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 CONSTRUCTION INDUSTRY INSTITUTE®

ROADMAP FORLEAN IMPLEMENTATION

AT THE P ROJECT LEVEL

UNIVERSITY OF CALIFORNIA, BERKELEY

GLENN BALLARD
MIN LIU

UNIVERSITY OF WASHINGTON

YONG-WOO K IM

STATE UNIVERSITY OF NEW YORK

COLLEGE OF ENVIRONMENTAL SCIENCE AND FORESTRY

JIN-WOO JANG

Research Report 234-11

ROADMAP FOR LEAN IMPLEMENTATION AT THE PROJECT LEVEL

by

Glenn Ballard
University of California, Berkeley

Yong-Woo Kim
University of Washington

Jin-Woo Jang
State University of New York
College of Environmental Science and Forestry

Min Liu
University of California, Berkeley

A Report to
Construction Industry Institute
The University of Texas at Austin

Under the Guidance of

CII Research Team 234
Implementation Road Map of Lean Construction at Project Level

CII Research Report 234-11

October 2007
© 2007 Construction Industry Institute®.

The University of Texas at Austin.

CII members may reproduce and distribute this work internally in any medium at no cost to internal recipients. CII members are
permitted to revise and adapt this work for the internal use provided an informational copy is furnished to CII.

Available to non-members by purchase; however, no copies may be made or distributed and no modifications made without prior
written permission from CII. Contact CII at http://construction-institute.org/catalog.htm to purchase copies. Volume discounts
may be available.

All CII members, current students, and faculty at a college or university are eligible to purchase CII products at member prices.
Faculty and students at a college or university may reproduce and distribute this work without modification for educational use.

Printed in the United States of America.

 Table of Contents
List of Tables ......................................................................................................... ix

List of Figures ..........................................................................................................x

Executive Summary ............................................................................................... xi

1.0 Introduction..............................................................................................................1

1.1 What is “Lean”?...........................................................................................1

1.2 Why you should implement lean on your projects ......................................4

1.3 Project production systems ..........................................................................4

1.3.1 Lean Project Delivery System ...................................................5

1.3.2 How projects differ from other types of production system ......7

1.4 How is lean project delivery different from current best practice? .............9

1.5 Muri, Mura, Muda......................................................................................12

1.6 Structure of the report ................................................................................14

2.0 Research Strategy...................................................................................................16

2.1. Research objectives....................................................................................16

2.1.1. Understand how lean has been implemented in construction..16

2.1.2. Identify lean tools specific to project production systems.......16

2.1.3. Investigate relations between lean metrics and traditional

project performance metrics ....................................................17

2.1.4. Analyze the success factors and challenges of a lean journey.17

iii
 2.1.5. Develop a roadmap for each phase of a project.......................17

2.1.6. Provide know-how on a lean journey ......................................18

2.1.7. Identify the role in lean implementation of each member of the

project team..............................................................................18

2.2. Research methodology...............................................................................18

2.3. Research methods ......................................................................................20

2.3.1. Case study ................................................................................20

2.3.2. Field trials ................................................................................21

2.3.3 Statistical analysis....................................................................22

2.4. Data generation and analysis .....................................................................24

2.4.1. Case selection...........................................................................25

2.4.2. Interviewing .............................................................................25

2.4.3. Document analysis ...................................................................26

2.4.4. Observation ..............................................................................27

2.4.5. Evaluation of data source.........................................................27

2.4.6. Data analysis and validation ....................................................28

2.5. Research Plan Chart...................................................................................29

3.0 Review of the Literature ........................................................................................30

3.1 Toyota ........................................................................................................30

3.1.1 Toyota Production System (TPS) ............................................31

3.1.2 Toyota Product Development System (TPDS) ........................36

3.1.3 The Toyota Way ......................................................................51

iv
 3.1.4 Toyota’s impact beyond manufacturing ..................................54

3.2 Lean in Construction..................................................................................55

3.2.1 Organizations promoting lean in construction.........................56

3.2.2 Project case studies on lean implementation ...........................61

3.2.3 Relevant Previous CII Research ..............................................66

3.3 Organizational Change...............................................................................74

3.3.1 Kotter’s Model .........................................................................74

3.3.2 Large Group Method................................................................76

3.3.3 Changing Culture through Supervisory Practices....................79

3.3.4 Individual Change....................................................................80

4.0 Findings from Case Studies, Field Experiments and Statistical Analyses.............83

4.1 Statistical analysis of the correlation between PPC and productivity........84

4.2 Case studies................................................................................................86

4.2.1 Case study process and interview questions ............................87

4.2.2 Participants in the case studies.................................................88

4.2.3 Summary of case studies..........................................................90

4.2.4 Findings from case studies.......................................................94

4.3 Field trials ................................................................................................130

4.3.1 Field trial process...................................................................130

4.3.2 Summary of field trials ..........................................................130

5.0 Conclusions and Recommendations ....................................................................135

v
5.1 Starting your lean journey........................................................................135

5.2 Guidelines for organizational change ......................................................137

5.3 Implementing lean on projects.................................................................139

5.4 Implementation issues by project role .....................................................143

5.4.1 Owners and Owner Agents ....................................................144

5.4.2 Process Managers...................................................................144

5.4.3 Design and Construction Specialists......................................145

5.5 Recommendations for future research .....................................................149

5.5.1 What should owners demand of their service providers? ......149

5.5.2 Enabling pull by reducing lead times and extending the project

window of reliability..............................................................150

5.5.3 Links between Lean and Safety .............................................151

5.5.4 How to better incorporate facility use and running costs into

capital facility planning?........................................................151

5.5.5 How to better achieve Built-in Quality? ................................152

5.5.6 Demand variability and its consequences in construction .....153

5.5.7 Tolerance management ..........................................................154

5.5.8 Building to a model................................................................155

5.5.9 Set based design.....................................................................155

5.5.10 Lean, Green and Technology.................................................155

5.5.11 How lean can mitigate negative forces in the construction

industry ..................................................................................156

5.5.12 Confirmation and analysis of critical relationships ...............156

vi
 5.5.13 Effective lean implementation ...............................................157

Appendices..............................................................................................................158

A. Lean Construction Principles from PT 191...................................................159

B. Field Trials ....................................................................................................161

B.1 Abbott/Riley Construction ....................................................................162

B.2 Dow Chemical.......................................................................................170

B.3 Ilyang Construction ...............................................................................179

C. Case Studies ..................................................................................................187

C.1 Air Products...........................................................................................188

C.2 BAA/LOR .............................................................................................195

C.3 General Motors......................................................................................210

C.4 Sutter Health..........................................................................................217

C.5 Integrated Project Delivery ...................................................................241

C.6 Boldt ......................................................................................................254

C.7 GS Construction ....................................................................................266

C.8 Messer Construction..............................................................................277

C.9 Walbridge Aldinger...............................................................................288

C.10 BMW Constructors .............................................................................299

C.11 Dee Cramer .........................................................................................305

C.12 Ilyang...................................................................................................312

C.13 Southland Industries............................................................................320

C.14 Burt Hill Architects & Engineers ........................................................337

vii
 C.15 Spancrete .............................................................................................350

D. Statistical analysis of the correlation between PPC and productivity...........358

D.1 Overview of the project.........................................................................358

D.2 Description of the work areas and crews ..............................................359

D.3 Limitations of the data ..........................................................................361

D.4 Data analysis and findings ....................................................................363

D.4.1 Testing an hypothesis.....................................................................363

D.4.1.1 Group A (Working Area A-G, 90 data points) .........................365

D.4.1.2 Group B (work area H&K, 22 data points).............................368

D.4.1.3 Group C (work area J, 20 data points) ....................................369

D.4.2 The regression equation of productivity and PPC .........................370

D.4.3 Other findings ................................................................................378

D.4.3.1 The relationship between load and output variation and

productivity ....................................................................................378

D.4.3.2 PPC and productivity correlation as work load changes.........379

D.4.3.3 Productivity and work load rate ..............................................384

D.4.3.4 Statistical analysis tables and figures......................................387

D.5 Conclusions...........................................................................................400

References...............................................................................................................403

viii
 List of Tables

Table 3.1 Summary of Previous CII Research on Lean Construction...............................73

Table 4.1 Summary of survey findings-owners.................................................................90

Table 4.2 Summary of survey findings-GCs .....................................................................91

Table 4.3 Summary of survey findings-specialty contractors ...........................................92

Table 4.4 Summary of survey findings-architect/engineer and suppliers..........................93

Table 5.1 Roadmap for implementing lean on projects...................................................140

Table 5.2 Implementation by project role........................................................................146

ix
 List of Figures

Figure 1.1 Lean Project Delivery System ............................................................................7

Figure 1.2 Range of Projects..............................................................................................10

Figure 2.1 Research Methods ............................................................................................22

Figure 2.2 Case Studies......................................................................................................25

Figure 2.3 Interview Question Categories .........................................................................26

Figure 2.4 Research Structure............................................................................................29

Figure 3.1 House of Toyota ...............................................................................................32

Figure 3.2 Example of Set-Based Concurrent Engineering...............................................40

Figure 3.3 “4P” of the Toyota Way (Liker, 2004).............................................................52

Figure 4.1 Lean Tools from Case Studies........................................................................109

Figure 4.2 Target Costing in Construction ......................................................................117

Figure 4.3 Success Factors and Barriers ..........................................................................130

Figure 5.1 Starting your lean journey ..............................................................................136

x
 Executive Summary
CII Research Team 234 was launched to understand secrets of success in applying lean at

the project level and to translate this understanding into an implementation road map.

What is “Lean”?

Lean is a fundamental business philosophy—one that is most effective when shared

throughout the value stream. “Base your management decisions on a long-term

philosophy, even at the expense of short-term financial goals” and “Grow leaders who

thoroughly understand the work, live the philosophy, and teach it to others” are 2 of the

14 principles listed in The Toyota Way (Liker, 2004).

As a business philosophy, lean is naturally applied at the enterprise level, but can also

be applied within business divisions, on projects, or even applied to specific processes.

The focus of this research is implementation of lean on projects. To the extent that we

treat enterprises or processes, we do so within the context of projects.

Roadmap for Lean Implementation on Capital Projects

Your power to do the following will vary with position and circumstance, but to the

extent you can, you should:

• select partners or suppliers who are willing and able to adopt lean project delivery

• structure the project organization to engage downstream players in upstream

processes and vice-versa, and to allow resources (e.g., money, float, equipment,

xi
 people) to move across organizational boundaries in pursuit of the best project-

level returns

• encourage thoughtful experimentation and celebrate breakdowns (plan failures,

product defects) as opportunities for learning rather than occasions for punishing

the guilty

• practice production control in accordance with lean principles such as making

work flow predictable and using pull systems to avoid overproduction

• do target costing: define and align project scope, budget and schedule to deliver

customer value, while challenging previous best practice

• practice set based design: make design decisions at the last responsible moment,

with explicit generation of alternatives, and documented evaluation of those

alternatives against stated criteria

• build quality and safety into your projects by placing primary reliance on those

doing the work of designing and making, by acting to prevent breakdowns,

including use of pokayoke (error proofing) techniques, by detecting breakdowns

at the point of occurrence, by taking immediate corrective action to minimize

propagation, and by acting on root causes in order to prevent reoccurrence

Although some have more power than others to implement lean on projects, no one is a

helpless victim of fate. Everyone can strive to become a lean enterprise. Everyone can

pursue the lean ideal. Everyone can apply lean principles and methods to their own

processes. Everyone can invite their customers, suppliers and partners to join them on the

lean journey.

xii
 1.0 Introduction
CII Research Team 234 was launched to understand secrets of success in applying lean at

the project level and to translate this understanding into an implementation road map.

This involves understanding the peculiarity of projects as a type of production system, the

adaptation of lean principles and methods appropriate to this type of production system,

and the differences in roles and relationships among project participants and how those

differences impact implementation. Our scope was restricted to the project, and only

deals with extra-project activities that are relevant to project management; for example,

anticipating how the facility to be delivered by the project will be operated, maintained,

altered, and ultimately decommissioned. This introduction explains how the research

team understood and carried out its mission and how the remainder of the report is

structured.

1.1 What is “Lean”?

The term “Lean Production” was coined by a member of the International Motor Vehicle

Research team to designate what the researchers saw as a new and superior type of

production system for motor vehicles (Womack et al, 1990). The researchers were

persuaded by the difference in comparative performance measures between Japanese,

American and European companies. Subsequently, it was found that the Japanese

advantage was largely because of Toyota, and many academics and practitioners now

believe that the Toyota Product Development System and the Toyota Production System

1
are exemplars for a new and superior way of designing and making all kinds of products,

both goods and services.

When Lean first became popular and more widely known, there was a tendency to see

it as a collection of tools and techniques, but it is now widely recognized as a

fundamental business philosophy. “(Our) final conclusion is that lean cannot be reduced

to a set of rules or tools. It must be approached as a system of thinking and behavior that

is shared throughout the value stream.” (p.4, Executive Summary, RT191 research report:

cf. Diekmann, et al, 2004).

Lean can be characterized in terms of objectives, principles, and methods or tools.

The Lean Ideal is to provide a custom product exactly fit for purpose delivered instantly

with no waste Are you attempting to conduct your business or deliver your projects while

maximizing value and minimizing waste? If so, then in a minimal sense, you are lean.

But it would make little sense to call someone lean who claims to pursue those objectives

but disregards fundamental principles such as those identified by CII PT 191, which

focus on the process level, or the 14 principles defined in Jeffrey Liker’s The Toyota

Way, which deal with the lean enterprise. The same holds for those claiming allegiance to

these principles but not using available methods. For example, a candidate might

proclaim the principle of Creating Connected Process Flow, but fail to use pull

mechanisms to release work between specialists or fail to reduce batch sizes or fail to

right size work-in-progress inventories. Lastly, since lean is a never ending journey in

pursuit of perfection, it is more appropriate to ask about the rate of learning rather than

the level of conformance to the ideal—remember the fable of the Tortoise and the Hare.

2
 How can you tell if a project or company is lean? Assess yourself by answering the

following questions:

• Are you pursuing the lean ideal?

• Are you following the appropriate principles in your striving for the lean ideal?

• Are you using the best methods for implementing those principles?

• How fast are you learning as a project organization?

Incorporation of lean into the theory of production has lagged behind innovations in

practice. Factory Physics (Hopp and Spearman, 2000) is one important attempt to

incorporate lean into the theory of manufacturing management. Toyota’s Product

Development System has attracted even less theoretical inquiry, but there have been

notable exceptions, principally the work of Ward, Sobek, and Liker1. Researchers in the

International Group for Lean Construction (www.iglc.net) are working to adapt lean

concepts and techniques to projects, and especially to construction projects, conceived as

a type of production system.

As for practice, lean has spread widely in manufacturing, moving far beyond the

automobile sector where it originated and also beyond the shop floor into white collar

functions. Lean has also spread from manufacturing into product development, services,

air and sea ship building, software development, and health care delivery, to mention but

a few.

1
See Ward, et al. (1995), Sobek, et al. (1998), Sobek, et al. (1999) and Liker (2004)..

3
1.2 Why you should implement lean on your projects

You may have a wide variety of reasons for implementing lean on your projects, but all

fall under the objective of generating greater value with less waste. What counts as value

varies with circumstance. For example, one owner involved in this research launched lean

project delivery in order to make themselves more attractive as a client, and hence

increase their access to scarce resources in an oversubscribed market.

Lean project delivery does not establish values, but rather seeks to continuously

increase the capability of delivering what is of value to specific customers in their

specific circumstances, and doing so with less waste of time, of capacity, of spirit, of

everything. Hitting a market window, minimizing environmental impacts, becoming

more reliable in reaching performance targets, reducing running costs, improving facility

outputs, becoming a better member of a community—these and many more objectives

may define customer value. You should implement lean on your projects in order to

develop and exploit this value generation and waste reduction capability.

1.3 Project production systems

The background for this research is the work of CII Project Team 191, which

differentiated the enterprise, project, and process levels of lean implementation, and

explored application of lean methods and tools to processes on construction sites.

Although our research focus is the project, we have become convinced in the course of

this research that at least the organization driving the project must be committed to

becoming a lean enterprise in order that project implementation have the best chance of

4
success. Without deep commitment and consistent leadership, project teams tend to slip

back into old habits of thought and action once the going gets tough. Consequently, we

have chosen to provide a roadmap for implementation of lean on ‘demonstration’

projects, meaning that the project is understood, structured, and managed by at least one

member of the project delivery team as an exploration how to apply or adapt some lean

principles or techniques to that organization’s delivery of projects.

1.3.1 Lean Project Delivery System

What we mean by a project is shown in Figure 1.1, a diagram of the Lean Project

Delivery System 2 . Projects have long been understood in terms of phases, e.g., pre-

design, design, procurement, installation and commissioning. One of the key differences

between traditional and lean project delivery concerns the relationship between phases

and the participants in each phase. The model in Figure 1.1 represents those phases in

overlapping triangles, the first of which is Project Definition, which has the job of

generating and aligning customer and stakeholder values, constraints, and design

concepts.. Those three elements may each influence the other, so a conversation is

necessary among the various stakeholders. Typically, like a good conversation, everyone

leaves with a different and better understanding than anyone brought with them.

Traditionally, project definition has been done by the architect (or engineer, for non-

building projects) working alone with the client. In Lean Project Definition,

representatives of every stage in the life cycle of the facility are involved, including

members of the production team that is to design and construct. Alignment of values,

2
The diagram and explanatory text are reproduced with permission from Best and de Valence (2002).

5
concepts, and criteria allows transition to the Lean Design phase, in which a similar

conversation occurs, this time dedicated to developing and aligning product and process

design at the level of functional systems. During this phase, the project team stays alert

for opportunities to increase value. Consequently, the project may revert to Project

Definition. Further, design decisions are systematically deferred to allow more time for

developing and exploring alternatives (Liker, 2004): Make decisions slowly and

implement quickly.). By contrast, traditional design management is characterized by

demands for a freeze of design and by a tendency to rapidly narrow a set of alternatives

to a single selection. Although done in the name of speed (and often encouraged by

limited design fees), this causes rework and turmoil, as a design decision made by one

specialist conflicts with the design criteria of another. The “set based” strategy employed

in Lean Design allows interdependent specialists to move forward within the limits of the

set of alternatives currently under consideration. Obviously, time is rarely unlimited on

capital projects, so selection from alternatives must eventually be made. The practice in

lean design is to select those alternatives at the last responsible moment, which is a

function of the lead time required for realizing each alternative. Reducing those lead

times by restructuring and streamlining supply chains allows later selection and thus

more time invested in designing and value generation.

The transition to detailed engineering occurs once the product and process design for

a specific system has been completed and released for detailing, fabrication, and delivery.

At least the latter two functions occur repetitively over the life of a project, hence the

model shows Fabrication and Logistics as the hinge between Supply and Assembly.

6
 Assembly completes when the client has beneficial use of the facility, which typically

occurs after commissioning and start-up. The management of production throughout the

project is indicated by the horizontal bars labeled Production Control and Work

Structuring, and the systematic use of feedback loops between supplier and customer

processes is symbolized by the inclusion of post occupancy evaluations.

Alteration &
Means (Design Product Fabrication & Commission- Decommission
Ends
Concepts) Design Logistics ing -ing

Process Detailed Operations &

Constraints Installation
Design Engineering Maintenance

Project Definition Lean Design Lean Supply Lean Assembly Use

Production Management :: Production Control and Work Structuring

Learning Loops

Figure 1.1: Lean Project Delivery System

1.3.2 How projects differ from other types of production system

What are the characteristics of projects that make a difference for lean implementation?

We understand a production system to be a collection of people and other resources

organized to design and make something of value to a customer. The product can be

goods or services, and are of value only to the extent that they enable realization of

7
customer or stakeholder purpose. Projects are one type of production system, but a very

important type because all products are designed and made the first time in projects, even

products like cars and refrigerators that are mass produced.

Note that the delivery of capital facilities is one subset of projects. To the extent that

capital projects involve making things, the concepts and methods of the Toyota

Production System definitely apply, but for projects as a whole, Toyota’s Product

Development System is a more appropriate model and inspiration because product

development is also a type of project production system, and requires integration of

designing and making.

Turning to the issue of differentiating characteristics, the first is that projects start by

specifying customer value through an iterative and generative process, as opposed to

production systems devoted exclusively to making, which start from customer orders for

products that have previously been defined and designed. Those responsible for filling

the order have nothing to say about what the customer actually needs, if they can afford

it, or how multiple stakeholders will be satisfied. This scenario is well known to those

familiar with value stream mapping, where value can be defined as that which is

necessary to complete the customer order without reference to how the customer will use

what is ordered or why they need it.

A second differentiating characteristic of projects is that load on the system changes

both qualitatively and quantitatively during the course of a project. Consequently the

principle of achieving production system stability (avoiding mura—see 1.5) must be

achieved primarily by making the change in loads predictable rather than invariant.

8
 A third differentiating characteristic is a direct consequence of the inclusion of

definition and design in projects; namely, that direct collaboration is necessary between

multiple specialists in order to achieve optimal project outcomes, as opposed to

synchronization of interdependent specialists as occurs in lean manufacturing.

A fourth differentiating characteristic is a consequence of the previous three; namely

that relational contracts are needed to structure the project organization and align

incentives, as opposed to transactional contracts. Relational contracts are agreements

among the parties about how to work together toward the lean ideal, as opposed to

transactional contracts that specify terms of exchange.

1.4 How is lean project delivery different from current best

practice?

PMI’s Project Management Body of Knowledge (Project Management Institute, 2006) is

representative of a number of prescriptive models of project management that have been

developed based on experience. Their lack of an explicit underlying theoretical model has

been criticized and their implicit theories of production and production management

revealed by a critique from the lean perspective (Koskela & Howell, 2002a; Williams,

2004). These and other critics (Howell et al, 1993) have also advanced empirical data to

support the claim that traditional methods of project management are ineffective,

especially as projects become increasingly complex, quick, and uncertain as regards both

ends and means.

9
 “The deficiencies of the theory of the project and of the theory of

management reinforce each other and their detrimental effects propagate

through the life cycle of a project. Typically, customer requirements are

poorly investigated at the outset, and the process of requirement

clarification and change leads to disruption in the progress of the project.

The actual progress starts to drift from the plan, the updating of which is

too cumbersome to be done regularly. Without an up-to-date plan, the work

authorization system transforms to an approach of informal management.

Increasingly, tasks are commenced without all inputs and prerequisites at

hand, leading to low efficiency or task interruption and increased variability

downstream. Correspondingly, controlling by means of a performance

baseline that is not based on the actual status becomes ineffective or simply

counterproductive. All in all, systematic project management is transformed

to a facade, behind which the job actually gets done, even if with reduced

efficiency and lessened value to the customer.” 3

Figure 1.2 Range of projects

Some lean construction advocates have argued that the deficiencies of traditional project

management become progressively more apparent as projects become more dynamic; i.e.,

3
Reproduced with permission from p. 11, Koskela & Howell, 2002a.

10
as they become more complex, uncertain and quick. (Koskela & Howell, 2002a) This is

supported by the finding that lean project delivery is virtually mandatory on projects

pursuing sustainability objectives, which are arguably the most comprehensive and

complex, engaging the most stakeholders, and posing the greatest technical challenges.

The primary criticisms of best practice-based prescriptions are:

• they assume a theory of the project as a transformation of inputs into outputs,

neglecting the flow and value perspectives so central to lean

• they assume a command and control theory of management; one in which the

planning function is dominant over the execution function

• they assume that projects can be divided into parts and the parts managed as if

they were independent one of another except for sequential dependency.

• they attempt to control projects through after-the-fact variance detection

• as a consequence of all the above, on dynamic projects, actual project execution

and formal management practices tend to drift apart, with management becoming

increasingly an observer and commentator on what is happening rather than a

driver of the project toward its objectives

On the other side of the ledger, it must be acknowledged that some elements of lean

methods are found in current practice. The construction industry has more than its share

of bright, dedicated people. It is no surprise that many innovations have been developed,

and that some of the best project managers and supervisors succeed by ‘breaking the

rules’. The critical point here is the lack of a theoretical foundation from which to explain

11
why effective management practice is successful. Without that underlying theory,

systematic learning and improvement is not possible. Lean provides just such a theory,

with explicit principles and methods. Lean is the basis for never ending innovation in

both theory and practice, each reinforcing the other.

1.5 Muri, Mura, Muda

The popularity of the Toyota Production System (TPS) has led many to understand lean

entirely in terms of reducing waste, where waste is understood as anything not necessary

for delivering value to a customer. The TPS is how Toyota manufactures its products. In

that context, value is understood in terms of what the customer orders; i.e., entirely in

terms of the product to be provided. Consequently, it is quite natural to focus on

eliminating muda, non-value-adding activities.

However, several authors have noted the inadequacy of this view. For example,

Jeffrey Liker, in his The Toyota Way explains that Toyota’s more fundamental principles

and practices actually start not from muda, but most fundamentally from muri and mura.

Muri is ‘unreasonableness’; e.g., overburdening people or tools. Mura is inconsistency or

variability. In Liker’s opinion, mura is the most fundamental because failure to avoid

unevenness causes both overburdening and non-value-adding activities. On the other

hand, Kitano (1997) sees muri as the starting point of a Plan-Do-Check-Act cycle in

which muri is addressed in Planning, mura is controlled in Doing, and muda is attacked

in Checking (after-the-fact analysis).

In production systems dedicated to making copies of an already-produced design,

unevenness can be avoided by level loading production; in other words, by making things

12
ahead of the time they are needed, and so achieve a better match between capacity and

load in the manufacturing facility.4 In projects, stability-the opposite of variability and

unevenness-can be provided by making load predictable so capacity can better be

matched to it. In both cases, achieving stability is the starting point, but it is achieved

through level loaded production schedules in manufacturing and by making work flow

predictable in projects.

In addition to this adaptation of production control, it is also necessary to specify the

handoffs between specialists in project production systems. In a manufacturing facility,

this can be done through layout of workstations and routing of materials, but such

structures and routes change frequently in construction, so rapid redesign of the

production system is a vital capability. Some theorists and practitioners believe that these

redesigns are done best through collaborative team planning using a technique called

reverse phase scheduling.

Several principles and techniques need little or no adaptation and can be directly

applied to capital projects. One example is set based design, which is central to Toyota’s

product development system. Another is the self-imposition of artificial necessity as

illustrated in the famous Toyota dictum “Lower the river to reveal the rocks.” (Ohno,

1988). Indeed, since most projects are relatively short cycle, they offer the opportunity

for more frequent experimentation and more rapid learning, suggesting that project

delivery teams should be tasked with production of knowledge along with delivery of the

project.

4
There appears to be a contradiction between ’making things ahead of time’ and the concept of
overproduction. Overproduction means making things before they are needed. This refers to the needs
or readiness of the immediate customer, but also refers to the needs of the production system as a
whole, one of which is to avoid loss of capacity.

13
 There are also principles and techniques that are directly applicable in large part to

projects, but require study and experimentation to make that application. One very

important example is Built-In Quality; i.e., building quality into the design and making

process

1.6 Structure of the Report

The remainder of this report consists of an explanation of our research methodology; a

review of the literature; a report on findings from statistical analyses, case studies, and

field trials; and presentation of a roadmap for implementing lean on projects; followed by

appendices and references.

We present two roadmaps, one within the other. The first, more comprehensive is a

concept-level roadmap for an organization striving to become a lean enterprise. The

second is a more detailed roadmap for planning and executing demonstration projects,

one of the milestones along the on ramp to the lean highway.

The appendices include lists of lean principles, the case studies, the field trials, a

statistical analysis of the correlation between work flow reliability and productivity, and

description of lean methods and tools adapted for project production systems, including

cross functional team structures, relational contracts, target costing, set based design,

production control, reverse phase scheduling, and built-in quality.

We do not include descriptions or instructions for using many other lean tools and

methods, both because they are not unique to project production systems, and because

they are already in the literature. For the same reason, we do not try to convince the

14
reader to take the lean road. We hope, however, to have provided useful advice to those

who make that choice.

15
 2.0 Research Strategy

2.1 Research Objectives

The primary purpose is to understand secrets of success in applying lean at the project

level and to translate that understanding into an implementation road map

2.1.1 Understand how lean has been implemented in construction

In order to understand secrets of success in applying lean at the project level, it is

necessary to understand implementation practices which are effective and ineffective. For

that purpose, descriptive research is included, describing how industry practitioners

implement lean principles at the project level.

2.1.2 Identify lean tools specific to project production systems

Implementation of lean on projects involves the application of methods and tools, some

of which may be applied not only to construction but also to other industries. However,

there are some lean tools that are designed or adapted specifically for project production

systems. It is important to identify lean tools for project production system and to present

how to use them.

16
2.1.3 Investigate relations between lean metrics and traditional project

performance metrics

Some industry practitioners who have not applied lean on their projects want to know if

successful lean implementation leads to project success which can be measured in

traditional project metrics. The study investigates relations between Percent Plan

Complete (PPC) and productivity using statistical analysis. The research team used only

one metric (i.e., PPC) for this study because PPC was the only common metric that most

case study organizations have used and data is available.

2.1.4 Analyze the success factors and challenges of a lean journey

Understanding current practices for lean implementation will allow for better analysis of

the success factors and challenges on a lean journey. As a guide for a journey, it is

important to know what is important and what challenges will be faced.

2.1.5 Develop a roadmap for each phase of a project

A significant part of the research is to develop a roadmap for each phase of a project,

which includes pre-project planning, design, supply, construction, and use phase. A

roadmap in each phase of a project consists of a set of recommended actions and

processes derived from the research.

17
2.1.6 Provide know-how on a lean journey

Tips are to be provided in the research in addition to general guidelines. Tips come from

the experience of industry practitioners who successfully applied lean on their projects.

2.1.7 Identify the role in lean implementation of each member of the

project team

The research will specify the role in lean implementation of each member of the project

team (i.e., owner, owner agent, process managers, specialists, and supplier). It includes

implementation issues and advice for each stakeholder.

2.2 Research Methodology

The primary purpose of this research is to define the implementation of lean at the project

level and to develop an implementation road map. Qualitative research seems appropriate

to our research for the following reasons:

1) Too few organizations or projects have applied lean to support statistical analysis

of standardized survey results

2) Discovering secrets or pattern of lean success requires more than standardized

survey

Qualitative research is useful for studying many different aspects of a relatively small

number of cases (Ragin, 1994). Qualitative methodology is different from quantitative

methodology in several ways. The results of qualitative research can only be expressed

verbally. On the contrary, quantitative methodology can be summarized in numbers or

18
tables (Have, 2004). Ragin (1994) stated that qualitative research is used to study

commonalities, which are common properties, within a relatively small number of cases

of which many aspects are taken into account. Cases are examined intensively, with

techniques designed to facilitate the clarification of theoretical concepts and empirical

categories, whereas quantitative research is used to study the co-variation within large

data-sets, which have a relatively small number of features. While quantitative research is

focused on summary characterizations and statistical explanations, qualitative research

offers complex descriptions and tries to explicate webs of meaning. The important feature

of qualitative research is to ‘work up’ one’s research materials, to search for hidden

meanings, non-obvious features, multiple interpretations, implied connotations, and

unheard voices. Ragin (1994) also stated that ‘most quantitative data techniques are data

condensers: and qualitative methods, by contrast, are best understood as data enhancers’.

‘Most qualitative research tends to be based on an interpretative approach, in the sense

that the meanings of events, actions, and expressions is not taken as ‘given’ or self-

evident’, but as requiring some kind of contextual interpretation’ (Have, 2004).

Considering the characteristics of both qualitative and quantitative research

methodologies, the research team has conducted research with a combination of

qualitative and quantitative methodologies, however, the focus is placed on qualitative

methodology. Quantitative research was used to analyze the correlation between

productivity and PPC (Percent Plan Complete, a measure of planning reliability).

19
2.3 Research Methods

Research methods have been classified in many different ways (Robson, 1993). One

general approach distinguishes between three main strategies; experiments, surveys, and

case studies.

“Experiment is to measure the effects of manipulating one variable on other variables.

Survey is to collect information in standardized form from groups of people. Survey

usually employs questionnaire or structured interview. Case study is a development of

detailed, intensive knowledge about a single ‘case’, or of a small number of related

‘cases’.” (Robson, 1993; p. 40)

2.3.1 Case Study

Case studies are investigations of particular cases (Hamel, 1993), and are conducted by

giving special attention to bringing together the findings from observing, reconstructing

and analyzing the cases under study (Zonabend, 1992). The case study is also defined as

“an empirical inquiry that: investigates the contemporary phenomenon within its real-life

context; when the boundaries between phenomenon and context are not clearly evident;

and in which multiple sources of evidence are used” (Yin, 1989, p.23).

The case study has been criticized for: its lack of representativeness and for its lack of

rigor in the collection, construction, and analysis of the empirical materials that give rise

to case studies (Hamel, 1993). Despite these criticisms, however, the case study has been

one of the top-ranking methods in qualitative research. The case study can be a very

worthwhile way of exploring existing theory. A well-constructed case study may provide

a source of new theory when there are a small number of examples.

20
 The objective of RT234 is to produce roadmaps for implementing Lean on

construction projects. The case study takes shape as part of an inductive approach. The

research team studied fifteen (15) cases, abstracted key findings from the cases, and

generalized the findings to conclusions.

2.3.2 Field Trials

Field trials in lean implementation were conducted on three different projects. The term

“field trials” is used instead of “experiments” because it is not possible to control all

variables when trying out new practices in a complex socio-technical system like a

project. The purpose of these trials is to evaluate selected case study findings and to get

in-depth insight into lean implementation. Three companies were involved in the

experiments: Abbott, Ilyang Construction, and Dow Chemical. Abbott and Dow

Chemical are owner companies. Ilyang Construction is a specialist in earthwork and

structural construction located in South Korea. All field trials focused on production

control, the primary purpose of which is to improve work flow reliability (i.e.,.predictable

hand-offs). Researchers participated in the course of the trials and observed and

documented lean implementation practices.

21
 Case Study Experiments

• 15 case studies • 3 field trials (Abbott, Ilyang and

• To interview using questions Dow Chemical)
prepared and agreed by team
members
• To involve in the course of entire
experiments
• To scrutinize documents and to • To observe and document lean
have observations implementation
• To discover the implementation
strategy during the limited time.

• To generalize the findings

• To develop a roadmap in each phase of a project

Fig 2.1. Research Methods

2.3.3 Statistical analysis

Statistical analysis was performed to test the hypothesis that PPC and productivity are

positively correlated. Key methodology issues include the nature of statistical

significance, the interpretation of levels of correlation, and the method of clustering

analysis. Bryman and Cramer (2005) speak to the first two of these three issues:

“The test of statistical significance tells us whether a correlation could have arisen

by chance (i.e. sample error) or whether it is likely to exist in the population from

which the sample was selected. It tells us how likely it is that we might conclude from

sample data that there is a relationship between two variables when there is no

relationship between them in the population. Thus, if correlation is significant at 0.01

level, there is only one chance in 100 that we could have selected a sample that shows

a relationship when none exists in the population. We would almost certainly

22
 conclude that the relationship is statistically significant. However, if the significant

level is 0.1, there are ten chances in 100 that we have selected a sample which show a

relationship when none exists in the population. We would probably decide that the

risk of concluding that there is a relationship in the population is too great and

conclude that the relationship is non-significant.”

Bryman and Cramer (2005) also discuss how to interpret the correlation coefficient

values as below:

“What is a large correlation? Cohen and Holliday (1982) suggest the following:

0.19 and below is very low; 0.20 to 0.39 is low; 0.40 to 0.69 is modest; 0.70 to 0.89

is high; and 0.90 to 1 is very high. However, these are rules of thumb and should not

be regarded as definitive indications, since there are hardly any guidelines for

interpretation over which there is substantial consensus.”

“A useful aid to the interpretation of a correlation coefficient i) …the coefficient of

determination ( r 2 ). This is simply the square of the correlation coefficient r

multiplied by 100. It provides us with an indication of how far variation in one

variable is accounted for by the other. Thus, if r=-0.6, then r 2 =36 per cent. This

means that 36 per cent of the variance in one variable is due to the other. When r=-

0.3, then r 2 will be 9 per cent. Thus, although an r of –0.6 is twice as large as one of

–0.3, it cannot indicate that the former is twice as strong as the latter, because four

times more variance is being accounted for by an r of –0.6 than one of –0.3).

Clustering analysis is the analytical method used in detailed exploration of correlation

between target variables. Clustering analysis requires that we first find some possible

differences within the data set. The data set was divided into groups based on similarities

23
such as the type of work, complexity of work, crews’ skill levels and number of crews.

Then a potentially differentiating characteristic is selected; for example, the number of

tasks planned each week. Each of the groups is further divided in accordance with the

clustering method, based on the differentiating characteristic. An example: We divided

the 92 data points in Group A into two clusters: Group A-1 and Group A-2 according to

how many tasks were planned each week. SPSS statistical software was used in

clustering, which involved the following three steps:

Step 1: Find the most widely spaced initial cluster centers. In this case, there exist

Cluster 1 with a center of 0 and Cluster 2 with a center of 380.

Step 2: Assign each data point to its closest cluster center and update the cluster center.

For example, the first set of data has 6 tasks planned. Its closest cluster center is 0. So it

belongs to Cluster 1. The updated cluster center is 3 ((6+0)/2). This process was repeated

until all data sets had been assigned and the cluster centers updated.

Step 3: Repeat Step 2 until there is no more change in cluster centers.5

2.4 Data Generation and Analysis

Methods for data generation include interviews, direct observation, and review of

documentation. The methods generate data focused on motivation, preparation, training,

organization, contract, scope of control, implementation, tools, lessons learned, success

factors, challenges, and advice.

5
See Appendix D for a detailed description of the statistical analysis.

24
2.4.1 Case selection

Lean implementation at the project level relies on lean implementation at the

organizational level. Therefore, the research team studied the leading organizations in

lean implementation and the projects in which the organization has been involved. The

research team selected fifteen (15) successful adopters of lean, and categorized them

according to their role on project delivery teams. There are four owner companies, four

general contractors, four specialty contractors, one supplier, one integrated team, and one

A/E. Details of organizations used in this case study are shown in Fig 2.2.

Integrated
Owner Project A/E GC SC Supplier
Team TEX

• Sutter Health • IPD • Burt Hill • Messer • BMW • Spancrete

• BAA • GS • Southland
• Boldt Industries
• Air Products
• GM • Walbridge • Dee-Cramer
• Il Yang

Fig 2.2. Case Studies

2.4.2 Interviewing

Interviewing is the most commonly used form of qualitative research. The research team

prepared open-ended questionnaires. The questions included lean history, lean principles

and the tools that they implemented, the flow of commitment, employee training,

contractual types, performance measurement, and success/failure factors. The

25
questionnaire surveys were administered through interviews. Fig 2.3 shows the topics

investigated.

Description of the Lean projects

Organizational commitment statement

Training

Prior Lean experience

Organizational and contractual structure for Lean

Open-ended
questions for
Their ‘lean’ stories at the project level
each stakeholder
Lean principles or tools implemented

Interactions with other stakeholders

Success factors and challenges

Metrics

Lessons learned

Fig 2.3 Interview Question Categories

2.4.3 Document analysis

Another qualitative research method involves using various kinds of documents (Have,

2004). The research team collected various records regarding companies’ lean

implementation. The research team studied ‘natural’ documents that are produced as part

of an established social practice. For instance, the research team has obtained internal

documents, such as a lean implementation plan, training materials, meeting minutes,

various forms of schedules, contract documents, and demonstration project

26
implementation documents, as well as, external publications, such as a movie describing

the implementation of a lean tool, newspaper articles, and promotional materials for

public investment. Studying these documents allowed the research team to understand the

internal strategies and processes for lean implementation.

2.4.4 Observation

Observation refers to methods of generating data which entail the researcher directly

involving herself or himself in a research setting so that they can experience and observe

first-hand a range of dimensions in that setting (Mason, 2002). Esterberg (2002) argued

that observation is the essential part of qualitative research. Researchers go to the natural

settings in which activities takes place, and observe what people ‘really’ do in those

settings. The research team visited construction sites, construction material prefabrication

plants, and the head offices of stakeholders, and recorded specific observational data

from participation in project implementation processes and other activities devoted to

planning, controlling, and managing construction processes.

2.4.5 Evaluation of data source

A major challenge for interpretive approaches centers on the question how researchers

can be sure that they are not simply inventing data, or misrepresenting their research

participants’ perspectives (Mason, 2002). Qualitative researchers, over many years, have

been locked in debates about this question, and different qualitative approaches offer

different solutions. The research team sought to draw reflexively on our own experiences

and perceptions, and to see these as part of the data. The main challenge with this

27
approach is to ensure that our team is doing it in meaningful and sensitive ways, rather

than imposing our own interpretation inappropriately or without justification. Therefore,

we tried to record the route by which we came to our interpretations as fully and

explicitly as we could.

2.4.6 Data Analysis and Validation

The first step in data analysis is to generalize research findings from a review of

literature, case studies, and field experiments. Then a roadmap is developed for getting on

the lean highway, i.e., along the way to becoming a lean enterprise. This research focuses

on the process for demonstration projects. Finally implementation issues and project roles

for each stakeholder is investigated.

The validity of our method and analysis is assured in two ways. The first way is to

assure the validity of data generation methods. The other way is to use a technique called

‘triangulation’. This technique is conceived as multiple methods, for instance, we used a

combination of interviews, document investigation, and observing. By using more than

one method, we tried to assure the validity of our research analysis.

One of the concerns of our project team is the generalization of the results of the case

studies and experiments. Our mission is to develop a roadmap for lean implementation.

Usually, the case study methodology is implemented at a time when only a small

numbers of cases exist, and it is difficult to generalize the results of a limited number of

cases. Therefore, for each stakeholder, our research team tried to show generalization by

picking multiple cases that illustrate the range of settings, or subjects, to which our

original observations might be applicable. Although this research examines various lean

28
implementation strategies and tools, we found that they had several characteristics in

common. However, detailed standardization of lean implementation should be avoided

because each project has its own context. Hence, theoretical generalization may be

adopted for this research.

2.5. Research Plan

The relationships among these various research tasks are shown in Figure 2.4. The

approach used was to synthesize the available literature, field trials and extensive case

studies. From findings from literature review, field trials and case studies, guideline and

roadmap were developed for lean implementation at project level.

Roadmap for Lean Implementation at the Project Level Research Structure

Define Lean Project

Chapter 1

Identify differences
Delivery System and
between lean project Identify Mura, Muri, Establish structure of
Define lean principles differences from other
delivery and current Muda the report
types of production
best practice
system

Develop case study

Chapter 2

Develop field trials

Define research process and interview
process and select
methodology: Case questions, and select
participants in field
study, experiment participants in the case
trials
studies
Chapter 3

Review organizational
Review Toyota System Define lean in the change
(TPS, TPDS) construction industry (Kotter’ s model,
Large Group Method)
Chapter 4

Analyze the findings

Analyze the correlation
from case studies Analyze the findings
between PPC and
(adapters, reasons, from field trials
productivity
and processes to lean)
Chapter 5

Describing learnings
from literature review, Establish roadmap for
Establish roadmap for Identify implementation
statistical analyses, getting on the lean
demonstrating projects issues by project role
case studies, and field highway
trials

Figure 2.4: Research Structure

29
 3.0 Review of the Literature

What has been written about lean and related topics is a vital resource for developing an

implementation roadmap. The research team drew on publications, interview-based case

studies, field experiments and statistical analyses. This chapter is devoted to a review of

the relevant literature and is organized under four main headings:

• Toyota (3.1)

• Lean in Construction (3.2)

• Organizational Change (3.3)

This is not a comprehensive review of the literature on lean, on organizational change, or

on project management. Our intent is rather to use selected publications to inform and

expand our investigation into effective implementation.

3.1 Toyota

The term “Lean Production” was coined by a member of the International Motor Vehicle

Research team to designate what the researchers saw as a new and superior type of

production system for motor vehicles (Womack et al, 1990). The researchers were

persuaded by the difference in comparative performance measures between Japanese,

American and European companies. Subsequently, it was found that the Japanese

advantage was largely because of Toyota, and many academics and practitioners now

believe that the Toyota Product Development System and the Toyota Production System

30
are exemplars for a new and superior way of designing and making all kinds of products,

both goods and services. More recently, lean has been viewed as a business philosophy,

with application to all aspects of a business, including but going beyond product

development and manufacturing.

Whatever focus one chooses, the inspiration and historical origin of lean is Toyota. In

this section, we describe the Toyota Production System (3.1.1), the Toyota Product

Development System (3.1.2), and the Toyota Way (3.1.3). Given our focus on projects,

only the literature on Toyota’s Product Development System is described in detail. We

also include a brief section, 3.1.4, on organizations that have implemented lean inspired

by Toyota.

3.1.1 Toyota Production System (TPS)

3.1.1.1 House of Toyota

The “House of Toyota” diagram has become one of the most recognized symbols in

modern industries. The concept of “House of Toyota” was developed by Taiichi Ohno

and Eiji Toyota to explain the Toyota Production System (Ohno, 1988). A house is strong

only if the foundation and the pillars are strong. A house is functional only if the roof is

well built. The ultimate goals of TPS, ‘highest quality, lowest cost, shortest lead time’

will be achieved based on the foundation of operational stability and the two pillars of

TPS: just-in-time (JIT) and autonomation (automation with a human touch, Jidoka).

31
 Figure 3.1.House of Toyota

JIT (just-in-time) is achieved when parts reach the manufacturing line at the time they are

needed and only in the amount needed. A kanban is one tool to manage and assure JIT.

Kanban are usually in the form of cards used to signal (or pull) needed parts and

materials from upstream workstations. Limiting the number of kanban limits the amount

of inventory.

Jidoka, as known as autonomation, is a Japanese term meaning automation with a

human touch. Autonomation is achieved when machines are given some characteristics of

human intelligence; principally the ability to shut themselves down or otherwise signal

detection of an upset condition or defect. Autonomation prevents the production of

defective products, avoids overproduction, and automatically stops abnormalities on the

production line allowing the situation to be investigated and corrected.

32
 The Toyota Production System emphasizes three Ms: Muda (waste), Mura

(unevenness – leveling), and Muri (overburdening). All Lean teaching emphasizes the

removal of waste, but few mention the concepts of level loading and overburdening

people or machines. Jeffrey Liker (2004), in his The Toyota Way, explains that Toyota’s

fundamental principles and practices actually start not from muda, but from mura, and

then also muri. In Liker’s opinion, mura is the most fundamental because failure to avoid

unevenness causes both overburdening and non-value-adding activities.

3.1.1.2 Spear and Bowen

In their article, “Decoding the DNA of the Toyota Production System (1999)”, Spear and

Bowen investigated why few manufacturers have succeeded in adapting the TPS – even

though almost all information about Toyota was available. They believe the reason is that

the adapters missed the systemic operation and cultural background that permeates

through Toyota. The manufacturers focused only on tangible tools and practices they

observed during their plant visits. Such a focus made it hard for the adapters to

understand the paradox of the TPS-that activities, connections, and production flows in a

Toyota factory are rigidly scripted, yet at the same time Toyota’s operations are very

flexible and adaptable.

Toyota has a scientific method both for defining problems and establishing sets of

hypotheses that can be tested. To make any changes, Toyota uses a thorough problem-

solving process that requires comprehensive assessments of the current conditions and a

plan for improvement, which is usually an experimental test of the proposed changes.

The scientific method stimulates the learning culture in Toyota and consequently explains

33
why the high degree of specification and structure at the company affect for a learning

organization.

The authors suggest four rules to adapt TPS successfully. Three rules explain how

Toyota sets up its operations as experiments. The last one describes how the scientific

method is taught to every level of workers in the company. The four rules are:

1. How people work – the first rule governs the way workers do their work. All

work shall be highly specified as to content, sequence, timing, and outcome.

2. How people connect – the second rule deals with the way the workers interact

with one another. Every customer-supplier connection must be standardized and

direct, and there must be an unambiguous yes-or-no way to send requests and

receive responses.

3. How the production line is constructed – the third rule explains how production

lines are constructed. The pathway for every product and service must be simple

and direct. That path should not be changed unless the production line is

redesigned.

4. How to improve – the fourth rule explains how people learn to improve. Any

improvement must be made in accordance with the scientific method, under the

guidance of teacher.

Every activity, connection, and production path is required to be designed according to

these rules and have built-in tests to signal problems automatically. This system makes

TPS flexible and adaptable to changing circumstances.

Another study Spear conducted (2004) further explains how Toyota has achieved one

of the most successful companies in the world and why so many companies have failed to

34
adapt TPS. Again, the author suggests four lessons from Toyota. The first lesson is that

direct observation is essential. The second is that proposed changes should be structured

as experiments. The third is that small, simple, and frequent experiments are to be

conducted to solve problems and improve productivity continuously. The last lesson is

that managers coach the workers to solve the problems, not fix the problems themselves.

