum in some regions of the USA, but implementation is just beginning. 29
LCI Growth LCI Corporate Membership 80 LCI Individual Membership 600 70 500 60 400 50 40 76 30 20 49 300 520 200 41 100 10 0 386 247 0 2010 2011 2012 Growth of Corporate Membership by year 2010 2011 2012 Growth of Individual Membership by year 30
LCI AGC Growth LCI Communities of Practice (CoP) AGC Lean courses 30 2012 (1st year) 1200 people trained. 11 locations across US 25 20 15 10 16 22 24 5 0 2010 2011 Growth of CoPs by year 2012 2013 More courses. More locations. 3 new CoPs are in the early formation stage in 2013. Most interest from Building membership. Interest increasing variation across chapters. AGC Lean Construction Forum LCI Partnership 31
Perspective from the Lean Pioneers It s about people more tools less. The people doing the work are best to improve it. Big Room challenges with dispersed teams. Breaking down silos leads to better work. More time to do value-added work. BIM, when implemented early, leads to better projects. Less stress even when solving problems. 32
Perspective from the Lean Pioneers Beware of the belief Lean? We already do that. Lean requires discipline, perseverance, and hard work. Focus on delivering Value better projects, better industry. Change the way we look at and deliver value. Get the right partners for the projects. Invest time in culture development. 33
Trends in Lean Construction Lean expanding in University Programs. Early adopters are expanding Lean implementation beyond projects and into their organizations. Facilities Managers, like David Umstot, SDCCD vice chancellor Are applying Lean in maintenance operations, Want life cycle costs to drive design decisions. 34
Resistance and Barriers to Implementation Lack of understanding of what Lean Construction is and its benefits. Belief that it is a fad or doesn t apply to them. Lack of Owner or Top Management involvement and commitment. Historical adversarial culture of the industry. Poor communication and collaboration. Lack of an embedded culture of transparent, synchronized cost management. No direct measurements of overall implementation. The mindset that it takes too much time prevents many from starting. 35
The Choice is in your hands How it s been How it could be 36
Tradeline Three 1. Pioneers see Lean as a competitive advantage Improved safety. Better quality. Better value delivery. Fewer RFIs and change orders. Increased schedule stability and performance Increased productivity. Projects are just more fun. 2. Owners looking for more value for investment dollars Healthcare. Education. 3. You don t need to be an expert to get started Learn more read, AGC classes, learn by doing, study trips, etc. Go to LCI Communities of Practice (CoPs) and events to connect with thought and experience leaders. Focus more on Value Delivery and the way you think about and perform your work. 37
Questions? JULIAN A. J. ANDERSON PRESIDENT RIDER LEVETT BUCKNALL JULIAN.ANDERSON@US.RLB.COM WWW.AMERICAS.RLB.COM NATALIE J. SAYER PRINCIPAL & FOUNDER THE BLAIR DAVID COMPANY THEBLAIRDAVIDCOMPANY@GMAIL.COM THANK YOU! 38