3.1.1.3 Shingo

Shingo (1988) focused on inventory and set-up time. He considered inventory as not a

“necessary evil”, but an “absolute evil” and insisted on achieving production without

inventory. Based on this view of inventory, he suggested the non-stock production (NSP)

method to eliminate inventory. The NSP method recognizes the interrelationship among

each individual operation as it relates to the whole process while the traditional western

approach tends to stress the importance of improving individual operations. The NSP

addresses the real cause of problems by eliminating inventory, and reducing setup times

and lead times to improve production. It views management and production as two

approaches to eliminate inventory.

Shingo divided management into three activities: planning, control, and monitoring.

According to Shingo, Western philosophies traditionally tend to emphasize the planning

function among these activities. For instance, the Deming cycle for quality control

recognizes “plan”, “do”, “check”, and “action”. It does not define “control”. However, in

practice most product defects occur due to improper maintenance during the control

stage.

35
 Control is the critical function to reduce defects and machine failure in uncertain

circumstances. When control is ignored in production, the main tool for production

quality is an inspection, especially a sampling inspection. This means that the production

may not guarantee 100 percent quality of products. 100 percent inspection for 100

percent quality is not very common in practice due to time and cost constraints. One

solution TPS and Shingo insist on is built-in quality. Built-in quality during the

production process is one of the principles of TPS for quality assurance without

additional inspection efforts. Control is important not only for built-in quality, but also

for reduced inventory by eliminating waste.

Shingo considered production as a network of processes flowing, “the chain of events

during which raw materials are converted into products”, and operations flowing, “the

chains of events during which workers and machines work on items”. Moreover, he

claimed that processes take precedence over operations. In other words, the functions of

the process are established first, and the functions of operations are then determined to

supplement the process functions.

3.1.2 Toyota Product Development System

The literature on the Toyota Product Development System (TPDS) is quite small relative

to what’s been written on the Toyota Production System. Key authors and publications

include, in approximate order of publication:

• Womack, Jones & Roos’ The Machine That Changed the World, 1990

• Clark & Fujimoto’s Product Development Performance, 1991

36
 • Ward et al’s “The Second Toyota Paradox: How Delaying Decisions Can Make

Better Cars Faster”, 1995

• Womack & Jones’ Lean Thinking, 1996

• Sobek et al’s “Another Look at How Toyota Integrates Product Development”,

1998

• Sobek et al’s “Toyota’s Principles of Set-Based Concurrent Engineering”, 1999

• Fujimoto’s The Evolution of a Manufacturing System at Toyota, 1999

• National Center for Manufacturing Sciences’ Product Development Process-

Methodology and Performance Measures, 2000

• Kennedy’s Product Development for the Lean Enterprise, 2003

• Liker’s The Toyota Way, 2004

3.1.2.1 The Machine That Changed the World and Product Development

Performance

In the middle to late 1980s, MIT led an international motor vehicle research program that

focused on factory production and supplier relationships. At roughly the same time, Kim

Clark at the Harvard Business School was studying product development in the

automotive industry. The findings of the MIT program were published in popular form in

The Machine that changed the World. Under the influence of early reports from the

Harvard team, some special studies were done by the MIT team on product development.

Their findings and conclusions are reported, along with those of the Harvard team, in

Chapter 5: Designing the Car, and can be summarized in four principles, intended to be

descriptive of Japanese manufacturer’s practices as a whole:

37
 • Leadership: the practice pioneered by Honda of having a shusa lead each product

development project, functioning as a “supercraftsman” rather than as a

coordinator, as had previously been the case.

• Teamwork: specialists from functional departments are assigned to a project for

its duration, rather than staying (organizationally) within their home department

and shifting from project to project with workload variation.

• Communication: early conflict between competing priorities and explicit

commitment (signed documents) by team members to keep their mutual

promises.

• Simultaneous Development: concurrent development enabled by the

predictability of functions and explicit agreements regarding the design space

within which solutions will be developed.

The Harvard team used the expression “heavy weight project management” to

differentiate the Japanese approach. Another critical feature identified was sharing

incomplete information among the various functional specialists. They also reported that

the Japanese had almost half as many team members on similar projects as did the

Americans and Europeans. Other important findings:

• The Japanese completed product development projects 25% faster than anyone

else.

• The Japanese spent almost half the engineering hours on comparable projects.

• The Japanese had 1-in-6 projects delayed versus 1-in-3 for Europeans and 1-in-2

for the Americans.

38
 • The Japanese had a clear advantage in various other dimensions of performance,

including return to normal quality in factories producing new models, return to

normal productivity, time from production start to first sale, development time for

prototypes, and supplier share of engineering.

3.1.2.2 Ward and Sobek

The three articles of which Ward or Sobek were the lead authors were published in MIT’s

Sloan Management Review (1995, 1999) and in the Harvard Business Review (1998)6.

They report the findings from research on Toyota’s product development specifically,

and describe more clearly and in more detail several of the practices reported in the

earlier publications.

For example, sharing incomplete information was noted by Clark and Fujimoto, but

in their 1995 article, Ward and company show how that practice was part of a strategic

approach to design, “set based concurrent engineering”7 , which is contrasted to “point

based design”, in which functional specialists select options that meet their design

criteria, but without consideration of other specialists’ criteria, resulting in rework and

confusion. The set based strategy is to have everyone agree on the eligible options

(alternatives or ranges of values), so that each specialist can move forward within that set

confident that their efforts will not be wasted.

6
Ward et al (1995), Sobek et al (1998) and Sobek et al (1999)
7
See Lottaz et al (1999) for a fascinating account of set based design using continuous rather than discrete
values. Their account is summarized in Ballard (2000).

39
 Figure 3.2 Example of Set-Based Concurrent Engineering8

In their 1999 article, Sobek and company explicitly contrast Toyota’s set based design

strategy with concurrent engineering, which they understand to be an improvement on

traditional practice, but still within the limits of the point based paradigm. Key points of

difference are that Toyota does not typically have engineers work on only one project at

a time, does not typically collocate project teams, does not rotate engineers cross

functionally for their first 10-20 years, does not use any different computer modeling

tools than competitors, rarely uses QFD9 or Taguchi functions10, does explore broader

design spaces (possible solutions), narrows sets of options more slowly and deliberately,

and still completes engineering more quickly than anyone else. The authors also describe

the principles of set based design more completely than in their 1995 article.
8
Reproduced with permission from p. 70, Sobek et al (1999).
9
Quality function deployment; a tool for translating from ‘what’ to ‘how’; generally, from the voice of the
customer into the language of technical specifications
10
Method for quality engineering; typically statistical evaluation of the interdependence of different
variables (Taguchi, 2005).

40
 In their 1998 article, Sobek and company identify six processes used by Toyota in

product development and stress the fact that these work together as a whole and are not to

be cherry picked:

• Mutual adjustment as opposed to rigidly preprogrammed processes; facilitated

by methodical preparation for meetings and disciplined meeting management

• Mentoring supervisors, not facilitators or coaches, but mentors, who teach

both technical and social skills through questioning, not through commanding

• Integrative leaders. This is a return to Clark and Fujimoto’s shusa, now

characterized as the Lead Designer, in line with Womack et al’s

“supercraftsman”, but at odds with the idea of a ‘super project manager’.

• Standardization of processes and skills in functional specialties to increase

predictability of what will be produced from each specialist—obviously a

necessity for set based design. This process involves on the job training,

rotation within a functional group until management level (10+ years), then

rotation across functional groups to develop a network of mutual obligation—

because a highly skilled specialist will not be able to function as a mentoring

supervisor in another functional group.

• Standardization of the product development process—but at the milestone

level, with substantial discretion of the project team to shape and modify.

• Standardization of design. Functional groups maintain extensive checklists for

evaluating the adequacy of a design option, but those checklists are

maintained by each functional department, not by some centralized group of

‘planners’, and are continuously updated to reflect new knowledge and

41
 innovations. These design standards are also expressed in terms of sets, ranges

of acceptable values or sets of viable solutions, not point values, unlike most

design standards.

• The authors conclude by pointing the reader to what they believe is the secret

to Toyota’s success in product development; namely, recognition that

“…people, not systems, design cars.”

3.1.2.3 Lean Thinking

In their 1996 book, Womack and Jones provide guidelines for designing new products,

along with the order taking and delivery process, and the production (manufacturing)

process. They characterize effective product design as follows:

• Define needs through customer interviews

• Dedicate people for the life of the project

• Organize in cross functional teams

• Use QFD (quality function deployment 11 ) to translate from the voice of the

customer into technical specifications

• Set and design to a target cost, which is defined as “the development and

production cost which a product cannot exceed if the customer is to be satisfied

with the value of the product while the manufacturer obtains an acceptable return

on its investment”.

11
The seminal text on QFD is Akao, 1990.

42
 • Follow the heavy weight project manager model (Chief Engineer) from Clark and

Fujimoto.

They differ from Sobek, Ward and their co-authors regarding staff dedication to single

projects, the centrality of QFD, their interpretation of the heavyweight project manager

model, their appreciation of target costing (Womack and Jones include it but Sobek et al

do not) and their appreciation of the set based design strategy (Sobek et al include it but

Womack and Jones do not).

Womack and Jones also provide a roadmap for lean implementation, extending from

processes, through projects, to the entire enterprise, and beyond the single enterprise to

the networks of which it is a member as customer or supplier. Their roadmap has a 5 year

time line. The phases and steps are as follows:

Getting Started

• Find a change agent

• Get the knowledge

• Find a lever by seizing the crisis, or by creating one

• Forget grand strategy for the moment

• Map your value streams

• Begin as soon as possible with an important and visible activity

• Demand immediate results

• As soon as you’ve got momentum, expand your scope

43
Creating an Organization to Channel Your (Value) Streams

• Reorganize your firm by product family and value stream

• Create a lean promotion function

• Deal with excess people at the outset

• Devise a growth strategy

• Remove the anchor-draggers

• When you’ve fixed something, fix it again

• “Two steps forward and one step backward is OK; no steps forward is not

OK”

Install Business Systems to Encourage Lean Thinking

• Utilize policy deployment

• Create a lean accounting system

• Pay your people in relation to the performance of your firm

• Make everything transparent

• Teach lean thinking and skills to everyone

• Right-size your tools

Completing the Transformation

• Convince your suppliers and customers to take the steps just described

• Develop a lean global strategy

44
 • Convert from top-down leadership to bottom-up initiatives

3.1.2.4 The Evolution of a Manufacturing System at Toyota

In his 1999 book, Fujimoto proposes an evolutionary model for Toyota’s development,

responding to the often noted fact that Toyota did not work from a grand plan, but rather

reacted to circumstance and opportunity. In his model, the “routine capabilities”

identified in his earlier book (Clark & Fujimoto, 1991) are treated as “genes” which

enable the firm to adapt over time to changing conditions. Product development projects

are evaluated in terms of speed, efficiency, and product integration (quality). Those

projects that achieved high marks on all three dimensions are said to be those with the

following “routine capabilities”:

• Supplier capabilities—allowing suppliers of components to design those

components for manufacturing and assembly

• In-house manufacturing—application of manufacturing capabilities to

prototyping, pilot runs, and production ramp-up; all of which occur in product

development before the start of manufacturing

• Overlapping product and process engineering phases to reduce lead time—which

requires intensive communication and mutual trust of the upstream and

downstream people

• Wide task assignment for engineers; i.e., the opposite of over specialization

• Heavyweight project manager system

45
Perhaps the most important of Fujimoto’s contributions is the observation that

organizational routines created by an emergent process are difficult to imitate, and that

the difficulty is greater for product development than for manufacturing (p. 199).

3.1.2.5 Product Development Process-Methodology and Performance

Measures/ Product Development for the Lean Enterprise

In 2000, NCMS, the National Center for Manufacturing Sciences, published a report on a

2 year research project, the goal of which was “...to determine how to make substantial

improvements, not just incremental improvements, in product development lead times by

studying the methodologies of world class companies that had distinguished themselves

by being fast to market with the highest quality products.” 12 In 2003, Michael Kennedy

published Product Development for the Lean Enterprise to make the learning from that

research project available and accessible to the general public in the form of a story about

a company that goes through the lean transformation.

The central message in both the research report and Kennedy’s book is that mindsets

and paradigms are more important than tools and methods. Even cross functional teams,

computer modeling, and decision support tools were found to have a limited impact on

project durations. Another important finding is that the research project, though not

focused exclusively on Toyota, found Toyota’s product development system to be the

best performing and best structured. The NCMS report concludes with a broad

characterization of the difference between Toyota’s and the other companies’ approaches

to product development, finding that while everyone else was concerned with achieving

12
from http://lpdi.ncms.org/history.htm, accessed January 3, 2007

46
compliance to procedures, Toyota was concerned to promote learning. Even Toyota’s

fantatical dedication to process and skill standardization was understood as means to

learning and continuous improvement. Other companies designed then tested, while

Toyota learned through study and analysis, then designed.

In Product Development for the Lean Enterprise, Kennedy tells a story about how

one company changed its product development process. A major theme in that story is

implementing major organizational change. The following quote is from p.231:

“There are two methods for implementing major change. The common approach is

what I call the ‘define and convince’ model, in which an assigned expert (or expert

team) defines the change specifics and convinces the rest of the organization to

follow their recipe for change. This model works best in small companies, largely

because of the close link between the company’s leadership and its workers. But in

large companies, this process is slow, seldom wins widespread buy-in, and often

requires extensive infrastructure and procedural controls to maintain the change.

The other method is the ‘participative model’, in which the leader defines the change

goals and challenges the workforce to define and execute the changes. The process

itself is a series of facilitated large-group sessions for convergence and decision-

making, sandwiched around smaller group parallel activities for testing and learning.

The power of this approach is the rapid assimilation of knowledge and buy-in across

the organization. But it requires the leaders to trust the workers, not ‘perceived’

experts, with the details.”

47
Kennedy provides a recommended reading list on participative change13 and notes the

similarity between the ‘lean’ way of delivering projects and the participative change

methodology itself.

3.1.2.6 The Toyota Way on Product Development

In his 2004 book, The Toyota Way, Liker illustrates Toyota’s application of its

fundamental management principles to its product development system, using the Lexus

and Prius programs. The Lexus project represents the Toyota Production System in its

full glory, developed over twenty-plus years. However, it had never faced quite the same

challenge as when it decided to enter the luxury car market in head-to-head competition

with the likes of Mercedes and BMW. In Liker’s account, we see more clearly than

before how a Toyota Chief Engineer, in this case Ichiro Suzuki, manages a product

development program, and how he functions as ‘chief designer’, how he drives the set

based design strategy, and how he integrates design and engineering across vehicle

systems.

Suzuki began by benchmarking the competition, principally through interviews in

which customers were asked why they chose to buy one brand or another, and also their

reasons for rejecting competitors. Mercedes, BMW, Audi, Volvo, Jaguar, Nissan

(Maxima), and GM (Cadillac) were chosen as benchmark competitors. The next step was

to set targets, based on that benchmarking, for top speed, fuel consumption, noise,

aerodynamics and vehicle weight. To achieve these targets, Suzuki established what he

called the “YET” list:

13
See Bunker (1997), Bunker and Alban (2006), and Danemiller Tyson (2000).

48
 • Great high-speed handling/stability YET A pleasant ride

• Fast and smooth ride YET Low fuel consumption

• Super quiet YET Light weight

• Elegant styling YET Great aerodynamics

• Warm YET Functional interior

• Great stability at high speed YET Low aerodynamic friction

Each of these paired vehicle characteristics are in tension. For example, mass had

previously been used to dampen vibration, but Suzuki forced the team to explore

reducing noise at its source, the engine. This is a great illustration of the target costing

concept. The “YET” list imposed targets on the project delivery team that required them

to go beyond previous best practice.

Liker presents the Lexus project as a break though for Toyota from its conservative,

risk-averse past. Looking back at Fujimoto’s evolutionary model, we might see this

breakthrough as both continuous and discontinuous with the past; an adaptation of the

organism’s interaction with its environment, but one enabled by its fundamental

principles and practices (“genes”).

Did Toyota create a “new product development process” with its Prius project? It was

certainly tasked to do so by Toyota management. The goals of the Prius project were to:

1. Develop a new method for manufacturing cars for the 21st century.

2. Develop a new method for developing cars for the 21st century.

49
 Liker says nothing about the new manufacturing method, but identifies two changes

in Toyota’s product development system; namely: 1) Use of the obeya14 (big room) for

more team control of the project—though it is clear that the Chief Engineer remains the

driver, and 2) Inclusion of manufacturing engineers in the concept development stage—

though that practice started prior to the Prius, and appears rather to be a continuation of a

long term trend to include downstream players in ever earlier upstream processes. The

Chief Engineer as lead designer, target setting to drive innovation, and set based design

appear to remain at the heart of the Toyota Product Development System—but now

tweaked to get more horsepower from the same displacement.

As of 2003, these innovations, together with innovations in the use of computer

technology15, enabled Toyota to routinely develop new products in 12 months or less,

roughly half the time required by competitors. Again, the changes appear to be both

continuous and discontinuous. In this case, the technological challenge of developing a

hybrid vehicle for production, together with the speed of delivery demanded by Toyota

management, required more collaborative management, as evidenced both in the use of

the obeya and in the cross functional organization used in the concept stage of the project.

We might say that Toyota’s outstanding capability is the capability of reinventing itself,

not in response to changes in its environment, but rather in anticipation of changes in its

environment, so that it becomes an environmental force itself.

14
See Tanaka (2005) for more detailed information on Toyota’s use of the obeya.
15 But note Toyota’s technological conservatism, expressed in the principle “Use only reliable, thoroughly tested
technology that serves people and processes” (Liker 2005).

50
3.1.3 The Toyota Way

The Toyota Production System (TPS) and the Toyota Product Development System

(TPDS) are not the Toyota Way. TPS and TPDS apply the principles of the Toyota Way

(Liker, 2004) to manufacturing and to product development, respectively. As was shown

in the preceding section, Toyota changed its product development process to meet the

challenges of the Prius. Over time, Toyota also changes its manufacturing system. These

changes are fundamentally driven by the 14th principle of the Toyota Way: “Become a

learning organization through relentless reflection and continuous improvement”. One

reason why so many have failed to successfully imitate Toyota’s performance and

success is that they are shooting at a moving target. Understanding at the level of theory

and principle is the only sound basis for learning, and learning faster than competitors is

the only sound basis for business success. Benchmarking and imitating current best

practice is a sure recipe for staying second best.

The Toyota Way is a set of management principles at the level of the business

organization or enterprise. Many companies’ attempts to implement lean have been fairly

superficial. One of the reasons is too much focus on tools such as 5S, JIT, kanban, and

standardization. Each company faces its own problems in different environments,

requiring thoughtful adaptation and application of the lean principles, not mindless

imitation. In this case, hardheaded business objectives can be achieved only by

embracing and understanding lean philosophy.

Liker offers 14 principles organized in four categories: Philosophy (the foundation),

Process (application of lean tools), People/Partners (developing internal and external

51
people), and Problem Solving (the evolution to lean enterprise through continuous

improvement) as seen in Figure 3.2.

Problem Solving
(Continuous
Improvement &
Learning)

People & Partner

(Respect, Challenge, and
Grow Them)

Process
(Eliminate Waste)

Philosophy
(Long-Term Thinking)

Figure 3.3 “4P” of the Toyota Way (Liker, 2004)

The fourteen (14) management principles of the Toyota Way are:

Section I: Philosophy: Long-term thinking is the foundation of the Toyota Way. The

objective and focus from the very top of the company is to add value to customers and

society. This drives them to become a learning organization, one that can adapt to

changes in the environment and survive as a productive organization. Without this

foundation, none of the investments Toyota makes in continuous improvement and

learning would be possible.

• Principle 1. Base decisions on long-term philosophy even at the expense of short-term

financial goals

52
Section II. The Right Process Will Produce the Right Results: Toyota is a process-

oriented company. They have learned through experience what processes work,

beginning with the ideal of one-piece flow. Flow is the key to achieving best quality at

the lowest cost with high safety and morale. At Toyota this process focus is built into the

company’s DNA, and managers believe in their hearts that using the right process will

lead to the results they desire.16

• Principle 2. Create continuous process flow to bring problems to the surface

• Principle 3. Use “Pull” systems to avoid overproduction

• Principle 4. Level out the workload (heijunka) – Work like the tortoise, not the hare

• Principle 5. Build a culture of stopping to fix problems to get quality right the first

time (jidoka)

• Principle 6. Standardized tasks are the foundation for continuous improvement and

employee empowerment

• Principle 7. Use visual control so no problems are hidden

• Principle 8. Use only reliable, thoroughly tested technology that serves people and

processes

Section III. Developing People and Partners: the Toyota Way includes a set of tools

that are designed to support people continuously improving and continuously developing.

This suits Toyota’s employee development goals perfectly because it gives people the

sense of urgency needed to confront business problems. The view of management at

Toyota is that they build people not just cars.

16
See Johnson & Bröms (2000) for an illuminating contrast between ‘managing by results’ and ‘managing
by means’. Toyota and the Swedish truck maker Scania are presented as examples of those who
manage by means.

53
 • Principle 9. Grow leaders who thoroughly understand the work, live the philosophy,

and teach it to others

• Principle 10. Develop exceptional people and teams who follow your company’s

philosophy

• Principle 11. Respect your extended network of partners and suppliers by challenging

them and helping them improve

Section IV Continuously Solving Root Problems Drives Organizational Learning:

The highest level of the Toyota Way is organizational learning. Identifying root causes of

problems and preventing them from reoccurring is the focus of Toyota’s continuous

learning system. Tough analysis, reflection, and communication of lessons learned are

central to improvement as is the discipline to standardize practices.

• Principle 12. Go and see for yourself to thoroughly understand the situation (genchi

genbutsu)

• Principle 13. Make decisions slowly by consensus, thoroughly considering all

options; implement rapidly

• Principle 14. Become a learning organization through relentless reflection (hansei)

and continuous improvement (kaizen)

3.1.4 Toyota’s impact beyond manufacturing

Toyota’s impact has extended far beyond manufacturing. To cite but a few examples,

lean principles and methods are now in use in healthcare, software engineering, finance,

oil field development, and government operations. An indicator of the extent of lean’s

54
penetration is a set of articles in the McKinsey’s on-line publication in 2007 (McKinsey

Quarterly, 2007, number 3), in which the following articles were posted:

• “Beyond manufacturing: The evolution of lean production”

• “Toward a leaner finance department”

• “Applying lean to application development and maintenance” (Information

Technology)

• “Better manufacturing in China”

• “Applying lean to the public sector”

The Lean Enterprise Institute (www.lean.org) has numerous publications describing

the application of lean both within and beyond manufacturing. Productivity Press, which

published the vast majority of the lean manufacturing titles, has established a Healthcare

Performance Press, which recently published a white paper entitled “Applying Lean in

Healthcare” (Nash, et al., 2007).

3.2 Lean in Construction

Lean construction as a movement arose from recognizing the limitations of current

project management and applying new production management or “lean production” to

the construction industry. In this section, we describe the lean construction literature. Our

first topic is lean construction organizations (3.2.1), which are sketched lightly here, but

described in more detail in Appendix E. We then turn to publications, starting with theory

(3.2.2), then the lean project delivery system (3.2.3), followed by publications concerning

55
implementation of lean in construction (3.2.4), and ending with a brief review of previous

CII research relevant to our topic (3.2.5).

3.2.1 Organizations promoting lean in construction

There are an increasing number of organizations promoting lean in construction. Here

three of the primary and longest lasting are described, in the order in which they

emerged: the International Group for Lean Construction, the Lean Construction Institute,

and Constructing Excellence. Associated with the first two, organizations active in lean

construction appeared in Chile in 1994 (led by Luis Alarcon at the Catholic University of

Santiago), in Brazil in 1997 (led by Sergio Antonio Itri Conte in Sao Paolo and by

Professor Carlos Formoso of the University of Rio Grande do Azul), and in Denmark in

1999 (an LCI affiliate based at the Danish Technological Institute).

3.2.1.1 International Group for Lean Construction

The International Group for Lean Construction, a loose association of mostly scholars

and researchers, held its first conference at the offices of VTT, the Finnish Building

Institute, in Espoo, Finland in August, 1993. The conference was organized by Lauri

Koskela, then of VTT, and Glenn Ballard of the University of California, Berkeley.

Koskela and Ballard met during the former’s time at Stanford as a Research Fellow. The

research report (Koskela, 1992) Koskela produced during that time challenged the

construction industry to apply the new production management principles coming out of

manufacturing. At that same time, Ballard was developing what became known as the

Last Planner® system of production control (Ballard & Howell, 1998; Ballard, 2000).

56
Koskela’s theory and Ballard’s tools have together been an important foundation for the

extension of lean into construction.

Six people attended that first meeting. In July 2006, IGLC held its 14th annual

conference in Santiago, Chile, organized by Professor Luis Alarcon, also a participant in

the 1993 conference, and editor of the proceedings of the first three annual conferences.

Attendance has increased over the years to the 80-110 range. Annual conferences rotate

from Europe to Asia to South America to North America, then start over again. In the last

few years, European participants in IGLC have formed a regional organization, the

European Group for Lean Construction, which meets quarterly at different locations

within Europe.

113 authors from 20 different countries submitted papers to IGLC 14 in Santiago. In

alphabetical order, the countries were: Australia, Brazil, Chile, Denmark, Finland,

Germany, Indonesia, Israel, Japan, Korea, Mexico, Netherlands, Norway, Nigeria,

Palestine, Sweden, Taiwan, Turkey, UK, and USA.

The IGLC 14 proceedings are organized under the following research themes,

indicating the breadth and scope of inquiry. Descriptions of each of these themes, with an

account of the research frontier, is provided by theme champions on the IGLC website

(www.iglc.net). Papers from the proceedings of all IGLC conferences may be

downloaded for free from the same website.

IGLC Research Themes:

• Theory

• Product development and design management

57
 • Production system design

• Prefabrication, assembly and open building

• Supply chain management

• IT support for lean construction

• Production planning and control

• Safety, quality and environment

• People, culture and change

• Implementation and performance measurement

3.2.1.2 Lean Construction Institute

The Center for Innovation in Project and Production Management was formed in 1997 by

Gregory Howell and Glenn Ballard to develop and deploy related knowledge. Lean

Construction Institute is the dba for the Center’s work in the construction industry.

Howell and Ballard had worked together for some time as project management

consultants, and had proven effective at saving bad jobs. Under the growing influence of

lean and the frustration of one specific South American project, they decided that what

was needed was to create a lean project delivery system that would help avoid jobs going

bad in the first place, and which would provide a theoretical framework that others could

learn and put into practice. The driving idea was to unite theory and practice, by working

directly with early adopters of lean in the mode of scientific experimentation.

58
 LCI originally had multiple functions, several of which have been partially or

completed delegated to other organizations. Research is now primarily done through

university research organizations such as the Project Production Systems Laboratory at

the University of California, Berkeley. Consulting was found to be in tension with its

advocacy role and is no longer provided by LCI. Education is limited to awakening

awareness of new concepts and techniques, but does not extend to training. What remains

as central for LCI to perform is the role of advocate and think tank.

“Lean Construction is a production management-based approach to project delivery-a

new way to design and build capital facilities” (LCI, 2000). Traditional project

management is focused on managing activity-by-activity. The focus on activities

conceals the waste generated between coupled activities by the unpredictable release of

work and uncertain arrival of needed resources (Koskela, 1992). The purpose of

traditional project control is to minimize the negative variance from pre-established

(contracted) budgets and schedules (Halpin, 1985; Howell and Ballard, 1996). This view

of traditional project control leads to contract-minded management, which monitors

contract compliance and relies on managing contracts as the means to managing projects.

In effect, the tendency in traditional project management is to ignore actual production

altogether, as occurs in the practice of pushing work with schedules regardless of the

readiness of the production system. By contrast, the focus of management in lean

construction is explicitly and directly on production , starting with work flow reliability,

then extending to cycle time, work-in-process, available capacity, etc. Managing the

combined effects of dependence and variation is the first concern in lean construction.”

(Howell, 1999)

59
 Generally, two main research streams have been observed in lean construction

principles and practices. One is the theoretical stream with Lauri Koskela's theory of

production based on the Transformation-Flow-Value concept (the TFV-concept). The

other is the practical stream with Glenn Ballard and Greg Howell's production control

focusing on work flow reliability. Ballard (2000) suggested a Lean Project Delivery

System17 . It represents five phases in which each phase overlaps with the next using

overlapping triangles (See Fig 1.1). They are project definition, lean design, lean supply,

lean assembly, and use. Research in the lean community covers the phases and tools of

the lean project delivery system, plus theory and implementation.

LCI now has affiliates in Denmark, the U.K., Germany, Norway and Sweden, and

works closely with university-based groups promoting lean practices in Brazil, Chile, and

Peru. LCI holds an annual Congress, intended to assemble the best thinkers and best

practitioners of lean in the world. LCI also co-sponsors, with the University of California,

Berkeley’s Project Production Systems Laboratory, a Lean Design Forum, which meets

twice a year. In addition, LCI periodically holds conferences on construction industry

issues such as relational contracting and the scarcity of skilled construction labor.

Presentations and audio tapes from the Congress, Design Forum, and special events are

available at www.leanconstruction.org\files. Also available at that website are the LCI

White Papers, produced from 1998 through 2001. These eleven White Papers are

attempts to advance thinking about lean in the context of project production systems. A

further source of information is the Lean Construction Journal, an LCI electronic journal

available at www.leanconstructionjournal.org.

17
Details are described in Chapter 1.3.1.

60
3.2.1.3 Constructing Excellence

The lean construction movement in the United Kingdom was launched by the Rethinking

Construction report (1997), which was crafted by the major buyers of design and

construction services, including BAA, whose chairman, Sir John Egan, chaired the

commission that authored the report. It demanded substantial performance improvement

in the industry and spawned multiple initiatives, many of which have been consolidated

under the umbrella of Consulting Excellence.

3.2.2 Project case studies on lean implementation previously published

A number of relevant case studies describing lean implementation on capital projects

have been published previously, including:

• Petroleos de Venezuela’s PARC project

o Ballard, Glenn, Gregory Howell, and Michael Casten (1996). “PARC: A

Case Study.” Proceedings of the 4th Annual Conference on Lean

Construction, Birmingham, England.

• Koch Refining’s Mid-Plant Project

o Howell, Gregory and Glenn Ballard (1994a). "Lean Production Theory:

Moving Beyond 'Can-Do'." Proc. Conference on Lean Construction,

Santiago, Chile. September, 1994.

o Ballard, Glenn and Gregory Howell (1994a). “Implementing Lean

Construction: Stabilizing Work Flow.” Proceedings of the 2nd Annual

Meeting of the International Group for Lean Construction, Santiago,

61
 Chile. (Available in Lean Construction, A.A. Balkema Publishers,

Rotterdam, Netherlands, 1997.)

o Howell, Gregory and Glenn Ballard (1994b). "Implementing Lean

Construction: Reducing Inflow Variation." Proc. Conference on Lean

Construction, Santiago, Chile. September, 1994.

o Ballard, Glenn and Gregory Howell (1994b). “Implementing Lean

Construction: Improving Performance Behind the Shield.” Proceedings of

the 2nd Annual Meeting of the International Group for Lean Construction,

Santiago, Chile. (Available in Lean Construction, A.A. Balkema

Publishers, Rotterdam, Netherlands, 1997.)

• Nokia twin towers

o Koskela, Lauri, Glenn Ballard, and Veli-Pekka Tanhuanpaa (1997).

“Towards Lean Design Management.” 5th Annual Conference of the

International Group for Lean Construction. Griffith University, Gold

Coast, Australia. July, 1997

• Texas Showplace

o Ballard, Glenn (2000). The Last Planner System of Production Control.

PhD thesis, Dept. of Civil Engineering, University of Birmingham,

Birmingham, U.K., June, 2000.

• Malling (precast concrete fabricator)

62
 o Ballard, Glenn, Nigel Harper, and Todd Zabelle (2003). “Learning to See

Work Flow: Application of Lean Production Concepts to Precast Concrete

Fabrication.” Journal of Engineering, Construction and Architectural

Management, 10(1), Blackwell Publishers, Oxford, U.K. pp. 6-14.

• Terminal 5, Heathrow Airport

o Arbulu, Roberto, Glenn Ballard and Nigel Harper (2003). “Kanban in

Construction”. Proceedings of the 11th annual conference of the

International Group for Lean Construction, Virginia Tech, Blacksburg,

VA, August, 2003.

o Arbulu, Roberto and Glenn Ballard (2004). “Lean Supply Systems in

Construction”. Proceedings of the 12th annual conference of the

International Group for Lean Construction, Elsinor, Denmark, August,

2004.

o Ballard, Glenn (2006). “Innovations in Lean Design”. Presented at the

University of Cincinnati, April 26, 2006.

• St. Olaf’s College Tostrud Fieldhouse

o Ballard, Glenn and Paul Reiser (2004). “The St. Olaf College Fieldhouse

Project: A Case Study in Designing to Target Cost”. Proceedings of the

12th annual conference of the International Group for Lean Construction,

Elsinore, Denmark, August, 2004.

• Channel Tunnel Rail Link project (Contract 105)

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 o Koerckel, Andre and Glenn Ballard (2005). “ROI in construction

innovation – a lean construction case study”. Proceedings of the 13th

annual conference of the International Group for Lean Construction,

Sydney, Australia. pp. 91-98.

• Spancrete’s Lean Approach to Manufacturing (company case study, not a project)

o Brink, Todd and Glenn Ballard (2005). “SLAM – a case study in applying

lean to job shops”. Proceedings of the ASCE 2005 Construction Research

Congress, San Diego, CA. pp. 1-6.

• Toyota South Campus Facility

o Lapinski, Anthony R., Michael J. Horman and David R. Riley (2006).

“Lean Processes for Sustainable Project Delivery”. Journal of

Construction Engineering and Management, ASCE, October 2006, pp.

1083-1091.

Implementation of lean on projects appears to have begun with the 1994-95 PARC

project at PDVSA’s Marven Refinery in Venezuela, roughly in parallel with Koch

Refining’s Mid-Plants project in Corpus Christi, Texas. Lean on PARC was driven by

production control and first run studies in a successful effort to overcome massive

schedule problems in the last year of construction on a $1.2B project. A 28%

improvement in productivity was recorded in that final year and all critical units were

completed on schedule.

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 The Mid-Plants project was also focused initially on production control, and

succeeded in integrating materials management with lookahead planning and weekly

work planning. The pipefitter crews with PPC below 50% had an average productivity 30

percent less than crews with PPC above 50 percent. Additional work was done on built-in

quality which resulted in cutting the defect rate in half for piping test systems.

Nokia Twin Towers was the first application of Last Planner® to the design phase of

a project, followed by the Texas Showplace project.

The Malling case demonstrated the beneficial application of lean concepts and

methods to the design and fabrication of engineered-to-order products, in this case

precast concrete elements.

Terminal 5 was a laboratory for experimentation with multiple lean tools, including

just-in-time deliveries, model based detailing, extensive prefabrication and preassembly,

forms of relational contracting and aligning interests, and integration of materials

management with production control. (See the BAA case study in the Appendix for more

details.)

The Tostrud Fieldhouse case was the first application of a target costing methodology

adapted from Japanese product development to the design and construction of capital

facilities. Even though early and partial, the application was very successful, resulting in

a facility unit cost 1/3 less than comparable facilities, delivered 10 months faster.

Contract 105 was part of the massive Channel Tunnel Rail Link Project, devoted to

the construction work needed at St. Pancras’ Station in London to support the change in

Eurostar’s terminus from Waterloo to St. Pancras, which is 11th on the register of historic

buildings in the United Kingdom. Lessons learned from Terminal 5 were applied at St.

65
Pancras, and in addition, even more extensive use was made of 3D modeling to integrate

the design of product and process.

Spancrete is a fabricator of precast concrete products, both made-to-stock and

engineered-to-order. The story of Spancrete’s lean journey is told in the case study in

Appendix C. This paper tells that story through the date of its publication in 2004.

The Toyota South case study links lean and sustainability, a very important

connection the further development of which is called for in Chapter 5 of this report.

In addition to these case studies of lean implementation, there are numerous papers on

the implementation of lean in construction. For example, see the proceedings of the

annual conferences of the International Group for Lean Construction at www.iglc.net.

3.2.3 Relevant Previous CII Research

Numerous CII research reports have been produced on topics relevant to our research.

Topics include safety, quality, materials management, productivity, project control,

project planning, and many more. In this section, we briefly describe some of the more

recent research and explain how their findings are related to lean implementation on

projects.

3.2.3.1 Craft Labor Productivity (PT 143)

This study compares two strategies for improving construction labor productivity, those

strategies being “the buffer strategy” and “the production planning strategy”.

Increased use of buffers reduces the need to plan production in detail by introducing

flexibility into the production system. Conversely, precise production planning reduces

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the need for large buffers by ensuring that the correct materials, designs, and equipment

are available for craft workers.

The production planning strategy proved more effective than buffers at improving

crew productivity, and was effective for both piping and electrical trades.

The buffer strategy is in conflict with the lean principles of zero inventory and a pull

rather than push system. The lessons from lean principles suggest reducing variability of

work flow to reduce the needs for buffer. The production-planning strategy is in line with

the production control system which focuses on making release of works to downstream

predictable. The findings from PT 143 are also consistent with the detailed design of

construction operations, which may involve virtual prototyping, physical mockups, and

first run studies. The crew that will do the first run of a new operation is involved in

detailed planning, then the first run is used to test the capability of the operation as

designed against safety, quality, time and cost targets.

3.2.3.2 Making Zero Accidents a Reality (PT 160)

The research focused on short duration projects that are commonly referred to as

shutdowns, turnarounds, or outages. This research was conducted by interviewing

contractor personnel on 44 different shutdown projects. 50 percent of the projects

reported having achieved zero OSHA recordable injuries. Shutdown projects with better

safety records were those that were successful in transferring workers from other projects

to perform the work. There is no simple or singular solution to achieving zero injuries.

Excellent safety performance is achieved through applying those practices that have

shown to be effective, whether on large projects or on shutdown projects.

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 While findings did not disclose any impact on safety performance when the work

force was large or small, the findings did show a relationship between the level of

supervision offered and safety performance. Incentivized contracts, or ones in which the

contractor receives a financial reward or monetary benefit for performing work safely,

were shown to be associated with better safety performances.

The most notable conclusion that can be drawn from this study is that the

achievement of zero injuries on shutdown projects is a goal that is achievable. For

exemplary safety performance, workers for the shutdown should be familiar with the

shutdown work. For best safety results, scheduling must be done in greater detail, in

terms of hours as opposed to shifts or days.

The benefit experienced by detailed scheduling directly applies to the planning

procedure inherent within lean construction. The ability to schedule down to the most

specific and useful increment of time allows for the greatest amount of flexibility and

control.

3.2.3.3. Improving Capital Projects Supply Chain Management (PT 172)

The PT 172 project team explored improvement of the supply chain management and

elimination of quality-error related costs for construction sites.

The research team focused on issues of production system design. Although

numerous publications on supply chain management investigate flows and handoff of

information, materials, and funds, they do not address issues of production system design.

The team argued that the production system design that organizations in the supply chain

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will use is deeply related to supply chain management. Moreover, the system design

affects how processes that involve multiple firms performed and managed.

This research studied examples of capital projects supply chain management tools

and techniques from managerial aspects: supply-based management; life-cycle costing;

assembly of unique facilities from standardized modules and components; problem

solving through strategic partnering; emphasis on long-term working relationships;

extensive use of communication and information technology so that the value chain

supports the supply chain; short and reliable cycle times from raw materials to site

(and/or strategic placement of inventory in critical material supply chains); phased

delivery of materials to the construction site to match installation rates; and information

visibility that allows efficiencies such as risk pooling, logistics optimization, and supplier

managed inventory.

The research team focused on defining the flow of information and materials using

Value Stream Mapping or inter-organizational process mapping to depict current and

ideal states in the process of developing implementation plans. After that, the team

suggested several lessons learned: reducing non-value-adding activities; implementing

Just-in-Time deliveries; creating flows; procuring customer-approved materials; pulling

inventories from upstreams as needed; and implementing long-term alliances with

suppliers.

The research suggested lean production as a system to provide one view on supply

chain management. According to the research, implementation of capital projects supply

chain strategies in the construction industry can provide advantages in terms of cost,

time, quality, and safety. Specifically, using various techniques related in lean principles,

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such as integrating all key stakeholders in the construction supply chain, can promote

organic delivery systems, and eliminate wastes of money and time caused by

inefficiencies in movement of material and labor.

3.2.3.4. Lean Principles Applicable to Construction (PT 191)

CII PT191 (2004) examined if lean manufacturing principles can be applied to the

construction industry with similar benefits to those achieved by the manufacturing

industry. Although the construction process is far different from manufacturing and lean

production is more difficult in construction than in manufacturing, CII PT191 found that

lean does apply to construction and recommended that it be applied. The team studied

Lean principles extensively focused on construction site. PT 191 focused on construction

site installation and proposed five lean principles as followings:

• Customer focus

• Culture and people

• Workplace organization and standardization

• Elimination of waste

• Continuous improvement and building quality

These principles have has numerous sub-principles, which are described in Appendix A.

3.2.3.5. Leadership in a Knowledge Era: Achieving the Learning

Organization (PT 201)

A learning organization is skilled at creating, acquiring, sharing, and applying

knowledge, and embracing change and innovation at all levels, resulting in optimum

70
performance and maximum competitive advantage. The research team suggests that EPC

(Engineering, Procurement, and Construction) companies focus on leadership,

champions, direction, technology balance, and resource allocation.

The team also proposes that a shift to a long-term outlook on learning is necessary.

Experienced based improvement will allow the organization to build upon past successes

by permitting personnel to store, access, and expand upon project experiences gained

throughout the organization. Building a learning organization is part of any continuous

improvement process.

Any firm deciding to make a lean transformation would also by definition be deciding

to become a learning organization. The matrix developed by “Leadership in a

Knowledge Era: Achieving the Learning Organization” is a valuable tool to help a firm

decide how and where effort must be placed in order to reap the benefits of lean. So

much of lean is based on the idea of learning from past mistakes and, perhaps more

importantly, letting the appropriate person or persons within the organization learn. One

can have a leaning organization that is not explicitly lean. One cannot have a lean

organization that is not a learning organization. A lean organization is a learning

organization.

3.2.3.6. Making Zero Rework a Reality (PT 203)

Zero re-work, or do it right the first time, is a comprehensive process for management

and elimination of quality-error related costs for construction sites.

A Zero Field Rework checklist (CII Implementation Resource 203-2) was developed

to assist in identifying areas for improvement. The research concluded that major

71
management support and pre-project planning are consistent for both safety and quality

activities on the projects surveyed. Worker involvement is needed in order to resolve the

continuing problem of field rework.

“Do it right the first time”, and building quality in process are central to a Lean

principle of built-in quality. Rework is a form of waste. As in Lean, the research finds

the way to eliminate rework not in inspection, but in project planning and process. The

report identifies several ways to begin to identify and quantify rework.

The tools developed for identifying and tracking rework over time are invaluable to

lean construction. In order to identify areas which are wasteful, data must be collected

and analyzed. The framework developed for tracking and the dealing with rework issues

is very solid, and because of its reliance on the framework of existing safety procedures,

should be easy to integrate into most firms. Eliminating rework and quality problems are

a major area of concern for all lean implementations in construction or manufacturing.

The development of tools to help track, quantify, and resolve these problems is

invaluable to anyone who is beginning their lean construction implementation.

3.2.3.7. Work Force View of Construction Productivity (PT 215)

This research identified factors that have a significant impact on construction

productivity. Tools and consumables, materials, engineering drawing management, and

construction equipment were cited as primary causes for concern. It was discovered that:

• Craft workers can provide insight to the root causes of productivity loss,

• Most major concerns are addressable on the jobsite,

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 • Productivity must be examined from a behavioral aspect, and must use cost and

progress reporting, and engage crafts in two-way communicating

The workforce themselves are participating in documenting the factors influencing

construction productivity and the relative impact those factors have on overall job-site

management. This activity involves research into the production inefficiencies and root

cause analysis. Its findings also reinforce the importance of lean production control, and

specifically the practice of reliable promising and the critical importance of being able to

say no. If a worker or anyone lower in an organizational hierarchy cannot say no to an

inappropriate request, a request that does not comply with mutually understood criteria,

then they are not making a promise on which others can rely. By contrast, here is the

language of reliable promising: ‘Do you have everything you need to carry out your

assignment safely and effectively? If not, let’s fix it or assign work that is ready to be

done.’ This study relates to lean in the aspect of decentralized decision-making and

information transfer from the bottom-up.

The implications of previous CII researches on Lean construction are summarized in

Table 3.1.

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 Table 3.1: Summary of Previous CII Research on Lean Construction

Project Implications for Lean Construction

Lean production control (Reducing buffer by reducing

PT143 Craft labor productivity
variability)

PT 160 Making Zero Accident a Reality Lean production control

PT172 Improving capital projects supply

Lean implementation on material supply system
chain management

PT191 Lean principles applicable to

Application of lean principles to construction site
construction

PT201 Leadership in a Knowledge Learning organization

PT203 Making Zero Rework a Reality Built-in Quality

PT215 Work Force View of Construction

Get feedback from craft workers
Productivity

3.3 Organizational Change

Lean transformation requires more than applying tools and techniques. Application of

lean at all levels, enterprise, project, and process, requires a change in organizational

culture. The key literature on organizational change includes the following.

3.3.1 Kotter’s Model

Kotter (1996) developed a model for managing organizational change that offers a

valuable tool to construction management professionals who intend to change the culture

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of their organizations. Kotter takes a broad look at organizational change, and the forces

necessary to make the change successful. Through examples of both successful and

unsuccessful efforts, Kotter describes what needs to be in place in order for an

organization to accept change. Kotter's model suggests a three-part framework: 1) Defrost

the status quo, 2) Take actions that bring about change, and 3) Anchor the changes in the

corporate culture.

The first element, “defrost the status quo,” comprises four essential steps. First,

leaders must establish a sense of urgency. People must have a reason, and a really good

one at that, for doing something different. In Kotter's experience, 50 percent of change

efforts failed right here. The second step is to form a guiding coalition. Change cannot be

directed through the existing hierarchy. It must be nurtured and supported by a dedicated

group of influential leaders throughout the organization. Third, leaders must create a

vision. Once people accept the urgency, they want to know where they are going.

Without a vision, the change effort can dissolve into a series of incompatible projects that

start to look like change for change’s sake. The fourth step is to communicate the vision.

Leaders must communicate the vision through their actions.

The second element of the model is to take actions that bring about change, which

includes three steps. This is the action element, and the first step is to empower others to

act on the vision. Leaders must clear the way for employees to develop new ideas and

approaches without being stymied by the old ways. The second action step is to plan for

and create short-term wins. Employees want to see results within 12 to 24 months or they

will give up. Short-term wins validate the effort and maintain the level of urgency. The

third step arises from the second: consolidate improvements and produce still more

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change. Short-term wins must be stepping-stones to greater opportunities and bigger

wins, all consistent with the vision driving the overall effort.

The third element, Anchor the change in the corporate culture, is a single step.

Having made effective changes, leaders must now make the changes permanent. Leaders

must connect new behavior with corporate success, showing that the new ways are here

to stay.

Change is complex, uncertain and difficult, but it is not impossible. Kotter's model for

leading change provides a framework that may be applied in any organization at any

level. The success of any change initiative within an organization is directly linked to the

leadership team leading the change. Liker (2004) also emphasizes the need for planning

before any change is undertaken. With successful leadership and a clear plan for change,

any organization can be successful at changing itself.

3.3.2 Large Group Method

Large Group Methods is a group of techniques and methods that have been developed to

deal with the challenges of changing a large group or large firm. The techniques

themselves are open to interpretation and need to be chosen correctly depending on how a

firm wishes to change, and must take into account several other variables depending on

the group that is being studied. (Bunker and Alban, 2006)

The overall goal of large group methods is to change an organization. This change

must be defined. The development of the definition of the change is often the most

difficult part of the process. A firm must decide where they want to go in order to be able

to plot a course to get there. There are several valuable tools available to organizations

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looking to define and plot how a change should be made. Most of the below methods are

overlapping. They all seek to help organizations decide where they want to go, then help

them on their way to get there.

3.3.2.1 The Search Conference

The Search Conference (Emery and Purser, 1996) is a rigid framework for the

development of the future vision of an organization. It takes place over the course of at

least two and a half days and seeks to look at where the company is now, where it has

been in the past, and where it wants to go in the future. No outside experts are necessary

for the facilitation of the conference. The ideal number of people involved is 35 to 40

plus people. In this model 1/3 of the time is spent on action planning, or deciding how a

firm will achieve the future it has determined it wants to achieve. (Bunker, 1997)

The search conference uses diverse groups that scan the current environment,

examine their history as a system, assess the present situation and agree on a future. As

stated above, 1/3 of the time is devoted to planning for actions that will allow them to

realize the future they have agreed to and want. In this model conflict is acknowledged

but not dealt with at length. The emphasis is on finding what is held in common and can

be agreed to by all as the basis for the proceeding. (Bunker and Alban, 2006)

3.3.2.2. Future Search

The future search is also a method to create a future vision of a company. What

differentiates it is the management of the small groups which make up the future search.

Small self-managed groups work. The Future Search engages people more emotionally,

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as the activities are both rational and affecting. The Future Search can accommodate

from 35 to more than 100 people. (Bunker and Alban, 2006)

Groups of people are organized at tables made up of stakeholders. The first step is to

determine trends will affect them in the future and then determine what they will or will

not do about them. The second step is to analyze the present and determine what they are

proud about, and what they are sorry about within their current organization. Finally

“max-mix” groups determine the common ground that can be used as a foundation to

move forward. The goal of Future Search is to engage people both emotionally and

rationally, as the activities are both rational and affecting. (Bunker and Alban, 2006)

3.3.2.3. Whole-Scale Change

Whole scale change is a method that was developed to deal specifically with large groups

of people. The number of people can range from 100 to 2,400 people. Because of the

number of people involved in these events, there is heavy planning involved both in the

design of the event, and the logistics needed to bring this many people together. Unlike

the above methods, whole-scale change custom designs the process of each event to the

particular client event. Because of this, outside experts are needed (Bunker and Alban,

2006). Whole-scale interactive events are events that do not necessarily require the

physical meeting of the people involved in the meeting.

Whole Scale Change is as stated above very planning intensive. The organization of

such events can be stated in general terms. First, there must be some kind of assessment

of the external environment and understanding of the past and present, as well as a focus

on the desired direction for the future. Whole-Scale change events can include customers

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and suppliers, which make this particularly suitable to a construction environment.

(Bunker and Alban, 2006)

All three of the above methods seek to reach the same end, a changed organization.

The changing of an organization is not something that simply happens any more than a

building simply appears. There has to be a decision made and a consensus reached on

how an organization should look and work in the future. After that, determining how to

reach these goals is the next step. The description of the above methods is an attempt to

introduce Large Group Methods to the construction industry.

3.3.3 Cultural change through supervisory practices

In 2005, Productivity Press published two books that are very important for

understanding lean implementation. David Mann’s Creating a Lean Culture describes

how Toyota standardizes supervisory practices in tandem with standardization of work

processes. While explicitly focused on factory production, Mann’s line of thought is

nonetheless critical for appreciating how Toyota instills and perpetuates its culture of

continuous improvement and learning through the way people are supervised at every

level in the organization. Standardization of supervision extends beyond routine tasks

such as checklists, walking the floor, and producing production plans. It also covers what

to do in conditions of breakdown. This may be the touchstone for the presence or absence

of a lean culture; namely, how supervisors/managers react when something goes wrong.

Are problems pushed aside as anomalies to be explained away? Is there a search for

someone to blame? Alternatively, are near misses, errors, quality defects, schedule busts,

budget overruns analyzed to root causes and action taken on them? Is the learning

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communicated throughout the organization and processes changed to prevent

reoccurrence?

The second book is Donald Dinero’s Training Within Industry, the story of a training

program developed in World War II in response to the vast numbers of unskilled people

coming into the labor force—much the same as the challenge now facing the construction

industry. It is now well known that methods of quality control perfected for war time

production in the U.S. were brought to the Japanese through classes by W. Edwards

Deming, Joseph Juran and other quality guru’s, and became an essential part of what later

came to be called lean production. Until recently, it was not known that TWI was also

part of the United States’ redevelopment of Japan. Toyota still uses the TWI training and

sees it as essential to the Toyota Production System.

TWI has three major training programs: Job Instruction, Job Relations, and Job

Methods. Job Instruction teaches supervisors how to train and coach others. It starts from

recognition of the fact that knowing how to do something is not the same as knowing

how to teach someone else to do it. The CD in Dinero’s book (Dinero, 2005) includes an

illustration of the method of instruction. Job Relations teaches supervisors how to treat

people as individuals, and was included in MacArthur’s redevelopment strategy in an

effort to transform Japan from a feudalistic into a democratic society. Job Methods

teaches supervisors and direct workers how to evaluate and improve work methods.

These supervisory skills—people management, coaching, and methods

improvement—are fundamental to the standardization of supervision described by David

Mann, and are essential for creating the change in culture that ‘going lean’ requires.

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3.3.4 Individual Change

In order to understand how organizational changes can be incorporated into a

management system, it is necessary to explain how an individual can accept change. An

individual’s involvement and participation in the process of change is based in

psychology. There are various theories that govern the participants through the change

process. These theories, or schools of thought, are as follows; behavioral approach,

cognitive approach, psychodynamic approach, and humanistic approach (Cameron and

Green, 2004).

(a) ”the behavioral approach, which focuses mostly on observing and changing people’s

behaviors to conform to the desired standards, using various punishments and rewards in

order to accomplish the organization’s goals, such as performance management and

coaching and skills training”.

(b) “the cognitive approach, which goes below “the surface” to consider processes going

on within a person’s mind and considers that change can take place if people’s thought

processes can be altered. This approach proposes interventions such as the management

by objectives, business planning and performance coaching”.

(c) ”the psychodynamic approach, which goes one step further to consider the

psychological processes and states people go through when experiencing change. In this

perspective the motivation of people should not only enact cognitive schemas but also

emotional processes in order to be effective and thus, the management interventions it

proposes include counseling people through change, addressing emotions and

understanding change dynamics”.

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(d)”the humanistic approach, which emphasizes personal growth and maximization of

one’s potential. This approach builds on the psychodynamic approach, but suggests a

more global understanding of people’s needs as they go through change and proposes

interventions such as fostering communication and consultation, addressing the hierarchy

of people’s needs and developing a learning organization”.

The issues relating to any change management technique, the techniques that

involve an individual of course, have to deal with the resistance to change, level of

motivation, culture influence, proper communication, effective training, and an

appropriate evaluation and assessment of the overall effectiveness. Each of these issues

are unique to the individual involved and must be addressed throughout the entire process.

Any breakdown, such as not taking into account the cultural background or effect the

change will have on an individual’s culture will influence the effectiveness of the change,

as well as the motivation of the individual and the required vehicle for communication.

Another interpretation of how an individual can facilitate change involves the

Five-Factor Model of personality (FFM) and Emotional Intelligence (EI). The FFM has

components of neuroticism (anxiety, insecurity, and distress), extraversion (quantity and

intensity of the activity level), openness to experience (proactively seeking and

appreciation), agreeableness (the individual’s rating along the continuum of compassion

to antagonism) , and conscientiousness (persistence and motivation towards goal-directed

behavior). Each of these components relates to the individual’s change schemata, which

are “mental maps representing knowledge structures of change attributes, and

relationships among different change events” (Vakola et al., 2004).

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 The next idea involves an individual’s emotional intelligence, which is the degree

of adaptiveness and responsiveness an individual has over their emotions. This is

paramount to facilitating change. The level of effectiveness that the change will be

incorporated and followed is dependant of how well the individual’s change schemata

and EI are blended with the appropriate psychological approach.

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4.0 Findings from statistical analyses, case

studies and field experiments

Our conclusions and recommendations are based on what we found from a review of the

literature, from statistical analyses, from case studies, and from field trials. In the

previous chapter, we presented our review of the literature. This chapter describes what

we found from statistical analyses, case studies and field trials.

Statistical analysis of the correlation between PPC (percent plan complete: a measure

of work flow reliability) was done on data provided by BMW Constructors from a project

they did for the BP Refinery in Whiting, Indiana.

Case studies were done through interviews with four owners, one architect/engineer,

five construction manager/general contractors, one integrated team, four specialty

contractors, and one supplier. Because of their length, we have chosen to place the case

studies in the Appendix. In this chapter, we describe only the key findings from those

cases.

Field trials in lean implementation were conducted by three organizations, two of

which are members of the research team: Abbott (through Riley Construction, a CM on

one of their projects), Dow Chemical, and Ilyang Construction.

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4.1 Statistical analysis of the correlation between PPC and

Productivity

PPC (percent plan complete) is a metric within the Last Planner® system of production

control (Ballard & Howell, 1998) that measures the extent to which planned work is

completed as planned, and hence the extent to which future work load can be predicted

and preparations made for doing that work. It seems intuitively obvious that increasing

PPC should increase labor productivity to some extent, but data collection and analysis is

necessary to validate that causal relationship and to measure the degree of correlation

between the two variables.

Data was provided by BMW Constructors from BP’s Whiting, Indiana ULSD

refinery project. The data consisted of weekly PPC measurements and the corresponding

productivity measurements for the pipe fitter crews working in 13 different work areas on

the project.18

Key findings from the study:

1. PPC and productivity were found to be positively correlated at a 95%

confidence level.

2. A formula for estimating the increase in productivity from a one unit

increase in PPC was produced: Prod= 0.693+0.818*PPC.

3. No correlation between the variation of work load and productivity was

observed.

18
BMW Constructor’s consultant on the project was Peter Gwynn of Lean Implementation Services.
Strategic Project Solutions’ SPS Production Manager software was used for production control.

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 4. No correlation between the variation of work output and productivity was

observed.19

5. The correlation coefficient between productivity and PPC increases if the

ratio of work load to capacity lies in a moderate range. Overloading or

underloading weakens this correlation.

o Underloading reduces the correlation by increasing PPC and

decreasing productivity.

o Overloading reduces the correlation by reducing PPC, while

productivity does not increase beyond the point at which load

matches capacity. In other words, as more tasks are planned for a

crew, when the task load exceeds the capacity of the crew, their task

completion rate decreases. This need not reduce productivity, since

the crew is, by definition, fully loaded with work relative to their

capacity to perform work, but does reduce the flexibility to

accommodate variation and breakdowns without use of overtime as a

capacity buffer.

The practical significance of these findings is that project managers have an additional

means for improving labor productivity on projects20; namely, by improving work flow

reliability as measured by PPC. Work flow variation, labor capacity, and labor

19
Findings 3 and 4 suggest that use of the Last Planner® method at least partially shielded productivity
from variations in work load in each area week to week by identifying actual work load (tasks for
which all constraints had been removed) available in each area in time to shift capacity to better match
load.
20
Reducing work flow variation can bring other benefits besides improved productivity, but the statistical
analysis only addressed productivity. Future research is needed to explore the impact of variation in
work flow on safety and quality.

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productivity interact with each other. It is important for project managers to take these

factors and their interdependence into account in planning and steering production.

These are important findings regarding the impact of work flow reliability on

productivity, but it should be noted that, according to Last Planner theorists, the primary

impact was not measured in this study. When short term production plans can be taken as

promises made from one trade or crew to another, as those promises become more

reliable, the downstream crews can prepare and plan to do the work they know will be

available tomorrow or next week. When production plans are not accurate predictors of

future work load, everyone who is dependent on others for something needed to do their

own work (materials, information, work space, equipment, etc.) is robbed of the ability to

plan. Since the release of work from crew to crew was not examined in this study, even

greater impact of production planning on productivity can be expected, and should be

explored in future studies.

Note also that the analysis was done on PPC measured no more than one week ahead

of task execution. Another area of opportunity for productivity improvement, also

needing study and analysis, is extending that window of predictability.

4.2 Case studies

The case studies were very helpful in understanding why and how various companies

playing different roles in the construction industry have implemented lean on their

projects. After an overview and summary of the studies, findings are presented, grouped

under these headings:

• Who has driven project implementations? (4.2.4.1)

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 • Why have organizations chosen to ‘go lean’? (4.2.4.2)

• How have organizations prepared for getting lean journey started? (4.2.4.3)

• What implementation paths have been followed? (4.2.4.4)

• What lean tools have been applied? (4.2.4.5)

• What metrics have been measured? (4.2.4.6)

• What results have been achieved? (4.2.4.7)

• What are success factors and barriers? (4.2.4.8)

4.2.1 Case study process and interview questions

Interviews were used to supplement published documents to produce case studies on

selected companies playing various roles on projects. In this section, we describe the

interview process and questions.

Interviews were conducted for the most part in person, otherwise by telephone. The

interviews were informal, but started from and were directed to answering the following

key questions:

• Why did your organization decide to ‘go lean’?

• How did you go about it?

• What happened?

• What have you learned about implementation?

• What would you do differently if you could do it over again?

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4.2.2 Participants in the case studies

The case study population is not presented as a statistically valid sample drawn from a

larger population. There are as yet so few companies in the construction industry

practicing lean project delivery that sample sizes would be too small to support

statistically valid generalizations. However, participants are recognized in the industry as

early adopters of lean, and thus are a valuable source of information about

implementation. Not all early adopters were included, but a substantial number

volunteered to work with the researchers to develop case studies. The companies that

participated in the case studies were:

• Owners

o Air Products

o BAA (U.K. airport owner/operator)

o General Motors

o Sutter Health

• Integrated Teams

o Integrated Project Delivery

• Architect/Engineers

o Burt Hill

• Construction Managers/General Contractors

o Boldt

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 o GS E&C (Korean)

o Laing/O’Rourke (U.K.)--included in the BAA case study

o Messer Construction

o Walbridge Aldinger

• Specialty Contractors

o BMW Constructors (industrial piping contractor)

o Dee Cramer (mechanical contractor)

o Ilyang (Korean earthwork and structural contractor)

o Southland Industries (mechanical contractor)

• Suppliers

o Spancrete (precast concrete fabricator)

No consulting engineers (design specialists) were included, although several have come

to the attention of the research team as implementers of lean in their organizations and on

their projects, but too late to include in the case studies.

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4.2.3 Summary of case study findings

Table 4.1 Summary of case study findings-owners

Case Drivers Lean Tools Results

Company-wide lean

implementation; Reduced plant shutdown

Value Stream
Needs for waste cycle time by 15 days at
Air Products Mapping, Last
elimination in the Wichita Falls plant; achieved
Planner® System
process of project PPC of 98%

delivery

Relational

Terminal 5 project contracting, 3D Completed Terminal 5 project

vital to national modeling, JIT, Last on time and on budget;

BAA
interest and equal to Planner® System completed T5 Civils phase

company’s net worth Value Stream 10% under budget

Mapping,

On Flint Engine Plant

Company-wide lean expansion, reduced

implementation; construction time by 27%,

Value Stream
Needs for waste generated a structural steel
GM Mapping, 3D
elimination in the mill order in 3 weeks and
modeling, JIT
process of project completed construction with

delivery zero change orders from

design errors with 3D design

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 Last Planner®

System, 3D
Need to seismically
modeling, Cross ARC project hit its target cost
upgrade health care
functional team, in a period of severe price
Sutter Health facilities in
Target costing, Set escalation for both materials
competition for scarce
based design, and services
resources
Relational

Contracting

Table 4.2 Summary of survey findings-Integrated Team (IPD) and GCs

Case Drivers Lean Tools Results

Last Planner®
Moving money across IPD designed and built a
System, JIT, Visual
IPD (integrated organizations for best central plant in 8 months
Control, Relational
team) project level for $600,000 under the
contracting, Target
investment $6,000,000 GMP
costing

Target costing, Last

St. Olaf’s College in 10
Planner® System,
months less time and for 65%
Steady erosion in profit Reverse Phase
Boldt (GC) the square foot cost of a
margin Scheduling, Value
similar facility built in the
Stream Mapping,
same area (Target Costing)
Set based design

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 Management's

recognition for waste Saves around 10% of rebar

GS (GC, Last Planner®
from large inventory; engineering, fabrication, and
Korea) System, JIT
internal needs for installation costs

increasing profitability

Last Planner®
Desire to better serve
System, Reverse Reduced stress, reduced cost
customers; desire to
Phase Scheduling, of concrete shear walls by
reduce stress on project
Messer (GC) Value Stream 40% and columns by 10%
managers; desire to
Mapping, First Run (First Run Studies), reduced
reduce variation and
Studies, Visual project duration by 2 months
waste
Controls, 5S

5S, Logistic Plan,

Client's demands and
Walbridge Value Stream Saved $9 million over last
internal needs - a better
Aldinger (GC) Mapping, Built-in three years
way of doing things
Quality

Table 4.3 Summary of survey findings-specialty contractors

Case Drivers Lean Tools Results

Client's demands; Reduced cycle time; Reduced

Unique position of administrative waste such as

Dee Cramer 3D modeling, JIT
being engaged in as-built drawing; Reduced

manufacturing. inventory

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 Seeking for

competitiveness;
Last Planner Increased net profit by 10 %
Needs for reliable
Ilyang (Korea) ®System, Kanban, and reduced safety non-
production plan for
Visual Control conformance report by 50 %
strategic procurement

plan

Improved productivity in
3D modeling, JIT,
ductwork installation by 41%
Pursuit of continuous Value Stream
and virtually eliminated
improvement, Mapping, Built-in
rework.
eliminate waste, Quality, Last
Southland
increase accountability, Planner® System,
Industries Improved productivity in
strengthen labor force, Visual Control, 5S,
terminal unit
increase Reverse Phase
fabrication/installation by
communication Scheduling, First
60%, with zero returns for
Run Studies
defects.

Table 4.4 Summary of Findings: Architect/Engineer and Supplier

Case Drivers Lean Tools Results

Concern for future Last 50% increase in operating

viability of Planner®System, profit on Last Planner® pilot

Burt Hill architectural/engineering Building projects, higher design

firms; desire to be a Information productivity, better schedule

leader in process Modeling, Target and budget performance

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 improvement costing, Relational

Contracting,

Value stream

mapping to
Increased raw material
initiative
Reverse negative trend inventory turns, increased
Spancrete semiannual process
in profitability throughput, improved
improvement in
productivity
every work group in

the company

4.2.4 Findings from case studies

In this section we organize and present the case study findings under the following

headings:

• Who has driven project implementations? (4.2.4.1)

• Why have organizations chosen to ‘go lean’? (4.2.4.2)

• How have organizations prepared for getting lean journey started? (4.2.4.3)

• What implementation paths have been followed? (4.2.4.4)

• What lean tools have been applied? (4.2.4.5)

• What results have been achieved? (4.2.4.6)

4.2.4.1 Who has driven project implementations?

The roles played on projects are primarily the following:

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 • Owner/owner agent

• Manager (project/phase)

• Design specialist

• Construction specialist

• Supplier

The Lean Construction Institute (www.leanconstruction.org) pursues a strategy for

industry transformation that has three elements: 1) Change mental models and the terms

of discussion through education; 2) Create lean companies to put pressure on competitors

through the market; and 3) Help owners learn what to demand from and how to support

their project delivery teams. These have happened in roughly that order, with owners now

coming to the front lines and demanding and facilitating principle-based changes in

practice. BAA was the first. Sutter Health is having a huge impact in its market. Air

Products and GM have brought the demand for lean project delivery into the industrial

sector.

Owners seem to be the ones who most often initiate lean practices on construction

projects, but they are often assisted by a willing or even leading project/phase manager.

For example, BAA and Laing/O’Rourke on the Terminal 5 project at Heathrow Airport;

GM and Ghaffari Associates on the Flint Engine Plant project; Sutter Health and its A/Es

and CM/GCs, such as HGA and Boldt. Southland Industries, a design-build mechanical

contractor, has also played a leadership role on Sutter Health’s lean projects.

Managers can initiate within the project phases they control; e.g., Laing/O’Rourke,

Messer, Boldt, Burt Hill, GS, Walbridge. When managers have financial responsibility

for their phases, they do not need owner agreement. Managers tend to focus on planning

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and control functions on projects, both because they are key to successful implementation

of other improvements and because those are the processes they control. However, design

and construction managers can team up to do target costing (Boldt and Burt Hill), though

the owner must have been persuaded to adopt that method.

Integrated Project Delivery (IPD) is an example of a project delivery team banding

together to obtain and deliver projects using the lean project delivery system on design-

build projects. In that role, they can function with virtually the same powers as an owner

and can facilitate project-level improvements.

Design and construction specialists can initiate lean practices, but typically are

limited in what can be done to impact entire projects unless they are supported either by

the owner, project manager, or are members of a self-formed team like IPD. When acting

unilaterally on projects, they tend to work on their own production processes. For

example, construction specialists may redesign installation operations for superior safety,

quality, time or cost performance.

Suppliers can take the initiative in shaping their services and work processes, but

some have been frustrated at their inability to persuade customers to take advantage of

the supplier’s lean capabilities. For example, reducing delivery batch sizes and on site

inventories is a standard lean objective, but is not valued by customers operating in non-

lean fashion. Indeed, some standard industry practices, such as paying for fabricated

items on delivery, encourage the opposite of JIT.

One of the bigger obstacles to the deployment of Lean construction is in the nature of

the contract hierarchy. Most of the changes that lean construction entail cannot be

accomplished within a single organization involved in a project. The cooperation of a

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number of entities is required in order for lean concepts to have substantial impact on

project performance. With a few, very specific exceptions, the firms who have been

experimenting with lean construction are large contractors who can demand the

cooperation of the downstream entities, or large owners who specifically request that lean

construction techniques be applied. This top down approach leaves the smaller

subcontractors at a significant disadvantage in trying to apply lean construction

techniques on non-lean oriented projects.

The example of Dee Cramer is very telling. Dee Cramer is an HVAC contractor

based in Detroit who has done a lot of work with GM. They must manufacture the large

ductwork assemblies that are required for their projects, then they must install the

assemblies at the project site. The manufacturing they do is extremely specialized and in

most cases, no two assemblies are the same. This has led Dee Cramer to adopt many of

the lean principles in its manufacturing operations. Until recently they were unable to

extend these principles when working with clients who are not ready for lean.

It must also be said that specialists can have an impact beyond their own specialties.

Ilyang is a case in point. The manager of a general contractor was asked to participate in

Ilyang's Lean meeting. The general contractor was satisfied with the reliability of

production planning which Ilyang provided. After Ilyang provided the production

planning, the general contractor asked Ilyang to make a presentation on their production

planning method. The general contractor encouraged other subcontractors to learn

Ilyang's production control system. The case of Ilyang shows an example where a

specialty contractor takes the initiative in lean implementation at project level.

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4.2.4.1.1 Coordination versus Production Roles

Some organizations, such as architectural firms, construction managers and general

contractors, are responsible for project coordination and control, and owners obviously

have substantial power over the way projects are structured. Companies that are

launching themselves on the long journey to become a lean enterprise tend to start by

working on processes within their own control, often using value stream mapping as a

method for revealing opportunities for reducing waste. Value stream mapping is a natural

starting point for companies that are more directly engaged in designing and making as

opposed to planning and coordinating, and of course should be implemented in parallel

with coordination and control in project implementations, or once sufficient stability has

been achieved.

Spancrete is an example of an industry player acting within its own house to

implement lean. A precast concrete fabrication company, they structure their lean

implementation around production groups producing certain types of products, both

administrative and manufactured products, and use value stream mapping as the primary

method. On the other hand, Southland Industries, a design-build mechanical contractor,

initiated its lean implementation with Last Planner®, but subsequently applied value

stream mapping to its administrative, engineering and construction processes.

4.2.4.2 Why have organizations chosen to ‘go lean’?

Implementation has usually been motivated by the perception of a threat, less often by the

perception of an opportunity for gain, though ‘early adopters’ tend to be more persuaded

by the latter. Many innovations in lean construction have occurred on projects under such

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severe stress that changes in thinking and practice were necessary for successful project

delivery. A key takeaway is the importance of systematically and deliberately creating

such conditions—‘lower the river to reveal the rocks’.

BAA faced unprecedented challenges on its T5 project, including the longest running

public inquiry in history, as many as 37 deliveries per second to site through a single

entrance, and laydown space sufficient only for one day’s inventory of materials. Sutter

Health was preparing for competition for scarce resources needed to comply with a

regulatory requirement for seismic upgrade of healthcare facilities in California, and,

with its fellow healthcare companies in the state, has routinely been faced with 1.5 year

permitting delays on hospital projects. Messer Construction reports that its project

managers were stressed beyond the breaking point. Boldt, a general contractor, and

Spancrete, a precast concrete fabricator, were both experiencing slow but steady erosion

in their profit margins.

There are exceptions. Some companies have begun the lean journey propelled by the

promise of gain. The GS E&C management team recognized the huge waste of materials

and inventory taking up space on sites. This led to the introduction of the Just-In-Time

(JIT) process as a potential solution for their inventory problem. Ilyang initiated

production control system to have a strategic procurement plan where reliable production

planning is compulsory.

Granting such exceptions, for the most part, organizations find it very difficult to

change unless they have no choice. A sign of a lean enterprise, firmly moving along the

lean highway, is that they generate that ‘necessity’ themselves, and do not wait for their

competitors, customers, or the market to compel them to change and improve.

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4.2.4.3 How have organizations prepared for getting lean journey started?

Implementation of lean within the case study firms was the most difficult and varied part

of the whole process. Most firms looked outside their organizations for help with this

step. The most popular early step in deciding on how to implement lean was to start

reading academic and trade journals and joining trade groups. LCI (Lean Construction

Institute) and LEI (Lean Enterprise Institute) are both organizations that offer their

members a wealth of knowledge.

Because lean is somewhat new to the construction industry, several of the case study

participants went directly to the more mature lean manufacturing literature. In some

cases, most notably GM, lean manufacturing was already being practiced in other parts of

the organization.

Most of the construction firms sought to hire outside help in the form of consultants

or bringing people in from other lean organizations with whom the firms were familiar.

Using a “Sensei”, or someone that is not within the firm to begin with is a good way to

get an objective look inside the firm. Walbridge sought out the advice of several of its

clients in the manufacturing sector. GS and Ilyang both sought out the advice of Toyota.

One of the most common comments on the deployment of lean within an organization

was to learn from one’s mistakes. Implementation strategies often change while they are

moving forward. The advice of most of the companies was to keep the stuff that works,

and learn from the stuff that didn’t work. Learning by doing is an important part of any

lean organization.

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4.2.4.3.1. Training

Training is another area where most of the firms went about it in different ways

depending on the existing organization. Larger organizations tended to rely on in house

training and use of existing models for lean deployment. GM and Air Products had the in

house knowledge and training staff to be able to dedicate to such an undertaking.

Still other firms went to other companies who had lean expertise. They then went

back into their own firms and set up a “lean team.” The goals of the lean team were to

disseminate knowledge through the organization and help build a lean culture.

Walbridge and Boldt are good examples of this.

All of the firms spoke at length about “learning by doing.” On the job training was

the most effective and used training technique. Due to the variability and scope of

construction there is no possible way to “teach” lean in a traditional academic sense.

There were also broad comments made on the people being trained. Most

construction people are hands on by nature, and will either resist or simply not take place

in a traditional classroom training session. Learning in the field, on a construction site

was by far the most popular way of training cited by most firms.

Still other firms required a certain amount of training hours per year. This training

could be done on the construction site or in a classroom setting with the appropriate

people. Walbridge and GS both require a certain amount of training hours per year for

every employee.

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4.2.4.3.2. Organizational change/ structure

Leadership is critical to the success of any lean initiative. Leadership must be considered

when deciding how an organization will look after lean implementation. Most of the

firms in the case studies had a separate “lean team.” This lean team was usually a cross

functional team taken from different levels and positions from within the firm.

In some cases it was as simple as training the right people and setting them loose

within the firm. Most firms however choose to have the lean team remain intact, in order

to track the changes and success of the lean transformation. In all cases people who were

natural leaders within the firm were the natural choices.

Lean commitment was another area most firms spoke a length about. The idea that

lean is here to stay, and that it is not optional was stressed. Lean commitment was most

effective when it came directly from the top of an organization, and was mirrored at

every other level of the firm. Commitment was seen as one of the most important

success factors during and after lean implementation.

4.2.4.4 What implementation paths have been followed?

4.2.4.4.1 Project Phases

Most implementations have occurred or focused on the construction phase of projects,

though that is now shifting upstream into definition and design. Again, BAA was a leader

in this area, and now both Sutter Health and GM are driving lean implementation in the

early phases of projects, where the driving principle is value generation rather than waste

reduction. A key part of the implementation is to create collaborative teams of owners,

designers, builders, suppliers and other key stakeholders such as regulatory authorities.

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Other features of lean product development such as target costing and set based design

also play key roles in these early project phases. 3D modeling is playing a big role on

both Sutter Health and GM projects. On the side of process managers, Burt Hill, an

architectural/engineering firm, is a leader in the implementation of lean in definition and

design, especially as regards both production control and 3D modeling.

The earlier lean is deployed in the project process, the greater the benefits that can be

expected. The use of lean design tools such as target costing may result in impressive

cost savings as seen in Boldt’s Tostrud Fieldhouse project. However, the opportunity for

lean still exists even when lean is adopted after construction begins. For example, BMW

Constructors, involved only in site installation, implemented lean production control and

JIT fabrication in their piping operations on the BP Whiting Refinery project and beat

their budgeted productivity by 31%.

4.2.4.4.2 Start in your own house

Besides first making process outcomes predictable (stabilizing), another item of standing

advice from the literature is to start with processes within your own control before trying

to work on processes involving interfaces with others. The cases and experiments support

that advice, suggesting that those intending to implement lean on a project start first with

processes and systems entirely within their own control, then subsequently attack

processes involving an interface with a single customer or supplier, then attack processes

involving multiple interfaces and so involve shared control by many parties. At least one

participant in the case studies, Sutter Health, reports the problems they encountered when

they did not start in their own house, but went directly to their service community. Air

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Products, on the other hand, seems to be an excellent example both of the recommended

practice and its benefits. Their application of lean to capital projects is but an extension of

an enterprise level implementation.

A general rule is suggested by these findings; namely, focus on what’s in your own

control, either directly (because you have the power to design and redesign the system) or

indirectly, through collaboration with others. Doing so yields better chance of success

and also increases your organization’s credibility when you invite others to collaborate on

improving shared processes.

4.2.4.4.3 Demonstration projects

Lean Construction is something you have to see and experience. Most case studies

showed that lean is most effective when a firm incorporates principles of lean into its

management and production system and then develops the ideas within the framework of

the firm. This means that companies must develop internal processes and process

controls. These concepts applied to construction must have a place or project to be

applied to. Learning by doing and learning from failure was a common comment on how

a firm went about a lean transformation. The project or projects that lean is applied to

must demonstrate the validity of lean both inside and outside the firm. No change ever

goes as planned, and lean construction is no different. Concepts can look great on paper,

but must ultimately be tested in practice, which often means on projects.

The use of a project as a demonstration serves all of the above stated needs. It starts

with the demonstration to managers who did not apply lean within an organization.

Important is also the demonstration to the stakeholders that these concepts can be applied

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to construction. This is of particular use for larger contractors who must have the buy in

from upper-level on-site management. The demonstration of these concepts and the

opportunity to improve upon them in real life are lean at its most basic. The ability of

management to realize this and to be able to facilitate and troubleshoot these changes is

critical to the overall success of lean construction.

For example, Boldt uses previous lean projects to get buy-in from clients as well as

from their own people, especially managers who have not yet applied lean. Ilyang

distributed documents on lean experiences in demonstration projects to get buy-in from

their internal organization. Ilyang managers made a strong commitment after successful

implementation on two pilot projects. At Ilyang, the number of construction managers

who want to apply Lean to their projects are increasing. Currently twelve projects are

implementing Lean. Demonstration projects not only get buy-in but also provide

feedback on methods and tools used in the projects. GS and Ilyang both modified their

Lean manual to take their culture into account. The demonstration project also seeks to

get buy in from line level workers. These are the people who are most responsible for

“getting the work done”. These people are often very suspect of any changes that are

forced upon them. The demonstration project should seek to demonstrate the usefulness

of lean for these people especially.

Lastly, but by no means least important, demonstration projects develop internal

advocates and allow lean champions to emerge.

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4.2.4.4.4 Use contracts to align interests to pursue lean goals

Lean pursues improvements at the system level and tries to avoid sub optimizing at lower

levels. To that end, it benefits greatly from commercial relationships among the various

members of a project delivery team that allow money to move across organizational

boundaries in search of the best project-level investment. This was not found to be an

element in all cases studied, but was critical for two of the four owners (BAA and Sutter

Health) and also for Integrated Project Delivery (IPD). An alternative approach is to

leave contracts substantially unchanged, but agree among the participants to ‘put it in the

drawer’. If the relational contracts now emerging prove to effectively align interests in

pursuit of the lean ideal on projects, the superior strategy would seem to be to use such

contracts to facilitate lean implementation on projects. In addition, both IPD and Sutter

Health noted that periodic meetings by principal sponsors help to avoid hindrances

caused by contracts.21

4.2.4.4.5 Improve performance through long-term alliances

The first attack as stated above is to improve the contractor’s planning reliability using

the contractor’s production control. Once you improve your planning reliability using the

production control system, you have to improve suppliers’ planning reliability and reduce

their lead time. There are multiple methods to improve a supplier’s reliability. One of

musts is to nurture contractor-suppler relationships.

21
This issue of project governance is explored further in the appendix on Relational Contracting.

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 Long-term alliances are preferred to competitive bidding. IPD showed a good

example of long-term alliance by working as a team. IPD provides even stronger relations

than other alliances by sharing costs and profits.

GS was a special case where a general contractor has its own rebar fabrication as well

as rebar engineering. The idea of owning its own arm came from the fact that GS does

not have control over rebar suppliers. It is an extreme case. It ensures reliable delivery to

sites, but there is a financial risk. GS justified its investment in that GS has enough

demand for rebar.

We see Toyota examples where a buyer partly owns its supplier. For example, when a

researcher visited the “Gihuchache” plant located in Nagoya, Japan, an hour away from

Toyota, a manager stated that Toyota had an ownership stake in the company. He went

on to state that it helps to improve loyalty and reliability to Toyota.

4.2.4.4.6 Implementation practices

Our research topic is lean implementation on projects. Here are the implementation tools

successfully used in the cases studied and in the field experiments:

• Sharing project objectives and stakeholder values with the entire project team.

• Providing reminders of project objectives and values.

• Creating and sharing a clear, crisp explanation for why change is needed and why

the change proposed is the right one—an elevator speech.

• Managers asking different questions to signal the reality of change; e.g., not

“How many work packages did you get out today?”, but rather, “What plan

failures have you learned to avoid repeating this week?”.

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 • Coaching

• Experiential learning exercises such as the Airplane Game

• Visual reminders of objectives and principles; posters, signs, inserts on documents,

pocket cards

• Team building

• Reliable promising

• Collaborative planning

4.2.4.5 What lean tools have been applied?

Figure 4.1 shows lean tools identified in the case studies. The Last Planner® System

(LPS, production control system), reverse phase scheduling, value stream mapping, JIT

delivery, and 3D modeling are tools used in high frequency. Other tools include 5S,

target costing, visual control, relational contracting, and cross functional team. Figure xx

presents lean tools identified through literature survey. Tools identified from literature are

similar to those identified in the case study. It is noted that 3D was not reported as a lean

tool in the literature while the research team recognized that 3D is an important tool

which enables to implement lean. The following sections are on the tools that are unique

in project production system.

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 6, 16%

11, 29%

3, 8%
Last Planner
Value Stream Mapping
JIT Delivery
0, 0%
5S
Target Costing
Poka Yoke
3, 8%
Visual Control
3D

3, 8% 5, 13%

7, 18%

Figure 4.1: Lean Tools from Case Studies

4.2.4.5.1 Production control (The Last Planner® System)

Production control, as distinct from project control, appears to have been introduced into

construction with the Last Planner® system (Ballard, 1994; Ballard & Howell, 1998).

Production control was used in the following case studies/field trials:

• Abbott

• Air Products

• BAA

• Boldt

• Burt Hill

• Dow Chemical

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 • GC Construction

• Ilyang

• IPD

• Messer

• Southland Industries

• Sutter Health

Key characteristics of production control include:

• Its objective is to achieve handoffs between specialists when needed to deliver

value to the customer

• Measures the extent to which handoffs occur when planned

• Conforms to the rules for managing in conditions of uncertainty; namely, to plan

in greater detail as the forecast period shrinks

• Empowers organizational members at every level to “stop the line” rather than

allow defects to flow downstream; specifically, defective assignments

• Transforms scheduled tasks, what SHOULD be done, into what CAN be done

through identification and removal of constraints, challenging those responsible

for specific constraints to notify the team immediately if they lose confidence that

constraints can be removed in time to supported scheduled work

• Methodically identifies problems and defects before they occur

• Serves as a means of stabilizing processes so they can be improved

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 • Applies quality criteria to potential assignments; namely, definition, soundness,

sequence, and sizing

• Gets an explicit commitment to completion of daily/weekly work plans, after

screening for conformance to quality criteria

• Requires and promotes reliable promising

• Makes the best match of capacity and load achievable in given conditions

• It is proactive, rather than reactive; does not wait until work is completed to

identify and act on negative variances between DID and SHOULD

Reverse phase scheduling22 is a collaborative planning method used to set the goals to be

achieved by production control; namely, the handoffs between specialists. Following the

principles of managing in conditions of uncertainty 23 , project schedules are produced

beyond milestone level detail phase-by-phase, by those responsible for doing the work in

each phase. Following a Last Responsible Moment strategy (Ballard & Zabelle, 2000),

the phase scheduling technique is used to develop a more detailed work plan that

specifies the handoffs between the specialists involved in that phase. These handoffs then

become goals to be achieved through production control.

Pull techniques and team planning (interactive scheduling) are used to develop

schedules for each phase of work, from design through turnover. The phase schedules

thus produced are based on targets and milestones from the master project schedule and

provide a basis for lookahead planning. A pull technique is based on working from a

target completion date backwards, which causes tasks to be defined and sequenced so that

22
This section on reverse phase scheduling is drawn primarily from Ballard & Howell (2004).
23
All forecasts are wrong. The further into the future a forecast is made, the more wrong it is. The greater
the detail in which a forecast is made, the more wrong it is. (March, 1988)

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their completion releases work; i.e., achieves a handoff. A rule of “pulling” is to only do

work that releases work requested by someone else. Following that rule reduces the waste

of overproduction, one of Ohno's seven types of waste. Working backwards from a target

completion date eliminates work that has customarily been done but doesn't add value.

Team planning involves representatives of all organizations that do work within the

phase. Typically, team members write on sheets of paper brief descriptions of work they

must perform in order to release work to others or work that must be completed by others

to release work to them. They tape or stick those sheets on a wall in their expected

sequence of performance. Planning breaks out in the room as people begin developing

new methods and negotiating sequence and batch size when they see the results of their

activities on others. The first step of formalizing the planning and the phase schedule is to

develop a logic network by moving and adjusting the sheets. The next step is to

determine durations and see if there is any time left between the calculated start date and

the possible start date. It is critical that durations not be padded to allow for variability in

performing the work. We first want to produce an 'ideal' schedule based on average

duration estimates, a practice recommended by Goldratt in Critical Chain (p. 45, Goldratt,

1997). The team is then invited to reexamine the schedule for logic and intensity

(application of resources and methods) in order to generate a bigger gap. Then they

decide how to spend that time: 1) assign to the most uncertain and potentially variable

task durations, 2) delay start in order to invest more time in prior work or to allow the

latest information to emerge, or 3) accelerate the phase completion date. If the gap cannot

be made sufficiently positive to absorb variability, the phase completion date must slip

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out, and attention turns to making up that time in later phases. The key point is to

deliberately and publicly generate, quantify, and allocate schedule contingency.

The primary rules or principles for production control are:

• Drop activities from the phase schedule into a 6-week (typical) lookahead

window, screen for constraints, and advance only if constraints can be removed in

time.

• Try to make only quality assignments. Require that defective assignments be

rejected.

• Track the percentage of assignments completed each plan period (PPC or ‘percent

plan complete’) and act on reasons for plan failure.

Most attempts to implement lean on projects have started with engaging participants in

production control. One argument for doing so, provided in RT191, is that projects are

structured and executed through rules and agreements of the participants, unlike a factory

in which flows and responsibilities can be fixed by machine layout and conveyance

systems.

Taking another perspective, the standing advice from experts in lean is to first

stabilize the production system before trying to optimize. Production control can be

understood as the means for stabilizing project production systems because it increases

the extent to which work plans accurately predict future states of a project. For example,

GS, a Korean construction contractor, tried to implement just-in-time (JIT) delivery to

reduce the inventory of rebar on site, then realized through several pilot projects that JIT

delivery cannot be achieved without first stabilizing demand; i.e., without improving the

predictability of future events, and hence the time when deliveries will be needed.

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4.2.4.5.2 3D modeling

3D modeling has been an important part of several lean implementations; e.g., the

Terminal 5 project, Channel Tunnel Rail Link Contract 105, Camino Medical Center, and

GM’s Flint engine plant project. Computer modeling is transforming design from a

process of document production into a process of model building, a type of collaborative

assembly.

3D modeling was used in the following case studies/field trials:

• Air Products

• BAA

• Burt Hill

• General Motors

• IPD

• Southland Industries

The past practice of “roughing in” mechanical and electrical work, and letting the

contractors deal with the collisions and design problems in the field was eliminated. On a

weekly basis all of the design work was run through a collision identification process,

and design problems could be identified before a contractor began work.

3D modeling also facilitates JIT material delivery on sites. The materials that were

needed for construction were known in their entirety prior to the start of construction.

This let the contractors know exactly what they would need to be able to complete any

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part of the project. There was no need to have extra materials on hand in case changes

had to be made.

4.2.4.5.3 Target costing

Target costing in the construction industry is the practice of constraining design and

construction of a capital facility to a maximum cost. It is an appropriate practice for all

clients with financial constraints (maximum available funds or minimum ROI

requirements) that a capital facility project must meet in order to be considered successful

by that client.

Target costing was used in the following case studies/field trials:

• BAA

• Boldt

• Burt Hill

• Messer

• Southland Industries

• Sutter Health

It has been customary for designers to work with clients to understand what they want,

then produce facility designs intended to deliver what is wanted. The cost of those

designs has then been estimated, and too often found to be greater than the client is

willing or able to bear, requiring designs to be revised, then recosted, and so on. This

cycle of design-estimate-rework is wasteful and reduces the value clients get for their

money. Cost has been an outcome of design. Target costing is a management practice that

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seeks to make cost a constraint on design and client purposes/stakeholder values the

driver of that design, thereby reducing waste and increasing value. Target costing can be

understood as one application of a production-oriented business management philosophy

that self-imposes necessity as a driver of continuous improvement and innovation. 24

Perhaps the most famous articulation of this philosophy was Toyota’s Taiichi Ohno’s

recommendation to ‘lower the river to reveal the rocks’; i.e., to periodically reduce the

buffers of inventory, capacity, time and money that absorb waste-causing variation in

order to stress the production system and reveal where it needs improvement (Ohno,

1988).

Applying artificial necessity on capital facility projects can be done by 1) reducing

the amount of money made available for design and construction of facilities with pre-

specified functionalities, capacities and properties; 2) increasing the minimum acceptable

ROI, or 3) increasing the valued facility attributes required beyond what current best

practice can deliver for a given cost.

Far from squeezing designers, suppliers and builders ever harder, the enlightened

client provides commercial incentives and organizational structures that enable and

encourage innovation in practices and streamlining of processes. When they assume

financial risk, designers, suppliers and builders can apply target costing to their own

projects.

The first steps in target costing are to set, then design to a maximum cost. “Can a

facility be designed and constructed that allows the client to achieve their purposes within

the limits of their constraints?” That is the question to be answered during the project

24
See Jeffrey Liker’s The Toyota Way for a thorough description of this business management philosophy.

117
definition phase. If the answer is negative, the project should not be funded. If the answer

is positive and the project is funded, the next challenge is to actually design to that

amount of funding, to the project target cost, and not to exceed it.

Figure 4.2 Target Costing in Construction

Boldt was the pioneer, at least in the United States, in adapting target costing from its

origin in product development (Cooper & Shagmulder, 1997 and 1999) to capital

projects. The first project, the Tostrud Fieldhouse Project, achieved very positive results,

completing in 10 months less and for 2/3 the square foot cost of a similar facility built

two years before in the same city (Ballard & Reiser, 2004).

Sutter Health requires the practice of target costing, which they call “target value

design” in its Integrated Form of Agreement, developed specifically to facilitate lean

project delivery. Their pilot project, the Acute Rehabilition Center, reached its target cost

with a small reduction in scope, despite enormous price escalation for materials and

services during execution. Leadership for that effort came both from Sutter Health and

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from HGA, the project architect/engineer. Boldt and Southland Industries are among the

companies actively involved in developing target value design on Sutter Health projects.

4.2.4.5.4 Set based design

Set based design was used in the following case studies/field trials:

• Abbott

• Boldt

• Southland Industries

• Sutter Health

‘Set-based engineering’ has been used to name Toyota’s application of a least

commitment strategy in its product development projects (Ward et al. 1995, Sobek et al.

1999). That strategy could not be more at odds with current practice, which seeks to

rapidly narrow alternatives to a single point solution, but at the risk of enormous rework

and wasted effort. It is not far wrong to say that standard design practice currently is for

each design discipline to start as soon as possible and coordinate only when collisions

occur. This has become even more common with increasing time pressure on projects,

which would be better handled by sharing incomplete information and working within

understood sets of alternatives or values at each level of design decision making; e.g.,

design concepts, facility systems, facility subsystems, components, parts.

Toyota’s product development process is structured and managed quite differently

even than other Japanese automobile manufacturers. Toyota’s product development:

• Develops multiple design alternatives.

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 • Produces 5 or more times the number of physical prototypes than their

competitors.

• Puts new products on the market faster than their competitors and at less cost.

Toyota’s superior performance may result from reducing negative iteration more than

enough to offset time ‘wasted’ on unused alternatives. Negative iteration occurs as a

result of each design discipline rushing to a point solution, then handing off that solution

to downstream disciplines in a sequential processing mode.

Whether or not one has the time to carry alternatives forward, would seem to be a

function of understanding when decisions must be made lest we lose the opportunity to

select a given alternative. We need to know how long it takes to actually create or realize

an alternative. Understanding the variability of the delivery process, we can add safety-

time to that lead-time in order to determine the last responsible moment. Choosing to

carry forward multiple alternatives gives more time for analysis and thus can contribute

to better design decisions.

4.2.4.5.5 Relational contracting

Relational contracting seeks to give explicit recognition to the “relationship” between the

parties to the contract. In essence, responsibilities and benefits of the contract are

apportioned fairly and transparently, with mechanisms for delivery that focus on trust and

partnership. At a project level in construction, this can improve working relationships

between all project stakeholders, can facilitate efficient and effective construction, can

enhance financial returns and can minimize the incidence and make easier the resolution

of conflict. (Cooledge, 2005)

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Relational contracting was used in the following case studies/field trials:

• BAA

• Boldt

• IPD

• Messer

• Southland Industries

• Sutter Health

Relational contracting seeks to align the interests of all of the contracting entities on a

construction project. This alignment of interests seeks foster cooperation between the

various entities on a construction project thru the use of legal and organizational tools to

help these entities work more closely together. Cooperation, especially between prime

and sub-contractors, is difficult on the construction site. The competing interests of the

entities on a traditional construction project lead to sub-optimization of the contractors.

The contractors, all independent, do what they can do help themselves, even if that means

more work for the next guy. There is very little incentive for contractors to make small

changes to their processes which could result in big gains for the other contractors. The

small cost is bore by the one contractor, and the gains are realized by another. With

contractors either unable, or unwilling to make small cost, huge benefit changes, the goal

of cooperation between contractors is distant.

IPD (Integrated Project Team) was an integrated team using relational contracting.

Three major contractors, or Primary Team Members (PTM’s) were bound together to

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share both the risk and profit of the project as a whole. This structure, among other

things, lead to a much closer relationship between the team members. An important and

notable part of this structure was the sharing of financial information across the project

team. The information was not shared in order to be able to blame problems on each

other; this would have been waste as all contractors realized rewards as well as risks.

The sharing of information allowed all of the team members to look at the project as a

whole, and to optimize the project as a whole.

4.2.4.5.6 Cross-functional teams

Cross functional teams were used in the following case studies/field trials:

• BAA

• Boldt

• Burt Hill

• IPD

• Messer

• Southland Industries

Sutter Health Cross Functional Teams are the organizational unit for all phases of the

Lean Project Delivery System. All stakeholders need to understand and participate in key

decisions. However, it is not possible for everyone to meet continuously and

simultaneously. Some division of labor is required. In general, the appropriate pattern to

follow is alternation between bigger alignment meetings and work by individuals or by

smaller teams on the tasks identified and agreed in those meetings.

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 Facility systems and subsystems offer natural groupings for the formation of cross

functional teams. For example, a Foundation team might consist of the structural

engineer, foundation contractor, key suppliers, etc. In addition, representatives from

Superstructure, Mechanical/Electrical/Plumbing/Fire Protection, Interior Finishes, and

other teams would participate.

In the design phase, the natural division is between product and process design, but

the trick is to counteract the developed tradition of producing them separately and

sequentially. Information technology can be helpful by making the state of both more

visible, e.g., through shared, integrated models. Nevertheless, having representatives of

each relevant specialty assigned to each team will always be essential.

4.2.4.5.7. Value stream mapping (VSM)

Value Stream Mapping (VSM) is a visualization tool to show the stream of value. It helps

users understand and streamline work processes. To understand where value is added in

a production process, one must first learn the steps or phases a product goes through to

reach a finished state. Mapping out all of the steps of a production process allows one to

focus on eliminating or minimizing steps that do not add values. VSM allows each party

involved in the construction process to understand where value is generated.

Value stream mapping was used in the following case studies/field trials:

• Air Products

• BAA

• Boldt

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 • Burt Hill

• Messer

• Southland Industries

• Sutter Health

• Walbridge Aldinger

Many companies including owner companies use value stream mapping to identify where

non-value-adding activities are located. For example, GS E&C, a general contractor,

implements value stream mapping to identify muda in the engineering and procurement

process in parallel with JIT and Lean production control on sites. Walbridge uses value

stream mapping for construction processes as well as supporting process such as

procurement, which they initiated after one of their customer demonstrated its usefulness.

4.2.4.5.8. Just-in-time (JIT) material delivery

The term ‘Just-In-Time’ (JIT) suggests that materials be brought to their location for final

installation only when they are needed. The ultimate objective of JIT production is to

supply the right materials at the right time and in the right amount at every step in the

process.

Case studies tell us that JIT requires reducing demand variability and fabricator lead

time. It also requires collaboration between installer and fabricator. Many companies

including GM and Southland Industry use 3D design for collaboration between installer

and fabricator. Production control was used in the following case studies/field trials:

• Air Products

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 • BAA

• Boldt

• Dow Chemical

• GC Construction

• Ilyang

• Messer

• Southland Industries

4.2.4.5.9. 5S

5S is a systematic approach to achieve total organization, cleanliness and standardization

in the workplace. 5Ss are 1) Separate/Scrap, 2) Straighten, 3) Scrub, 4) Standardize, and

5) Sustain. The objective of 5S is to increase efficiency at the micro-level such as

reducing time in finding a needed tool by keeping the workplace neat, orderly and

accessible. It can also eliminate wasted steps or long reaches that may be hazardous.

Many organizations in our case studies testified that the results were dramatic and

increased pride and morale although it is easy to implement. Companies such as

Walbridge Adlinger use 5S process and require it to be used on construction sites and at

their yard. 5S was used in the following case studies/field trials:

• Air Products

• Dow Chemical

• Messer

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 • Southland Industries

• Walbridge Aldinger

4.2.4.5.10. Visual control

Visual control provides information to guide everyday actions. Traffic signals and signs

are the most common examples. Many organizations in our case studies use visual

control for daily management. For example, Ilyang used hardhat visual control where

each color indicates distinct work division and level of management. It helps managers to

identify tasks and the numbers of workers on the task in each location. Some companies

posted a signboard describing standard procedures and safety issues on the site so that

workers can easily understand and follow them. Walbridge Adlinger used the logistical

plan which capitalizes on visual controls to help organize current and planned work on

the site.

Production control was used in the following case studies/field trials:

• Air Products

• Dow Chemical

• GC Construction

• Ilyang

• Messer

• Southland Industries

• Walbridge Aldinger

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4.2.4.6 What has been measured?

It is important to measure your lean system to see if you are on the right track. As

mentioned earlier, lean is not a destination but a journey. No specific metrics are required

for organizations pursuing lean. What measure to use depends on value. No specific

metric to measure how your organization or your project is lean is found in the course of

the research. However, the research team found several measures were used by

organizations in the case study. Most organizations that applied production control (a.k.a.

the Last Planner® System) on their projects measure PPC (percent plan completion) to

measure production planning reliability, which leads to work flow reliability. Some

organizations have developed their own metrics to measure their lean performance. For

example, Walbridge developed a metric called the “Lean Olympics”, a score card which

evaluates the lean performance of each project. Based on project performance, each

project is given a silver, gold or platinum rating. The best measure of progress is the rate

of organizational learning.

The universal metric in lean system is the rate of organizational learning in that lean

is a journey. Examples may include repetitiveness / frequency of failures in planning,

input of new ideas. Some metrics are available that are relevant to lean production system.

Examples include rate of delivery on time, on budget, and defect rate. It is important to

rethink current metrics being used in the context of lean.

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4.2.4.7 What results have been achieved?

• 13% reduction in total installed cost on BP’s Whiting Refinery project, in large

part from a 24% increase in piping productivity by BMW Constructors25

• Sutter Health’s ARC project hit its target cost in a period of severe price

escalation for both materials and services26

• The civil phase of BAA’s Terminal 5 project was completed on time (the first

major U.K. civil project to do so in the last 40 years) and under ran its budget by

10%, a savings of $125 million.27

• Southland Industries improved its HVAC installation productivity by 24.5% on

Sutter Health’s Camino Medical Center project, largely as a result of 3D

modeling and the extensive and precise prefabrication and preassembly that

enabled, supported by just-in-time deliveries and material handling innovations

such as wheeled carts for moving ductwork.

• GM cut 24 of 85 weeks off its Flint plant project, with zero change orders.28

• Spancrete has achieved substantial improvements in performance29:

o Throughput increased from 565,898 cu. ft. to 1,134,966 cu. ft.

o Direct labor hours per unit of output decreased from .174 to .162

o Raw material inventory turns increased from 17.14 to 25.15

• Laing/O’Rourke’s Malling precast concrete subsidiary increased its revenues

from 130,000 pounds sterling per week to 330,000 pounds sterling per week, with

25
March, 2006 presentation to RT 234.
26
Ballard (2006), “Rethinking Project Definition in terms of Target Costing”..
27
Ballard (2006). “Innovations in Lean Design”.
28
ENR, 10/10/2006, pp. 28-32.
29
Brink & Ballard (2006).

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 no increase in staffing or equipment, while doubling its productivity on precast

floor elements and achieving a 280% increase in productivity on its shear walls.30

• CORBER (Costain, Laing/O’Rourke, Bachy, and EMCOR Rail), the joint venture

responsible for Contract 105 at St. Pancras Rail Station, part of the Channel

Tunnel Rail Link project implemented digital prototyping, kanban inventory

replenishment in site stores, first run studies, and production control for a benefit-

to-cost ratio of 6.4 ($6,067,154-to-$947,105), a net savings of $5,120,409, and a

6.4% budget under run31.

• IPD designed and built a central plant in 8 months for $600,000 under the

$6,000,000 GMP.

• Walbridge Adlinger saved 9 million dollars over the last three years. It includes

the owner savings and the direct/indirect savings. WA passed back to the owner

65% of total savings.

• GS saves around 10% of rebar engineering, fabrication, and installation costs.

• Ilyang got awarded USD 27 million aqueduct construction project from a general

contractor because the general contractor pursues lean construction. The general

contractor asked to have a long-term alliance with Ilyang for the same reason.

Ilyang increased its net profit ratio by 10 percent last year and decreased safety

accidents by around 50% after they adopted lean.

30
Ballard, Harper & Zabelle (2003).
31
Koerckel & Ballard (2005).

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 • In its first attempt at target costing, Boldt delivered a field house (athletic facility)

for St. Olaf’s College in 10 months less time and for 65% the square foot cost of a

similar facility built in the same area during the same time period.32

• Burt Hill improved operating profit by 50% on its first three lean pilot projects.

4.2.4.8 What are success factors and barriers?

A commitment and leadership of management and cultural and behavioral change are two

most important factors for the successful lean implementation. When stakeholders are

reluctant to adopt learn, understand and implement lean, the lean implementation in the

project can not be achieved successfully. Many interviewee mentioned commitment and

leadership of the management contributes to establishing a sense of urgency. Making

everyone stakeholder is in the category of establishing a sense of urgency. The finding is

in line with Kotter’s experience (Kotter, 1996) that 50 percent of change efforts failed in

this step. Stakeholders should understand that lean implementation is a journey, not a

destination.

Many interviewees said that training is critical to the success of lean implementation.

It is noted that many perceive that learning by doing is as important as class-room

training. Some interviewee mentioned that enhancing partner’s lean capability is

important. Other factors include standardization, information sharing, contractual

problems, and confusion with existing control system.

32
Ballard & Reiser (2004).

130
 Success Factors and Barriers Commitment
Culture/behavior change
3%
Leadership
3% 3%
Training
3% 24%
3% Enhancing partner’s capability
3% Information sharing

7% Learning from failure

Making everyone stakeholder
7%
Standardization
21%
Confusion with existing system
10%
Contractual problems
13%
Others
o

Figure 4.3 Success factors and barriers

Basic finding: No one is a helpless victim of fate. Everyone can act within the limits of

their own power to create more value and less waste.

4.3 Field Trials

4.3.1 Field trial process

The field trials have been implemented to validate tools and implementation strategies

identified during the study. Researchers were involved as a consultant in each experiment

and data was collected.

4.3.2 Summary of field trials

Three organizations participated in the field trials: Abbott, Ilyang, and Dow Chemical.

Details of the field trials are described in Appendix B.

4.3.2.1 Abbott & Riley

4.3.2.1.1. Project and Tools

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 • Projects: AP39 Global pharmaceutical research and development center (process

and equipment building system)

• Tools: Last Planner® system

• Abbott is an owner company and Riley is a general contractor who applied the

Last Planner® system in this field trial.

4.3.2.1.2. Results and lessons learned

PPC data was collected for each week. PPC ranged from 54% to 94%.

Positive impacts include:

- Forced to think about what should be completed each day

- Better understanding of causes for not completing tasks

- GC Tradesmen bought into and knew what was expected

- Good success and participation from internal GC tradesmen

- Looking to implement full system on future projects

On the other hand, some negative impacts were noted:

- Time-consuming job

- Limited success in getting participation by subcontractors

- Subcontractor tradesmen were suspicious of system and concern over results

- Need to have some experience to recognize gaming of the system

- Difficult to define measurable quantities for some activities

4.3.2.2 Dow Chemical

4.3.2.2.1. Project and Tools

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 • Projects: Project Daytona in Midland Michigan (Industrial project)

• Tools: Relational contracting, Last Planner® system, pre-assembly, supply plan,

visual control/error proofing, and waste reduction (movement)

When it became apparent that Project Daytona in Midland Michigan would not be able to be

constructed within the time frame needed by the business the project team looked in the

application of Lean Principles. The project team put together a Lean Execution Strategy in which

tools mentioned above were applied.

4.3.2.2.2. Results and lessons learned

The following results were achieved even though detailed quantitative data was not

available.

• The team met the startup turnover sequence i.e. met the schedule reduction target of

seven months.

• The project has worked over 535,000 injury free hours

• Currently on budget even with equipment and labor inflation that we are seeing across the

US

• Contractor productivity numbers are equivalent to their best projects in spite of this

project doubling their annual workload in our facility

• Contractors were able to meet their commitments for routine maintenance and turn-

arounds (concern from owner management team due to the size of this project in

comparison to annual volume of work handled in “normal times). The concern had been

the project would be forced to use all the contractor resources to make the schedule. Due

to the planning efforts the project team never was forced to add people to try and make

up schedule.

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4.3.2.3 Ilyang

4.3.2.3.1. Project and Tools

• Projects: Seoul subway construction and Busan subway construction (heavy civil

construction)

• Tools: Last Planner® system

Ilyang is a specialty contractor in earthwork and structural work. The Last Planner®

system was applied to two similar heavy civil constructions. Experiments have been

implemented through three phases:

1. The first phase involved calculating PPC of week work plan. Reasons for failure

were identified through all three phases. However, Last Planner®(i.e, the

shielding process) was not implemented during this phase.

2. The shielding process through extensive constraint analysis was implemented on

the course of commitment planning. In the second phase, costs were assigned to

each assignment in the weekly work plan.

3. The shielding process was implemented as in the second phase. However, cost

information is excluded from the weekly work plan.

4.3.2.3.2. Results and lessons learned

PPC data was collected for each phase. PPC climbed from 50% to 90%.

The experiment showed that the Last Planner® improved work flow reliability (i.e.,

improving PPC) in tunneling projects. However, the study indicated several barriers. Four

actions have been proposed to improve PPC and the work flow reliability:

• Removing cost information from the weekly work plans,

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• Coupling plan-generating teams with field engineers and foremen,

• Overcoming the mentality of saying “Yes” to the boss all of the time

• Training foremen to plan.

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 5.0 Conclusions and Recommendations

This research has included a review of the literature, statistical analysis of the relationship

between production control metrics and productivity, case studies of early adopters and

field trials of selected lean tools by three research team members. In this chapter,

conclusions are drawn from the various sources evaluated in the research, both regarding

implementation strategies and the roles of different members of project delivery teams in

implementation.

Section 5.1 provides general guidelines for starting your lean journey. Section 5.2

summarizes key learnings about organizational change. Section 5.3 lists in some detail

the steps and methods involved in implementing lean on capital projects. Section 5.4

describes the different roles of project team members in the implementation of lean. The

chapter ends with Section 5.5, in which recommendations are made for future research.

5.1 Starting your lean journey

Lean is a journey, not a destination. Becoming a lean enterprise means never ending

pursuit of the lean ideal. We have chosen to treat implementation on projects as a way

station up the lean highway on ramp. The journey starts, not on projects, but in your own

house, educating yourself and your people about lean, applying lean principles and tools

such as 5S and value stream mapping to processes within your direct control, and

preparing your people for the changes to come. For a company or part of a company that

does its business through projects, the second milestone is demonstration projects, which

136
are carried out in order to learn how to apply lean principles and tools to the delivery of

projects, to develop internal advocates, and to begin the process of developing partners in

your supply chains. The third milestone is the engagement of all your own people in

process improvement and deployment of standard processes throughout the organization,

including standards for projects. Organizations enter the lean highway at the fourth

milestone, itself necessarily a launch rather than a completion; namely, beginning the

never ending process of structuring the supply chains in which the organization and its

projects participate to pursue the lean ideal, and extending those supply chains

progressively to ever more distant tiers of suppliers.

LEAN IDEAL

Lean Journey
Integrate supply chain

Standardize processes

Launch demonstration projects

Start in your house

Figure 5.1: Starting your lean journey

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5.2 Guidelines for organizational change

Any organization attempting to make a fundamental change in its structure or behavior

can benefit from following what has been learned about organizational change. The

following guidelines were drawn from the literature on organizational change, the

recorded experience of lean organizations outside the construction industry, and the case

studies and field trials carried out during this research:

• Learn by doing. Don’t over-theorize. Though lean is essentially a change in

thinking, changing practice can change thinking, enabling more fundamental

changes in practice, and so on in a virtual cycle.

• Start with your own work, whether that be direct production or production

management. Start on processes within your control. These may not involve an

interface with a supplier or customer. When ready, extend to systems that

interface with others.

• Bring an external consultant (sensei) to guide your Lean journey when you start,

to help with both strategy and training.

• Change the company culture by changing management practice. Classroom

training may be necessary, but will not be sufficient. A key to cultural change is

for supervisors to serve as mentors.

• Learn from failures. For example, one general contractor failed on a

demonstration project where most work was executed by second-tier

subcontractors. Since the general contractor did not have direct control over

second-tier sub-contractors, they had difficulties communicating production plans,

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 which is critical for lean production control. Their solution was to help a

subcontractor (first-tier subcontractor) have ‘lean’ capacity.

• Measure your lean system to see if you are on the right track. Most organizations

use PPC to measure their production control system. Some organizations have

developed their own metrics to measure their lean performance.

• Stabilize the target production systems by making work flow predictable before

attacking waste (muda). One general contractor started its lean journey by

applying JIT to reduce material inventory on site. But they found it difficult to

implement JIT delivery without stabilizing workflow.

• Start with demonstration projects to adapt concepts and techniques to your

situation, to provide proof of concept, to develop competence and confidence, and

to build internal advocates and external partners. Protect demonstration projects

from the normal demands of the organization—treat them like babies learning to

walk and talk.

• Strive for early wins to celebrate and maintain momentum

• Create a sense of urgency.

• Facilitate and coach collaborative behaviors.

• Provide consistent leadership.

• Structure evaluations and rewards to encourage desired behavior. Reward

teamwork and learning, not command and control and fire fighting.

• Don’t ask people to add more to their load. Take something away; stop doing

what no longer makes sense.

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5.3 Implementing lean on projects

The lean ideal is to provide a custom product exactly fit for purpose delivered instantly

with no waste. Based on what we have learned from the literature, from case studies,

from field trials, and from statistical analyses, the following actions seem to be necessary

in order for projects to effectively pursue that ideal. The ability of individuals and

organizations to follow this roadmap will vary with position and circumstance, but to the

extent possible, the following should be done to implement lean on projects:

• select partners or suppliers who are willing and able to adopt lean project delivery

• structure the project organization to engage downstream players in upstream

processes and vice-versa, and to allow resources (money, personnel, schedule

float, etc.) to move across organizational boundaries in pursuit of the best

project-level returns

• do target costing: define and align project scope, budget and schedule to deliver

customer and stakeholder value, while challenging previous best practice

• encourage thoughtful experimentation; explore adaptation and development of

methods for pursuing the lean ideal

• celebrate breakdowns as opportunities for learning rather than occasions for

punishing the guilty

• do set based design: make design decisions at the last responsible moment, with

explicit generation of alternatives, and documented evaluation of those

alternatives against stated criteria

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 • practice production control in accordance with lean principles such as making

work flow predictable and using pull systems to avoid overproduction

• build quality and safety into your projects by placing primary reliance on those

doing the work of designing and making, by acting to prevent breakdowns,

including use of pokayoke techniques, by detecting breakdowns at the point of

occurrence, by taking immediate corrective action to minimize propagation, and

by acting on root causes in order to prevent reoccurrence

• implement JIT and other multi-organizational processes after site demand for

materials and information is sufficiently reliable

• use First Run Studies: on processes that transform materials, use to design and test

process capability to meet safety, quality, time and cost criteria

• use computer modeling to integrate product and process design, to design

construction operations in detail, and for use by the customer in facilities

management

These can be organized in a roadmap specifically for projects, grouped by the phases of

the Lean Project Delivery System (Figure 3.1), preceded by a pre-project phase in which

the organizational and contractual structure of the project is created.

Table 5.1: Roadmap for implementing lean on projects

Pre-project Phase33

Structure the project contractually and organizationally for

33
Terms in italics are defined in the Glossary.

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 pursuit of the lean ideal, using relational contracts and cross

functional teams.

Project Definition

Phase

Align ends, means and constraints

Set targets for scope and cost based on aligned ends, means

and constraints

Set other targets for experimentation and learning

Design Phase

Make work flow predictable through reliable promising and

lean production control

Follow a set based design strategy

Design to target scope and cost

Design product and process simultaneously; design for

sustainability and constructability, including safe and defect-

free fabrication and assembly

Produce product specifications, fabrication instructions,

installation instructions and system specifications from an

integrated database

Supply Phase

Make work flow predictable through reliable promising and

lean production control

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 Prefabricate and preassemble

Apply appropriate lean tools and methods in fabrication

shops; e.g., 5S, value stream mapping, point of use materials

and tools, cellular manufacturing

Fabricate at the last responsible moment to reduce the risk of

design change

Produce assembly packages by kitting fabricated materials

with commodities not maintained in site stores

Deliver assembly packages to site just-in-time

Assembly Phase

Implement the principle of providing materials and tools at

the point of use through site stores and assembly packages.

Maintain commonly used and relatively small items (safety

equipment, small tools, consumables, fasteners, etc.) in site

stores. Replenish using kanban or vendor managed

inventory.

Do first run studies to improve the safety, quality, time and

cost of operations (placing concrete, pulling cable, setting

equipment), involving craft workers in operation design,

testing and improvement.

Achieve Built-in quality through preparation, detection,

correction and prevention.

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 Get feedback on the effectiveness of production management

and suggestions for improvement from craft workers

through surveys and interviews.

Apply other appropriate lean tools and methods in site

assembly; e.g., layout for minimal travel time and 5S.

Use Phase

Use commissioning and start up to verify delivery to

requirements

Transfer information (model, as builts, equipment manuals) to

operators for use in operations and maintenance

Conduct a post occupancy evaluation to verify understanding

of the purpose of requirements and the fitness for purpose of

design and construction.

Collect feedback from members of the project delivery team

and other stakeholders on lessons learned.

5.4 Implementation Issues by Project Role

Organizations play multiple roles on project delivery teams: owner, owner agent, A/E

(process manager), consulting engineers (design specialists), CM/GC (process manager),

construction specialists, and suppliers. Each of the organizations playing these roles has

different opportunities and face different challenges. Power to implement the project

roadmap is distributed roughly in the following order:

• Owner

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 • Owner agent

• Process manager (design and construction)

• Specialist (design and construction)

• Supplier

5.4.1 Owners and Owner Agents

Clearly owners, and to a large extent, their agents face the least obstacles to selecting

partners or suppliers, to structuring projects contractually and organizationally, and to

doing target costing. Public owners often face legal constraints on taking these actions,

motivated by the desire to avoid even the hint of wrong doing in the award of public

funds, and the desire to ‘spread the wealth’; though the effectiveness of alternatives to

traditional design-bid-build structures has increasingly led governmental agencies to

explore and embrace these alternatives.

5.4.2 Process Managers

Those who function as process managers, for the entire project or for one or several

project phases, can have a great deal of power to select their own partners and suppliers,

and to structure contracts and relationships, especially when they take on financial

responsibility for their work. Process managers tend to have less discretion regarding

target costing, though they certainly can set stretch goals within their areas of

responsibility to encourage innovation beyond best practice. Managers of the design

phase have some freedom to do set based design, though that can be limited by owners

who do not appreciate its potential benefits.

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5.4.3 Design and Construction Specialists

Design and construction specialists usually have little opportunity to select their fellow

team members, though they often can select their own suppliers and may be able to team

with other specialists, or even with process managers, as illustrated most notably by the

IPD case study. However, specialists, in fact all role players, can encourage thoughtful

experimentation and celebrate breakdowns as opportunities for learning. All role players

can also practice production control, though specialists are limited in their ability to

coordinate with others who are not committed to practicing production control in

accordance with lean principles.

Other role players, including design specialists, are very limited in their ability to do

or make set based design happen if the design phase manager is not supportive. Design

specialists can, of course, practice set based design within their own disciplines, and

within the limits set by the need to coordinate with other specialists.

Building quality and safety into projects occurs first in the design phase, then in

construction, so all role players can do this. Just-in-time deliveries and detailed design of

fabrication and installation operations obviously belong to constructors, both managers of

the construction phase and construction specialists. However, design for constructability

must occur in the design phase, so everyone can contribute. Indeed, digital and physical

prototyping best occurs in the design phase, otherwise it may be too late to make the

changes in design and the preparations for building necessary to act on what is learned

through prototyping.

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 Table 5.2: Implementation by Project Role

Owner Owner Process Manager Design Construction Supplier

Agent Specialist Specialist

Select partners Can act Can act Can act with Can choose Can choose Can choose

or suppliers who unilaterally, with owner approval with whom to with whom with whom to

are willing and within the owner on projects. Can work, both to work, both work, but have

able to adopt lean limits of approval choose with those who hire those who a vested

project delivery the law. whom to work, them and those hire them and interest in

but have a vested whom they those whom developing

interest in hire. they hire. 'lean'

developing 'lean' customers

customers.

Structure the Can act Can act Can act only Can encourage Can Cannot act.

project unilaterally, with when they have and respond encourage

organization to within the owner financial positively to and respond

engage limits of approval responsibility for opportunities, positively to

downstream the law. a project or a but cannot opportunities,

players in phase of a dictate but cannot

upstream project. structure or dictate

processes and commercial structure or

vice-versa, and to relationships commercial

allow money to relationships

move across

organizational

boundaries in

pursuit of the best

project-level

returns

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 Do target Can act Can act Can act only Can encourage Can Cannot act.

costing: define unilaterally, with when they have and respond encourage

and align project within the owner financial positively to and respond

scope, budget and limits of approval responsibility for opportunities, positively to

schedule to deliver the law. a project or a but cannot opportunities,

customer and phase of a dictate but cannot

stakeholder value, project. structure or dictate

while challenging commercial structure or

previous best relationships commercial

practice relationships

Encourage Can act Can act Can act within Can act within Can act Can act within

thoughtful within their within their own sphere their own within their their own

experimentation own sphere their own of control. sphere of own sphere sphere of

of control. sphere of control. of control. control.

control.

Celebrate Can act Can act Can act within Can act within Can act Can act within

breakdowns as within their within their own sphere their own within their their own

opportunities for own sphere their own of control. sphere of own sphere sphere of

learning rather of control. sphere of control. of control. control.

than occasions for control.

punishing the

guilty

Do set based Can act Can act Can act only Can encourage Can Can encourage

design unilaterally, with when they have and respond encourage and respond

within the owner financial positively to and respond positively to

limits of approval responsibility for opportunities. positively to opportunities.

the law. a project or a opportunities.

phase of a

project.

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 Practice Can act Can act Can act within Can act within Can act Can act within

production control within their within their own sphere their own within their their own

in accordance with own sphere their own of control. sphere of own sphere sphere of

lean principles of control. sphere of control. of control. control.

control.

Build quality Can act Can act Can act within Can act within Can act Can act within

and safety into within their within their own sphere their own within their their own

your projects own sphere their own of control. sphere of own sphere sphere of

by .... of control. sphere of control. of control. control.

control.

Implement JIT Can act Can act Construction Can support, Can Can encourage

and other multi- through through manager can act but is not encourage and respond

organizational contract contract either with owner directly and respond positively to

processes after site provisions provisions approval or when involved in the positively to opportunities.

demand for and through and they have implementation opportunities.

materials and assuming through financial

information is risk assuming responsibility

sufficiently risk

reliable

Use First Run Can act at Can act Construction Can support, Can act Can support,

Studies: on the project with manager can but is not within their but is not

processes that level. owner require/encourage directly own sphere directly

transform approval. construction involved in the of control. involved in the

materials, use to specialists to act. implementation implementation

design and test

process capability

to meet safety,

quality, time and

cost criteria

149
 Use 3D Can act at Can act Design manager Can act within Can act Can support,

modeling to the project with can their own within their but is not

integrate product level. owner require/encourage sphere of own sphere directly

and process approval. design specialists control. of control. involved in the

design, to design to act. implementation

construction

operations in

detail, and for use

by the customer in

facilities

management

Do post Can act Can act Can act with Can act with Can act with Can act with

occupancy unilaterally, with owner approval. owner owner owner

evaluations within the owner approval. approval. approval.

limits of approval.

the law.

5.5. Recommendations for Future Research

This research revealed the need for future research on a number of topics and questions,

some larger and some smaller.

5.5.1 What should owners demand of their service providers?

This research has provided some answers to the question: What should owners demand of

their architectural/engineering/construction service providers in order to take advantage

of the lean revolution in project delivery? However, more specific guidance is needed.

Further, the question should also be addressed: What should owners do to help their

service providers meet those demands?

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5.5.2 Enabling pull by reducing lead times and extending the project

window of reliability

Most work in manufacturing or construction is done by a number of different specialists

at least partially sequenced in time. Mass production and traditional construction project

management have pushed work from one specialist to the next in accordance with a

production schedule, without regard to the readiness of the downstream specialists to do

that work. In opposition, the mantra from lean manufacturing is to ‘flow where you can

and pull where you must’. The advice to have work flow from one specialist to the next

applies when we can balance successive specialists so they can each do work within a

target amount of time chosen to meet the demand for work completion. In construction,

this can be done within many operations and between some operations (e.g., in the parade

of finishing trades through rooms in a building), but frequently cannot be done when the

nature of work changes with project progress. In these cases, where work cannot flow

continuously without intermediate buffers, the best we can do is have the ‘customer’

specialist pull work from the ‘supplier’ specialist(s), thus assuring customer readiness and

minimizing the buffers in the production system. Two connected advances are needed to

enable use of pull as a technique for advancing work through networks of specialists: 1)

Reduce the lead times for acquiring what is needed from upstream suppliers of all sorts,

both on project and off project, and 2) Extend the window of time within which readiness

is sufficiently predictable to make pulling economical. Research is needed in both these

areas. Value stream mapping has proven effective in reducing lead times and the Last

Planner® system of production control has proven effective in extending the project

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window of reliability; i.e., improving the extent to which short term production plans

accurately predict future states of a project. These could be starting points for further

advances.

5.5.3 Links between Lean and Safety

The causal link between lean project delivery and safety warrants further research. There

are several reports of improvements in safety with the implementation of lean principles

and techniques. The most comprehensive and compelling report is from the Danish

contractor, MTH, which experienced much lower accident rates on its projects

implementing lean production control than on its projects that did not—approximately in

the ratio 1:3 (Thomassen 2002). At that time, only one business unit in the company was

pursuing lean. A recent update 34 reveals that the entire company has improved its

accident rate to roughly the same level as the initial lean projects, as lean practices have

been implemented widely throughout the company—but it must be noted that the causes

of improved safety have not yet been analyzed in detail. In the case study, GS integrated

safety into their Lean production control system. Special safety efforts are made on

selected activities, which is feasible due to the reliable work planning.

5.5.4 How to better incorporate facility use and running costs into

capital facility planning?

It is well known that there is an order-of-magnitude progression in costs as we move

from design costs to construction costs to running costs to actual use of a facility (Saxon,

34
Personal communication from Esben Misfeldt of MTH to Glenn Ballard; not yet published.

152
2005), but capital planning routines seem to be based primarily on the first cost ROI. We

expect that this is complicated in many companies by the organizational fracturing of

responsibilities for these different costs; namely, capital, operations and maintenance, and

business use of facilities. Money cannot always flow across organizational boundaries in

search of the best system-level investment. Decisions rather tend to be made that sub

optimize at local levels. Other possible complicating factors or inadequacies in budgeting

for capital facilities also need to be examined such as lack of generally accepted methods

for incorporating non-quantitative outcomes.

5.5.5 How to better achieve Built-in Quality?

We are not satisfied that current quality management practices in the industry adequately

incorporate the principles and methods for building in quality that we see in lean

manufacturing. One of many issues is what has been called value flowdown. Value can

be understood to originate on a project in the definition of customer and stakeholder

purpose; flow down into description of the characteristics of the project (product/process)

that is expected to enable realization of those purposes; flow from that into technical

specifications (e.g., through the use of QFD or similar tools), flow from that into design,

flow from design into the different instruments created for translating the design into a

physical facility; namely, product specifications, fabrication and installation instructions,

and system specifications; and finally flow into physical production and commissioning.

We suspect that there is considerable loss of value at the handoffs (to use a plumbing

analogy, value leaks out at the joints) and that quality management systems that rely on

assessments against the immediate standard are not adequate to prevent that loss. In

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addition to inspecting against requirements, we must be able to inspect against purpose;

i.e. everyone acting in the project must understand the reason for a requirement and be

able to trace it back to customer value. Additional aspects of built-in quality that we think

need to be strengthened in construction are the use of pokayoke (fool-proof) mechanisms,

better methods of detecting defects at the point of origin, better methods of finding and

correcting defects wherever they may have migrated before detection, and better

understanding of fitness-for-use requirements in handoffs between specialists, both

design and construction.

To our knowledge, no comprehensive data collection and analysis has been done to

explore the relationship between lean project delivery and quality performance. The

probability of a causal connection is supported, however, by numerous anecdotal reports,

especially involving the practice of first run studies; i.e., involving craft workers in

detailed design and field testing of operations (Saffaro, et al. 2006). Boldt, DPR and

Southland Industries are among the companies experimenting with built-in quality within

the context of lean project delivery. They are being driven by Sutter Health’s

commitment to lean project delivery and the contractual requirement for a “built-in

quality plan” in their new, relational form of contract.

5.5.6 Demand Variability and its Consequences in Construction

In manufacturing, variation is considered to be the devil (Hopp and Spearman, 2000). Its

manifestations and implications need to also be better understood in construction. One

important type of variation is variation in demand, which arguably causes enormous

154
waste of capacity, as production systems are structured to try to match peaks and are

unable to use all that capacity when in demand troughs.

Two specific research questions could be good starting points: 1) What is the impact

of variation in owner demand on the capacity utilization of process managers? And 2)

What is the impact of variation in process manager demand on the capacity utilization of

design and construction specialists?

5.5.7 Tolerance management

The move into model based design enables more extensive prefabrication and

preassembly, but that in turn places more stress on the management of tolerances. Current

computer models have clumsy mechanisms for what if'ing tolerance build up and for

assisting decision making regarding where slack is best located in a physical system. This

belongs to the more general research topic of buffers, i.e., slack in systems to absorb

variability. Buffers such as inventory, time and capacity are becoming well understood,

but there are buffers also in product design, e.g., dimensional buffers. A recent PhD

thesis (Milberg, 2006) reports research on dimensional tolerances, and has helped reveal

the inadequacy of current ACI (American Concrete Institute) specifications for tolerance

management, which has started a process of improving those standards. This may be only

the tip of an iceberg. Architects and engineers may have too little understanding of

tolerances or the process capabilities resident in current practice.

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5.5.8 Building to a Model

This is another issue related to computer modeling; namely, how to better use models in

construction planning and execution. Researchers are currently looking at a relatively

simple application--how to coordinate framing and mechanical rough-in, which includes

agreement on which walls must be completed prior to running duct work, and learning

how to minimize such instances through better design choices. More expanded and

extensive research is needed on this issue.

5.5.9 Set Based Design

The practice of set based design is from Toyota's product development system. In brief, it

is a strategy for executing design in which options, evaluation criteria, evaluations, and

selection decisions are explicitly described. The idea is to apply all applicable design

criteria from the beginning of design, rather than bringing them into play sequentially,

and to make design decisions at the last responsible moment, using all available time and

capacity within that limit, in order to produce a better design. One of the critical elements

is learning how to express the design criteria for each interdependent specialist so sets of

alternatives can be specified and understood. Common practice now seems to be to over

specify, thus unnecessarily restricting downstream choices.

5.5.10 Lean, Green and Technology: positive forces driving the

construction industry

Lean and green fit nicely together, as a systematic methodology for achieving objectives

and the most global set of objectives, respectively. The difficulty and uniqueness of

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design and construction challenges posed by sustainability goals requires collaboration

among specialists of all kinds, and that collaboration requires lean production planning

and control methods. Building Information Modeling (BIM) and other forms of

technology are also a positive driving force in construction and belong with ends

(sustainability) and means (lean) as the sharpest tool set currently available.

How to integrate the positive forces now driving the construction industry; namely,

the methodology of lean project delivery, the global objectives of sustainability (green),

and tools (technology)?

5.5.11 How lean can mitigate negative forces in the construction

industry

Lean should be explored for its potential to mitigate negative forces in the construction

industry, which include:

• Slow/negative growth in long term productivity

• Scarcity and turnover of craft workers and engineers

• High percentage of construction (physical) waste in landfills

5.5.12 Confirmation and analysis of critical relationships

A number of relationships that are regarded as critical from a lean perspective require

more detailed analysis and evaluation.

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 • Confirm and explore implications of the observation that as projects become

increasingly dynamic, traditional project management becomes increasingly

inadequate.

• Extend analysis of the correlation between work flow reliability, as measured by

metrics such as Percent Plan Complete, and performance dimensions such as

productivity.

5.5.13 Effective Lean Implementation

As lean ripples through the construction industry, there will be eventually be sufficient

data to support statistical analysis of the effectiveness of alternative implementation

strategies, enabling a more rigorous methodology than the case study approach used in

this research.

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Appendices

A. PT 191 Lean Construction Principles

There are numerous lists of lean principles. We reproduce here the list from the CII

Research Team 191 Research Report.

1.0 Customer Focus

1.1 Meet customer requirements

1.2 Define value from the viewpoint of the customer (project)

1.3 Use flexible resources and adaptive planning

1.4 Cross train crew members to provide production flexibility

1.5 Use target costing and value engineering

2.0 Culture/People

2.1 Provide training at every level

2.2 Encourage employee empowerment

2.3 Ensure management commitment

2.4 Work with subcontractors and suppliers

3.0 Workplace Organization/Standardization

3.1 Encourage workplace organization and use 5S

3.2 Implement error-proofing devices

3.3 Provide visual management devices

3.4 Create defined work processes

3.5 Create logistic, material movement, and storage plans

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4.0 Waste Elimination

4.1 Minimize double handling and worker and equipment movement

4.2 Balance crews; synchronize flows

4.3 Remove material constraints, use kitting, reduce input variation

4.4 Reduce difficult setup/changeover

4.5 Reduce scrap

4.6 Use total productive maintenance

4.7 Institute just-in-time delivery

4.8 Use production planning and detailed crew instructions, predictable task times

4.9 Implement reliable production scheduling, short interval schedules

4.10 Practice the last responsible moment, pull scheduling

4.11 Use small batch sizes, minimize work-in-process inventory (WIP)

4.12 Use decoupling linkages, understand buffer size and location

4.13 Reduce the parts count, use standardized parts

4.14 Use preassembly and prefabrication

4.15 Use preproduction engineering and constructability analysis

5.0 Continuous improvement and built-in quality

5.1 Prepare for organizational learning and root cause analysis

5.2 Develop and use metrics to measure performance, use stretch targets

5.3 Create a standard response to defects

5.4 Encourage employees to develop a sense of responsibility for quality

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B. Field Trials in Lean Implementation on Projects

Three members of our research team 234 conducted field trials in lean

implementation on their projects:

B.1 Abbott/Riley Construction

B.2 Dow Chemical

B.3 Ilyang

161
B.1 Abbott/Riley Construction

The following presentation tells the story of Abbott’s field trial of the Last Planner®

system in cooperation with Riley Construction, construction manager on an Abbott

project at its Chicago headquarters.

162
163
164
165
166
167
168
169
B.2 Dow Chemical

Introduction

When it became apparent that Project Daytona in Midland Michigan would not be able to

be constructed within the time frame needed by the business the project team looked in

the application of Lean Principles. The amount of time needed to be cut out of the

conventional project execution strategy was seven months with only seven months left

before the needed Return To Operations date. The planned execution strategy had been

design, bid, build. As there was no way design work could be completed to support this

drastic schedule compression something different had to be done.

The project team put together a Lean Execution Strategy that would shorten the

schedule, reduce waste, be constructed safely and satisfy management that they would

not just be “throwing money” at the problem by using excessive overtime.

Contract strategy

The current strategy of design and then lump sum bidding would not allow the team to

meet the needed completion date. The need to overlap design and construction led the

team to seek a relational contract with a contractor that could be clearly aligned with the

team’s goals. To alleviate management concerns with this approach the team put together

a criteria package (see the following table) and interviewed and received proposals from

four potential contractors.

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 Contractor selection criteria package
Score - on scale 1, 3, 9
RFP REQUIREMENT EVALUATION CRITERIA Relative
Weight A B Evaluation Comments

Price - crew mix & composite rates 35.00 0.35 Did not request estimated hours.
Direct/Indirect Ratio compared to other
0.00 0.00
bidders.
1. Costs
Capable of developing & working with Fee at
0.00 0.00 Look at placing productivity index- good productivity tied to incentive.
Risk
Indirect Labor Rate compared to other
0.00 0.00
bidders.
S. Total 35.00 0.35

Quality of Schedule - amount of detail 0.00 0.00 Manpower Histogram including subs - tied to the schedule

Quality Program 5.00 0.05

2. Schedule
Cost Tracking/Productivity Program 5.00 0.05

S. Total 10.00 0.10 0.0 0.0 Rosalie to recheck Col H & I

Contractor has current capacity to perform

0.10 Ability to meet Feb 28 deadline
this project.
10.00

Contractor's ability to expand or contract

3. Manpower, 10.00 0.10 Contractor has capability to provide needed resources from outside the area
resources over a short period of time.
Organization, and
Workload
Past Performance of Superintendents scheduled to work on project;
Qualifications of Field Staff/Supervision; Project Scheduler: Experience, Yrs
Organization Plan 10.00 0.10
of Constr Scheduling Exp, Understanding Duration of tasks &
interrelationships; QA/QC Manager: Experience, Yrs
S. Total 30.00 0.30 0.0 0.0
0.00
Safety Coordinator: Project Experience & Yrs Construction Experience;
Quality of Safety Program 10.00 0.10 Safety Coordinator: # of similar jobs(complex, tight schedule, congested) &
4. Safety results in role w/co

Historical Safety Performance 15.00 0.15

S. Total 25.00 0.10 #VALUE! #VALUE!

Total
100.0 #REF! #VALUE! #VALUE!
Score

#VALUE! #VALUE!

Fully meets Requirements 9

Mostly meets Requirement 3
Unacceptable 1

Bids were evaluated on hourly rates applied to the estimated work breakdown the Project

Steering Team developed as well as the fitness to complete criteria in Attachment A. The

job was awarded as a Time and Material contract as the total size of the job i.e., tons of

steel and feet of pipe would not be able to be determined until late in design and well

after fifty percent of the construction needed to be completed.

Past studies and the owners experience identified two key areas that lead to waste in

this type of contract scenario:

• Excessive overlap of design and construction

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 • Time and Material Contracts that can lead to low construction productivity.

To mitigate these risks, the team needed to develop a more detailed schedule. This led to

the decision to use the reverse phase schedule that was broken down to the individual

team member commitment and the ability to track whether the commitments were kept.

The need for this type of owner/contractor legal agreement became very apparent as

the team worked through the project. Not only did it save the time needed to complete

the design, bid the work, evaluate the proposals and award the contract, it also helped in

the execution of the project.

Due to the amount of work to be completed by a variety of contractors and the

limitations of the available space, the team had to balance the project needs over

individual contractor needs. With the elimination of the incentive (lump sum on only

their portion of the project) to maximize their own efficiency at the potential expense of

others, the contractors helped achieve the project goals by actively participating in the

daily work flow planning sessions.

Work flow – pull

To maximize field productivity with the design and construction overlap one of the

requirements was the use of the Last Planner System from Strategic Project Solutions

(SPS) for work flow planning. This system was used to effectively align design

deliverables with what the field needed to eliminate construction idle time errors and

interferences. The reverse phase schedule was developed during a two day planning

session held at the jobsite. Included in this session was Design Engineering,

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Construction Management, Construction Contractors, Manufacturing, Project

Management and two consultants from SPS. This process assured buy in and allowed all

parties to understand what the others could contribute to the benefit of the project.

Meeting outcomes were:

• A defined construction sequence

• A defined engineering deliverable sequence

• A project database that allowed the team to use SPS software to monitor

performance and pinpoint areas of concern

• Defined who would do what

After the initial construction schedule was developed weekly Production Planning

sessions were held via net-meeting with the construction leaders in Midland and the

design team in Houston. The meeting agenda was a review of the previous week’s

Production Plan, discussion of why any item was not completed, a plan to get the item

completed and the generation of the next week’s Product Plan. This process allowed the

project to peak at over 350 onsite workers and every one of them knew what they would

be working on for the next week and would have the materials, tools and equipment to

efficiently complete their work.

This process really aided the project communications as each week was an open

discussion on what was needed and what could be delivered with both the contractor and

design team making suggestions and developing a better work sequence. Several

examples of the team working together to benefit the project regardless of who would

traditionally do the work:

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 • New supply lines in an existing pipe rack were designed and installed by the

construction contractor and as-builts were entered into the design model.

Traditionally design would send a crew to measure, design and produce drawings;

the contractor would attempt to install, field fit and send back as-built drawings

• Contractor was informed of a price increase on piping and design was able to

produce a 90 percent Material Take Off ahead of schedule to beat the price

increase.

• Instead of the owner and contractor both engaging a materials management

organization, we decided to use only one organization for all items regardless of

who ordered.

Construction workflow planning meetings were daily and focused on the next days work

plans, from all contractors, and how they could be accomplished safely and efficiently.

The team named this The Focus Meeting. This daily meeting allowed the team to

maximize the sharing of space and equipment and eliminated problems with multiple

contractors needing access to the same space at the same time. It also enabled our

materials to be set in the location they would be needed at and not be in someone else’s

way. The contractors were very open to modifying their work plans to best suit the

project schedule.

Preassembly

To try to make as much work flow parallel and to minimize the number of workers onsite

the team used preassembly where ever possible. Exterior walls were changed from

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masonry to pre-cast concrete and all piping was shop fabricated using three local shops

and our preferred supplier.

Supply plan

The work flow plan also forced us to rethink our supply plan. Dow has a preferred

supplier of prefabricated pipe with contract terms already negotiated on price and

delivery timing. As the delivery terms would not meet our needs almost all early installed

piping and over fifty percent of the total piping had to be fabricated by the construction

contractor. The fabrication contract also does not specifically deal with the exact

sequence of the pipe fabrication and delivery.

To minimize the waste associated with inventory the design team and the mechanical

contractor used the reverse flow schedule to generate a need by date for all piping spool

pieces. This information was communicated to the piping fabricator and after their

review and agreement to meet the schedule the fabricators performance against the

scheduled was reviewed and tracked. This ended up being a weekly meeting with design,

construction and the fabricator where any shortages or errors were identified and a plan to

address was developed. This information was also shared at the entire team Production

Plan Review meeting so any additional problems could be corrected. On a tight schedule

just in time has to be right and this process helped make sure we met the construction

schedule with the correct pipelines at the right time.

On owner furnished equipment the need dates from our planning session were truly

need dates to be able to fit into the structure as it was erected. Because of this, the team

needed to work with the owner purchasing department and the vendors to stay on

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schedule. This also meant early design, steel fabrication and erection were completed

with preliminary vessel design data. To make sure this would not produce rework, the

design team worked with the vendors to ensure the final vendor design was identical to

the original design drawings received from the vendors.

Visual control/Error Proofing

The team used several examples of visual controls on safety status, project milestones

and for error proofing processes. An example is shown of the gasket board the team used.

Instead of a written specification for each line, the workers could get a visual image of

the proper gaskets for the system they would be working on. Examples are in the

following pictures.

Visual images

Movement

To minimize the waste involved in excess movement and to aid in housekeeping (5S)

inventories of pipe and steel were scheduled on a two day look ahead and laydown areas

were discussed in the daily Focus meeting to make sure the next day’s inventory was

stored where it was needed and was not in another work crews way. The contractors

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were not allowed to have more than two days worth of materials on the work site. Due to

the speed of this job and the difficulty of getting materials delivered at the speed they

were needed, the two day inventory rule didn’t prove to be a problem.

The team was also able to utilize the warehouse building and the truck docks as a

staging area for instrumentation. High value control valves were brought to the site in a

semi trailer that was then parked at one of the warehouse truck doors. See the following

picture.

High value control valves

Results

• The team met the startup turnover sequence i.e. met the schedule reduction target

of seven months.

• The project has worked over 535,000 injury free hours

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 • Currently on budget even with equipment and labor inflation that we are seeing

across the US

• Contractor productivity numbers are equivalent to their best projects in spite of

this project doubling their annual workload in our facility

• Contractors were able to meet their commitments for routine maintenance and

turn-arounds (concern from owner management team due to the size of this

project in comparison to annual volume of work handled in “normal times). The

concern had been the project would be forced to use all the contractor resources to

make the schedule. Due to the planning efforts the project team never was forced

to add people to try and make up schedule.

By following the plan, did not need to bring in extra people, work everyone extra, etc.

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B.3 Ilyang Construction

This field trial shows that the production control system or the Last Planner® System was

applied to a specialty contractor which is specialized in earthwork and civil work.

Ilyang’s lean journey is one of the cases studied for this research. This section describes

the first lean experiment for Ilyang where one of the authors served as a consultant.

The experiment was conducted on two subway construction projects. The study was

on tunneling and open cut process for both projects.

Project Description

Locatio
Project Outline of Project Method
n

- Tunnel : 738M - Tunnel :NATM35

Seoul Subway Seoul,
- 2 Station : 527M - Station : Open Cut
# xx Seoul
- 3 Vent tunnels :143M - Blasting

KyungN - Tunnel: 1,490M - Tunnel : NATM

Busan Subway
am, - 1 Station : 225M - Station: Open Cut
# xx
Busan - 2 Vent tunnels : 97M - Blasting

35
NATM, New Austrian Tunneling Method, NATM is a flexible method of tunnel excavation and support
which is adaptable to varying ground conditions from hard rock to soil.

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 Description of Activities

Major Assignments and Resources

Project
Main activity Equipme
Title Assignments Materials Labor
nts

- Earth Work :

196,097M3 -Blasting

- Earth Anchor : -Steel Arch Rib - ANFO - Excavator -Blasting

742EA - Rock Bolt - Bit -Dump Team

Seoul - Rock Bolt : - Shotcrete - Shotcrete Truck -Boring Team

Subway 1,369EA - Wire-eash - RockBolt - Crane -Shotcrete

# xx - Steel Arch Rib : -Average - Wire-Mesh - Drill labors

861 EA weekly - Steel arch - Fork left - Carpenters

- Shotcrete : 6,460 assignments : rib - Dozer - Ironworkers

M2 114

- Lining : 12,150M3

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 - Earth Work :

101,154M3
- Blasting
- Earth Anchor : - Excavator - Blasting
- Steel Arch Rib - ANFO
251EA - Jumbo Team
- Rock Bolt - Bit
- Rock Bolt : Drill - Boring
Busan - Shotcrete - Shotcrete
3,357EA - Dump Team
Subway - Wire-eash - RockBolt
- Steel Arch Truck - Shotcrete
# xx -Average - Wire-Mesh
Rib :1,457 EA - Crane labors
weekly -Steel arch
- Shotcrete : 15,141 - Fork left - Carpenters
assignments : rib
M2 - Dozer - Ironworkers
107
- Lining : 27,144M3

- Water Proofing

During the case study, the Seoul subway project was two months behind schedule, and

the Busan Subway project had incurred the enmity of the people due to the blasting. Such

conditions lead to unreliable work flow.

IMPLEMENTATION OF LAST PLANNER®

Projects use three types of plans: master schedule, phase schedule, and commitment

schedule. A master schedule and phase schedule needs to be approved by a client. A

master schedule is a schedule that covers from the beginning to the end of the project. A

phase schedule evolved from a master schedule entails detailed activities. An approved

phase schedule is evolved into three-week look-ahead schedule and a weekly work plan.

Case studies have been implemented through three phases:

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 1. The first phase involved calculating PPC of week work plan. Reasons for

failure were identified through all three phases. However, Last

Planner®(i.e, the shielding process) was not implemented during this

phase.

2. The shielding process through extensive constraint analysis was

implemented on the course of commitment planning. In the second phase,

costs were assigned to each assignment in the weekly work plan.

3. The shielding process was implemented as in the second phase. However,

cost information is excluded from the weekly work plan.

1ST PHASE

A kick-off meeting was held and co-facilitated by the authors. The participants agreed

that PPC (Percentage Plan Completion) on the weekly work plan and reasons for non-

completion will be traced and recorded but the Last Planner® will not be implemented

for a month to see how the Last Planner® improves their planning system.

It is worthwhile describing the organization of the contractor. Management staffs in

the project office are grouped into three departments: construction department, project

control department, and administration. It is interesting that project engineers are

segregated into project control department and construction department. All planning

processes including weekly work scheduling are in charge of the project control

department. The project control department keeps asking the construction department for

schedule updates because all field engineers are in the construction department.

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 The planning system did not need to change during the 1st phase because projects

issue the weekly work plan already. In the first phase, weekly work scheduling was

performed using spreadsheets filled by the project control engineer together with the site

engineer in the construction department. They had a three-week look-ahead schedule.

The PPC (percent plan complete) and reasons for non-completion was tracked and

published weekly. The PPC on Seoul subway project was 62% and PPC on Busan

subway project was 63%. Incomplete prerequisite work and lack of materials were the

major reasons for failure.

2ND PHASE

Ad-hoc meeting and training sessions were held and co-facilitated by the authors for

implementing the Last Planner® in Jan 2005. The key outcomes were (1) releasing

assignments that meet the five quality criteria, (2) developing and updating constraints,

(3) assigning and tracing costs to each assignment. The third outcome came from top

management in an attempt to bring an earned-value method to the level of operation for

tighter cost/schedule control.

Subsequent to the meeting and training sessions, the production control team added a

column on constraint analysis to the weekly work plan and look-ahead schedule. A

weekly meeting was used to address the status of constraints, and to discuss how to

resolve them. The PPC on the Seoul subway project was 79% and the PPC on the Busan

subway project was 75%.

3RD PHASE

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As the Last Planner® system was applied, the PPC continued to increase in value, until it

reached around 85% during the 8th week. However, the PPC did not surpass the level of

85%. An ad hoc meeting was again held for overcoming the 85% limit. At the meeting,

participants pointed out that the cost/schedule variance analysis at the level of operation

was the obstacle. The engineers at the project control department admitted that quality

assignment criteria are often sacrificed to earned-value. (i.e., they tend to release

assignments with high earned-value rather than assignments that meet quality criteria).

However, the project manager was concerned over the case where the PPC is high but

still behind schedule and still overrun.

The solution was suggested that the impact on total float and duration can be

measured and updated weekly36. The consultant explained to the project manager that

cost variance analysis at the level of operation might cause problems that impeded work

flow by making earned-value a priority when deciding which assignments to release to

the field, thus preventing quality assignments (Kim 2002; Kim and Ballard 2000). The

outcomes of this meeting were (1) to remove cost data in weekly work plan, (2) to trace

total float change every week.

During the third phase, the PPC climbed to 85% on the Seoul subway project and

84% on the Busan subway project. The reasons for the non-completion are presented in

Table 3.

36
In addition to the impact on total float, we intended to do cost analysis at higher level than the operations
level. But it did not work due to the problems of data collection in the course of this study.

184
 PPC Assignments
100% 120
90% 115
80%
110
70%

Assignments
60% 105
PPC

50% 100
40% 95
30%
90
20%
10% 85
0% 80
st nd rd
1 Phase 2 Phase 3 Phase

PPC Assignments
100% 120
90% 115
80%
110
70%

Assignments
60% 105
PPC

50% 100
40% 95
30%
90
20%
10% 85
0% 80
st nd rd
1 Phase 2 Phase 3 Phase

PPC: Seoul Subway Project

PPC: Busan Subway Project

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 Reasons for Plan Failure

Reasons
Appruval Prerequisite Material Equipment Changing Plan
for Failure
Weekly Total
Seoul Busan Seoul Busan Seoul Busan Seoul Busan Seoul Busan
Phase
Week01 3 6 22 18 20 15 3 3 1 0 91

Week02 7 4 12 19 17 15 2 3 0 0 79
1st Phase
Week03 7 5 16 9 22 13 1 3 0 1 77

Week04 5 7 9 13 15 14 3 1 0 0 67

Week05 5 2 10 9 13 14 0 2 1 0 56

Week06 2 3 8 11 9 10 1 3 0 0 47
2nd Phase
Week07 3 3 6 9 11 11 2 1 0 0 46

Week08 1 2 8 7 5 12 1 1 0 0 37

Week09 2 2 7 6 5 7 0 2 0 0 31

Week10 2 1 4 8 5 8 1 2 0 0 31
3rd Phase
Week11 1 0 5 4 7 8 0 1 0 0 26

Week12 1 2 5 6 2 4 0 2 0 0 22

SUM 39 37 112 119 131 131 14 24 2 1

610
TOTAL 76 231 262 38 3

CONCLUSIONS

The experiment showed that the Last Planner® improved work flow reliability (i.e.,

improving PPC) in tunneling projects. However, the study indicated several barriers. Four

actions have been proposed to improve PPC and the work flow reliability:

• Removing cost information from the weekly work plans,

• Coupling plan-generating teams with field engineers and foremen,

• Overcoming the mentality of saying “Yes” to the boss all of the time,

• Training foremen to plan.

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 Appendix C. Case Studies

C.1 Air Products

C.2 BAA/LOR (Lean construction in the United Kingdom)

C.3 General Motors

C.4 Sutter Health

C.5 Integrated Project Delivery

C.6 Boldt

C.6 GS Construction

C.7 Messer Construction

C.8 Walbridge Aldinger

C.10 BMW Constructors

C.11 Dee Cramer

C.12 Ilyang

C.13 Southland Industries

C.14 Burt Hill Architects & Engineers

C.15 Spancrete

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C.1 Air Products Case Study

Background

Air Products serves customers in technology, energy, healthcare and industrial markets

worldwide with a unique portfolio of products, services and solutions, providing

atmospheric gases, process and specialty gases, performance materials and chemical

intermediates. Air Products is unique in the role it plays in Lean Construction. Due to the

specialized nature of the facilities that they use, Air Products has an in-house design

team. This places Air Products in the very unique position of being both an Owner and

an Architect/Engineer.

Lean initiatives

Air Products began an organization wide push toward what they called a “High

Performance Organization” because of increased competition in a commodity market.

Based on more competition from all over the world, Air Products saw that they had to

become more competitive in every sector of their business. They instituted an

organization wide “Continuous Improvement” program in 2001. Their Continuous

Improvement program is best described as developed from a Lean perspective.

The two main groups within Air Products were previously working with different

quality and performance programs. The “Gas” division was working more with lean

theory, and the “chemical” group was working more with a six sigma approach to

production. The Continuous Improvement program sought to take the best tools from

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each of the schools of thought and combine them into a company wide program. Both of

these schools of thought can still be seen in the Continuous Improvement program today.

Lean Preparation

Training for Air Products Continuous Improvement program is intensive and ongoing.

Air Products has a stated goal of training 2% of its employees in lean techniques such as

value stream mapping other topics selected by Air Products as important. This training is

very intensive and the sole responsibility of the people who are trained is to make sure

that the Continuous Improvement movement is kept moving forward.

Air Products selects the people for the Continuous Improvement training based on

several factors. The first and most important factor was that the people be high

performing and leadership type people. Air Products chose to select the people based on

past performance of the employee, and the placement of the employee within the

organization. These 2% of employees are then sent out into the organization to train

others and uses the skills that they have been taught. This leadership training program is

in line with one of Toyota Principles, “Develop People Who Live Your System and

Culture and Develop Exceptional Team Associates”.

Lean Projects

One of lean projects was a project in Wichita Falls, Kansas. The project site was a large

chemical plant. The majority of the work revolved around the replacement and

integration of control systems throughout the facility. The work scheduled would also

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require a shutdown of the plant, so other maintenance tasks were scheduled to take place

at the same time.

The use of the Last Planner® System (LPS) on the project was highlighted. The

fact that the entire facility would be shut down in order for the work to be completed

required that the project take as little time as possible. The use of the LPS required that

the work plan be as detailed as possible, and that it be planned by the people who would

be doing the work. The planning was done in such a way as to allow the plant to be

brought back online in phases. This required that work be completed in the order in

which the facility was to be re-started, not in the order which the work was easiest to

complete.

Air Products identified 6 phases to the commissioning of the plant. They then

developed a “stair step” approach to the 6 phases of the commissioning of the plant. This

allowed the various work sections to be completed, and re-started, as the work was

completed, and before the completion of the project as a whole.

The development of the work plan was done with all stakeholders present in one

room. The use of “post it” notes was the preferred organization tool. The various

contractors would develop “post it” notes which represented tasks, or more accurately,

hand offs to the next phase in the construction process.

In the end, the project was very successful. They were able to post a 98.8 percent

planned complete. They said that the first project was a learning experience, and that the

second project was easier.

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Lean Principles Applied: Value Stream Mapping

Air Products makes extensive use of value stream mapping. They make a very big point

of stressing it in their training program. The use of value stream mapping is organization

wide.

The value stream mapping technique they use draws very heavily from lean

theory. The use of value stream mapping at Air Products was heavily stressed. Based on

the demonstration and the available literature, this is probably the single most important

tool that Air Products uses. Several representatives within the organization said exactly

that.

Last Planner®

As stated above, the Last Planner® System (LPS) has been deployed on several

construction projects within Air Products. The LPS was deployed uniquely by Air

Products. As stated above, the use of “post it” notes on which individual activities, or

handoffs were recorded was the easiest and most logical way Air Products found.

Beyond the use of meeting facilitators, the majority of the day to day planning and

production scheduling were done exclusively by the contractors. The first use of the Last

Planner® system is detailed above, and the following uses of the system were very

successful.

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Lean Metrics

Currently PPC was the only metric that Air Products uses for lean construction

implementation. AP mentioned that they need to develop lean metrics to measure their

performances.

Lessons Learned

Air Products has a very strong Continuous Improvement Program that has been

developed over several years. The biggest obstacles that they faced in implementing lean

principles were mostly due to people within the organization that were unwilling to

change.

The prior use of lean techniques and an active Six Sigma program within Air

Products can also be seen as a barrier. The combination of the two programs was

difficult, and resulted in some confusion among employees. Clear guidelines and

leadership were necessary for the two programs to be adopted into one, all encompassing

philosophy. The strong training program, although there from the beginning of the

initiative, was hampered at the beginning by the choice of the employees that underwent

training. Air Products had to re-evaluate how they decided who to train, and how to

disperse the accumulated knowledge across the organization.

Within the Construction group, lean principles are relatively new. Several new

programs within the design group were cited. The design group was in the beginning

stages of trying to apply Last Planner® and other lean tools within the

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Construction/Design group. The changes within the design group were being developed

and guided by the leadership of the group.

Success Factors

Air Products gave several examples of what had worked well for them, and what had not

worked so well. The biggest piece of advice that they had to offer was that you had to

have strong leadership leading the change within the company. They cited several

examples where initiatives within the company failed or were set back due to the failure

of leadership to stress and monitor the changes within the organization. They also had a

lot of information on what exactly they did to be able to change the behavior of people

within the organization.

Air Products seemed to take training very seriously. They did not take an

“organization wide” approach to training, but sought out individuals within the

organization who they thought could lead the change from within the organization. They

then trained them extensively in all areas of their Continuous Improvement Program.

This training was a very exhaustive and ongoing approach to spreading knowledge across

the organization.

Recommendations for those considering implementing lean in construction

Air Products was very clear with the advice that they gave to others seeking to deploy

lean within their organizations: Use the huge amount of knowledge that is out there in

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order to make lean your own. They cited several examples of lean theory that had been

adopted from all industries.

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C.2 BAA/LOR Case Study (Lean construction in the United

Kingdom)37

Background

The United Kingdom has seen an increase in the application of lean in construction since

the mid 1990’s. The impetus for these efforts was “Constructing the Team” by Sir

Michael Latham of 1994, and “Re-Thinking Construction” lead by Sir John Egan’s

Construction Task Force, both reports sponsored by the UK Government. In response to

the poor outcomes of construction projects (cost, time and fitness-for-purpose)

“Constructing the Team” proposed a need for better partnering and collaboration amongst

project stakeholders. “Re-Thinking Construction” focused on the benefits of a production

management approach to construction including a roadmap for industry transformation.

These efforts resulted in numerous bodies being formed that have since been integrated

into Constructing Excellence where best practice ideas are explored and shared among

industry stakeholders. BAA’s Terminal 5 project at Heathrow Airport has been central to

the development and implementation of lean construction in the United Kingdom. This

report starts with a case study on T5’s Civil Phase.

In July of 2005 Marcus Agius, chairman of BAA, said with some pride that the

construction of Terminal 5 at Heathrow airport was already 60% complete and that the

giant £4.2bn ($7.9b) scheme was on time and on budget. He hailed the precision with

which the terminal is being delivered as a remarkable achievement. Terminal 5 is now, in

37
Strategic Project Solutions contributed greatly to the case study on BAA/LOR. The management
consulting firm was consultant both to BAA and to LOR during and after the T5 Civils Phase.

195
August 2007, nearing completion, and is still on time and on budget. These are accolades

to which few other projects, either large or small in scale, can lay claim.

The extension to the Jubilee underground line was plagued by striking electricians

and opened nearly two years late, the Millennium Dome was grossly over budget for a

host of reasons (including numerous design changes) and the new Scottish Parliament

building complex was 10 times over budget. T5, as the new terminal is known, is a larger

and more complicated project than any of these schemes, and was preceded by a decade-

long planning battle, which has itself led to changes in the planning system for major

projects.

When complete, the terminal will be the largest freestanding building in the UK,

covering an area equivalent to 52 football fields at the western end of Heathrow.

However, the huge structure of the T5 building is just the most visible part of a

construction project that covers an area the size of London’s Hyde Park. As work goes on

fitting out the terminal building, there is just as much activity beneath, where a new

railway and tube station are being built alongside a multi-storey car park for 4500 cars.

Connected to T5 by tunnels are two satellite aircraft stands, each one the size of the

existing Terminal 4.

Last year 67m passengers used Heathrow airport, the biggest international

aviation hub in the world. By 2012, BAA estimates that the number of passengers passing

through could have grown to 80m per year. T5 will be occupied exclusively by British

Airways, allowing it to vacate space in the other terminal buildings.

The following quote is from the Royal Institute of Chartered Surveyors, October

2005

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http://www.rics.org/Builtenvironment/Engineering/Civilengineering/terminal_velocity_biz0905.html:

“After a 46 month public inquiry that heard 700 witnesses give 30 million words of

evidence recorded on 80,000 pages of transcript, ground was broken for Heathrow’s

new Terminal 5. Terminal 5 is a massive $7.9 Billion, 625 acre expansion to

London’s Heathrow Airport. When fully complete in 2011, T5 will provide Heathrow

with an additional 60 aircraft stands – about a quarter of which will cater for the new

Airbus A380. Over the life of the project around 60,000 people will be involved in the

building of T5. A total 37 million hours both on and offsite will be invested in T5.

The purpose of the T5 program is to increase Heathrow’s capacity from 60

million passengers per year to 90 million. The delivery of Terminal 5 is mission

critical for both BAA (the owner of Heathrow) and the U.K. Government. Firstly, at

the time of ground breaking, BAA’s market value was approximately $8.5 billion and

the program value $7.9 billion. Secondly, from the U.K. Government’s perspective,

T5 is vital as other countries were vying to have the first port-of- call into the

European Continent for air travelers.”

The civil phase of the program consisted of 3,500 craftspeople and a 2,500 person

support team, working on 80 concurrent projects. During the peak of the civil phase,

around 15,000 cubic meters of concrete was placed each week. Due to the location of the

project site, only one entrance / exit could be established. The site is surrounded by

operating runways on two sides and Heathrow’s other terminals (T1, T2 & T3) on the

third side. Through this access point, deliveries to site occurred every 30 seconds. Post 9-

11 security was also an issue as Heathrow is one of Europe’s primary terrorist targets.

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The location of the site limited onsite inventory of materials and equipment to one day or

less. In addition, start of construction onsite began before design was complete.

In order to ensure maximum flexibility when dealing with its supply network,

BAA elected early on to craft an agreement that 1) is based on cost-plus with “ring-

fenced” profit margins, 2) does not expose suppliers to excess risk and 3) focuses

suppliers on working towards the interest of all stakeholders. In fact BAA is itself taking

the huge financial and operational risks associated with the construction process.

"This is the key to the whole scheme running smoothly to schedule and to budget," says

Tony Douglas, managing director of the T5 project for BAA, adding that the government

and other procurers of complex projects should take note.” (RISC October 2005)

Lean Initiatives

The prime contractor on T5’s civil phase was Laing O’Rourke, who engaged Strategic

Project Solutions as management consultant. Together with BAA, they defined, designed

and implemented a production system that would ensure realization of the project

schedule while working to reduce cost. To accomplish this, the following process

(roadmap) was adopted.

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 Process roadmap for Terminal 5 Civils

Production System Definition

In order to determine the best possible approach for the design of the production system,

it is necessary to define the challenge. Strategic Project Solutions worked with the

program stakeholders to map supply chains and value streams, and to determine the

quantities of materials and resources required (demand) for the civil phase. As mentioned

above, the T5 civil phase consisted of eighty concurrent projects, 3,500 craft workers

supported by 2,500 engineering and administrative personnel. Because of the lengthy

public inquiry process, start onsite occurred prior to the completion of design.

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Additionally, during the public inquiry process agreements were made with the local

community to limit the flow of construction traffic from the hours of 7:00 AM to 9:00

AM and 4:00 PM to 6:00 PM. During these times delivery of equipment and materials to

and from the site was not permitted. The location of these projects resulted in one

entrance / egress with a delivery to site every 30 seconds. The T5 site is surrounded by

two operational run-ways, existing terminal buildings and a road and rivers that needed to

be diverted. Being unable to re-locate existing operational terminals and runways, BAA

allocated the area where the roads and twin rivers were located as the point of entrance

and exit. Because of the need to relocate the road and twin rivers, only a single point

could be established. The majority of work occurred after 9-11 resulting in intense

security measures compounded by the fact Heathrow is a known major terrorist target.

Space for storage of inventory onsite equaled one day or less. To better

understand the demand and potential behavior of the supply system, materials were

classified in three categories:

• Made to stock – Suppliers produce based on forecasted market demand

• Made to order – Suppliers produce standard products upon receipt of an order

• Engineered-to-order – Engineering must be completed prior to producing the order

High risk engineered-to-order materials were targeted for the most thorough analysis

including the use of supply chain and value stream mapping.

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 Value stream mapping suppliers

The production system was designed to mitigate variability as much as possible and to

use appropriate buffers to address any remaining variation. Based on the information

obtained in the definition phase, a production system was designed based on three key

elements:

1. Use of logistics centers and site stores to shield the site from outside variability

(that which came from outside the T5 program) and to allow “pulling” of

materials “just-in-time” to the site

2. Application of digital prototyping to integrate and validate design, to plan and

simulate operations, to create detailed bills-of-materials, and to drive numerically

controlled fabrication equipment.

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 3. Implementation of SPS|Production Manager to plan and control workflow,

material flow, and the flow of resources from raw materials supply, through

fabrication and preassembly, to final assembly at site.

Logistics Centers & Site Stores

Two logistics centers were used to shield the site from external variability and to allow

“pulling” of materials “just-in-time” to the site. Each logistics center served a certain

purpose. Colnbrook logistics center managed receiving and delivery of raw materials for

in situ concrete structures, for precast concrete, and also for fabrication, preassembly and

site delivery of rebar. Heathrow South logistics center provided pile cage fabrication, and

receiving and delivery of miscellaneous materials such as lumber, plywood, etc.

Initially the plan was to use nine site stores know as market places for management of

consumable items and small tools and equipment. Due to space constraints onsite the

program was able to deploy only one. In response, a secondary system of distribution was

created between the one market place and multiple site stores serving specific work areas.

This secondary system used the same methods and principles, including periodic milk

runs and small batch deliveries. In consequence, 2500 workers were provided

consumables and small tools with a 98% order fulfillment rate from a facility, the market

place, less than 3500 square feet in area.

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Overall logistics center design and flows

Colnbrook Logistics Center

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 Colnbrook rebar preassembly area

Site Stores & Marketplaces

The production management system, supported by daily production control meetings and

weekly forecast meetings for site and supply, was used to pull materials from engineering

through fabrication, delivery and site installation.

Site stores inventory control

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Digital Prototyping

In order to mitigate variability resulting from inaccurate engineering or associated bills of

materials, digital prototyping was implemented.

T5 Lean Metrics

• BAA reports an 8%-9% overall savings from planned expenditure for the civil phase

while achieving all major milestones on or ahead of schedule

• BAA also reports an additional savings for the subsequent T5C civil phase

Beyond Heathrow T5 Civil Phase

The approach and accomplishments of the Heathrow T5 civil phase has become a model

for other organizations considering the lean journey. Based on the experience of T5,

Laing O’Rourke has made lean a key element of their business philosophy, embedded in

their company vision:

• “We will be the company of first choice for all stakeholders,

• We will challenge and change the poor quality image of construction worldwide,

• With leanness and agility we will adopt work processes to compete with world leading

businesses”

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They have used lean to improve project outcomes and as a basis for differentiating

themselves in the market. Through this approach they have secured the position of being

the UK’s largest privately owned construction firm employing over 23,000 employees

worldwide with offices in UK, Germany, India, Australia and United Arab Emirates. It

has allowed them to secure high profile projects such as the upcoming London Olympics

and new Dublin Airport. Laing O’Rourke’s approach at Heathrow T5 provided the basis

for GS E&C’s rebar production system outlined in this report and has been the impetus

for numerous other project innovations within and beyond the UK construction sector.

Lessons Learned

Improving project outcomes is a sociotechnical challenge.

Lack of leadership is often attributed to less than effective implementation. This is based

on a false assumption that change can be driven from the top down through mandates and

announcements. However, the top down mandate approach can result in unnecessary

resistance. Additionally, solutions that are not linked to a desired benefit, do not address a

specific challenge or do not take into consideration stakeholder requirements, will be

difficult to implement.

Another fallacy is thinking that people can be trained by sitting in classrooms

rather than learning by doing. Education creates awareness and works towards

understanding. Training enables further understanding and begins to develop capability.

Education and training supported by experience results in competency.

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 It is important to recognize that people implement what they help to create.

Stakeholders responsible for operating new approaches must be involved in the definition

of the problem or the opportunity and provide input into the selection and design of the

solution. Additionally it is important to remember that, if there is not agreement on the

problem chances are there will not be agreement on the solution.

When new approaches are being implemented, people go through a personal

transformation process starting with denial, then resistance, then exploration, and finally

commitment.

Phases of change

Leaving conflicting legacy systems (e.g. software, compensation, etc.) in place will

inhibit implementation of new approaches and delay progress.

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Project objectives are often at odds with service provider objectives

Owner operators are looking to satisfy a business, political or social need and in so doing

better serve their customers. Service providers are looking to achieve a return on

investment for undertaking the project. Service providers do this by optimizing the

utilization of their resources. If the commercial model does not align project objectives

with service provider objectives then, service providers may be forced to find ways to

ensure their return on investment by locally optimizing their solution. The symptoms of

local optimization include; over or under staffing the project, building excessive

inventories or using time to level production. The Heathrow T5 agreement addressed this

issue by placing the risk with BAA, the owner and enabling the suppliers to deliver based

on project objectives while ensuring adequate return on investment enabling project

optimization and mitigating local optimization.

Recommendations for those considering Lean in Construction

1. Consider projects as temporary production systems that deliver end-user customer

benefit. Design, deploy and continuously improve the project to effectively deliver end-

user customer benefit.

2. Understand that enhancing end-user customer benefit through improving projects

effectiveness is a sociotechnical challenge – avoid mandating an approach or making

announcements but rather get stakeholders involved in the process (definition of the

challenge and creation of the solution). Once the solution has been determined and agreed,

put people to work where they can learn by doing. Remove conflicting legacy systems.

Facilitate individuals as they progress through the personal transformation process.

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3. Create the environment by aligning service provider compensation with project

objectives. Avoid placing risk with those that are not best suited to manage it.

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C.3 General Motors Case Study

Background

General Motors Corp. the world's largest automaker, has been the global industry sales

leader for 75 years. Founded in 1908, GM today employs about 327,000 people around

the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 33

countries. GM's largest national market is the United States, followed by China, Canada,

the United Kingdom and Germany.

GM is also a major builder of facilities in which to manufacture its automobiles

and parts. As an owner, GM is trying to get the construction industry to move more

towards lean construction. They have seen the effects within GM and they are trying to

gain the same benefits from the construction industry.

Lean initiatives: Why the company adopted lean

In the early 1980’s GM realized that Toyota had a different operating system that was

uniquely effective and GM either had to learn something about it or be buried by it. They

then went to develop a joint venture with Toyota at the plant at Fremont, California.

They started production in 1984, trying to learn from Toyota at this joint venture

operation.

GM then sent the people from all over GM to the plant to learn about lean and

bring the ideas home to other GM plants. They had limited success, most notably were

materials management and the shift from push manufacturing to pull manufacturing.

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 In 1996, commensurate with the launch of 4 new assembly plants GM created the

GM Global Manufacturing System (GMS) and began deploying it throughout GM’s

manufacturing operations. In 2003 it was decided to take GMS beyond the factory floor

and into the support functions. They wanted to try and apply lean techniques to the

support functions of GM, not just the manufacturing processes. GMS is comprised of 5

principles and 33 elements that together create a lean operating system. The focus of this

paper is on this application in the construction business.

Lean Preparation

The first thing that GM did was to value stream map two core processes – the Project

Planning Process and a portion of the Project Management Process. They then tried to

identify the waste involved within the processes. This was a huge undertaking. The

goals were to try and derive the same benefits that lean had brought to manufacturing.

GM has internal training for their capital projects group, but they do not train their

contractors or suppliers. They believe that it is the responsibility of the construction

firms to apply lean within themselves. GM stated that they specifically look for

contractors who are already applying lean principles to construction and they try and give

more work to the companies who are successful at doing this.

Two most recent and successful projects involving lean principles and practices

are detailed in the next section. It is important to note that both projects were design-

build projects that both had a guaranteed maximum price (GMP).

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Lean Projects

Two of the most successful and most studied projects at GM are the Lansing (Michigan)

Delta Township, or LDT plant, and the addition to an engine plant in Flint, Michigan.

Both of these projects were detailed in an October 10, 2004 ENR (Engineering News

Record) cover story.

GM’s major innovation on both of these projects revolved around the use of 3D

modeling of the entire project. This is not to be misunderstood. The entire project, down

to pipe hangers and bends in duct work were designed prior to the start of construction.

The design process was dominated by the collaboration of all of the engineers and

contractors involved in the construction process.

This level of collaboration before construction was necessary. The projects were

modeled, in their entirety, prior to being built. The plans were then locked, and all of the

contractors on the job were required to build exactly what had been designed. There

were to be no changes made during construction as they would most likely affect other

work further down the line. This lead to “as-built” drawings being produced before the

project began. All of the overlaps and possible problems were worked out, in the 3D

model, prior to building.

The 3D modeling process allowed several of the contractors involved to pre-

fabricate materials, to specifications, off-site. HVAC contractors could build entire duct

assemblies offsite, show up on the day they were scheduled to perform the work, and

simply attach the assembly where it was supposed to fit into the larger plan. The time

saved in pre-fabricating components also resulted in less time needed on the construction

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site. This in turn led to less equipment and personnel being needed on the construction

site.

Lean Principles Applied

1. Value Stream mapping

Representatives of GM repeatedly stated the value of using the Value Stream Mapping

tool. They continually apply it to all internal processes and try to drive the waste

identified out of the value stream.

The value stream mapping of their core processes led to the application of lean to

the construction process at GM. The waste identified within the construction process was

seen as a major source of possible savings for GM. Again, Value Stream Mapping was

the most cited lean technique when talking about with representatives of GM about lean

construction.

2. 3D design development as a lean enabler

Lean and 3D design development were often used interchangeably by people within GM.

Representatives of GM were continually noting that the detail and processes involved in

developing 3D designs were often enablers for other lean principles. Within GM Capital

Projects there is a culture of “Before 3D” and “After 3D”.

GM has placed a great deal of emphasis on the effect of 3D design within the

construction process. They rely heavily on the detailed designs and collaborative design

efforts that 3D allows.

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 GM decided that all design would be done in 3D following the successful

deployment of process equipment design in 3D. The process equipment that was going

to be housed in the buildings would be designed completely using 3D design techniques,

and so would the buildings.

The benefits that are derived from the 3D design processes are numerous. First,

the design is a complete design. The past practice of “roughing in” mechanical and

electrical work, and letting the contractors deal with the collisions and design problems in

the field was eliminated. On a weekly basis all of the design work was run through a

collision identification process, and design problems could be identified before a

contractor began work. This resulted in what GM called an “as-built” drawing prior to

the construction of a building. Enforcing that the contractors were installing equipment

and doing work according to plan was very important. It was not an option to change the

plan in the field. The plans had already taken into account all of the other trades and

work that had to be done and the structure was to be constructed exactly as it was

designed. There were very few changes to the plans, and where there were changes to the

plans they had to be very carefully considered.

This approach to design let the contractors take advantage of several lean

principles. The first was JIT, or just in time delivery of materials for the projects. The

materials that were needed for construction were known in their entirety prior to the start

of construction. This let the contractors know exactly what they would need to be able to

complete any part of the project. There was no need to have extra materials on hand in

case changes had to be made.

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Lean Metrics

The only metric GM currently track that is lean related, is the percentage of new major

projects that use 3D Design and BIM (Building Information Modeling). GM has made

this its new common process. GM had previously tracked mandatory training supporting

its lean GMS (Global Manufacturing System), first to executives, then to managers, and

then to all employees. There was an 8-hour GMS Overview course, an 8-hour course on

VSM (Value Stream Mapping), and an 8-hour course entitled Simulated Work

Environment. The latter is a mini assembly line where people are assigned tasks to build

small wooden vehicles and go through improvements on flow and workplace

organization to physically see the lean affects. Each executive was also required to

initiate a VSM workshop on one of their core processes, to promote the application of

lean beyond manufacturing, to the rest of the enterprise. Select manager-level employees

also receive extensive additional training to assist its full-time GMS Integration Center

staff in facilitating VSM workshops.

Lessons Learned

GM representatives said that they have no obstacles or barriers to the implementation of

lean construction. They said that the contractors are facing the obstacles. They cited the

reluctance of contractors to learn and apply lean thinking and principles to projects. They

summed up their difficulties in trying to push lean construction as external. They said

that the hardest thing for them to overcome was contractor reluctance to learn, understand

and implement lean.

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Success Factors

• Having enough fortitude to go out and understand the forms of waste and apply

the tools that you have available applying these things to value stream

• Having qualified contractors who understand lean principles.

• Helping contractors build their lean capability. GM has conducted symposiums

with contractor executives to promote awareness of lean construction and 3D

Design and encourage them to pursue their own path. Our engineers have also

worked with some of our architect/engineer firms to develop the expertise in 3D

BIM (Building Information Modeling)

Recommendations for those considering implementing lean in construction

GM’s advice for companies who wish to go lean was to seek out and find experts on the

subject, and then learn from them. In their words, there are experts on lean out there, and

contractors need to be able to go out and find them.

Their other piece of advice was to make lean your own. There is no lean manual

that is to be followed to the letter. Each contractor needs to look at the tools that are

available and apply the tools where they think they can reap the most benefits within their

individual firm. There is no right answer for every contractor, and the contractors

themselves need to be able to recognize this.

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C.4 Sutter Health Case Study

Sutter Health began with a bang, announcing its commitment to lean delivery of its

capital program March 23-24, 2004 in a 225 person meeting with representatives of its

design and construction services. With the help of consultants, they held a series of these

meetings devoted to education and discussion. In early 2005, both Sutter Health and its

supplier community realized that no one could tell them step-by-step how to do lean

construction. Suppliers realized, however, that Sutter was offering to pay them to

experiment with ways of improving performance, and was open to making changes

needed to assure supplier profitability under new conditions, roles and responsibilities. A

group of these Sutter Health service providers asked the Project Production System

Laboratory at Cal to be a ‘learning laboratory’ for them, as they collectively

experimented with lean methods. That learning is now actively underway, with four

major hospital projects launching in Summer 2007; each of them exploring lean methods

such as target costing (target value design in Sutter speak), set based design, cross

functional teams, built-in quality, the integration of lean methods with nD computer

modeling, and the application of Last Planner® in every project phase.

Background

Sutter Health is a healthcare organization composed of affiliates, which comprise 26

hospitals in Northern California, as well as numerous ambulatory treatment, medical

office, administrative and logistical support facilities serving over one hundred

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communities in Northern California, Oregon and Hawaii. Key people leading Sutter

Health’s facilities development:

• Bob Mitsch, VP, FPD

• Dave Chambers, Planning

• Dave Pixley, Project Management

• Morri Graf, Project Controls

Why did Sutter Health decide to ‘go lean’?

The initial driver for Sutter Health’s lean journey was the California regulatory

requirement that health care facilities be seismically upgraded to assure capability of

continuing in service after an earthquake. That requirement not only created an

aggressive time line for completion of their $6 billion capital program over 8 years, but

placed Sutter Health in competition for resources with other healthcare companies

obligated to meet the same requirement. The ultimate driver was the desire to improve

performance in the delivery of capital projects. The Director of Project Management of

facilities development had experienced success with collaborative approaches on projects

that he directly managed. He was after stability across the capital program; he didn’t want

to have to balance disasters with successes. Will Lichtig of McDonough, Holland &

Allen, outside counsel for Sutter Health, had a personal connection to the Lean

Construction Institute and brought together Sutter and the Institute’s thinking and

methods of applying lean to construction.

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History of Lean Implementation

Timeline

• Fall 2003 Pixley, Graf & Lichtig attended a Lean Construction Institute workshop

on lean and contracting

• Sutter Health engaged Lean Project Consulting

• Exploratory workshops with the Eden Hospital project

• MasterMind discussed lean readings. Members signed Manifesto

• March 23-24. 2004 Lean Summit-issue of Manifesto

• March 25, 2004 1st meeting of the Executive Leadership Group, about 45 of the

leaders of each service provider.

• May, 2004 Launched 5 pilot projects to implement Last Planner®

• 10/15/04 1st Vendor Forum: Collaborate, Really Collaborate

• 11/22/04 FPD/Vendors Strike Force meeting

• 12/8/04-2nd Vendor Forum: Reliable project delivery system

• Early 2005: Sutter Health project managers’ lean self assessments

• Early 2005: David Long, Senior Project Manager, appointed Sutter Health FPD’s

Lean Coordinator

• 3/22/05 Construction Documents Strike Force meeting

• 3//31/05-3rd Vendor Forum: Target value design

• Early 2005 realization by suppliers that Sutter was offering to pay them to

experiment with ways of improving performance, and was open to making

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 changes needed to assure supplier profitability under new conditions, roles and

responsibilities.

• Mid-2005: Another turning point-Dave Pixley’s challenge to have all Sutter

Health projects on the Last Planner® system by July 4, 2005.

• 2005-6: Fairfield and Camino Medical Office Building projects—successful lean

project delivery implementations

• 2007: Launch of 4 new hospital projects, each employing the Integrated Form of

Agreement and all lean methods recommended by academics and consultants,

including a Plan Validation phase in which key members of the project delivery

team help Sutter Health validate and improve their business plan for the project

Shortly after the Lean Construction Institute workshop, Sutter Health’s Facility Planning

& Development engaged Lean Project Consulting38 and also formed a small group of

people from their service providers —people who were important in making change

happen in the community—people who ultimately signed the Manifesto, including Rick

Linsicombe (Ellerbe Beckett), Dave Martino (SOM), Kyle Roquet (Skanska), Dave

Chambers (chief architect for Sutter), Dave Pixley, Frank DaZovi (Turner), and Lowell

Shields (Capital Engineering). This group functioned as a MasterMind. They read and

discussed 5 documents on lean over a 5 week period in the 1st qtr of 2004, such as Spear

& Bowen’s “The DNA of the Toyota Production System”.

38 Lean Project Consulting’s charter was to make Sutter project managers better consumers of lean project delivery, but to rely on
vendors as experts.

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 Lean Project Consulting facilitated exploratory workshops at Sutter Health’s Eden

Hospital project, exploring with that project team how they might collaborate and work

with each other differently. Several meetings were held on this project, but the response

was not good and the project stalled. At this time, Lean Project Consulting also began

developing the Manifesto, which was presented to the MasterMind with a proposal that it

be sent out with an invitation to Sutter Health project managers and to their service

providers to attend a Lean Summit.

In May 2004, implementation of the Last Planner® System was started on pilot

projects, selected for type, location and involvement of key vendors (service providers). 5

projects were selected:

• Davis medical office building: Construction Manager/General Contractor-Turner

(At this time, Turner had about 1/3 the total capital program.) Architect – Boulder

Associates who handles a significant portion of Sutter's medical office building

design. Sutter Project Manager: David Long. Kickoff mtg held in May 2004.

Completed 7/05. Last Planner® system implemented successfully.

• Modesto 8 story bed tower: Construction Manager/General Contractor-Skanska.

Sutter Project Manager-Bruce Russo (contractor to Sutter Facility Planning &

Development). On going. Last Planner® system implemented successfully.

• Delta: Construction Manager/General Contractor-HMH Builders. Sutter Project

Manager: Tom Mucha. Then in mid-construction and in trouble. Completed Fall,

05. A Last Planner® system failure, but changed mood of team and some

behaviors.

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 • Roseville emergency department: Architect/Engineer-HGA. Construction

Manager/General Contractor-Unger Construction. Sutter Project Manager-David

Long. Kickoff for the pilot on both Roseville projects occurred 6/16-19/2004.

Completed 8/05. David Long: “a complete Last Planner® system failure”. Some

value out of phase scheduling, but balance of Last Planner® system not adopted

by Unger.

• Roseville parking structure: Design-Builder --HMH Builders. David Long: “a

partial success and, with the other pilot project at Roseville, set the stage for

successful implementation on future Roseville projects; e.g., the Bed Tower

Project."

In parallel with the pilot projects, Lean Project Consulting began to conduct training of

FPD project managers. A part of each Facility Planning & Development monthly meeting

was devoted to training. There were also weekly Friday morning conference calls,

involving assignments such as keeping promise logs and readings.

Three Vendor Forums were held to create a sense of community and to get shared

understanding of basic ideas. 10/25/04-Collaborate, Really Collaborate. 12/8/04-Reliable

project delivery system. 3/31/05-Target value design.

In the first Vendor Forum, most of the discussion was around commercial issues,

which service providers presented as obstacles preventing changes in practice. In an

effort to overcome and help shift away from that focus, an FPD/Vendors Strike Force

meeting was held 11/22/04. Subsequently, in the 2nd Vendor Forum, Will Lichtig made a

presentation on Sutter’s contractual basis for its delivery model, which successively

shifted the primary focus off commercial issues.

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 By the end of the third Vendor Forum, Sutter was getting feedback that folks were

tired of going to meetings. Scheduled forums were cancelled and vendors were

encouraged to participate in the 9/2005 Lean Construction Institute Congress.

A Construction Documents Strike Force meeting was held 3/22/05 to figure out how

to produce construction documents differently. Sutter Health found that subcontractors

were not saying in public what they were saying in private; i.e., that they should do the

detailed drawings—though on the Mills project, subcontractors actually did produce the

CDs.

Another component originally envisioned was an Executive Leadership Group that

met regularly—original and subsequent signatories to the Manifesto. This group met

originally at dinners after the Vendor Forums. David Long: “These dinners may have

been more effective than the Vendor Forums.”

Ultimately these evolved into the Lean Coordinators’ monthly meetings, which

resulted from actions taken after the CD Strike force meeting to understand why subs

weren’t speaking up. At about the same time, Sutter Project Managers began saying

“We’re tired of being talked at.”, the response to which was “Then how are you going to

lead yourselves?”, which led to Sutter Project Managers being asked to do a self

assessment of their awareness and competence with lean in the beginning of 2005.

According to David Long, “Project managers were mostly resentful. Few were prepared

to be proactive. Project managers wanted to be ‘…given the tools’. ‘We still don’t

understand why we need to change.’”

A turning point in acceptance came from a combination of failures of traditional

practices and success of new. Also leaders converted and spoke up.

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 • After a reverse phase scheduling session on Project Manager Oren Reinbolt’s job,

he declared it valuable. Oren’s standing among his peers made this a key event.

• David Long’s success at Davis Medical Office Building.

• Folks at Roseville saw value in reverse phase scheduling.

• Steve Hunter of Turner Construction and Dean Reed of DPR Construction

reported success to Sutter Health’s FPD Project Managers meeting.

• Budget busts disclosed breakdowns in current practice. Lubor Mrazek and Oren

openly discussed ways to reduce cycle time for estimating.

• There were also comments about projects where reverse phase scheduling

revealed critical oversights.

On projects that did not fail, nay sayers dominated. Because of the previous educational

efforts and engagement, breakdowns could now be seen as failures of a traditional

approach to project management, as opposed to simply triggering efforts to do more of

the same, or to punish the innocent and move onto the next project. The lean context gave

Project Managers an alternative to being helpless victims of fate. Oren made a new

request of Turner to have estimators at every meeting. This stresses current capabilities

and capacities—an ever more visible consequence of the transformation to lean project

delivery. Previous behavior of Construction Manager/General Contractor project

managers was to be a “carrier pigeon”, shuttling messages back and forth between project

teams and the doers/decision makers. One thing becoming evident is that Construction

Manager/General Contractors have neither enough competent estimators nor enough

competent doer/managers.

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What Lean Principles and Methods were Applied?

The fundamental principles adopted by Sutter Health were expressed in the 5 Big Ideas,

developed with help from Lean Project Consulting, and signed by representatives of

Sutter Health’s service providers as shown below.

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Lean methods used on Sutter Health projects include relational contracting, target value

design (target costing), set based design, built-in quality, Last Planner®, reverse phase

scheduling, visual controls and cross functional teams.

Figure C.4.1 is from the Fairfield Medical Office Building Project, on which Boldt

Construction was the Construction Manager/General Contractor. This example of visual

controls shows how the team performed in its efforts to control cost within budget. It is

apparent that the cost estimate declines from beginning to end of the project, contrary to

the more common increase over time as estimators react to additional design detail. This

is in part a function of better conceptual estimating, facilitated by the inclusion of

builders on the design team, which applied the method and tools of target value design.

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 Estimate History

Another key method employed on Sutter Health projects is relational contracting. Will

Lichtig developed an “Integrated Form of Agreement” intended to facilitate pursuit of the

lean ideal—deliver the project while maximizing value and minimizing waste. The

Agreement was formed around the Five Big Ideas and is summarized in the following

figure.

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 The Integrated Agreement on 1 Page

The following is excerpted from Lichtig’s presentation to the American Bar Association

(Lichtig, 2005):

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What results were achieved?

The following is a Lessons Learned report from DPR Construction on its experience at a

Sutter Health project, the Camino Medical Office Building, where DPR was the

Construction Manager/General Contractor. The project was completed in May, 2007.

The report illustrates not only the results achieved on that project, but perhaps an

even more important result—the drive for continuous improvement. There is no Toyota

in the construction industry. Everyone is learning through doing and trying things out.

One remarkable consequence of Sutter’s challenge to its service providers is that

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competitors are sharing the results of experiments. A culture of learning is replacing the

traditional culture of knowing.

Further testimony to the demonstrated value in successful implementation of Lean

ideals is the fact that numerous companies in the Sutter Health vendor community have

themselves gone through a “Lean transformation”, intending to operate their own

companies in a Lean way and delivering all of the projects they do, whether or not with

Sutter Health, on a Lean basis.

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C.5 Integrated Project Delivery (IPD™) Case Study39

The IPD case study was constructed from multiple sources:

• Notes and presentation slides from a meeting between IPD representatives and

CII Research Team 234 in Orlando February 9, 2006

• An interview by University of Cincinnati Assistant Professor Cynthia Tsao and

her graduate student Jilei Wang with the leaders of Westbrook Mechanical

Contractors: Owen Matthews, Clay Harem and James Roberts

• Matthews and Howell (2005)—a description of IPD and its connection to

relational contracting

• A summary of Matthews and Howell (2005) produced by Jilei Wang.

Why did your company decide to ‘go lean’?

Westbrook is a 55-year mechanical contractor in Orlando, Florida. During their history,

no matter whether they worked as a subcontractor or a general contractor, they noticed

that the promises of cooperation and teamwork never reached their expectations. They

found that the traditional contractual structure causes four systemic problems:

z Good ideas are reserved and the opportunity for innovation is lost. Each of the

trade contractors hides their best ideas in order to get an advantage in bidding.

39
IPD is trademarked by Integrated Project Delivery

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 z The contracting structure hampers cooperation and innovation. Pages of

subcontracts were mostly remedies and penalties for noncompliance. These

contracts stood in the way of cooperation and innovation across trade boundaries.

z Lack of coordination. Some projects had no planning systems linking the various

subcontractors.

z Pursuit of local optimization. Each subcontractor tried to optimize its own

performance at the expense of both other subcontractors and the client.

In seeking answers to these problems, they have been working for years with other design

professionals and construction practitioners trying to find a better way to deliver projects.

The owners of a number of design firms and construction firms have met for breakfast

twice a month to develop a solution and have built a relational contracting method, the

Integrated Project Delivery or IPDTM, for their business.

“It provides opportunities to improve our company as a whole in terms of both quality

(i.e., quality of the product) and efficiency (i.e., production efficiency). It certainly allows

us to maximize our most limited resource – people. It makes sense for us to try to utilize

lean whenever and wherever we can.” (James Roberts, VP, Westbrook Mechanical

Contractors)

How did they go about it?

To ‘go lean’, Westbrook and several other contractors formed an IPD team which is

aimed at maximizing value and minimizing waste at the project level. The IPD is actually

a relational contracting method employing two principles to govern the team relationship.

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 1. All primary team members (PTMs) are responsible for the provisions of the prime

contract with the client. This single contract binds the IPD team to the client. It

defines the scope, schedule and cost of the project. One entity signs the prime

contract.

2. All PTMs share the risk and profit for the project performance. With a ‘pact’, all

PTMs bind themselves to each other and to the fulfillment of all the requirements

of the prime contract, sharing together in the cost and profit in accordance with a

pre-established formula. Each member is reimbursed for all verifiable direct costs;

profit is calculated at the end of the project and divided based on the formula.

With IPD’s relational contracting method, the goal of “one for all and all for project”

seems to be achievable.

What is IPD?

“It is helpful to distinguish between IPD Inc. and the IPD process. Within IPD Inc., each

team member is a shareholder. It does not matter if the Client wrote in ‘Westbrook’ or

‘IPD Inc.’ because the contract means the same to our team members. On Westbrook-led

projects, team members enter into a partnering agreement. On IPD Inc. projects, we

automatically share all project responsibilities. IPD Inc. is set-up as a non-profit company

because we distribute the profit of each project. An Architecture-Engineering-

Construction (AEC) industry problem today is that we always look at what could

possibly happen legally and then begin to write language to avoid potential problems.

With IPD, we do have a contract with the Client and it is a proper contract. Since all IPD

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team members are bound to the contract, we are not worried about a team member

backing out.” (Owen Matthews, CEO, Westbrook Mechanical Contractors).

“We apply lean to construction project management. Traditional project management is

riddled with incentives that encourage local optimization, and general contractors (GCs)

protect themselves from the resulting problems with contract language. This has a huge

impact on specialty contractors like Westbrook, especially in terms of schedule because

schedules are usually not realistic to begin with. There are likely other less obvious

examples of the impact of prioritizing local optimization, but they may be difficult to

quantify. Regardless, whenever the relationship between project participants becomes

adversarial on the job site, it is going to have a negative impact on the overall project.

PTMs are like mountain climbers. If one team member makes a mistake, we all pay for it.

If somebody falls, we pull him up. We do not just let him fall down the mountain.”

(James Roberts)

Key provisions of the IPD agreement:

• The primary team members each agree to be bound together accepting full

responsibility for all of the terms and conditions of the prime contract, sharing

together in the cost and profit in accordance with a pre-established formula. Each

member is reimbursed for all verifiable direct costs that he incurs. Profit is

calculated at the project level at the end of the project and divided based on the

formula.

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 • Each of the primary team members provides a certificate of insurance in the form

and amounts as indicated in the prime contract.

• Each primary team member agrees to open their books pertaining to this project to

the other primary team members and to the Client.

How does IPD align incentives?

• If one primary team member makes a mistake each will pay for it

• Cost reductions anywhere are shared among those in the Partnering Agreement

and with the Client

• An overrun on the project will reduce the gross profit available for distribution

How do you determine the positions of the team members?

“We establish team positions early in a project and based on the nature of the project.

Each project is different. Typically, the architect will lead the design process, and he will

hire all consultants. Since the OUC North project was mechanically and electrically

intensive, the architect just needed to “box” the house with mechanical and electrical

equipment. Then, it made more sense for the mechanical engineer to take the lead role in

design development.” (James Roberts)

How was the formula determined for profit distribution?

“We developed a formula that distributes profit based on direct costs. All PTMs brought

in their accountants to develop a formula that seemed fair to everyone. We have a

formula that weights labor, materials, equipment, and subcontractors differently. Labor

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has the greatest amount of risk. For any contractor, the more labor he has on the project,

the larger percentage of profit he gets. That works well. We use the same formula for

each project. We distinguish materials and equipment differently. For us, ‘materials’ is

something like mechanical pipe; ‘equipment’ includes large pieces of machinery that we

will need to purchase for the project. If somebody wants to replicate this, they just have

to develop their own system that works for them.

In a traditional project, the GCs or the construction manager puts a small 3% to

5% fee on all their costs, most of which are from subcontractors. This ends up amounting

to a very large sum of money. The IPD approach is unique and challenging in that the GC

is not getting mark up on the large trades like electrical, mechanical and plumbing. As a

result, he has to get a larger percentage on his direct materials, labor, equipment and other

subcontractors to make up for that the difference. It really took some work to make sure

that the GC would be sufficiently compensated in the IPD process.

The profit distribution formula must be adjusted based on the nature of project.

For example, in a power plant, there might be a lot of big pieces of machinery. In that

case, the weight of equipment should be adjusted to make the formula fair to everyone.”

(James Roberts)

What specific lean tools and methods were used?

• Don’t locally optimize—make decisions that add value and are for the overall

good of the project.

• Last Planner

• Reverse phase scheduling; pull versus push

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 • JIT deliveries

• Visual management

• LRM—taking action at the last responsible moment

• Target costing

What happened?

The IPD adds value in the design process by encouraging good ideas and collaboration.

This plays a big role in reducing project costs and enhancing the “value engineering”

process. Effective solutions can be devised very quickly without worrying about who will

pay for it. In addition, it facilitates cooperation, innovation and coordination. Since all the

primary team members have a common goal, they work in harmony instead of becoming

separate warring factions. Some examples of success:

z The use of the Last PlannerTM brought projects in under schedule.

z Many innovations occurred during the project process.

z Shared manpower occurred throughout the project and between all trades.

z Problem solutions to changes and omissions were quick and efficient.

z Redundant effort and expense were avoided.

z Job site safety improved—there has never been an accident on an IPD project..

z Rental equipment was shared.

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“When we first started focusing on prefabrication, it was hard to bring everybody on

board, even within our own company. The idea was very tough to sell. Our field guys

were used to doing all the pipe and welding together and doing all the work in the field. It

took us a month to get our field guys to bring work from the field into the shop. However,

after they saw the modified work, they saw how much easier it was for them to do their

jobs.” (Clay Harem, Project Manager, Westbrook Mechanical Contractors).

“It was hard for the GC to let go since they would not be in control as before. The GC

wanted to direct the show. On the OUC North Plant, it was actually the mechanical

company driving the project. Although they were not in charge, the GC had a good team

on the OUC project and did an excellent job.” (Clay Harem).

North OUC Plant results

“The goal was to design and construct a 60,000-ton chiller plant with a $6 million budget.

The demolition of two existing buildings on the site was not completed until January 7,

2004. There was also a 6-week delay due to Orlando’s architectural review board – the

Downtown Development Board (DDB). This project was built in the commerce section

of Orlando, so the plan had to be reviewed by both Orlando’s Building Department and

the DDB to make sure it fit within the master plan developed for that area. The reviews

were a little frustrating and impacted our work. We had to accommodate this disruption

into our schedule and restructured the process so that we could still meet our plan. The

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 Trading Ponies for Horses

The general contractor backfilled and compacted to an elevation 30"

below grade and the site was turned over to the Team Member responsible

for the electrical construction who laid 1 mile of 4" conduit without the

need for any excavation. Seeing the entire grid laid out “above ground”

as it were afforded the opportunity for accurate layout and verification.

The GC then came back in and backfilled to grade using fire hoses to

wash fine aggregate in and around the conduits. This innovation saved

two weeks off of the schedule. Howell & Matthews (2005)

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reviews impacted us financially as well. They asked for architectural modifications to the

building which resulted in $200,000 of additional work. We had to work the schedule and

budget issues out with our customer and were able to expedite the project by getting the

city to split the permit.

We are most proud of this project because of the quality of the finished product.

Although we finished the construction in a very short amount of time, we did not

compromise the quality of the project. As a matter of fact, we believe that the bar has

been raised in terms of quality and were awarded the Gold Brick Award for Quality for

this project.” (James Roberts).

North OUC Plant

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PROJECT SCHEDULE:

• Contract Date 12/30/2003

• Design Development (DD) Complete 01/26/2004

• Demolition Complete 01/07/2004

• Permit Issued 04/14/2004

• Work Begins on Site 05/04/2004

• Plant Ready to Operate 07/28/2004

This schedule performance was possible due to the relationships amongst team members

which fostered a common team commitment to the project.

PROJECT BUDGET:

• GMP $6,000,000

• Final Price $5,400,000

• IPD savings against GMP $600,000

The GMP was set after the DD documents were complete and reflected the IPD team’s

best value engineering. The savings of 10% was realized during construction.

How did it work out for the IPD team member companies?

• Margins may have been average for most, but more predictable.

• More fun, more rewarding professionally.

• Got paid for everything done except up front work.

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What you have learned from implementation?

“It was pretty tough to sell the Last Planner System to everybody, especially people that

are unfamiliar with how it works. The LPS makes things tough and you have to be

flexible by getting people on board slowly so they can see the value of it. When you hold

team members accountable, they do want to perform. The difficulty lies in getting them

to do the paperwork, their jobs, and keeping their commitments.” (Clay Harem)

z Some companies are still used to the old self-preservation concepts instead to

accepting the IPD concept.

z It needs time for old habits to die away. Not everyone is suited to work in the

IPD environment. Those assigned to work on IPD projects must be carefully

selected and prepared for the new rules.

z With IPD, the value engineering is very strong and effective. This offers

powerful benefits for the client but the benefits to the IPD team is difficult to

quantify. The IPD only benefits from cost savings after the budget is developed.

z Working with non IPD members to expand the team.

What would they do differently if they could do it over again?

“We would have probably selected a different GC as our initial team member to begin

with. They were honest people and trustworthy, and from a business standpoint, they

have been great partners. However, they did not share the same vision as us and they did

not share the same values in the design-build approach to project delivery as we did.

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They were purely Construction Managers (CMs) who indicated the desire for more

design-build work. The warning sign in hindsight was that they were never really

committed to IPD from the beginning. We had hoped that since we knew them as

individuals, we could trust them, so we were willing to take that gamble because they fit

in every other way.

However, the GC made negative comments during IPD meetings. Whenever we

sat down and discussed potential business opportunities that did not fit the traditional

mold, we started getting negative comments from the GC like, “No, the customer would

not buy that.” or “No, you cannot sell that to a customer.” Their comments were more

negative than constructive or positive.” (James Roberts).

How do you plan to further improve the IPD process?

z Invest time in marketing.

z Capture lessons learned, standardize and document processes, and educate.

z Streamline administrative processes.

z Can reduce effort involved in tracking costs?

z Formalize the operating procedures.

z Develop metrics to improve performance.

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C.6 Boldt Construction

Background

The Boldt Company is made up of three separate divisions: Boldt Consulting Services,

Oscar J. Boldt Construction and Boldt Technical Services. Boldt described its business in

2005 as 30% Healthcare, 20% Commercial and Industrial, 20% Power and Industrial,

20% education, 10% Pulp and Paper.

Paul Reiser, Vice President, Production and Process Innovation, describes Boldt

as having 7 regional offices, each with dozens and sometimes hundreds of projects

running out of each office. Mr. Reiser also described his firm as being in different states

of lean implementation. He said that some parts of the company were not using any lean

principles at all. Some projects were using Last Planner® successfully and some were at

the cutting edge of lean implementation using target costing, and similar advanced lean

principles.

Lean initiatives

In 1998, Paul Reiser, a vice president at The Boldt Co., began his search for ways to

increase productivity at his Appleton, Wis., general contracting company. He found "lean

construction management," an approach to building that uses factory-based

manufacturing principles to streamline operations and increase customer satisfaction.

Boldt was not in a "crisis" state when it approached the Lean Construction

Institute, but was looking for a way to increase job site productivity.

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 Mr. Reiser expects that competitive edge to come from promising and delivering

projects faster and better than competitors, ultimately increasing the amount of work that

Boldt does without increasing its resources. Those kinds of outcomes should arrive very

soon, he says.

A 20-year industry veteran, Reiser was attracted to Lean's principles for three

reasons, "First, Lean is simply systematically applied common sense. Second, it is

counterintuitive. Unlike anything I've seen before, it causes us to rethink how we manage

work. And, finally we saw it as an opportunity to deliver high value facilities to the

marketplace in shorter time."

Lean Preparation

Boldt started lean implementation in 1999. They started with the introduction of the Last

Planner® System (LPS). Boldt started small with 5 projects. They saw some success

and then expanded it soon to include over 20 projects. By 2002 there were over 200

projects within Boldt using lean principles. These projects were geographically located

close to there headquarters in Wisconsin.

Between 1999 and 2002 Boldt describes its training as widespread and dealing

almost exclusively with Last Planner®. The Last Planner® training was very concise,

dealing only with the Last Planner® system and stressing the importance of reliability of

commitments, and reliability in general.

Boldt describes the spread of the LPS among its central offices in Madison and

Milwaukee as “organic”. They began using Last Planner® on every project in this area.

The Last Planner® system became engrained within the organization.

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 Until recently, this was the extent of their lean implementation. Then people

within the firm began asking about other lean principles and applications. They began to

ask about the theory behind last planner, and how they could understand more about lean

in general. It is an example of learning by doing.

Boldt then began more training. The training was again, based around the

Wisconsin area. They brought approximately 30 of their construction managers and

superintendents in for a 3 hour training session. This training session detailed some of

the underlying principles of lean, the different types of waste, value stream mapping, pull

scheduling and production management. The hope was for a deeper understanding of the

lean principles that were being applied.

On the job training is the preferred method for Boldt. Sub-contractors are simply

asked, and obligated through contracts, to comply with the lean principles on its job sites.

Sub-contractors especially seem to be able to pick up lean principles like the LPS through

the act of participating in projects that employ the use of such lean principles. Learning

by doing are the words that come up most often when looking into how lean was

implemented at Boldt.

Lean Principles Applied

Boldt started their lean journey by applying the Last Planner® at the production level

first, then moves to upstream in the supply chain such as target costing.

Last Planner®

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The LPS as a project control seems like common sense. At a weekly meeting, the various

foremen of a project get together and plan for the week ahead. At the meetings, the

foremen make a commitment to do what they say they are going to do. This may again

seem like common sense.

PPC (percent planned complete) and reasons for failure are the end product of this

production control tool. The production commitments of every crew are judged against

the actual production completed. If there are 100 different production commitments

made during a week, and 80 of them are met, then you have a PPC of 80%. You then

have to go back and decide why the other 20% of commitments were not met.

This is where root cause analysis comes into play. Were the commitments

reasonable at the time they were made? Was there a problem getting the materials

needed to complete the particular commitment? What was the ultimate reason that this

commitment was not kept? Once the problem, or root cause is identified, step are taken

to make sure that the same mistake will not be made in the future.

The idea is to continuously improve in making accurate forecasts of what can be

completed in a given time period. Because of the interrelated nature of construction work

especially, forecasts made at the beginning of a job usually affect the whole job. If a

commitment by an electrician to wire a room is missed, then the crew installing the dry

wall in that room cannot start on time. This effect cascades through the construction

schedule.

An important piece of the LPS is the make-ready process. Make-ready is best

described as the criteria for making sure that an “activity” or assignment is ready to be

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started. A list of these make-ready assignments is the pool from which the front line

supervisor (last planner) assigns new assignments.

The key to make ready is making sure that the activity is ready in all ways to be

started. This includes the availability of labor, equipment, materials and anything else

“required” for the activity to be started. For instance, if an activity is ready to begin, and

scheduled to begin, but an important piece of equipment was absent, that activity would

not be considered to be an assignable activity. The resources that would be taken up by

this activity would be put to other uses until everything required for that activity was

ready and waiting for the construction work to start.

The use of Last Planner® and make ready are not easily separated, they are

interdependent on each other. In order for Last Planner® scheduling to work efficiently,

a make-ready process must be in place. In order for a make ready process to be utilized,

a Last Planner® system should be in place. These two subjects are also closely related to

the next subject, Pull scheduling.

Pull Scheduling

Pull scheduling as used by Boldt, is an important process. The first thing they do is

decide what one milestone, or act finishes the job. They then take that and place it on its

desired completion date. Then work backwards from the finish. As described by Boldt:

“Working from a target completion date backward, tasks are defined and sequenced so

that their completion releases work.”

Essentially, you have to look at the entire scheduling process backwards, from the

completed project, to the first permit required to break ground. When looking at a

construction schedule in this way, it is much easier to see how lead times affect the

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construction process. When laying the schedule out it would become clear that in order

to break ground on a construction site, first you must have the permit in hand to do this.

It is also easier to schedule for the application of the permit, and make sure that it is done

in time to start construction on schedule. The same applies to materials deliveries and

long lead time items necessary for the finished project. In general it is much easier to

look ahead in time than it is to look backward. This “unnatural” way of looking at a

schedule makes it easier to look backward, by instead looking forward.

Boldt defines the following as the steps involved in developing a pull schedule:

1. Define the phasing of the work.

2. Determine completion dates for the phases.

3. Using team scheduling and stickies on a wall, develop the network of activities

required to complete the phase working backward from the completion date.

4. Apply durations to each activity with no contingency or float in the estimates.

5. Re-examine logic to try to shorten the duration.

6. Determine the earliest practical start date.

7. Decide what activities to buffer or pad with time contingency.

z Which activity durations are most fragile?

z Rank order by degree of uncertainty.

z Allocate available time to the fragile activities in rank order.

Is the team comfortable that the available buffers are sufficient to assure completion

within the milestone? If not, either re-plan or shift milestone as needed and possible.

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Target Costing

Target costing is the idea that a building should be built to the budget specified. Another

way to put this is that it is the idea that a client could come to a builder with a sum of

money and have a project completed for that dollar amount. The key to target costing is

the value delivered to the customer.

Traditional design process involves a “rough” design process. The product of the

process is a building which is then taken and estimated in the traditional way to come up

with the cost to build the building. If the project is over budget, extensive re-work and

changes must be made to the design in order to bring the project back into budget. These

changes and re-work, under lean thinking, are pure waste. On a technical level, these

changes can possibly undermine the original design ideas and assumptions. Both of these

aspects combine to “remove value” from the ultimate customer, the building owner.

Ideally, every dollar spent by the customer on design would go into the design of

the building, not the rework and changes. This is the idea behind Target costing. Boldt

has applied this method in several situations and has had some success.

According to Boldt, the most important part is getting everyone involved in the

design process as soon as possible. This includes the architect, the general contractor, the

sub-contractors and most importantly, the customer. Getting a good idea of the

expectations of the customer is key in beginning the process of target costing. The value

of the building, as defined by the owner, can vary greatly from what the general

contractor of architect might consider value. Letting the customer describe and

contribute to the ultimate definition of value on each project is very important to lean

construction.

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 According to Boldt, in order for target costing to work, multidisciplinary design

teams are necessary. This is not easy in the traditional design-bid-build building process,

as the construction people are brought in after all of the decisions on the design are made.

This leaves little leeway for the most qualified building cost estimators (general

contractor)to exercise any control over the design, and therefore the cost of the project.

Lean Projects

Boldt has applied the LPS to their projects successfully, and many reports in LCI (lean

construction institute) community found Boldt’s successful implementation of the LPS as

a production control system. Recently Boldt’s lean application moves toward upstream.

As a lean design method, Boldt tried to apply the concept of target costing in their

projects.

Boldt has employed target costing in on several Design Build projects, one of

which was the St. Olaf College Fieldhouse. The college was given a donation which was

specifically earmarked for the construction of an new fieldhouse. There was no more

money that that which was donated, so staying within budget was a necessity. At the

same time, the college wanted to maximize the value of the gift, and get all that they

could from their investment into the new building.

Boldt started out by holding the contract for the architect. This made the architect

ultimately responsible to the general contractor, and therefore, the contractor could have

more input into the design process. A multidisciplinary team was formed that included

electrical and mechanical contractors, general contractor representatives, college

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representatives, structural representatives and architectural representatives. The goal of

the team was to come up with the project that would bring the most value to the customer.

On the second day of the design conference, target costs were handed out by

Boldt based on schematic designs. Each of the sub-contractors were asked to meet or

beat the target costs that they were handed. As little design as possible was done to this

point in order to leave leeway for the sub-contractors to look opportunities to build in

value.

Although the ultimate cost of the project was about 1% below what was budgeted,

lessons were learned, and soon after changes in the process were passed on to other

projects.

Lean Metrics

Mr. Paul Reiser mentioned that they use PPC as a lean metrics. But they don’t have any

other measures than PPC. He believes that other lean metrics such as delivery on time

rate, cycle time can be used once work flow demand becomes reliable (i.e., high PPC).

But it is time for Boldt to concentrate on work flow reliability.

Lessons Learned

Barriers or Challenges

• Failure of management commitment

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Boldt has cited several obstacles to lean implementation. Number one on the list would

be people in an organization who are unwilling to change. A common theme emerges

when reading or speaking with representatives of Boldt, that theme is: Lean is voluntary,

and not to be forced upon people.

The reason given for “failure” of lean of projects was the lack of a commitment

from the stakeholders on a project. The lack of commitment from upper level

management was specifically cited for the failure of projects where lean principles were

applied. In these instances the people in charge of the projects, project managers or

superintendents, were said to be not buying into the idea of lean. They clearly did not

want to change, and therefore did not really ever give lean a chance.

• Contractual problems

Another major obstacle to lean implementation is the contracting process itself. If a

contractor is brought in after the design of a project is completed, there is no opportunity

to apply lean concepts like target costing.

Paul Reiser also said that he believes there is opportunity for lean concepts to be

used on every project. However, the opportunity increases if contractors are involved

early. Mr. Reiser said that LPS can be applied to almost every type of project

successfully.

Success Factors

• Commitment and Leadership

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Boldt firmly believes that commitment is by far the most important success factor with

respect to lean implementation. The people in charge of the project, and the company,

must be behind the idea of lean, and be willing to change. There has to be clear

understanding and support for any change within a company, and lean in no exception.

Leadership is also extremely important. The people in charge must be willing to

lead the change within the company. The leadership must also know how and when to

apply their knowledge and oversight. As detailed above, the ability to learn from

mistakes is important. It is extremely important for leaders to recognize when a mistake

has been made, and react accordingly. Leadership must be willing to deal with the

successes, as well as the inevitable mistakes.

• Learn to Fail

Learning from your mistakes is very important. Lean principles in general emphasize

this point. Mr. Reiser makes the point that you really have to learn how to fail. You

cannot really move forward and learn anything without making mistakes. The important

thing is to learn from your mistakes, and take that knowledge forward. Mistakes and

failures should be opportunities to look at what went wrong and analyze the process that

led to the failure. There is no complete ready-made recipe for your organization.

Applying what you learned from the failure in the future is the key to being able to move

forward in any undertaking.

• Overcoming Problems by making everyone a Stakeholder

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Key in getting everyone committed to the overall goals of this project was a profit

sharing incentive plan. When the project was completed, all of the various stakeholders

would share from a “pool of profits” that would not be distributed until the project was

finished.

He used this reasoning to get agreement early on that all of the different unions in

Paper Machine Rebuild project would work together to get the job done ahead of time,

and under budget. He cited specific examples of different unions and sub-contractors

getting together ahead of time to plan the need for scissor lifts, and only getting as many

as they needed. This was contrary to the industry practice of every sub-contractor

handling its own equipment needs. The cramped quarters of the rebuild site made

minimizing equipment necessary. The sub-contractors agreed to share from a pool of

scissor lifts. Such arrangements helped to keep the project on track and on budget, but

they could also help to reduce the total crew sizes needed at peak times. Again, the

construction site was small, and everyone who was there who wasn’t absolutely

necessary was just getting in the way.

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C.7 GS Engineering & Construction

Background

GS E&C in Seoul, Korea, was established in 1969 and has since expanded into large-

scale development and public projects, making them a world-wide general contractor. In

2005, GS E&C had robust sales in all five sectors, their $5.631 billion was up 39.1%

from the year before. With a diverse business portfolio, that includes civil engineering

($0.73 billion, 13%), plant ($1.037 billion, 18%), environment ($ 0.312 billion, 6%),

architecture ($ 2.202 billion, 39%) and housing ($1.350 billion, 24%), the opportunity for

growth is ever-apparent. To successfully manage an organization with this amount of

diversity and potential for growth, an efficient management system is necessary. Since

1997, GS E&C has utilized the Project Management System (PMS), which is an

integrated project management system based on the Earned Value Management System

(EVMS), to control profit and loss. This system has also assisted in the analysis of

company processes through the use of schedule and cost controls. Subsystems covering

marketing, design, construction, sales, finance, personnel, and general affairs were all

integrated to form PMS, which has been used at all construction sites.

Lean Initiatives

The GS E&C management team has recognized the huge waste of materials on

construction sites. As an example, the on-site processing of rebar has caused a vast

amount of cuttings, and the stockpiling of rebar on construction sites has created

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opportunities for rust and theft. In order to improve the inventory management, the

company considered the development of an advanced inventory management system,

which could reduce inventory. At the beginning stage of the system development, the

only concern was effective inventory management. This led to the introduction of the

Just-In-Time (JIT) process as a potential solution for their inventory management. The

JIT implementation task force team was organized to adapt JIT into the GS E&C

operational procedures. However, JIT is based upon workflow reliability, and GS E&C

experienced difficulties with its incorporation into the PMS, due to low work reliability.

In order to adapt JIT successfully, GS E&C had to develop an expanded project

management system, which covered not only procurement, but also human resources,

equipment, subcontractor, safety, environment, payment, and various others.

On the matter of inventory, the current PMS was not suitable or beneficial for the

field management. Their PMS mainly covered the information regarding profits and

losses, which although a main concern of the home office, is rather impractical for field

management. Therefore, GS E&C needed a system to support the field office inventory

management while performing their construction processes.

Lean Preparation

Organization

Since June 2005, in order to implement the Total Project Management System (TPMS),

GS E&C has expanded its existing PMS organizational scheme to include the

management of two teams: the TPMS planning team and the JIT Implementation task

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force team (TFT). The new organization sets up goals as the general process innovation,

including the procurement of materials. Moreover, the head office of each department,

which are civil engineering, plant, environment, architecture, and housing, have their own

TPMS teams for implementing TPMS. Besides TPMS, GS E&C has the Process

Innovation team in charge of the improvement of work process at the corporate level. GS

E&C has also recognized the importance of the innovation of the whole construction

process. As a result, they have started the Process Innovation task force team, and have

charged them with corporate level innovation of process. The responsibilities of the team

include defining the Process Innovation and eliminating the barriers for TPMS.

Training

GS E&C has established the training courses and have regularly trained and tested the

basic concept of TPMS, TPS, and Lean Construction to all of their employees, including

executives through online instruction. The implementation of TPMS in each department

is reflected in the performance evaluation of the department head. The criteria used for

measuring performance are the number of implementation sites, the level of application,

and the adaptation of the basic TPMS concepts. GS E&C also emphasizes the

implementation of TPMS in monthly meetings and construction site visits, and now all

employees have a general understanding of TPMS and Lean Construction.

One of the key training agenda is TPMS. One day training session consisting of

eight hours training on lean construction and TPMS was given to 1,848 their employees

and 300 employees of their subcontractors.

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Total Project Management System (TPMS)

The PMS has historically been utilized by both field office and head office managers.

Usually, they used the PMS to control profit and loss within each work process. The

TPMS extends the area so far from the PMS system by incorporating JIT, quality,

environment, safety and technological information, and the support objects that include

field managers (or foremen) and subcontractors. TPMS is the integrated construction

business management system for construction field offices, through digitization of project

information, and the ultimate goal is the cost reduction through the use of construction

process innovation (see following figure).

Connection through Mobile

Field Portal
In/Out stock,
Daily Work Check
Resource

Daily Work JIT

Mgt.
• Standardization of
• In/Out Stock
Mgt. Cost
TASK and Schedule • Inventory Mgt..
• Development of
TASK/Human
Innova
Resource Mgt. Tool
tion
Const. info. Inspection

Incorporation of Information

Process Innovation

GS E&C TPMS

Daily Work Management and JIT are the two main bodies of TPMS, and these

concepts are connected through the Field Portal for the incorporation into the supply

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chain of a project. TPMS builds the foundation of knowledge by incorporating materials,

human resources, equipment, quality, environment, safety, and technological information.

This foundation provides for the Daily Work Management System, JIT and all other

information the field management needs, which can be integrated within the Field Portal

through mobile equipments like a PDA. The head office creates and distributes the

incorporated set of information for each project, which allows the field manager to input

materials, human resources, and equipment properly for a construction site according to

the information in real-time through the use of TPMS.

Daily Work Management

The Daily Work Management, which is the core of TPMS, allows a field manager to

manage the daily work processes, which were unable to be monitored or evaluated in the

typical PMS application. Therefore, Daily Work Management, which has relatively high

Percent Plan Complete (PPC), became the essential base for the TPMS, and it allows

field managers and subcontractors to create measurable values of workflow reliability.

The number of activities in a typical master schedule are about 200~300, which

are insufficient to define the work processes for the variety of projects, and the average

PPC for a typical master schedule is only 40 percent. In order to standardize the work

process and increase workflow reliability, GS E&C breaks down construction process

into the categories: activity, detailed activities, and task.

• “Activity” is scheduled a month after the project planning. Usually 500~1,000

activities are defined by an estimating firm for a project.

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 • “Detailed Activity” is the minimum unit of resource management and is

scheduled a month before the activity. 8,771 of detailed activities are standardized

and registered in TPMS.

• “Task”, the minimum unit of work, is scheduled daily through daily work

management. 46,122 of tasks are standardized and registered in TPMS. The

material and costs are linked with the task, and they are automatically calculated

in the TPMS whenever the task is completed.

The three levels of work defined above, link the daily process management tool to the

master schedule, and allow the field manager may manage daily works systemically. BS

E&C scheduled about 200 employees to work on the systemization of work for seven

months. As a demonstration of this process, the subcontractors complete a work activity

and input this into the TPMS directly, through the use of mobiles and screen boards in

field offices, and then the field managers of GS E&C have the opportunity to confirm the

action. Whenever any conflictions occur among subcontractors, personnel of GS E&C

mediate them and help subcontractors.. TPMS may help subcontractors to understand the

importance of work reliability through the PPC analysis of daily work management and

provide the criteria for evaluation of subcontractors. The concepts of “Shielding” and the

“Make Ready Process” in Last Planner® System were introduced into the daily work

plan system in order to increase PPC. The transparency of payment may be secured

through daily work meetings discussing the completion of daily work and payment,

which is updated automatically according to completion of work.

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JIT

GS C&E established two systems for JIT:

• Rebar Processing Plants and

• GS-BAS (Bar Bending Automation System)

Rebar Processing Plants

GS C&E established two rebar processing plants in both the Seoul and Pusan areas, in

Korea, in 2005 and they have supplied rebar to 15 GS E&C construction sites. The rebar

was distributed through a JIT process and the plan is to expand this operation for all

construction projects company-wide. The goal of the rebar processing plants is to

minimize the amount of loss due to rebar waste, meet the exact specifications of the

reinforcing process, eliminate the space for inventory loading and field working, and

manage the material effectively. The construction sites, estimating firm, which is a

subsidiary, and the rebar processing plants cooperate through the rebar processing plant

operating system, which is called an Extended BAS.

The rebar processing plants have the yearly capacity to produce 280 thousand tons

of rebar with the order from job sites. Through the implementation of the JIT material

delivery system, rebar losses can now be kept below 1%, saving the company at least $4

billion a year.

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GS-BAS (Bar Bending Automation System)

The GS-BAS systematizes all processes related to reinforced concrete work, which

represents 20~30 percent of the cost for most construction projects. This integrated CAD

system lowers cost by minimizing rebar consumption and raises work precision. In 1997,

GS E&C began, and was completed by 1998, to develop an automated program for

calculating material quantities and preparing detailed shop drawings, a job that had been

done by hand up until that time. This system automates shop drawing preparation,

material quantity calculation, procurement, and on-site project management. The GS-

BAS has raised both the quality and productivity of on-site rebar work.

Implementation on Projects

GS E&C started its lean journey by adopting JIT to rebar fabrication and installation.

However, GS realized that JIT material management cannot be realized without

improving plan reliability. It lead to adopting the Last Planner® System (LPS). In Apr,

2005, GS E&C implemented the Last Planner® System (LPS) on three (3) pilot projects,

which are the “Xi” apartment project, the Seoul Ring Road project, and the GS Caltex

Alkylation Plant Project. Those projects were selected to test Project Flow system of

Strategic Project Solutions, Inc. (SPS) in housing, civil, and plant projects. Since 2004,

GS C&E has adapted TPMS on 16 construction sites. Currently 110 projects are using

TPMS. During the pilot projects, the interconnection of the existing master schedule

management system and new daily work management was tested. The PPC rose to over

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70 percent of daily work plan. Then GS integrated rebar JIT system with the Last

Planner® System (LPS).

Lessons Learned

GS has identified several barriers and success factors that companies must take into

account for proper and successful implementation of lean applications.

Barriers

• Difficulty of Defining Daily Work Load and Low PPC: Only the works which

“can” be completed should be input in the following day’s daily work plan and

the work must be completed as planned. However, subcontractors who do not

have experience with a daily work plan may suffer by not defining the daily

workload, which will result in a low PPC on the daily schedule. In order to

prevent the unfavorable result, GS E&C personnel and the engineers of

subcontractors may analyze the reason for uncompleted work and propose an

alternative during the daily work meetings. The daily work meeting is very useful,

especially for complex projects, like plant projects. The responsibility of each

stakeholder might be defined through the daily work meeting.

• Complaints from Suppliers/Subcontractors: There were external complaints at

the beginning of the rebar JIT process through the rebar processing plants.

Subcontractors believed they lost their jobs in the rebar production sector. As time

went on, however, the suppliers and subcontractors noticed the benefits of the JIT

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 process. The suppliers/subcontractors have raised their unit prices and been

satisfied with the increased profits. GS E&C has allowed higher unit price of

installation by way of compensation for reduced rebar waste.

• Complaints from Internal Organization: GS E&C personnel also opposed the

adaptation of the rebar JIT process at the early stages. They expected more

workload with the direct rebar prefabrication.

Success Factors

• Leadership of Management: the leadership of CEO has been critical for the

implementation of the TPMS. It has been possible to overcome various kinds of

barriers such as, the establishment of an estimating firm, rebar processing plants

and the matter of the organization, including new teams and executives for TPMS,

with the solid leadership of the CEO, and a fervent believer of the systemized

processing.

• Paradigm Shift: The shift away from traditional thinking is essential. The push

system in traditional construction should be changed to the pull system, in which

successors are the customers of predecessor. Moreover, the daily work plan, work

leveling, and phase scheduling concepts are important.

• Task Standardization: The agreements of the customer, general contractor,

subcontractor, and supplier, regarding the standardization of process.

• Real-time Information Sharing: the information regarding which tasks have

been done and what can be done the next day should be shared on real-time.

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GS noted that the first two factors, which are leadership and paradigm shift, are major

success factors.

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C.8 Messer Construction Case Study40

Background

Messer Construction Co. is a full-service commercial construction manager, design-

builder, general contractor, program manager, and developer.

We are a company of builders, with more than 750 construction leaders and

innovators. Our long-term, sustainable success lies in the quality of our construction

professionals. We believe in growth-from-within, and invest in career planning &

development to lead construction innovation within the industry.

The company was organized and has continuously operated since 1932. Our first

office opened in Cincinnati, Ohio. Now Messer has offices in Columbus, OH, Dayton,

OH, Indianapolis, IN, Louisville, KY, Lexington, KY, Knoxville, TN, and Nashville, TN.

Messer’s impressive client base includes hospitals and medical facilities,

education facilities (K-12 & higher education), aviation, arts & entertainment, religious,

historic renovations, non-profit, industrial and commercial organizations throughout Ohio,

Indiana, Kentucky and Tennessee.

In 2007, Messer will put in place more than $700 million of commercial

construction.

Messer is a 100% employee-owned company. As employee-owners, we take

pride in being a true corporate citizen in each of our markets where we work and

live. We invest in our communities because we care. We invest because vibrant

40
This case study was based primarily on a series of interviews with Bill Krausen, a senior executive in
Messer Construction.

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communities are good business. We invest because the customers we serve deserve our

support in their community priorities and endeavors.

During 2006, Messer and Messer leaders contributed more than $850,000 in our

regions to help create vibrant communities where we live, work and raise our families.

Deloitte, a Big 4 accounting firm, named Messer Construction Co. the 9th largest

private company in Greater Cincinnati and Northern Kentucky. Ohio Business Magazine

ranked Messer as 35th in its Top 100 Private Companies in Ohio. In 2004, Messer was

honored with an unprecedented back-to-back "Build America" Award for the Ohio

Judicial Center, home of the Ohio Supreme Court in Columbus.

Year after year, Messer has won top honors for Safety and the Association of

General Contractors (AGC) Awards for “Build Kentucky” and “Build Ohio.”

Engineering News Record ranked Messer:

• TOP 25 Government and Healthcare Work

• TOP 50 Construction Managers At-Risk

• TOP 100 Design Build Firms

Lean initiatives

Why did Messer decide to 'go lean'?

Several reasons:

1. Too much variation exists in project management performance. We tackle part of this

through leadership development where we are making sure that our project leaders

understand how to influence others to meet the common goals by understanding first

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 how others perceive them as leaders and what they do within our relationships that

either supports that or prevents it. The other part was needing to adopt tools that best

support this leadership position - lean tools fit very well into this vision.

2. Lack of confidence in plans and schedule. Too many conversations including the

words "we hope to..., we think that..., we might be able to..., we'll see if...". We need

to be able to be better with our promises and predictions.

3. Lack of consistency. Too many people plan and manage their projects in different

ways - some more effective than others. We're not against autonomy, but rather

sharing of best practices in the process and letting people adapt those best practices to

their own style.

4. Lack of commitment from others. Too many broken promises, from both the lack of

understanding of the key elements of a commitment and from having the confidence

to enforce accountability.

5. Stress level of our project managers. This needs to be fun - it's why we all do it. We

need to create an environment that supports successful performance leading to people

feeling good about the work they do and to have the motivation to come back the next

day and do better.

6. Growth of our leaders. More knowledge and better tools lead to building our

intellectual capital and improving performance.

7. Most importantly...value to our customers. We must find ways to provide more for

less. Lots of other industries seemed to have figured this out. Instead of joining the

ranks of mediocrity where the belief is that we are all victims of the game we all

choose to play, we're going to take a leadership role in proving that it can be done.

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Lean Preparation (history of implementation)

How did we go about it? It started with complete commitment of the senior managers of

the company. We are all committed and take personal responsibility for making sure that

it happens. We started (almost 15 years ago) with changing our culture from “command

and control” to “participative” management. We taught everyone how to use some basic

tools to do this. Four years ago we adopted the Last Planner system and drove it through

every project. Then, back of house support functions starting adopting lean tools that

work for them. We moved in the last two years to adopting advanced lean tools which

we are currently in the midst of studying. Lean has now risen to be part of our business

planning

We are now actively selling lean to subcontractors as we enter new areas. For

example, we recently made a presentation in one of our newer regions to the

subcontractors association breakfast meeting—over 100 people attended and it was very

well received.

We are using reverse phase scheduling with designers as part of the

preconstruction phase.

We are using lean on all of our projects – at risk and not-at-risk.

I am not aware of anyone who has rejected lean, whether designers or

subcontractors, once they see the impact it has on meeting the goals.

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Lean Principles Applied

Initially Last Planner and associated methods such as reverse phase scheduling were the

focus of our lean implementation. We are now working on what we call our advanced

lean tools, which include:

• Visualization on the job site

More use of models to aid in planning and problem-solving

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 Communication boards—how are we doing against the plan

Color coded progress toward schedule milestones

Progress toward meeting safety goals and recognizing those that contribute at the

highest level working safely

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• Daily huddle meetings of the total project—many of them run by foremen

o Create connection between managers and craftworkers – open

communication.

o Discuss the goals from the previous day.

o Discuss the goals for today.

o Invite suggestions on how to improve.

o Assure that there are safe plans of action for every activity.

o Share company information.

o Recognize performance.

• 5S on sites

• Value stream mapping—one major initiative on subcontractor payment. Found

that 2/3-3/4 of all subcontractor checks get held up. We got rid of unnecessary

forms and adopted a master insurance certificate. We take care of insurance and

bond requirements at pre-award. A smaller value stream mapping initiative is

underway on our recruiting process and on our equipment/tools management

process.

• First run studies (noted below in “Metrics”)

• Capturing best practices and developing standard work processes all of which are

housed in our “Center Of Excellence” knowledge bank accessible by all Messer

people.

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Messer Standard Work Practice

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 • Lean leadership team: 20-22 people representing every region and every

department in the company. The team meets every month to share best practices,

provide education and to discuss future opportunities for improvement. The team

is the central communication network for Lean at Messer.

Lean Metrics (measures of success)

What happened? Beyond the traditional challenges of change, we have moved greatly

towards accomplishing the reasons "why" listed above. We have had many comments

from project leaders that the stress is now easier to manage. Project leaders are also

saying that lean helps them deliver projects in a way that better helps them to meet the

client’s goals. People are genuinely embracing lean tools and we're moving more and

more towards lean thinking, as opposed to “doing lean”. People are more engaged, we're

getting better commitments from subs, suppliers, designers and our customers, there's

more trust, more ownership, better communication, we're better at predicting, we're more

confident, there's less stress and most importantly, many of our customers are telling us

how much they like the lean processes - they are seeing the value it brings. We are no

longer selling internally. We’ve gone from advocating a change in old planning processes

to seeking out excellence in the newer planning processes. Ultimately, for this to be

successful, it must have an impact on the most important people on the construction team

– the builders. We have heard many positive comments from our craftworkers in the

daily huddle meetings. We’ve had Foremen in training sessions, when talking about their

experiences, making statements like “there is no way we would have ever gotten that

project done without lean”.

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 We are beginning to capture hard numbers as a result of lean implementation. One

area we get hard numbers is in the reduced cost from redesigning our construction

operations using First Run Studies and by comparing schedules from previous phases of

work completed for a repeat client. Some metrics captured to date:

• In cases where we working with repeat clients and the opportunity to build

additions that are similar in scope to the ones previous, we’ve seen significant

improvement in the schedule to complete. On a recent major office building

expansion, we were able to complete the project 2 months earlier than the

previous project, which was smaller and less complex.

• On this same project, using first run studies, we were able to reduce the total cost

for the concrete shear walls by 40% and concrete columns by 10% from the

previous project.

• On a recent parking garage, we used first run studies to improve the costs of the

perimeter concrete crash walls which were running significantly over budget.

After the study and recommendations were made, the work shortly came within

the budget and ultimately was performed 25% below budget.

• On a recent hospital project, we used first run studies to improve how we were

sequencing interior concrete shaft walls whereby assuring that we would be able

to meet a very aggressive budget for that work.

We are also tracking PPC (percent plan complete) across the company. We maintain

trend charts on each project, we collect these in the corporate office and are now trying to

relate the PPC metric to safety and other performance goals.

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Lessons Learned (Obstacles, Barriers)

What advice do you have for others who are on the lean launch pad? Get commitment at

the top first, educate the entire company, train in the use of the tools, move from

mandating change to finding ways that people can internalize lean's value - that it works

for them, find ways to measure success, engage the stakeholders - all of them - not just

upper managers!, and finally celebrate the success and take it to the next level.

For us it is critical to involve everyone, including craft workers and line

supervisors. We don’t want a forced, top-down process reengineering. We want people to

feel like they have value, that they are adding value and that they have full support in

their efforts.

Most people did not see inadequacies in our previous practice. There seem to be

levels:

• Level I: Believers—this stuff works.

• Level II: Bandwagon approach—success stories inspire back-of-house folks.

• Level III: Now starting to be creative in the use of lean tools; e.g., two similar

projects (same client, same designer, same design, different locations) being done

simultaneously have done reverse phase scheduling with sets of subcontractors,

including competitors, before work took place.

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C.9 Walbridge Aldinger

Background

Walbridge Aldinger has a long and distinguished history covering over 90 years of

service in the construction industry. They provide a variety of contract services:

Integrated Program Management, Full-Service Turn-Key, Process Engineering and

Technical Services, Construction Management, General Construction Contracting, and

Design-Build.

Walbridge representatives described their firm as industrial, commercial, and

heavy civil. They estimated that approximately 10% of their business was design-build,

40% construction management/program management, and 50% hard bid type work.

Walbridge is ranked by ENR as Number 1 in automotive construction and Number 2 in

manufacturing construction in the US, which put Walbridge in a special position to adopt

lean principles through strong relationships with their customers.

Lean initiatives

Walbridge began its lean journey when they recognized the improvement opportunities of

Lean production. Several of their clients in the manufacturing industry, requested that

Walbridge begin to apply lean principles to their construction processes in order to derive

cost savings from these projects. These clients were also deploying lean tools within

their own companies and provided coaching for Walbridge and their lean initiatives.

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 Walbridge joined LCI (Lean Construction Institute), LEI (Lean Enterprise

Institute), and began looking at how lean could be applied to Walbridge. They also hired

a consultant who was familiar with lean manufacturing. This consultant, and

Walbridge’s working relationships with their manufacturing clients, shaped what would

become Walbridge’s lean implementation.

Lean Preparation

Walbridge adopted lean practices starting in 2000 drawing from several models. With

this in mind they have developed an extensive training program that deals with the

concepts that they have found to be most successful within Walbridge.

The overall Walbridge training program mandates 30 hours per employee, which

includes management of construction, safety and other topics. All employees are

required to complete an 8-hour “Lean Fundamentals” training program. There are

additional training programs that specifically cover value stream mapping, kanban,

quality control, lessons learned, and other topics. Walbridge also has Lean outreach

training programs for project teams, A/E firms, suppliers, and subcontractors.

Walbridge describes its lean program as an integral part of its overall operating

system applied enterprise wide. According to Walbridge, as of 2006 all construction

projects had at least some lean concepts being deployed.

Commitment within Walbridge starts with top management. When originally

developed and deployed, non-leadership employees were designated as Lean Champions

responsible for the implementation of lean tools and methods on projects. To improve

results, Walbridge realized that leaders would need to drive the program at every echelon

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throughout the organization. Senior project leaders are now designated as Lean

Champions responsible for overseeing and deploying Walbridge’s lean initiatives.

Also included in the lean management at Walbridge is the lean construction

steering team, a cross functional team made up of twenty-five (25) people drawn from the

groups throughout the corporation. They are responsible for developing and

implementing new ideas within Walbridge’s lean program.

Walbridge has two dedicated Lean Managers who can be described as coaches

tasked with, among other things, lean implementation and auditing. These lean managers

are grown from within the ranks Walbridge.

Lean Projects

Almost all Walbridge projects apply Lean practices. Project Leaders assess relevant

application of the lean tools and principles that can best be deployed on a particular

project. The level of lean implementation is judged internally in what Walbridge calls its

Lean Olympics.

Lean Principles Applied

Visual control / Logistical Planning

Walbridge places great emphasis on Logistical Planning as a method to eliminate 9 forms

of waste and improve the flow of work on a job site. The Logistical Plan capitalizes on

visual controls to help organize current and planned work on the site. Logistical planning

is a dynamic activity that provides effective communication and coordination, improves

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material management, and minimizes work interruption. The following is a generic site

logistics plan developed by Walbridge:

The site logistics planning is a very straightforward way to let everyone who

looks at a plan knows where they should be, and not be. It has been a very popular tool

for Walbridge with their clients to reduce possible conflicts and confusion often

associated with construction sites. Project stakeholders are updated anytime a site

logistics plan changes.

Site Logistics Plan

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Value Stream Mapping

Walbridge implemented value stream mapping as a first step to Lean improvement.

Walbridge applies Value stream mapping to identify all the steps in a process showing

how the product or service is being changed from activity to activity.” Walbridge applies

six distinct steps:

1. Define the Current State Map

2. Identify waste and Opportunities for Improvement

3. Formulate a Future State Map

4. Create a Work Plan to the Future State

5. Define Measurable(s) to gage performance

6. Analyze Cost Savings

Value stream mapping is a way to visually represent the steps necessary for a process.

The process is then analyzed, looking for the steps in the process that actually add value

to the finished product. The idea is to be able to identify steps in the process that do not

add any value to the process. An example of a value stream map produced by Walbridge

is shown below:

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 Value Stream Map

After developing a value stream map, identifying the parts of the process that do not add

value to the finished product is necessary. Once these non-value-added or waste

activities are identified, the goal is to try to reduce or eliminate them.

5S Process

Walbridge defines the 5S’s as:

1. Separate/Scrap

2. Straighten

3. Scrub

4. Systematize

5. Sustain/Standardize

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The examples given for each are unique to Walbridge and their interpretation of the 5S

process drawn from manufacturing.

5S Description 5S Example

1 Separate/Scrap Separate like materials and equipment and remove or

dispose of that which is no longer needed.

2 Straighten Put material into bundles or racks so there is order.

Equipment locations can be outlined to show where it is to

be stored.

3 Scrub Broom swept areas. Put trash in designated trash bins.

Clean equipment.

4 Systematize A system is in place to communicate the 5S expectations on

a regular basis. The 5S audit process is done regularly. The

labor forces understand the expectations and follow them.

The system goes into “autopilot”.

5 Sustain/Standardize Develop standards for 5S expectations and audit those

standards on a weekly basis.

Walbridge management and staff place great value on the 5S process and require it to be

used on all construction sites and at their yard.

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Quality control using Lean principles

Walbridge uses a Quality Control Plan modeled on the USACE Contractor Quality

Control (CQC) program consisting of 4 phases: 1) Submittal 2) Pre-installation 3)

Initial Inspection 4) Follow-up. The Quality Control Plan “builds in quality” during

each step of construction/installation to ensure work complies with contract documents.

The process verifies specified materials are used and installation is acceptable to produce

the required end product. It encompasses approval of submittals, subcontractor

installation activities, inspections, and tests. Effective quality control eliminates the

waste of defect and rework by identifying and correcting deficiencies early upstream in

the construction process.

To assure quality, the Quality Control Program must be applied in unison with

safety, lean practices, effective leadership, and other elements of the Job Site Quality

Plan. Pre-installation coordination meetings are held for each definable feature of work.

In-process inspections apply the Toyota principle of genchi genbutsu – go see for

yourself in the workplace. As work progresses, the WA Quality Control Program flows

into the defined Project Close-Out Plan and helps minimize the traditional punch list.

Lessons learned database

Walbridge has developed its own internal computer database to capture Lessons Learned.

This database is a repository of knowledge gained from all of their projects. At any time

an employee may go to the database and choose to search for similar projects and

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implementations of lean. This database aims to be able to spread knowledge gained on

one jobsite across the firm.

Lean Metrics

Walbridge has developed several metrics for measuring the effectiveness of its lean

program. The most cited of these measures was the one percent savings program. This

program seeks to save Walbridge and its customers at least one percent on the operating

budget through the elimination of waste and process improvement. The savings are

broken down into three different categories -- direct, indirect, and owner savings.

Walbridge developed a metric called the “Lean Olympics” which evaluates the

lean performance of each project. Projects are reviewed monthly and awarded bronze,

silver, gold or platinum rating based on an internal Walbridge-developed checklist.

Lessons Learned

The lessons learned by Walbridge are numerous. They continually cite the leadership of

the firm and its lean champions as imperative to the success of any lean program.

Walbridge recognizes Lean performance requires behavioral change which can be

challenging. Walbridge representatives had specific examples of where they thought that

an idea or process had been ingrained within the organization, only to find out that that

particular process reverted to where it was prior to the implementation of lean. They

cited re-training, leader involvement, and constant “auditing” as ways of controlling and

ultimately changing the behavior.

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 Other lessons learned include the ability to take an existing tool and to make it

your own. They cite several examples where they had to take an existing lean “tool” and

make it their own, changing it so that it would be effective within their organization or a

particular project. Last Planner® was such an example. Walbridge found the PPC

element was not successfully implemented at Walbridge and took additional resources to

complete, whereas the look-ahead schedule offered a useable tool to help subcontractors

plan work details.

They said that education, leadership, and commitment are important success factors

in lean implementation.

• Education; Walbridge cites education being the first success factor of any lean

program.

• Leadership; Without strong leadership, any initiative, however good it is, will

fail. This is another very strong point within Walbridge.

• Commitment; Commitment was also cited as key to the success of any lean

implementation. Walbridge encourages stakeholders to continuously improve and

understand that lean implementation is a journey toward perfection, not a

destination.

Suggestions for those considering implementing lean in construction

For any organization wishing to adopt lean thinking, Walbridge suggests starting with

something simple. Their advice was to start with a small change and see how that works

out. They said that once a few people within the firm see that lean can work, you can

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start to leverage that buy-in from various people to start to implement more changes

within the firm and maybe even outside the firm. The key is to start simple.

The other piece of advice given was to prepare the firm for a journey. Lean

implementation will not be quick. The key to being able to successfully implement lean

in any firm is the ability to look at lean as an on-going process that will take some time

before results were either seen or realized.

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C.10 BMW Constructors

Introduction

The huge BP refinery in Whiting, Indiana was the birthplace in 1912 of the thermal

cracking process, which doubled the yield of gasoline from a barrel of crude oil, while

also boosting its octane rating.

ULSD Project

With the addition of a new Distillate Hydrotreater (DHT), BP's refinery in

Whiting, Ind., will produce additional supplies of ultra low sulfur diesel (ULSD) fuel

that meet or exceed all on-road diesel regulations. The new DHT unit, a $130-million

dollar capital investment, will have the capacity to produce about 36,000 barrels per day

of the ULSD product.

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Approach

BMW Constructors teamed-up with Strategic Project Solutions, Inc. (SPS) to implement

lean construction principles, techniques, and tools within BP and the Regional

Contracting Alliance (RCA) for the construction phase of the ULSD project. The

decision to implement lean was driven largely by the challenging nature of the

construction plan (an independent benchmarking firm assigned a very low probability of

achieving schedule and budget), and to exemplify how the adoption of lean solutions can

benefit BP with future capital projects at Whiting, such as its upcoming multi-billion

dollar expansion related to the Canadian Oil Sands.

The production management solution integrated various systems including:

• Use of digital prototypes (3D models) to collaboratively plan workflow at both

strategic and production levels.

Team planning

• Use of P3 at the strategic project level, with the team continuously reviewing and

updating the remaining of the plan throughout the project (as opposed to just

‘capturing progress’)

• Use of SPS|PM Production Controller to plan and control at the production level

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 Production control meeting SPS|PM screen

The technical solution was supported by:

• Extensive input into the planning process at all levels from people responsible for

doing the work

• Weekly workflow coordination meetings

• Detailed production plans coupled with daily production control

Proactive constraint management including continuous identification and recording of

workflow constrains, recording commitments to remove constraints prior to them

interrupting workflow, and following-up on the status of removing constraints

The production management solution enabled the project team to ‘go slow to go

fast’. Teams did not start field execution of a work package unless they were confident

that: 1) the work can and will flow according the detailed workflow plan, 2) the work can

flow uninterrupted from start to completion, and 3) starting the work is consistent with a

collaboratively developed and continually updated strategic workflow plan.

Benefits

• “Drove a lot of frustration out of the job,

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 • Foremen had time to plan the job and to ensure materials were available. Heard a

lot less griping and negative noise in and around the break / lunch area”, BP

Project Executive

• “Reduced interferences causing downtime among craft disciplines resulting in

waiting for access, tools, materials, equipment and engineering” RCA Senior

Project Manager

Results

• Under cost budget 13%

• Improved labor productivity by 24% compared to similar ULSD projects

Lessons Learned

• Implementation is HARD work requiring a massive leadership effort

• “It is a system that, in my opinion, runs flat in the face of the construction /

mechanical culture of NWI. I include our BP folks as well as contractors. This is

why ‘it takes a bit to get folks on board’. It also requires management (BP)

commitment to STICKING IT OUT, because the folks actually constructing can

revert back to the ‘good old ways’ really easily.” BP Construction Manager

• Success requires development of a robust implementation strategy and sufficient

implementation support

• Implementation is a long-term journey – not an event

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Recommendations

• All production planning should be carried-out collaboratively by those

responsible for executing the work

• Include support groups such as scaffolding, warehousing, delivery, material

handling, and logistics personnel in production planning sessions

• Use the 3D model as support tool, or best available design documents, to assess

options and develop production sequences during planning sessions

• Limit planning sessions to 1 – 1.5 hours

• Develop and issue a printed flow chart for each production work stream. Field

people will often refer to these valuable tools

• Sequence and chart material handling and logistics processes in the same manner

as direct field construction. Balance material handling capacity / flow with

installation capacity / flow

• Conduct periodic interface commitments sessions. Issue the commitments

document for use as field guide for the upcoming work period

• Firmly require field crews to either follow their detailed work sequences or re-

plan as necessary, especially early in the construction phase of the work. Set the

requirement early

• Allow plenty of time and allot sufficient personnel resources for workflow

planning, including collecting, organizing, and entering work stream information

in the production management system prior to beginning work on work streams.

Small investments in structured workflow planning and control can yield

significant returns in the form of improved field productivity

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• Utilize construction staff personnel for planning facilitation; utilize clerks for data

entry and data management

• Celebrate and recognize achievements and milestones

• Do not start a planning session with a preliminary plan (schedule or budget) from

a manager, the owner or staff. Start with a blank slate

• Do not let dominant personalities control work sequence development. Loud

doesn’t equal optimum. Everyone has an equal say in the planning process. Over

95% of workflow conflicts can and should be resolved by group-consensus in

favor of what’s best for the project as whole

• Do not get discouraged if a work stream or work plan is agreed to be discarded

after time is spent on its development.

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C.11 Dee Cramer Case Study

Background

Dee Cramer is one of Michigan-based suppliers in heating, cooling and ventilation. Since

1937, Dee Cramer have been committed to excellence. Excellence in design,

workmanship, competitive pricing and customer service.

Due to its computer aided design capabilities, Dee Cramer professionals can

create heating, cooling and air-exchange systems in detail and to exact specifications,

moving quickly from the drawing board to construction site.

Within the Construction Industry Dee Cramer describes itself as “the air guys”.

Most of their work is in the traditional Design-bid-build contract environment. On most

large construction projects they are 2nd or 3rd tier sub-contractors.

Lean initiatives

Dee Cramer’s answer to the question of why did you apply lean was very simple and

clear: “We recognize it as a way to cut costs, improve our profitability and stay

competitive.”

Due to their unique position of being engaged in both fabrication and construction,

Dee Cramer has been familiar with lean techniques for a while. Their manufacturing

facility is most familiar with lean ideas and processes. While the terminology they used

was not easily identifiable as lean, the ideas they were trying to get across were definitely

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rooted in lean philosophy. Dee Cramer consider themselves fabricators rather then

manufacturers. To them a manufacturer produced the exact same item over and over.

Dee Cramer has an ongoing “process improvement” program both within their

shop and on construction sites. More emphasis was placed on the in-house process

improvements within their manufacturing operations.

The process improvement program was made up of 13 different initiatives within

the firm. Each initiative was developed, implemented and measured by an internal group

of people ultimately responsible for the process that was to be improved. That is to say

that the people who were doing the manufacturing or construction work were the ones

that were responsible for coming up with the process improvement ideas, and then

implementing them.

According to representatives of Dee Cramer, one of the ongoing process

improvement initiatives was based around materials handling. Because of the size and

complexity of the ductworks that Dee Cramer manufactures, delivers and installs on

construction sites, this is not surprising. The fabrication process alone is heavily reliant

on computer aided design.

On the construction site, Dee Cramer cited a two week look-ahead schedule

process improvement program. This program was developed by Dee Cramer Foremen.

The two week look-ahead program is an attempt to try and systematize the planning and

scheduling of work that is to be completed within the next two weeks at a crew level.

The implementation of this program is still on-going, but according to representatives of

Dee Cramer, the outlook for this program is very good.

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Lean Preparation

Dee Cramer indicated that they were heavily reliant on “hands on training”. They cited

the smaller size of the firm as the major reason for this. They indicated that they could

much more effectively train employees in the field and on construction sites.

One example of Dee Cramer’s process improvement is the two week look-ahead

schedule. Representatives of Dee Cramer said that training for the program was

conducted by a handful of employees familiar with the process. These employees would

travel to the various project sites and help the foreman develop look-ahead schedules.

The people doing the training were also foremen within Dee Cramer. This resulted in a

very in depth and complete training by people most familiar with the processes and

problems that might come up during the development of the look-ahead schedules.

Lean Projects

Dee Cramer’s formal introduction to Lean Construction was thru General Motors projects

that they were a part of. General Motors had demanded from the beginning that all

contractors involved with the projects apply both lean techniques and 3-D computer

modeling prior to construction.

3-D modeling of a potential project is the process of completely designing, down

to the last duct hanger, the entire project before construction starts. All potential conflicts

between different contractors are identified and rectified using a 3-D model of the project.

This is said to produce “as builts” of the project before the project even begins. The idea

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behind 3-D modeling is to keep the designs completely accurate and to work the

problems thru in the computer model, as opposed to on the construction site.

According to Dee Cramer, they have been using 3-D modeling for longer than

most people. All of the units that have to be manufactured by Dee Cramer must be 3-D

modeled prior to being built. Prior to the GM projects, Dee Cramer would have to

develop 3-D models of the equipment they were going to produce anyway. This usually

meant taking 2 dimensional designs and then, in house, developing 3-D designs in order

to manufacture the units necessary. The development of the complete 3-D model prior to

construction allowed Dee Cramer to be in a position to take full advantage of the process.

However, Dee Cramer emphasized that they are not completely reliant on

computer aided design. We just use them wherever possible as it cuts production costs.

In some instances it is not practical.

Dee Cramer said that during the construction of the GM facility that they were

using Just-in-time delivery of materials. They were able to forecast very accurately, how

much material would be needed, and have just that amount of material available to the

crew on site.

The 3-D modeling also reduced the need for changes to be made on the

construction site. This was described by Dee Cramer as the source of the majority of the

problems that they would usually have to deal with on a more traditional project. When

dealing with one of a kind manufactured items that are not produced on-site this

represents a major cost and time saving measure.

The GM projects that Dee Cramer participated in are now looked at as examples

of cutting edge construction technology and project management.

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Lean Principles Applied:

JIT

Just in time delivery was a lean tool that Dee Cramer liked to be able to take advantage of

whenever they could. Dee Cramer manufactures the larger air handling equipment that

they use. Due to the size of the equipment, having it sit around a construction site is

either not possible, or not advisable.

Dee Cramer said that they try as much as possible to use just in time delivery

methods. They also said that is very difficult with most projects. They cited the GM

projects as examples of when everything goes correctly. They said that during work at

the GM projects the manufacturing was being done 1-2 days before the units were to be

installed. In some cases, the units were manufactured and installed in the same day.

Dee Cramer cited their position as a sub-contractor as a major inhibitor to being

able to push just in time further. Construction scheduling changes are always difficult to

deal with.

Look Ahead Schedule

Dee Cramer is in the process of training its entire foremen to complete a two week look-

ahead schedule. The two week look-ahead schedule is a way for foremen and other

planners to be able to look at what is scheduled in the next two weeks, and what is likely

going to be done in the next two weeks. The overall goal of this program is more

reliability in the planning that Dee Cramer does. It is in line with the Last Planner®

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System (LPS). Dee Cramer recognizes that the work flow reliability is a pre-requisite to

JIT.

Lean Metrics

Dee Cramer’s Process Improvement program is an internal program that grew out of their

desire to continually improve the way they do business. The program is made up of line

people who are part of the processes that are to be improved. That is to say the process

improvement ideas come from the people who are most familiar with the process. The

ideas are not forced onto employees from above.

The Process Improvement program also develops ways to measure the

effectiveness of the programs that they initiate. Although no data was able to be obtained,

the representatives of Dee Cramer assured us that the measurement of the improvements

was ongoing and the responsibility of the group that initiated the changes.

Lessons Learned

The single biggest obstacle that Dee Cramer faces in its lean journey is the place they

occupy in the overall hierarchy of construction. They are usually 2nd or 3rd tier

subcontractors. This puts them in place where they are usually reacting to changes that

are not of their own making. While process improvement is possible, the biggest gains

that could be made are well outside of the sphere of influence of Dee Cramer.

However, they mentioned that they still can apply some lean principals to projects

within a scope allowed where the owner is not ready. Hopefully they will eventually "see

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the light" and implement it on future projects. Some owners are not sophisticated enough

to ever be ready. In that case lean principals must be promulgated by the entity delegated

by the owner to be in overall charge of the project (i.e. architect, engineer, construction

manager, general contractor)

Dee Cramer said that there is a golden rule: “He who has the gold makes the

rules.” It is from a specialty contractor’s perspective. This was the summarization of lean

projects that Dee Cramer had participated in. Dee Cramer cited owners who demand lean

projects as the single biggest help for lean deployment.

As stated above, Dee Cramer is in a unique position of being more than ready to

be able to take advantage of the lean process, especially 3-D modeling. All that is needed

is more participation and involvement in the construction process by the owners of the

buildings that are being built.

Recommendations for those considering implementing lean in construction

Dee Cramer was very cautious about making changes to its organization. They cited

several programs that were great ideas, but never really got off the ground because the

perception within the firm was that these process improvements were being “forced” on

the employees.

Instead, Dee Cramer ties to get a grass roots movement within the organization.

They are very careful not to be seen as forcing anything onto employees, and prefer to let

the process improvement gains speak for themselves. The two-week look-ahead schedule

was an example of this.

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C.12 Ilyang Construction Case Study

Background

Ilyang Construction is a global leader in the specialty contracting of earthwork and

structural projects. Ilyang Construction was founded in 1976. Since its foundation we

have played an integral role in building a foundation for a nation. Across the nation,

Ilyang has constructed highway, opened tunnel and built seaports, golf courses and

airports to foster economic development.

Ilyang Construction has annual sales in the range of 900 million USD, which

ranks it third among similar businesses in Korea. By being a large specialty contractor in

both earthwork and structural work, Ilyang has created a unique situation. They function

as the coordinator, much like a general contractor, of the work in those phases,

coordinating both their own subcontractors and other specialty contractors. While Ilyang

has its own work force for earthwork, they usually hire their sub-contractors for structural

work, as a second-tier subcontractor. In this way, Ilyang can be the leader of Lean

initiatives and implements Lean ideals while being a subcontractor.

Lean initiatives

The motivations for implementing the Lean philosophies were both financial and

organizational, meaning Ilyang desired more efficient productivity, and controls.

1) Their market became very competitive, as a company seeking for management

competitiveness as well as technical competitiveness.

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 2) The production plan was not reliable. Ilyang encountered frequent changes, from

internal & external needs, and was prevented from having a strategic material

procurement plan, because a reliable lookahead production plan was not created.

3) The potential for a strategic procurement plan, such as an alliance with a supplier,

seemed to be required during times of such inflation on materials, for example:

gas, h-beam, rebar, etc.

4) The home office did not have the necessary insights pertaining to each project site.

The problems of each site were hidden from management.

WS, a managing director at Ilyang, remarked, “Every project site submits its annual

progress schedule and cost schedule. They look beautiful, but the sad thing is that we

cannot rely on the schedules from each project site. So, when the head office makes a

case flow schedule, we refer to cash flow diagrams from previous projects. I know many

other companies tell you the same story.”

JH, an assistant project director at the head office, stated “such frequent work

schedule changes prevent the home office from having a strategic procurement plan.

Sometimes, either the managing director, or my boss, complains to me about the inability

of having a strategic procurement plan. The question remains as to what is the root cause

for the problems. It comes from a lack of reliability with the work plan from the project

sites.”

Additional noted deficiencies with the previous system:

1) They have had trouble in production scheduling; the GC changes work orders

frequently to optimize cash flow, based on their schedule of values with the client.

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 2) Ilyang needs to develop its own production plan, taking into account the whole

picture of the project.

3) Prices for major construction materials have gone up in recent years.

4) Need to have a consistent and reliable lookahead schedule to have a strategic

procurement plan.

Lean Preparation

The level of commitment by Ilyang came from a strong top-management commitment,

which was gained after two pilot projects were tested successfully. The successful

elements of those pilot projects are addressed below.

Elements of successful Lean preparation:

1) External consulting: had a consulting contract with the SUNY-Research

Foundation.

2) Organization: had a Lean task force team, which consisted of three fulltime

engineers, and was supported by a senior managing director.

3) Training stage one: a numerous project managers and 10 project engineers were

trained for pilot projects on Lean, Lean construction, and plan reliability (i.e. Last

Planner®).

In addition to that training, every manager was given the opportunity to receive

training at Toyota Motor Company, in Japan. While the expense was significant,

the CEO and Managing Director felt it was worth the investment.

4) Promotional vehicle: Had two projects described in papers presented at

International Group for Lean Construction conferences.

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 5) Lean implementation manual: with the help of the SUNY research team, Lean

Task Force Team, and managers from early winners, which incorporated the

lessons learned, and Ilyang culture.

6) Implementation: organization-wide.

Lean Projects

Ilyang’s mission statement has set Lean implementation as a top priority in their 5-year

vision (2003-2008). However, the extent of Ilyang’s implementation of the Lean

principles into their projects has been limited. Since the head office only recommends

their projects implement the Lean strategies, cooperation is still on a volunteer basis. If

any project wants to adopt it, the head office will provide a manual, as well as training.

As of Sept 2006, Ilyang had twelve projects that are targeting Lean implementation.

Lean Principles Applied

Ilyang pursue the Last Planner® System as a strategy for production control. The

following steps are main processes for their LPS.

a. LPS: takes on a role of leading specialty contractor

b. A Six-week lookahead schedule: with GC and other SCs. Identifies constraints,

uses “post-it” and invites GC and Engineers (or owner’s representatives) to the

meetings.

c. Daily meeting: checks on constraint removal, the pervious day’s and next day’s

activities.

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 d. A Constraint removal strategy: using Organizational Hierarchy Constraint

Analysis

e. A Weekly plan: to release constraint-free tasks

f. Metrics (PPC and PCR) and learning process

Kanban

Ilyang has adopted a kanban system to facilitate LPS and to ensure safety plan. Each task

resulting from weekly plan requires a distinct card (kanban). Each card indicates the

scope of task and major safety accidents on the task in history is described. Each foreman

is required to pick up the cards under his/her responsibility and announce accidents

before job begins. After job is completed, he/she is required to return the cards to the

office. Kanban eliminates the efforts to measure and check the progress because task is

clearly defined in the course of production control.

Kaizen

Ilyang encourages employee to make suggestions from employees in routine team

meeting. Ilyang gives financial rewards by offering incentives for suggestion. In this

regard, Ilyang has a 1% cost reduction program which offer bonuses to successful

project sites annually.

Visual Management

1) Colored Hardhat

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Ilyang used hardhat visual control where each color indicates distinct work division and

level of management. It helps managers to identify tasks and the numbers of workers on

the task in each location.

2) Safety and Standard Procedure

Ilyang made a handbook of safety and standard procedure for more than 50 construction

processes. Experienced construction managers and engineers participated in the process.

It helps reduce time for planning preparation and variability of processes. They posted a

signboard describing standard procedures and safety issues on the site so that workers can

easily understand and follow them.

Lean Metrics

Since, the Lean construction implementation tool was the Last Planner®, performance

was measured in Percent Plan Complete (PPC). The metric of the Last Planner®system is

a Planned Percentage Completion as a measure of the performance of the planning

system, and as a tool for learning from plan failures (Ballard, 1994). PPC is a measure of

workflow reliability because the production plan of upstream production units is one

source of information regarding workflow to downstream production units (Ballard,

2000). In addition to PPC, PCR (Percent Constraint Removal) is also used in Ilyang.

PCR is a metric to measure the performance in the make-ready process (i.e., constraint

analysis). PCR is the measurement of how successfully the make-ready process has been

performed.

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Lessons Learned

1) Having a reliable work plan: The lookahead planning should be extended to

incorporate all scheduled activities foreseen within a three to six week window. All

participants are required to cooperate with, and contribute to, the overall planning and

controls.

Lee, a project manager at a pilot project site (highway construction project)

remarked, “Three months after we started Last Planner®, we recognized that our ability

to improve work flow reliability was limited. By not extending to outside the

organization, such as a general contractor, there was always an ad-hoc work practice or

priority changes, which resulted in changes to our work plan. This issue was brought to

the attention of the SUNY Research Foundation, and they suggested that we include a

member of the general contracting firm and the relevant specialty contractor into our

work plan meetings. This action extended our LP (Last Planner®) system across the

entire organization.”

Lee continued, “their first reaction when we asked them to participate in our work

plan meeting, was not positive. They (the general contractors) said, “Why should we help

you with your work? It is your job.” However, later they realized the benefit of having a

reliable work plan, from Ilyang, and provided them with a reliable work plan also.

2) Having a good channel of communication that reduces the number of correspondents

needed to coordinate and remove constraints: By having the GC and Engineer at the table,

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during the time of production planning, there is a reduction in fire-fighting, in lead time

necessary to get approval, and to coordinate a planning of the start of projects. WS, a

managing director, explained the other benefits. He said “One of our clients (the GC)

appreciates what we are doing, and asked for training on those successful procedures. He

also encouraged other SCs to adopt Lean. Even though there are no concrete results,

some SCs are interested in having long-term alliances with us, this was stimulated by our

Lean system.”

Conclusions

Ilyang’s decision to pursue Lean principles was driven by the CEO’s commitment and his

personal vision. This organization is a good example of a specialty contractor leading the

way for Lean implementation in projects. They started a production control system within

their organization. Later, they extended that system to upstream participants, including

the general contractor. They started with improving workflow reliability as their Lean

implementation strategy, which was in line with Toyota’s recommendations. Once they

became comfortable with the production control system resulting in improved work flow

reliability (i.e., lengthened lookahead planning window), their lean journey extended to

other lean tools such as kanban.

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C.13 Southland Industries Case Study

Background

Southland Industries was formed in 1949 as Southland Heating, a small residential

design-build group in Southern California. The company grew in size as it ventured into

the larger commercial projects market in the 1970’s. Today, the design-build-maintain

specialty contractor, with over 1500 employees, provides services that include HVAC,

plumbing, process piping, controls and automation, and fire protection. Southland is one

of the 10 largest mechanical contactors in the nation and Contracting Business’s 2001

Commercial Contractor of the year. Southland focuses on facilities with complex

mechanical systems that use significant amounts of energy on a 24*7 basis. These

include: healthcare (hospitals and medical office buildings), hospitality (hotels and

casinos), advanced technology (biotechnology, pharmaceutical, manufacturing, data

centers and semiconductor fabrication) and campuses (education,

commercial/institutional, and federal facilities).

Southland has its corporate office in Irvine, CA, and operating divisions in

Southern California, Northern California, Nevada, and the Mid Atlantic region. Each

division provides full services with planning and development, mechanical engineering,

construction, and service groups. Though spread across the nation, the same corporate

philosophies and company wide standards are instilled throughout the organization

through frequent corporate training, common company systems, quarterly operational

lessons learned meetings, and monthly manager’s meeting in each regional office.

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 The integration of design and build processes has allowed Southland Industries to

rapidly deliver cost effective, high quality solutions. Southland’s core purpose is

“Building Customers for Life”. Southland has five core values that add definition to its

company culture:

1. Passionate, dedicated, entrepreneurial PEOPLE are our most important

resource.

2. INNOVATE to create opportunities and solutions

3. Safely deliver QUALITY

4. Professional and personal INTEGRITY

5. PROFIT as a vital measure of success, growth, and prosperity

Lean Initiatives (why did we ‘go lean?)

Continuous improvement. Most companies decide to change because they must

change—they are experiencing lower margins, are burning out their people, their clients

demand it. With Southland’s culture of innovation, the drive to continuously improve the

standard methods of construction and design was natural. Lean practices reflect many

improvements that Southland was trying to implement in their products: added value,

increased productivity, and higher levels of planning.

Strengthen our labor force. Labor is the highest risk for all self performing construction

companies. Levels of construction activity cycle with the economy. Keeping a

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consistent level of work and therefore work force, is very challenging. The economics

and demand for work is uncontrollable, but the way it is planned and scheduled is

manageable. A steady flow of work is necessary to be able to keep the right people in the

right seat on the bus. Many regions have also experienced a shortage of labor resources,

making the steady flow of work a great priority to be able to attract the best resources of

labor.

Eliminate waste. Rising costs for raw materials have affected all levels of the

construction industry. If we are able to eliminate unnecessary material costs, our clients

will be able to get better value.

Increase communication. Clear communication is key to a strong team. Southland

wanted to improve communication on all levels.

Increase accountability. If commitments are made, they should be completed as

promised. Most of the activities that constructors perform rely on others to perform

before them. If predecessors are not met, cost and schedule overruns are inevitable.

Southland wanted to improve their reliability of delivering on time and under budget.

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Lean Preparation (what’s the history)

Southland Industries has been incorporating lean philosophies for about ten years, and

joined the Lean Construction Institute in 1998. Southland felt they shared the same

philosophy on how to perform work while able to enhance their core values already in

place.

In 1999, goals and an action plan were developed by the corporate managers. The

use of the Last Planner System was implemented with 1 and 3 week look aheads, tracking

PPCs and observing variance issues. Standard protocol bottlenecks were identified and

corrective actions on how to reduce these issues were encouraged. Lean’s philosophy of

continuous improvement was in line with Southland’s core purpose of “Building

Customers for Life” and the “Continuing Improvement Process.” Southland uses the CIP

by setting up a system designed to add value by gradually and continually improving any

process with constant review. The Last planner system has been incorporated into the bi-

annual training meetings since July 1999. Participation in the Lean Construction Institute

has given Southland the opportunity to share experiences with others, learn the latest

progress in the lean movement, and expose key employees to the lean culture.

Each Southland division has applied lean in a different way. This case study

focuses on the Northern California Division. In 2001 they implemented a division

specific lean plan. The Northern California division has +250 employees with offices in

San Francisco and San Jose. They have dedicated sheet metal, HVAC piping, process

piping, and plumbing fabrication shops. The number of employees and size of the offices,

combined with the innovative and young mindsets, created an ideal location to take lean

to the next level. A series of various training courses were started. The courses ranged

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from guest speakers from other lean companies, last planner implementation, 5 S training,

book assignments, and Sutter’s 5 Big Ideas. Not all projects implemented lean practices,

but all had or intended to implement at least one or two of the following tools: pull

schedules, 1-week lookaheads, 3-week lookaheads, PPCs, value stream mapping, and

target costing.

Lean Principles Applied (how did we do it?)

From this point, becoming a “lean enterprise” was the

goal, new ideas were encouraged, and all opinions

were welcome. We knew a culture could not be

forced and implemented overnight, so it was, and still

is, a slow progression. The Northern California

division continued to implement the tools as

mentioned above, and changed people’s mindsets at

the field, shop fabrication, and management levels.

The photographs opposite show examples of some

lean management principles applied in the Northern

California division. Lean methods in action

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Continuous Process Flow

Southland wanted to create a continuous flow of work and to increase productivity in

both fabrication shops and field installation. Shown opposite are photographs of the step

by step process of how pre-fabricated pipe racks are mobilized and installed on the

jobsite. In the pre-assembly stage, the duct was fabricated in the shop in 20-25’ sections.

The pipes, of different systems, are attached to unistrut to create racks of pipe, which can

be easily attached to the hangers on the jobsite. These racks of pipe are stacked on top of

each other, in backwards order of installation, and set on wheels to be easily moved to the

jobsite. The cart of pipe racks are placed in baskets and picked to the designated floor of

installation by crane. The racks are wheeled to the first installation location, raised using

a hi-jack, and then attached to the previously installed hangers.

Similar to the pipe pre-fabrication, the ductwork is fabricated and sectioned into

20-25’ lengths. Each section is tagged, cleaned and end sealed. Wheels are attached to

one section and the other sections are then stacked on top of each other in reverse order

of installation.

The flow of work, from raw material through

fabrication and installation moved in a quick

pace, never sitting still and arriving at the

jobsite for installation at the last responsible

moment. This efficient work flow eliminated

waiting time, extra material handling, and

excess inventory in both shop and field. Piping module installation

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Visualization Control

Terminal Unit Prefabrication

Our Terminal Unit prefabrication process is an example of the use of multiple principles.

We started doing prefabrication on our terminal units about 4 years ago because we saw

this installation as a repetitive process with opportunities for improvement if we did it on

a production line instead of in the field.

Initially, we brought the same method of installation from the field into the shop.

The use of a production line process increased our productivity by 50% in fabrication. It

also provided us with a controlled environment for quality control, process optimization,

and standardization. After performing the task in the shop for a couple projects, we

gathered team members from two of the most current projects to capture lessons learned

on the process. We mapped the entire process from design though installation and found

that there were areas in the process that were repetitive, had risk for quality control issues

and information that was lacking or incorrect. We used this information to redefine the

process and built tools that automatically transfer information between the engineer and

the unit manufacturer, pipe kit manufacturer, and controls manufacture; more information

on prefabrication is then added by the detailer and foreman. The end result is a single

page pull schedule and fabrication matrix and QC labels for the shop to use for

scheduling, fabrication, QC, and delivery.

The new process has provided us with zero defect returns or modifications due to

inaccurate information or damaged components. We have increased our productivity by

60% across the entire process. We are continuing to review and improve the process at

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regular intervals after a batch of projects has been completed. Moving forward, we

would like to balance the work flow into a one piece flow process, however we are

challenged with the limited project need throughout the year, and the varied time frames

needed by each trade to complete their work. Only one field hand was available and used

per trade, thus we found that small batches are currently more effective over one piece

flow; however if the manpower was balanced thus that each component of the

prefabrication were completed in equal time, a large batch would become very efficient.

Value stream map used for setting up a lean terminal unit

Duct Fabrication Spooling Sheets

The production of duct spooling sheets resulted from applying visualization in the sheet

metal fabrication shop. The standard production of shop drawings was to mark up the

engineered 2-D drawings by hand, produce hand drawn details, and then fabricate off of

the detail drawings. This method proved inefficient in clearly communicating all the

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information to the fabricators. Constant communication and meetings between the

detailer and fabricator were necessary to work out all the problems. A streamlined

system was needed, so changes were made: after coordination with all trades, a 3-D

drawing is produced. After approval, spool sheets are produced from the same 3-D

program for each section of duct. This creates a roadmap for each section of duct

breaking it down into parts for easy assembling instructions. Each spool sheet shows a

list of fittings, a 2-D drawing with key dimensions and section numbers, and a 3-D

isometric which identify offsets and elevations that a 2-D drawing would be unable to

show, The spool sheets provide a quality control mechanism and eliminate re-

fabrication based on human error. Because the pre-assembled sections are fabricated in

the shop, less labor is spent in the field producing a safer environment. In combination

with the delivery and installation methods implemented above, Southland has been able

to streamline the duct fabrication, terminal unit fabrication, delivery and installation

process using lean techniques.

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 Sample spool sheet

See for Yourself to Understand the Situation

Project Managers are encouraged to go to their job sites and stand in one location for one

hour just observing: produce a list of any trades being wasteful with time, production,

how it could be done better.

Target Costing

Design decisions should be made based on the business case of the client, a combination

of facility use and available budget. With Southland’s early involvement during the

design phase, it has been easy implementing targetcosting as a standard activity. The

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owners’ budget is broken up into the sub trade amounts to be used as their base target

budget. Separately, the sub trades produce an estimate based on assumptions during

conceptual design and discussions. This has proved to be the most difficult task: creating

a baseline scope on very little information, typically only the general zones of

occupancy use are known. A series of regular meetings, these can be as often as once a

week to once a month, depending on project need, are held to discuss design options and

the impact they have on other trades’ scope. The group is encouraged to optimize the

whole to increase value and decrease overall costs. If a cost goes up in one area of the

budget, an equal or greater cost must go down in order to stay within the overall

target. As design progresses, more concepts and costs become concrete and construction

planning can provide opportunities in productivity and inter-trade coordination that

results in further savings. Results have shown that the owners have been able to receive a

building that is within budget and schedule and sometimes have the opportunity to add

value and scope to their base building while maintaining the original targeted

budget. Through these exercises it was found that an active and decisive owner is crucial

in evaluating decisions, that open-minded team members are necessary to have a truly

collaborative team, and that all team members need to keep the same goal in mind: to

increase value while reducing costs.

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 Budget
Project Estimate
Original Budget

Contingency Transfer
Cost

Added Scope
Added Scope

5 5 5 6 6 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2 7/2
/ / / 1/ 2/ 3/ 4/ 5/ 6/ 7/ 8/ 9/ 10/ 11/ 12/ 1/ 2/ 3/ 4/ 5/ 6/ 7/
10 11 12
Time

Chart showing the fluctuating cost estimate to meet the owner’s budget

Pull Systems

Deliveries from the fabrication shop to the roughly two dozen projects scattered around

the bay area were sometimes incomplete due to poor planning, lack of fabrication time, or

some form of miscommunication. The field foremen were already planning with their

look ahead scheduling, so we took it a step further and added last planner to our delivery

protocols. The method of the one week lookahead schedule was utilized in the shop

using a large dry-erase board on the main shop delivery wall. The days were divided into

morning, midday, and afternoon deliveries, the contents per timeslot included: material

content, foreman, and jobsite. This clearly stated when, who, and where things were

being delivered, eliminate confusion of contents and setting clear goals of delivery. This

simple lookahead tool enabled the deliveries to be predictable, eliminate additional or

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unplanned deliveries, and most importantly, allowed the field personnel to plan their

installation around the targeted receipt of deliveries. Just-in-time deliveries allow the

warehouse to ship the material exactly when needed and so to eliminate inventory on the

jobsite. We delivered the duct or pipe the very same day it is to be installed.

Relentless Reflection and Continuous Improvement

In 2004, a lean construction committee was formed in Northern California with a core

group of managers and department supervisors meeting a couple times a year to train

employees in the teachings of lean. Soon, employees attending these meetings started

introducing buzz words of “5S,” “muda,” “value stream mapping,” and “pull schedules”

to all levels of management and departments. In addition to using the language, we

started leading through example, gradually implementing the lean methods discussed into

our projects when possible.

Since 2006, these meetings have increased to a mandatory monthly meeting, but

instead of training classes of “what is lean?”, it has transformed into discussion meetings

on “why do we do it this way, what can be improved, how do we become more lean, and

what works for us?” We started discussing lessons learned on the projects that had

implemented lean tools, with that information we reflected on how to improve each lean

activity to be more effective by adjusting the tools to fit the division’s needs. The

monthly meetings are also used as a forum to update the group on the latest lean seminars

and training attended by team members.

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 Definitions of the 3 “Levels of Lean” were established to categorize the current

construction projects. This provides a way to measure how “lean” our division is.

Level 3 is the lowest level of lean project; the only source of lean implementation

would be from Southland, there is no influence from the owner or general contractor, so

all lean tools are internal, though still providing value to the customer. Minimal lean

tools are used: last planner system, pre-fabrication and pre-assembling, mechanical and

plumbing 3D CAD and just-in-time delivery.

Level 2 projects have a general contractor driving lean to other subcontractors,

but the owner may not be on board. The internal lean methods are used to affect

schedules and construction planning benefiting the entire project team. Minimum lean

tools in Level 2 include Level 3 tools plus: 3-D CAD drawings using Navis Works clash

detection, and complete fabrication section drawings with spooling sheets.

Level 1 is the highest level of lean project: the entire construction team, led by the

owner representative, uses lean methodology. All lean tools are used in Level 1, which

include Level 2 tools plus: shared tools and equipment with other trades, ongoing team

training on 5S, 7 wastes, last planner and constraint analysis meetings with entire team,

and pull scheduling. Goals will be set to encourage the goal of becoming 100% Level 1

on all projects. Our division is in the midst of establishing a realistic goal based on

current status, industry demands, and field cooperation.

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Lean Metrics (measure of success, what happened?)

The most important metrics are of those that are not tangible or measurable with

numbers. The monthly meetings act as a catalyst to continue to push the implementation

of lean throughout all facts of operation: field, fabrication, fabrication, and management.

The implementation of a continuous process flow for the duct fabrication and

installation was able to improve the installation productivity by 41% while using 33%

less crew size than originally man-loaded. Rework of ductwork, fabricated by the sheet

metal shop, has been almost entirely

eliminated. This method also added

immeasurable ‘soft’ benefits: the team was

able to trust each other by meeting

commitments, creating a safer and more

methodical and reliable working

environment, and supplying immediate

solutions to problems found earlier in the

process. Field Staff Impact

The new process of terminal unit prefabrication has provided us with zero defect

returns or modifications due to inaccurate information or damaged components. We have

increased our productivity by 60% across the entire process and continue to review these

after a batch of projects has been completed to modify the process and adjust as needed.

Commitment to continuous improvement drove Southland to become a “Design-

Build-Maintain” company. The latest addition of maintain to the design-build model, has

allowed Southland to learn the design or installation impacts on the operation of a facility.

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Southland has been able to understand what systems work most efficiently, which

systems tend to fail, and what components of design are necessary or extraneous. These

lessons learned have created immense value to the design and build aspects of Southland.

The lean methods have spread to non-lean clients and other subcontractors

through working with them in a collaborative spirit on projects. Southland has become

an asset to projects by engaging other companies’ project team members in training

classes like the introduction of pull schedules, 5S, and value stream mapping. Southland

has introduced the last planner to other companies, simply by posting or submitting our

one week and three week lookaheads, thus creating more accountability between the team

members.

Lessons Learned (what did we learn, obstacles, barriers?)

Successful implementation of lean is required to start from top corporate levels then

filtering down to the divisions, then to projects. The backing of lean at the higher

management levels can only provide the intent and influence on company members, but

an action-oriented core group of middle management will be the force for actual

implementation of lean on a company wide level. Lean is further driven by contractors

and owners that require this on their projects.

Ultimately a lean, decisive owner is vital in successfully running a lean project; an

owner who provides an environment for all the parties to collaborate and hold each other

accountable.

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 Setting goals in manageable increments are necessary and reporting back on

lessons learned is mandatory.

Implementation of lean principles is easier on design build work when the project

team is picked early. Early involvement allows Southland to help develop lean systems

like last planner, constraint analysis, and target costing for each project and apply these to

the design, the construction and maintenance activities.

Southland has encountered many of the typical obstacles facing lean

implementation. New last planner users see the method as doing more paperwork and do

not want to invest the time to learn something new. The learning curve is intimidating

but once it is taken, most personnel cannot go back to the traditional way of planning.

Another obstacle is the “this is how I’ve always done it” mentality. The

construction industry consists of a variety of personalities and many feel that methods

that have worked for them will always work for them. Employees need to be innovative

or willing to learn new techniques to see the benefits of lean.

Southland Industries, as a whole, has been using lean methods for ten years and

are now becoming close to a company-wide lean enterprise. It has been a slow process to

alter people’s mindsets to think lean, but if persistent with our goals, only benefits can

emerge. The lean wheels are turning and we are now getting to the downhill part of the

lean learning curve.

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C.14 Burt Hill Case Study

Background

With a focus on sustainable design, technology integration, and energy management, Burt

Hill is an international design firm providing award-winning innovation and exceptional

service across a broad range of markets. We are a full-service organization ready to

assist our clients in all aspects of the building process:

• Architectural Design

• Programming

• Master Planning

• Interior Design

• Sustainable Design

• MEP Engineering

• Landscape Architecture

• Civil Engineering

• Construction Services

• Creative Services

Having twelve offices in the United States, Dubai, and India, Burt Hill is among the

world’s largest architecture, engineering, interior design, and landscape architecture

companies. Our clients benefit from the expertise of over 800 professionals. For each

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project, a multi-disciplinary team is chosen from this talented group to analyze and

respond to the client’s unique needs. This ensures that every Burt Hill building is not

only attractive, but also effective and appropriate. While these professionals have

expertise in diverse areas, they share a common goal: designing facilities that will meet

our clients’ needs and contribute to their success.

Burt Hill has been delivering on that promise for the last seven decades. Since the

firm’s establishment in 1936, we have designed a vast range of projects both large and

small, valued collectively at more than $50 billion. With this legacy of technical

expertise and our superior service to clients, Burt Hill has become a leader in the design

of facilities for higher education, K-12 education, healthcare, science and technology,

corporate / commercial, and residential and destination development markets.

Why did Burt Hill start down the lean path?

Pete Moriarty, Burt Hill CEO, met Greg Howell of the Lean Construction Institute in

Europe in 1999. On his return, he told John Brock ‘this is something up your alley’

because of John’s experience and role with project management.

John began attending LCI events, beginning with the Intro to Lean, and the Lean

Congress in 2000. Others, including Tim Schmida, who was the Principal in Charge for

Alliance Hospital, the first of a series of pilot projects, and Mark Dietrick, CIO, who has

led the development of Building Information Management (BIM), Web Portals, and other

technology joined in. Training and on-project consulting was done in the offices, through

Glenn Ballard of LCI. Staff also attended the Introduction to Lean seminars.

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John, Mark, and others became involved in LCI as participants and presenters, sharing

the experiences and results of the Burt Hill pilot projects that followed, in LCI forums.

Pete was aware of industry problems, of industry reports on waste and

productivity performance, and wanted Burt Hill to be at the front edge of trying to

improve the industry; to be a leader in process improvement. He set the goal for Burt Hill

to be 100% BIM-enabled by 2009 which he believes is vital for the company’s future

viability.

Value added to Burt Hill Projects

As the training progressed, the firm piloted Lean approaches on various projects with

successful results. The pilot projects were characterized by increased Collaboration

through BIM (teams working in the same model), Web Portal (sharing consistent project

information), Programming & Planning Workshops, team meetings facilitated with the

Lookahead Schedule, as well as significantly improved schedule and budget performance

through the use of Pull Schedule and Target Cost approaches.

Success was identified as Value Added to our projects including:

• High Percent Plan Complete (PPC) of at least 70% to 80% range typical after

implementation.

• Client Construction Budgets maintained – through Target Cost approach.

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 • Client Schedules maintained- through pull schedule and look-ahead schedule

approach.

• Greatly improved productivity and ability to focus on more high value aspects of

the design project.

• High collaboration and an informed design team and client throughout the

process.

• Lean approaches yielded positive results – right out of the box, even before they

had mastered the techniques., resulting in a low risk experience.

Burt Hill pilots projects included:

• Alliance Hospital – Collaboration Tools & Techniques, Pull Schedule, Last

Planner

• UPMC Laboratory – Collaboration Tools & Techniques, Pull Schedule, Last

Planner

• WVU Hospitals – North West Pavilion – Collaboration Tools & Techniques, Pull

Schedule, Last Planner, Target Cost (Burt Hill retained Boldt Construction as a

cost consultant to Burt Hill), Builder, Web Portal

• WVU Hospitals Cancer Center – Collaboration Tools & Techniques, Pull

Schedule, Last Planner, Target Cost, Builder Alliance, Web Portal

• Passavant Hospital – Collaboration Tools & Techniques, BIM

• 1000 Park – BIM, Last Planner

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 This replacement hospital
complex included a new
three-story 52,000 square
foot professional building a
new 294,000 square foot
hospital and a new 47,000
square foot nursing home.
The Cancer Center Expansion
project will renovate 17,000
square feet of the existing
Mary Babb Randolph Cancer
Center, as well as create a
new 70,000 square foot, four-
story addition which will
contain two floors of Cancer
Center space, two shell floors
for future expansion, and
provisions for a future
conference center.
A facility Master Plan for
expansion on outpatient
services as well as a
comprehensive renovation
program for the 472,000-
square-foot facility. Projects
underway at this time
include expansion of
radiation oncology with an
additional linear
accelerator, MRI addition, a
new cardiac
catheterization lab, as well
as expansion for upgrades

Since the initial pilots, over 50 BIM projects have been produced or are in production,

and the use of our collaboration tools is becoming common on Burt Hill projects.

John, Mark, and others became involved in LCI as participants, and presenters,

sharing the experiences and results of Burt Hill pilot projects in LCI forums.

What was done?

Pete got something started which was taken seriously in the company, with periodic

reports to the firm’s Executive Committee and Board of Directors. Lean efforts were

initially focused on project coordination and control, with implementation of Last Planner

on pilot projects.

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In 2007, Burt Hill is taking steps that will further integrate Lean into the organization:

• We are now at a point in our evolution, where we are creating the tool sets, and

training that will help us drive a more complete roll out of new tools and processes.

• Project Desktop (a web-based project portal that will have Lean tools such as the Last

Planner system built in) is being developed in coordination with new software

upgrades that are planned.

• Firm-wide commitment to Design Management training – at three levels, with a

development of a “certification” of Burt Hill project managers.

o Basic Training – will include Contracts, Project Planning, Communication,

and Accounting interface.

o Intermediate – Lean Approaches, New tools, Target Cost, Pull Scheduling,

o Advanced – Additional Lean, tools including Set Based Design, Big Room

collaboration techniques in the offices, and BIM advancements.

BIM

Recent years have seen increasing industry awareness about Building Information

Modeling (BIM), a digital design process that changes design from its historical,

document-based process to an intelligent, model-driven one. Building information

models record, organize, and link the knowledge created throughout development of the

design so that it is more usable, accessible and transparent. Burt Hill’s involvement in

this area represents the next logical step in the firm’s longtime commitment to the

effective use of technology in delivering value to our clients through knowledge-based

design.

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 As a firm, we have taken an aggressive approach to the adoption and exploitation

of BIM tools, which we recognize as offering more integrated, intelligent and efficient

design and documentation. Senior management has established an ambitious direction

for the firm and committed the resources necessary to achieve them – including hiring a

full-time BIM-implementation manager to assist project teams as they move to the

information modeling process and to coordinate efforts across the firm. Every one of our

offices has one or more active BIM projects. Through these pilot efforts, our staff are

developing the methods, content, and experience to support our entire organization’s shift

to intelligent modeling. The design software industry recognizes our pro-active stance,

deep knowledge, and technical ability by seeking us as partners for beta testing,

development and critique of their emerging products.

The building information model is quite simply a digital representation of the real

building. Using the software our designers assemble components like walls, windows,

floors, furniture, and so on to construct a realistic model of the final design. More

importantly, they also manipulate the associated non-geometric information that is vital

to successful projects, such as cost, manufacturer, options, or other parameters. Working

this way is the primary benefit of BIM: rather than assembling 2-D symbolic graphics,

our designers work in a data-rich three and four dimensional environment. We have

found this workflow better leverages the talents of our design teams, and more closely

aligns their design efforts with the eventual realization of the project.

Of course the adoption of any new technology, method, or tool presents

challenges. We have learned important lessons about the distribution of the work effort

(generally concentrated earlier in the project) and the staff required (typically a smaller,

343
but more knowledgeable team) for a successful BIM project. The adoption of this

technology has prompted changes in the way we train employees, assign staff to projects,

and manage our work to ensure that we continue to deliver successful designs. These

efforts have been particularly important during the early period, and have proven

worthwhile as we see our projects built and our clients satisfied. We remain convinced

that Building Information Modeling is not only invaluable, but inevitable, and we remain

committed to staying at the forefront of its adoption.

BIM technology fits perfectly with our firm’s emphasis of delivering value

through knowledge-driven design because it reduces the low-value tasks like

coordination and drafting in favor of tasks with more knowledge investment. It is these

tasks which ultimately offer more satisfaction for our employees, better value to our

clients, and more significance for our work in the built environment.

Rough Time-line:

• Late 1980’s-mid 1990’s: Industry leader in using 3D CAD for Visualization and

high-end Design Representation.

• Mid-Late 1990’s: Early adopter of “Object Based 3D Design” for integrating 2D

documents, schedules and quantities from 3D models.

• Early 2000’s: BIM becomes a serious industry movement; Burt Hill is positioned as a

leader. A CAD Innovation Group was formed and initiated BIM pilot projects in

several offices. A strategy of learning by doing was adopted, which allowed

champions to emerge, and involved every office although not via a central mandate.

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• Current: Industry leader in transforming entire practice using BIM processes. Burt

Hill now has a formal BIM implementation plan with a Board mandate for 100%

adoption by 2009. Industry leaders in integrating BIM with analytical and simulation

tools being used to enable “Performance Based Design” processes to meet

sustainability objectives.

This BIM group has done the best of the three initiatives thus far. Experiments showed

that internal benefits were sufficient to warrant moving forward. Better documents were

produced. More time was available for design because there was less rework. Also able to

say that better design interface was achievable between architecture and engineering, and

also able to better predict impacts on building performance and sustainability.

Three levels of improvement from BIM were identified:

1. Improve how we design, draft and document

2. Improve collaboration and enhance our services.

3. Change our business possibilities. How to take this data and bridge the gap with

construction and how to get into facilities management?

Early successes have led to having the entire organization behind the BIM initiative.

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 BIM used for “Performance
BIM used for BIM used for
Based Design
Collaborative Discipline Interactive Project
Integration Review

Integrated Practice initiative

There is currently much momentum in our industry related to integration of design and

construction. Many studies have been done that quantify the inefficiencies of our

fragmented industry related to lack of information sharing between project participants –

most significantly between design and construction disciplines precipitated by the

traditional design-bid-build model. Many owners are becoming aware to these

inefficiencies and are beginning to demand a more efficient approach that integrates

design and construction encouraging much higher levels of collaboration and information

sharing via alternative forms of agreements such as design-build and alliance contracts.

BIM is a tool that enables a much easier and comprehensive information exchange --

potentially for the life-cycle of a project -- and is therefore very supportive of the

Integrated Practice concept.

Many within the AEC industry are aware of this industry changing dynamic and

are beginning to explore alternative forms of agreement that can enable higher levels of

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design and construction integration enabled by BIM information sharing. We believe

that it is important to be at the head of the curve related to this and have been

participating in industry events that are helping to define new agreements that address the

concerns of all project stakeholders. In the interim, we are looking for opportunities to

push integrated practice on our current BIM projects, placing supplemental data sharing

agreements in place so that we can begin to address the challenges and explore the

opportunities related to working more collaboratively with construction.

A current project in Boston has a LEED Platinum goal. We see we need to bring

all tools and partnerships to the table.

Now using Revit MEP that integrates IES, analytical software. Burt Hill appears

to be way ahead in using analytical software to understand how buildings will perform.

Can do early, conceptual design modeling building location,

orientation, etc.

Jim Summers, from the Boston office, is managing the BIM implementation

effort.

What advice do you have for others starting down the lean path?

Begin with Introduction to Lean training. Pilot the techniques with LCI assistance and

training. Appoint in-house leaders. Measure and report progress to leadership.

Initiatives like Last Planner, Target Cost, etc. will provide productivity gains that

are as significant as BIM.

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 The BIM initiative has gone very well, so we probably would not change how we

did that if we were to be starting over. The Project Management initiative is not at the

same level, though it is not clear why. There are probably more cultural challenges with

Project Management. It is frustrating, since we even have data linking lean Project

Management with profitability. May need the same CEO-level mandate. We have a COO

mandate for the Basic training. We are seeking a CEO mandate – and Principal support.

We are exploring ways to link Project Management tightly with our BIM

implementation team to speed up our development. That team consists of “techies” who

are green on Project Management, but have demonstrated an ability to integrate new tools

into our practice.

We have developed 4 practice groups to better align technological initiatives to

practice:

1. Content expertise - BIM

2. Document standards-transition period

3. Design management group

4. QC-feedback loop

The dilemma - for Architects and Engineers, PM is like a medicine, that the patient does

not want to swallow --- it requires management skills that are not taught in Design and

Engineering schools. These skills are not the motivation for individuals seek careers in

the design professions. Mid level Project Managers cannot be effective or successful in

an environment that does not support even basic management. Advancement of the

348
profession in Design Management will require both a better offering from the PM

perspective, and more acceptance by firm leaders. It feels like we are at a crossroads.

Independent Program Management and Design Management disciplines and consultants

have been emerging to manage what the process of the design professions. We need to

seek out the right techniques, people and leadership to innovate our design practice.

To work through these issues, we are:

• Seeking individuals who embrace Design Management and Lean principles as a

discipline.

• Building new tools using current technology

• Building a network of champions who will help advance development and

provide instruction and coaching in our studios.

• Strengthening our training programs.

• Aligning employee evaluation and compensation systems with our Lean goals.

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C.15 Spancrete Case Study41

Background

Spancrete is a manufacturer of precast concrete products based in Waukesha, Wisconsin,

with five precast fabrication plants, two concrete pipe plants, and one machinery plant in

various locations in Wisconsin and Illinois. Spancrete employees more than 500 people

and produces both custom and standard products, and thus its different production

facilities can be characterized as job shops or as batch flow shops (more on this in the

next section). In early 2003, in response to declining profit margins, Spancrete began

implementing SLAM, Spancrete’s Lean Approach to Manufacturing .

Among the many challenges of taking a company lean, Spancrete struggled with how

to apply the models and lessons from Toyota to their own situation. How can rules and

tools developed for assembly lines and worker-paced flow lines be applied to Spancrete’s

production-to-order of standard and custom products? They decided to rely primarily on

value stream mapping, which has proven effective not only in achieving substantial

improvements in the way work is done, but even more important, is causing a cultural

revolution, transforming Spancrete into a learning organization (Senge, 1990).

Lean Initiatives

The guiding philosophy of Spancrete’s lean implementation is to provide top down vision

and support, but to generate changes and improvements bottom up. Spancrete divided the

entire company into manageable groups; e.g., Wet Cast Waukesha, Pipe Specialty Green

41
This case study is drawn in part from Brink & Ballard, 2005.

350
Bay. They developed an implementation schedule, choosing to start with direct

production in order to force upstream support groups to keep pace, trained everyone in

the first group42, then selected a core team to be the instrument for improving processes

within that group, consisting of everyone from executive level to the plant floor, picking

laborers who seemed to ‘get it’ during training.

Core team formation takes 1-2 days, including training in value stream mapping (also

done internally), after which the team members collect data for two weeks , then meet to

map the current state process in a long one day session. Soon thereafter, if no additional

data collection is needed, the core team identifies areas of opportunity for improvement

and develops a roughcut future state map of the process, plus an implementation plan.

They meet again two weeks into the implementation plan to take stock and replan as

needed. Every quarter, each core team revisits its processes and uses value stream

mapping to make further improvements.

Core Team with process map on wall

42
Training consists of a 3-4 hour class on basics of lean, 3 hours presentation and 1 hour simulation, taught
by Spancrete personnel.

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Lean Projects

The first core team project was done in Waukesha Wet Cast, beginning in late February,

2003. Data collection revealed that laborers spent on average 3 hours a day looking for

tools, and team members proposed to apply 5S, including the use of tool shadow boards

on the shop walls so tools would be readily available and more often returned to their

proper location after use. The manager of Wet Cast resisted a 5S solution for fear that if

tools were readily available, workers would steal them. After much argument and

education, the manager had to be released. He simply was not able to embrace the new

philosophy. His release opened the floodgates for worker enthusiasm and ideas for

improvement.

In short order, the core team cleaned up the work area, set up tool shadow boards, and

organized cabinets for supplies with a person responsible for keeping them stocked. A

helper who had only recently come to work for Spancrete made a naïve suggestion:

‘Instead of stringing extension cords all over the floor, which takes time and also poses a

tripping hazard, why not drop down cords from the ceiling?’ That resulted in reel

stations for electrical power cords routed over ceilings and walls, soon followed by

compressed air, oxygen and acetylene, the gases used in cutting torches.

Job shop versus flow shop at Waukesha Wet Cast

Waukesha Wet Cast has 10 form beds serviced by a concrete batch plant, with concrete

delivered to the form beds by two small tractors with 2.5 cubic yard buckets. Beds,

batcher and tractors constitute the machines in the production system. Some form beds

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are made of wood and some from steel. They are different maximum sizes. Some forms

are flat and some are vertical (for cylindrical columns). Some are made for rectangular

columns, some for beams, some for decks. The type and size of products produced in a

single day vary widely, making it uneconomical to dedicate labor resources to production

cells/flow shops. Even so, Spancrete has demonstrated the applicability and benefits of

lean techniques to job shops. Techniques successfully applied include value stream

mapping, pull mechanisms applied to processing, reductions in batch sizes, 5S, raw

material inventory control with kanbans, point of use storage (e.g., supply cabinets, drop

down cords), reduction in changeover time, and total productive maintenance (TPM).

Tool Shadow Board in Waukesha Wet Cast after 5S

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Waukesha Wet Cast Results

5S implementation was just the start of a stream of innovations in Waukesha Wet Cast.

As of July, 2004, their cost per cubic foot of product was down 27% from the February,

2003 baseline, labor productivity was up 67%. SLAM was off to a good start.

Impact on the company as a whole

Despite its partial implementation and the inevitable difficulties such as recalcitrant

managers and fixed habits, SLAM has already had an enormous impact on the entire

company. Consider the improvements in production from 2003 to 2004:

• Throughput increased from 565,898 cu. ft. to 1,134,966 cu. ft.

• Direct labor hours per unit of output decreased from .174 to .162

• Raw material inventory turns increased from 17.14 to 25.15

On the ‘soft’ side of the ledger, it is widely agreed that Spancrete is a better place to

work. The change in culture is something a visitor can feel. Everyone seems to have a

story to tell about how something was improved, from choosing to use two tractors to

deliver concrete to form beds as a means of reducing cycle time and labor delays, to

reducing material inventories in the warehouse, to revealing to management that for lack

of an ‘expensive’ repair43, the yard crane had been unable to turn left for the last five

years!

43
Analysis revealed that a simple, inexpensive modification to a hydraulic cable fixed a problem that
workers had lived with and worked around for years.

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Lean Principles Applied

Many lean principles and tools have been applied at Spancrete:

• value stream mapping

• pull mechanisms applied to processing

• reductions in batch sizes

• 5S

• raw material inventory control with kanbans

• point of use storage (e.g., supply cabinets, drop down cords)

• reduction in changeover time

• total productive maintenance

• visual workplace

• standardizing work

Lean Metrics

Lean metrics include:

• labor productivity

• inventory turns

• throughput rates

• employee satisfaction

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Lessons Learned

Bearing in mind the warning against unthinking imitation, nonetheless others can learn

from Spancrete’s example. Other precast concrete fabricators come first to mind,

especially those that provide engineered-to-order products and routinely have a broad

mix of products in production. Indeed, job shops producing all types of products can

beneficially apply the Spancrete approach, whether or not they serve the construction

industry. Beyond that come projects as a type of production system designing and making

a single, unique product. Granting that uniqueness, even so projects repeat processes,

even when the products of those processes differ one from another; e.g., processes for

pulling wire, placing concrete, reviewing submittals, evaluating change orders, planning

production, selecting specialty contractors, and so on. Mapping those processes can

reveal opportunities for eliminating waste, and better yet, can be a social instrument for

engaging project members at every level in the improvement and learning process.

Keys to successful implementation include:

• a leader of the lean implementation effort solely dedicated to that task

• the strategy of providing top down vision and support, but making changes from

bottom up. This is an effective way of empowering employees, but senior

managers, including the facilitator of the implementation effort, must be able to

put their egos aside and support changes even when they think they have a better

idea.

• Value stream mapping, which is an effective tool for bottom-up identification of

waste and opportunities for improvement.

356
• Teams as the organizational unit of change, drawn from all hierarchical levels and

various functional departments. This promotes communication and learning

across both horizontal and vertical levels within a company.

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 D. Statistical Analysis of the

Correlation between PPC and

Productivity

This appendix D reports the process and findings of a statistical analysis of the

correlation between PPC and productivity. 134 sets of weekly production data from a

pipe installation project were collected to conduct the test.

D1.0 Overview of the Project

The data source project was a major expansion for the BP Refinery in Whiting, Indiana—

the ULSD (Ultra Low Sulfur Diesel) Project. With the addition of a new Distillate

Hydrotreater (DHT), the refinery can produce additional supplies of ultra low sulfur

diesel fuel that meets or exceeds all on-road diesel regulations. The new unit has the

capacity to produce approximately 36,000 barrels per day of the ultra low sulfur diesel

product. Construction started in March 2005 and completed in May 2006.

According to the project managers for BMW Constructors, the piping contractor

on ULSD, this is the first time the crews used the Last Planner System. Ballard (2000)

developed the Last Planner® System (LPS) to help increase the predictability of work

flow. LPS stabilizes the work environment through team conformance to rules; e.g., to

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only assign tasks from which all constraints have been removed, thus shielding direct

production of each component function from upstream variation. Once that shield is

installed, it becomes possible to move upstream in front of the shield to reduce inflow

variation, and to move downstream behind the shield to improve performance. The

concept, function and application of LPS can be found in (Ballard 2000).

D2.0 Description of the Working Area and Crews

Production data were collected from two sources. The first source was productivity data

recorded by the contractor. A spreadsheet with ten Working Areas’ production data was

provided to the researchers. It included each working area’s start and end working period,

PPC (Percent Plan Completed), the number of weekly planned tasks, the number of

weekly completed as planned tasks, actual working hours, and earned working hours. The

second resource is from the online database of the management consultant, Strategic

Project Solutions (http://www.strategicprojectsolutions.com). This database has detailed

recording of every task ID, description of work content, predecessor and successor,

members of each team, duration, actual starting time, actual finish time, planned starting

time, planned finish time, and current status (planned, executed, or completed).

PPC is used in the Last Planner® System (LPS) to measure the reliability of work

flow. PPC is calculated by dividing the number of tasks actually completed according to

the plan by the number of tasks that were planned to be completed. PPC measures the

release of work from one crew to the next as predicted by a work plan. Partial completion

does not count because incomplete work does not release follow-on work. Similarly,

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work that was completed but was not planned to be completed does not count because the

specialists in the next step might not have been able to predict its release and plan

accordingly for it.

The weekly production data for ten working areas (Area A-H, J &K) were

collected. The work consisted of process and utility piping installation. The pipe size

ranged from 1/2" to 30" diameter and from standard weight to schedule 80. The work

content was primarily carbon steel construction with stainless steel and chrome in some

areas. For the most part, the work was similar in level of difficulty with the exceptions of

area J, H and K. Area J is mostly large bore piping (18" to 30" diameter piping with a

high percentage of chrome alloy) to overhead fin fan coolers. Areas H and K are pipe

rack areas with a lot of straight run piping. (personal communication from Rick Tuttle,

BMW Constructors, Inc, December 1, 2006)

Table D.1: Summary of the amount of production data collected from a pipe installation

project

No. Working Area Period No. of weeks

(1) (2) Start (3) End (4) (5)

1 A 6-Nov-05 5-Feb-06 14

2 B 6-Nov-05 26-Mar-06 18

3 C 25-Dec-05 2-Apr-06 13

4 D 29-Jan-06 19-Mar-06 8

5 E 29-Jan-06 16-Apr-06 11

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 6 F 25-Dec-05 16-Apr-06 16

7 G 15-Jan-06 9-Apr-06 12

8 H 15-Jan-06 12-Mar-06 9

9 J 27-Nov-05 9-Apr-06 20

10 K 2-Oct-05 8-Jan-06 13

134 weeks’ production data (see Table D.1) were collected. Productivity44 was calculated

by dividing weekly earned hours by actual hours. All crews were made up of union craft

workers. Crew sizes fluctuated from approximately 8 to 12 workers depending on the

amount of available work in each area. The contractor developed a standard work process

for the piping work. All working areas utilized the standard process. Crowding was not an

issue for any of the ten working areas, all of which were outdoors. As far as defect rate,

welders were tested before being placed in production and the contractor had a negligible

weld reject rate and less then 3% rework for the entire project. There was negligible

overtime work.

D3.0 Limitations of the Data

The limitations of the data collected are:

44
Strictly speaking, performance factor was calculated, not productivity, but the ratio of estimated to actual
productivity (performance factor) is often used as proxy for productivity in the construction industry.

361
The production data is based on working areas, not crews fixed in composition. Some

changes in productivity may have resulted from changes in the specific workers assigned

to a work area each week.

1. Data was available only for a single trade. Consequently it is not possible to evaluate

the impact of improved plan reliability (as measured by PPC) on the productivity of

following trades.

2. This is the first time the crews used the Last Planner® system. There might be a

certain level of inaccuracy in terms of understanding and application of LPS. A

certain level of inaccurate data recording may also exist. That might also distort the

correlations among the variables found in the study.

3. Several large industrial piping projects were underway in the area at the time of the

ULSD Project, but BMW Constructors did not need to work overtime in order to

complete their project work successfully, and chose not to pay overtime as an

incentive to attract and retain skilled workers. This may have reduced the overall skill

level of their workforce, which would make their productivity improvement even

more impressive.

4. The estimates for work load and capacity were based on the number of tasks assigned

and completed, as opposed to quantities of work product to be installed. There could

be some imprecision in those estimates from differences in the labor content of tasks.

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D4.0 Data Analysis and Findings

The production data of Working Area A-G were studied together because according to the

project managers, those seven working areas were comparable; i.e., those working areas

have 1) similar type of work, and 2) similar composition and skills of workers. After

discussing with the project managers, two data points with zero productivity recorded

were removed. The statistical analysis was conducted on 90 sets (work weeks) of

productivity data of those seven working areas. The findings are discussed below.

D4.1 Testing an Hypothesis

LPS can help improve overall productivity when there are hand-offs between crews of

different trades. If the construction process is regarded as chains of production units or

specialists, the higher the PPC, the more reliable the output from upstream units and the

better downstream players can match their resources to the expected workload and avoid

waste of resources. By better managing the release of work between system participants,

project managers can increase the predictability of work load throughout the production

system. With predictable work load, project managers can better match capacity to load

and thus improve productivity.

The Last Planner approach can also help a crew improve its own productivity. For

example, using the screening, sizing, and sequencing tools in LPS, the crew doing Last

Planner should have higher productivity because of the impact of planning and

preparation on performance; i.e., reduction in delays, rework, and generally in non-value-

added time. Since the level of PPC can be taken as an indicator of the extent to which

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Last Planner is being effectively implemented, higher PPC should result in better

productivity performance.

The theoretical analysis of the relationship between PPC and productivity is clear.

But there was previously no published analysis of the correlation between PPC and

productivity. Therefore, one goal of this case study is to collect production data from a

real project and use the data to test if there is a correlation existing between PPC and

productivity. The hypothesis for this case study is:

Hypothesis: A correlation exists between PPC and Labor Productivity

Labor productivity in the Working Areas was measured by:

EarnedHour
Productivity =
ActualHour

Three Main Groups (Working Area A-G, H&K, and J)

The ten working areas were divided into three groups:

Group A: Working Area A-G

Group B: Working Area H&K

Group C: Working Area J

Within each group, the type of work, difficulty of work, skill level of crew, and crowding

of work area were similar. Group A has 90 sets of PPC and Productivity data, Group B

has 22, and Group C has 20 (see Table D.2).

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 Table D.2: Correlation analysis of PPC and Productivity for the three main Groups

Group Working Total data Type of work Correlation Coefficient

area points

A A-G 90 General 0.246*

B H,K 22 Straight run piping 0.292

C J 20 Large bore -0.156

** Correlation significant at 0.01 level.

D4.1.1 Group A (Working Area A-G, 90 data points)

The scatter plot between PPC and productivity for Group A is shown in Figure D.1. The

X axis is the weekly PPC and Y axis is the weekly productivity. Visually, Figure D.1

shows a slight trend that while PPC increases, productivity also increases.

Figure D.1: Scatter Plot between Productivity and PPC

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 Table D.3: Correlation analysis for Group A (Work Areas A-G)

Correlations

PROD PPC
PROD Pearson Correlation 1 .246*
Sig. (2-tailed) . .019
N 90 90
PPC Pearson Correlation .246* 1
Sig. (2-tailed) .019 .
N 90 90
*. Correlation is significant at the 0.05 level (2-tailed).

The correlation coefficient analysis of Group A is listed in Table 3. The correlation

coefficient is 0.246 at 0.05 significance level. Interpretation of significance level, drawn

from Bryman and Cramer (2005), is provided below.

“The test of statistical significance tells us whether a correlation could have arisen

by chance (i.e. sample error) or whether it is likely to exist in the population from

which the sample was selected. It tells us how likely it is that we might conclude from

sample data that there is a relationship between two variables when there is no

relationship between them in the population. Thus, if correlation is significant at 0.01

level, there is only one chance in 100 that we could have selected a sample that shows

a relationship when none exists in the population. We would almost certainly

conclude that the relationship is statistically significant. However, if the significant

level is 0.1, there are ten chances in 100 that we have selected a sample which show a

relationship when none exists in the population. We would probably decide that the

366
 risk of concluding that there is a relationship in the population is too great and

conclude that the relationship is non-significant.”

Bryman and Cramer (2005) also discuss how to interpret the correlation coefficient

values as below:

“What is a large correlation? Cohen and Holliday (1982) suggest the following:

0.19 and below is very low; 0.20 to 0.39 is low; 0.40 to 0.69 is modest; 0.70 to 0.89

is high; and 0.90 to 1 is very high. However, these are rules of thumb and should not

be regarded as definitive indications, since there are hardly any guidelines for

interpretation over which there is substantial consensus.”

“A useful aid to the interpretation of a correlation coefficient i) …the coefficient of

determination ( r 2 ). This is simply the square of the correlation coefficient r

multiplied by 100. It provides us with an indication of how far variation in one

variable is accounted for by the other. Thus, if r=-0.6, then r 2 =36 per cent. This

means that 36 per cent of the variance in one variable is due to the other. When r=-

0.3, then r 2 will be 9 per cent. Thus, although an r of –0.6 is twice as large as one of

–0.3, it cannot indicate that the former is twice as strong as the latter, because four

times more variance is being accounted for by an r of –0.6 than one of –0.3).

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Accordingly, Table D.3 shows that there is a positive correlation of 0.246 existing

between PPC and productivity for Group A. This indicates that Productivity and PPC are

positively correlated.

D4.1.2 Group B (Working Area H&K, 22 data points)

The scatter plot for PPC and productivity of Group B is shown in Figure D.2. We can see

a positive correlation between PPC and productivity in Figure D.2. The correlation

coefficient analysis between PPC and productivity for Group B is listed in Table D.4. The

correlation coefficient is 0.292.

2
HKPROD

0
-.2 0.0 .2 .4 .6 .8 1.0 1.2

HKPPC

Figure D.2: Scatter plot of PPC and Productivity for Group B (Work Areas H&K)

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 Table D.4: Correlation analysis for Group B (Work Areas H&K)

Correlations

VAR00030 VAR00033
VAR00030 Pearson Correlation 1 .292
Sig. (2-tailed) . .187
N 22 22
VAR00033 Pearson Correlation .292 1
Sig. (2-tailed) .187 .
N 22 22

D4.1.3 Group C (Working Area J, 20 data points)

The scatter plot of PPC and productivity of Group C is in Figure D.3. There is no

correlation between PPC and productivity observed in Figure D.3. The correlation

coefficient analysis between PPC and productivity for Group C is listed in Table D.5. The

correlation coefficient is –0.156.

2.5

2.0

1.5

1.0

.5
JPROD

0.0
.5 .6 .7 .8 .9 1.0 1.1

JPPC

Figure D.3: Scatter plot of PPC and Productivity for Group C (Work Area J)

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 Table D.5: Correlation analysis of PPC and Productivity for Group C (Work Area J)

Correlations

JPPC JPROD
JPPC Pearson Correlation 1 -.156
Sig. (2-tailed) . .510
N 20 20
JPROD Pearson Correlation -.156 1
Sig. (2-tailed) .510 .
N 20 20

According to Table D.2, the correlation coefficient between PPC and Labor Productivity

is 0.246 significant at 0.05 level for Working Area A-G. Therefore, the result of

hypothesis testing is that a statistically significant positive correlation exists between PPC

and Labor Productivity.

D4.2 The Regression Equation of Productivity and PPC

A statistical analysis of the correlation coefficient of each pair of variables was conducted

and the result is shown in Table D.10. The definition of each variable is also listed in

Appendix B. It was found among all the production variables, only PPC is significantly

correlated with productivity. A linear regression was also carried out between

Productivity and PPC. We obtained the equation:

Productivity = 0.693+0.818*PPC Eq. 1

This means that every rise of one unit of PPC predicts a rise on productivity of 0.818

unit. The analysis of variance shows that the regression result is significantly different

from zero (F=5.681, confidence value = 0.019 (significant). Figure D.1 shows the linear

regression line of Productivity and PPC.

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D4.3 Other Findings

D4.3.1 The relationship between Work Load or Output Variation and Productivity

If the flexibility of capacity is given, the variation of work load or output does not

necessarily impact labor productivity.

The variation of load on each Working Area = SD(number of weekly planned

tasks)/Average number of weekly planned tasks Eq.2

(Where SD is Standard Deviation of the sample data.)

The variation of construction output from each Working Area = SD(number of weekly

completed tasks)/Average number of weekly completed tasks Eq.3

Table D.6 Variation of load, output and productivity

Working Average SD of Ave SD(Load)/ SD of Ave of SD(Output)/

Area prod Load Load Ave(Load) Output Output Ave(Output)

A 1.13 19.32 47.08 0.41 24.75 50.08 0.49

B 1.43 52.28 67.24 0.78 66.54 96.41 0.69

C 1.17 51.73 116.62 0.44 49.20 118.23 0.42

D 1.66 55.39 68.75 0.81 52.73 54.50 0.97

E 1.78 41.10 86.00 0.48 51.84 99.00 0.52

F 1.18 103.50 157.19 0.66 123.01 175.88 0.70

G 1.13 60.90 94.92 0.64 72.44 102.83 0.70

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Correlation -- -- 0.288 -- -- 0.341

Coefficient with Ave

Prod

The average weekly productivity of each Work Area is also calculated. The results are

summarized in Table D.6, which shows that there is no significant correlation between

variation of load and average productivity. Also, there is no significant correlation

between variation of output and average productivity. The correlation coefficient tables

and scatter plots are in Tables D.11 & D.12 and in Figures D.10 & D.11.

D4.3.2 PPC and Productivity Correlation as Work Load Changes

Of the three main groups, Group A shows a significant positive correlation between PPC

and productivity. The data in Group A was analyzed in greater detail to find out how PPC

and productivity are related as the work load changes.

First, work load was defined as Tkplachr:

Tkplachr = number of Weekly tasks planned/ Weekly Actual hours Eq. 4

Tkplachr was used as an indicator of overloading or underloading. For the following

analysis, first all the data sets were divided into clusters according to the value of

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Tkplachr. Second, the correlation coefficient between productivity and PPC was tested

within each cluster. The results are shown below.

Table D.7: Correlation analysis of PPC and productivity in the clusters within Group A

No. Total Cluster # of data Cluster Range of the Correlation

data points in Centers cluster (# of Coefficient

points Cluster tasks

planned/actual

hours)

1 90 Group A-1 84 0.22 [0.01,0.77] 0.258*

2 Group A-2 6 1.41 [0.91,2.51] -0.401

3 84 Group A-1-1 71 0.17 [0.01,0.29] 0.254*

4 Group A-1-2 13 0.48 [0.36,0.77] 0.255

5 71 Group A-1-1-1 39 0.11 [0.01,0.20] 0.202

6 Group A-1-1-2 32 0.23 [0.20,0.29] 0.334

7 Group A-1-1- 45 0.30 [0.20,0.77] 0.316*

2+A-1-2

*Correlation significant at 0.05 level.

SPSS statistical software was used in clustering, which involved the following three

steps:

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Step 1: Find the most widely spaced initial cluster centers. In this case, there exist

Cluster 1 with a center of 0.01 and Cluster 2 with a center of 2.51.

Step 2: Assign each data point to its closest cluster center and update the cluster center.

For example, the first set of data has 0.05 tasks planned per actual hour. Its closest cluster

center is 0.01. So it belongs to Cluster 1. The updated cluster center is 0.03

((0.01+0.05)/2). This process was repeated until all data sets had been assigned and the

cluster centers updated.

Step 3: Repeat Step 2 until there is no more change in cluster centers.

The results are summarized in Table D.7. It is found that the correlation between

productivity and PPC increases when the work load rate lies in a moderate range.

The clustering processes are explained below:

D4.3.2.1 Cluster A-1 and A-2

As result, Group A was divided into Cluster A-1 and Cluster A-2 (see Table D.7). Cluster

A-1 has 84 data points, average is 0.22 tasks planned/actual hour, and the range is [0.01,

0.77]. Cluster A-2 has 6 data points, average is 1.41 tasks planned/actual hour, and the

range is [0.91, 2.51] (see Figure D.4 and also Table D.13 and Figure D.12).

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 0.01 0.77 0.91 2.51

Range of the cluster (# of tasks

planned/actual hours)

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6

84 (0.258*) 6 (-0.401)

Figure D.4: Correlation analysis of PPC and productivity in clusters A-1 and A-2

D4.3.2.2 Cluster A-1-1 and A-1-2

Since the productivity and PPC correlation in Cluster A is significant, we continue to

divide Group A-1 into two clusters: Cluster A-1-1 and A-1-2. Cluster A-1-1 has 71 data

points, average is 0.17 tasks planned/actual hour, and the range is [0.01,0.29]. Cluster A-

1-2 has 13 data points, average is 0.48 tasks planned/actual hour, and the range is [0.36,

0.77] (see Figure D.5, and also Table D.14 and Figure D.13).

0.01 0.77 0.91 2.51

0.29 0.36
Range of the cluster (# of tasks
planned/actual hours)

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6

84 (0.258*) 6 (-0.401)

71 (0.254*) 13 (0.255)

Figure D.5: Correlation analysis of PPC and productivity in clusters A-1-1 and A-1-2

375
D4.3.2.3 Cluster A-1-1-1 and A-1-1-2

We continue to divide Cluster A-1-1 into two clusters: Cluster A-1-1-1 and A-1-1-2.

Cluster A-1-1-1 has 39 data point, average is 0.11 tasks planned/actual hour, and the

range is [0.01, 0.20]. Cluster A-1-2 has 32 data points, average is 0.23 tasks

planned/actual hour, and the range of tasks is [0.20, 0.29] (see Table D.15 and Figures

D.13 & D.14).

0.01 0.77 0.91 2.51

0.29 0.36
Range of the cluster (# of tasks
planned/actual hours)

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6

84 (0.258*) 6 (-0.401)

71 (0.254*) 13 (0.255)

39 (0.202) 32 (0.334)

Figure D.6: Correlation analysis of PPC and productivity in clusters A-1-1-1 and A-1-1-

D4.3.2.4 Combine Cluster A-1-1-2 and A-1-2

We combine Cluster A-1-1-2 and A-1-2 to see how the correlation between Productivity

and PPC changes when the capacity utilization is in a moderate range, not underloading

376
or overloading. Here we have 45 data points, the average is 0.30 tasks planned/actual

hour, and the range is [0.20, 0.77] (see Table D.16 and Figure D.15).

0.01 0.77 0.91 2.51

0.29 0.36
Range of the cluster (# of tasks
planned/actual hours)

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 2.4 2.5 2.6

84 (0.258*) 6 (-0.401)

71 (0.254*) 13 (0.255)

45 (0.316*)

Figure D.7: Correlation analysis of PPC and productivity in the clusters within Group A

Table D.17 and Figure D.15 shows that the correlation coefficient between Productivity

and PPC increases to 0.316* in a moderate capacity utilization range. On the other hand,

the Productivity and PPC correlation is not as strong when there is overloading or

underloading.

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D4.3.3 PPC and Work Load Rate

The correlation coefficient between PPC and work load (Weekly Tasks Planned/Actual

Hours) is –0.313 at 0.01 significant level. The correlation coefficient between PPC and

another measure of work load, Weekly Tasks Planned per Worker per Week, is –0.282 at

0.01 significant level (see Tables D.8 and D.9).

Table D.8: Correlation between PPC and work load (Weekly Tasks Planned/Actual Hours)

Correlations

PPC TKPLACHR
PPC Pearson Correlation 1 -.313**
Sig. (2-tailed) . .003
N 90 90
TKPLACHR Pearson Correlation -.313** 1
Sig. (2-tailed) .003 .
N 90 90
**. Correlation is significant at the 0.01 level (2-tailed).

Table D.9: Correlation between PPC and work load (Weekly Tasks Planned per Worker

per Week)

Correlations

PPC TKWORKW
PPC Pearson Correlation 1 -.282**
Sig. (2-tailed) . .007
N 90 90
TKWORKW Pearson Correlation -.282** 1
Sig. (2-tailed) .007 .
N 90 90
**. Correlation is significant at the 0.01 level (2-tailed).

Figure D.8 is the scatter plot of PPC and work load (Weekly Tasks Planned/Actual

Hours). It shows when work load increases, PPC decreases. This trend is not strong when

378
Weekly Tasks Planned/Actual Hours is lower. But it gets stronger as work load gets

higher than a certain level. The graph shows that when Weekly Tasks Planned/Actual

Hours increases beyond 0.3, PPC decreases quickly.

Figure D.8: Scatter plot of PPC and work load (Weekly Tasks Planned/Actual Hours)

Weekly Tasks
Actual Hours
Completed

-0.074
-0.130

Weekly Tasks -0.313** PPC 0.246* Productivity

Planned/Actual Hours

0.317**
-0.093

Weekly Tasks Earned Hours

Planned

Figure D.9: Path model for labor productivity

379
 Figure D.9 shows the Path model of labor productivity performance. It shows that PPC is

positively correlated with productivity. Since PPC is a measure of plan reliability, when

we improve PPC, productivity increases. Therefore, in order to improve productivity,

project managers should devote management effort to improving PPC.

D4.3.4 Statistical Analysis Tables and Figures

Table D.10: Correlation analysis of 17 production variables

PROD PPC TASKPL TOTALC COMNO COMPL

AN OM PL AN

PROD Correlation 1 .246* -.093 -.074 -.064 -.051

Sig. .* .019* .384* .486* .551* .630*

PPC Correlation .246* 1 .136 .297** -.021 .369**

Sig. .019* .* .203* .005* .843* .000*

TASKPLAN Correlation -.093 .136 1 .923** .495** .951**

Sig. .384* .203* .* .000* .000* .000*

TOTALCOM Correlation -.074 .297** .923** 1 .679** .948**

Sig. .486* .297* .000* .* .000* .000*

COMNOPL Correlation -.064 -.021 .495** .679** 1 .444**

Sig. .551* .843* .000* .000* .* .000*

COMPLAN Correlation -.051 .369** .951** .948** .444** 1

Sig. .630* .000* .000* .000* .000* .*

380
CNOPLTPL Correlation -.011 -.057 -.268** -.043 .487** -.249**

Sig. .921* .591* .011* .687* .000* .018*

CNOPLTCO Correlation -.122 -.316** -.196 -.049 .570** -.280**

Sig. .253* .002* .064* .649* .000* .008*

CPLANCOM Correlation .146 .301** .202 .022 -.543** .281**

Sig. .170* .004* .056* .834* .000* .007*

ACTUHR Correlation -.130 .433** .501** .580** .238* .596**

Sig. .220* .000* .000* .000* .024* .000*

EARNHR Correlation .317** .450** .413** .477** .195 .507**

Sig. .002* .000* .000* .000* .065* .000*

TKPLACHR Correlation -.043 -.313** .338** .194 .169 .181

Sig. .686* .003* .001* .067* .111* .087*

TKPLAERH Correlation -.154 -.113 .115 .088 .127 .060

Sig. .149* .291* .282* .410* .235* .574*

TKCOMACH Correlation -.037 -.203 .347** .295** .323** .239*

Sig. .729* .055* .001* .005* .002* .023*

TKCOMERH Correlation -.140 -.055 .093 .100 .153 .062

Sig. .192* .609* .387* .350* .152* .565*

NWORKER Correlation -.131 .433** .499** .577** .233* .593**

Sig. .219* .000* .000* .000* .027* .000*

TKWORKW Correlation -.042 -.282** .291** .160 .145 .147

Sig. .696* .007* .005* .132* .173* .166*

381
 Table D.10: Correlation Coefficient Analysis of 17 Production Variables (Continued)

CNOPLT CNOPLT CPLANC ACTUH EARNH TKPLA

PL CO OM R R CHR

PROD Correlation -.011 -.122 .146 -.130 .317** -.043

Sig. .921* .253* .170* .220* .002* .686*

PPC Correlation -.057 -.316** .301** .433** .450** -.313**

Sig. .591* .002* .004* .000* .000* .003*

TASKPLAN Correlation -.268* -.196 .202 .501** .413** .338**

Sig. .011* .064* .056* .000* .000* .001*

TOTALCOM Correlation -.043 -.049 .022 .580** .477** .194

Sig. .687* .649* .834* .000* .000* .067*

COMNOPL Correlation .487** .570** -.543** .238** .195 .169

Sig. .000* .000* .000* .024* .065* .111*

COMPLAN Correlation -.249* -.280** .281** .596** .507** .181

Sig. .018* .008* .007* .000* .000* .087*

CNOPLTPL Correlation 1 .793** -.773** -.142 -.115 -.133

Sig. .* .000* .000* .183* .278* .212*

CNOPLTCO Correlation .793** 1 -.962** -.199 -.204 .031

Sig. .000* .* .000* .060* .053* .769*

CPLANCOM Correlation -.773** -.962** 1 .151 .192 -.018

Sig. .000* .000* .* .156* .070* .869*

ACTUHR Correlation -.142 -.199 .151 1 .809** -.348**

382
 Sig. .183* .060* .156* .* .000* .001*

EARNHR Correlation -.115 -.204 .192 .809** 1 -.295**

Sig. .278* .053* .070* .000* .* .005*

TKPLACHR Correlation -.133 .031 -.018 -.348** -.295** 1

Sig. .212* .769* .869* .001* .005* .*

TKPLAERH Correlation -.032 .050 -.045 -.204 -.238* .464**

Sig. .765* .638* .672* .055* .025* .000*

TKCOMACH Correlation .034 .147 -.139 -.323** -.268* .950**

Sig. .751* .168* .193* .002* .011* .000*

TKCOMERH Correlation .015 .076 -.074 -.167 -.202 .381**

Sig. .892* .482* .490* .118* .058* .000*

NWORKER Correlation -.146 -.201 .151 .999** .808** -.352**

Sig. .171* .057* .155* .000* .000* .001*

TKWORKW Correlation -.115 .027 -.015 -.320** -.275** .977**

Sig. .281* .798* .885* .002* .009* .000*

*Correlation is significant at the 0.05 level (2-tailed).

**Correlation is significant at the 0.01 level (2-tailed).

383
Table D.10: Correlation Coefficient Analysis of 17 Production Variables (Continued)

TKPLAE TKCOM TKCOM NWORK TKWOR

RH ACH ERH ER KW

PROD Correlation -.154 -.037 -.140 -.131 -.042

Sig. .149* .729* .192* .219* .696*

PPC Correlation -.113 -.203 -.055 .433** -.282**

Sig. .291* .055* .609* .000* .007*

TASKPLAN Correlation .115 .347** .093 .499** .291**

Sig. .282* .001* .387* .000* .005*

TOTALCOM Correlation .088 .295** .100 .577** .160

Sig. .410* .005* .350* .000* .132*

COMNOPL Correlation .127 .323** .153 .233* .145

Sig. .235* .002* .152* .027* .173*

COMPLAN Correlation .060 .239* .062 .593** .147

Sig. .574* .023* .565* .000* .166*

CNOPLTPL Correlation -.032 .034 .015 -.146 -.115

Sig. .765* .751* .892* .171* .281*

CNOPLTCO Correlation .050 .147 .076 -.201 .027

Sig. .638* .168* .482* .057* .798*

CPLANCOM Correlation -.045 -.139 -.074 .151 -.015

Sig. .672* .193* .490* .155* .885*

ACTUHR Correlation -.204 -.323** -.167 .999** -.320**

384
 Sig. .055 .002 .118 .000 .002

EARNHR Correlation -.238* -.268* -.202 .808** -.275**

Sig. .025* .011* .058* .000* .009*

TKPLACHR Correlation .464** .950** .381** -.352** .977**

Sig. .000* .000* .000* .001* .000*

TKPLAERH Correlation 1 .554** .993** -.210* .459**

Sig. .* .000* .000* .048* .000*

TKCOMACH Correlation .554** 1 .499** -.329** .912**

Sig. .000* .* .000* .002* .000*

TKCOMERH Correlation .993** .499** 1 -.173 .375**

Sig. .000* .000* .* .104* .000*

NWORKER Correlation -.210* -.329** -.173 1 -.327**

Sig. .048* .002* .104* .* .002*

TKWORKW Correlation .459** .912** .375** -.327** 1

Sig. .000* .000* .000* .002* .*

*Correlation is significant at the 0.05 level (2-tailed).

**Correlation is significant at the 0.01 level (2-tailed).

385
Table D.11: Correlation between average productivity and SD(Input)/Ave(Input) for work

areas A-G

Correlations

AVEPROD SDAVEIN
AVEPROD Pearson Correlation 1 .288
Sig. (2-tailed) . .531
N 7 7
SDAVEIN Pearson Correlation .288 1
Sig. (2-tailed) .531 .
N 7 7

Table D.12: Correlation between average productivity and SD(Output)/Ave(Output) for

work areas A-G

Correlations

AVEPROD SDAVEOUT
AVEPROD Pearson Correlation 1 .341
Sig. (2-tailed) . .454
N 7 7
SDAVEOUT Pearson Correlation .341 1
Sig. (2-tailed) .454 .
N 7 7

Table D.13 Correlation between Productivity and PPC in cluster A-1 (with 84 data sets)

Correlations

PPCA184 PRODA184
PPCA184 Pearson Correlation 1 .259*
Sig. (2-tailed) . .017
N 85 85
PRODA184 Pearson Correlation .259* 1
Sig. (2-tailed) .017 .
N 85 85
*. Correlation is significant at the 0.05 level (2-tailed).

386
 1.8

1.7

1.6

1.5

1.4

1.3
AVEPROD

1.2

1.1
.4 .5 .6 .7 .8 .9

SDAVEIN

Figure D.10: Scatter plot for average productivity and SD(Input)/Ave(Input) for work areas

A-G

1.8

1.7

1.6

1.5

1.4

1.3
AVEPROD

1.2

1.1
.4 .5 .6 .7 .8 .9 1.0

SDAVEOUT

Figure D.11: Scatter plot for average productivity and SD(Output)/Ave(Output) for work

areas A-G

387
 6

2
PRODA184

0
.2 .4 .6 .8 1.0 1.2

PPCA184

Figure D.12: Scatter plot of productivity and PPC in cluster A-1 (with 84 Data Sets)

Table D.14: Correlation between productivity and PPC in cluster A-1-1 (with 71 data sets)

Correlations

PPCA11 PRODA11
PPCA11 Pearson Correlation 1 .254*
Sig. (2-tailed) . .033
N 71 71
PRODA11 Pearson Correlation .254* 1
Sig. (2-tailed) .033 .
N 71 71
*. Correlation is significant at the 0.05 level (2-tailed).

388
 6

2
PRODA11

0
.2 .4 .6 .8 1.0 1.2

PPCA11

Figure D.13: Scatter plot of productivity and PPC in cluster A-1-1 (with 71 data sets)

Table D.15: Correlation between productivity and PPC in cluster A-1-1-2 (with 32 data

sets)

Correlations

PPCA112 PRODA112
PPCA112 Pearson Correlation 1 .334
Sig. (2-tailed) . .062
N 32 32
PRODA112 Pearson Correlation .334 1
Sig. (2-tailed) .062 .
N 32 32

389
 6

2
PRODA112

0
.2 .4 .6 .8 1.0 1.2

PPCA112

Figure D.14: Scatter plot of productivity and PPC in cluster A-1-1-2 (with 32 data sets)

Table D.16: Correlation between productivity and PPC in clusters A-1-1-2 + A-1-2 (with

45 data sets)

Correlations

PPCAF PRODAF
PPCAF Pearson Correlation 1 .316*
Sig. (2-tailed) . .034
N 45 45
PRODAF Pearson Correlation .316* 1
Sig. (2-tailed) .034 .
N 45 45
*. Correlation is significant at the 0.05 level (2-tailed).

390
 6

2
PRODAF

0
.2 .4 .6 .8 1.0 1.2

PPCAF

Figure D.15: Scatter plot of productivity and PPC in clusters A-1-1-2 + A-1-2 (with 45 data

sets)

391
Table D.17: Variables for correlation coefficient analysis

Variable Measurement

PPC number of weekly completed according to

planned tasks/number of weekly total

planned tasks

Productivity weekly earned hours/ weekly actual hours

Taskplan number of Weekly planned tasks

Totalcom number of Weekly total completed tasks

(including completed according to plan and

completed not according to plan)

Comnopl number of tasks Weekly completed not

according to plan

Complan number of tasks Weekly completed

according to plan

Cnopltpl number of tasks completed not according

to plan/ number of tasks Weekly planned

Cnopltco number of tasks completed not according

to plan/ number of tasks Weekly completed

Cplancom number of tasks completed according to

plan/ number of tasks Weekly completed

Actuhr Weekly Actual hours

Earnhr Weekly Earned hours

392
 Tkplachr number of tasks Weekly planned/ Weekly

Actual hours

Tkplaerh number of tasks Weekly planned/ Weekly

Earned hours

Tkcomach number of tasks Weekly completed/

Weekly Actual hours

Tkcomerh number of tasks Weekly completed/

Weekly Earned hours

Nworker number of workers per week

Tkworkw number of tasks per worker per week

D5.0 CONCLUSIONS

The following findings emerged from this case study:

1. The hypothesis is valid: Productivity and PPC are positively correlated at a

statistically significant level; and

2. A regression equation between productivity and PPC was derived for this case study.

Prod= 0.693+0.818*PPC

These findings prove that work flow variation from plan does impact labor productivity.

Increasing work flow reliability as measured by PPC can plausibly be understood to be

393
the result of improving the quality of assignments, meaning that constraints have been

removed and prerequisites arrive when needed, which in turn results in better labor

productivity. One unit of PPC increases causes 0.818 unit of productivity increase. Thus

in order to improve labor productivity, it is important to improve work flow reliability in

the planning process.

There are other observations from the case study:

1. No correlation between the variation of work load and productivity was observed,

2. No correlation between the variation of work output and productivity was observed.

These observations suggest that following the LPS at least partially shielded productivity

from variations in work load in each area week to week by identifying actual work load

(tasks for which all constraints had been removed) available in each area in time to shift

capacity to better match load.

3. The correlation coefficient between productivity and PPC increases if the ratio of

work load to capacity lies in a moderate range. Overloading or underloading weakens

this correlation.

a) Underloading reduces the correlation by increasing PPC and decreasing

productivity.

b) Overloading reduces the correlation by reducing PPC, while productivity does

not increase beyond the point at which load matches capacity. In other words, as

394
 more tasks are planned for a crew, when the task load exceeds the capacity of the

crew, their task completion rate decreases. This need not reduce productivity,

since the crew is, by definition, fully loaded with work relative to their capacity

to perform work, but does reduce the flexibility to accommodate variation and

breakdowns without use of overtime as a capacity buffer.

Work flow variation, labor capacity, and labor productivity interact with each other. It is

important for project managers to take these factors and their interdependence into

account in planning.

These are important findings regarding the impact of work flow reliability on

productivity, but it should be noted that, according to Last Planner theorists, the primary

impact was not measured in this study. When short term production plans can be taken as

promises made from one trade or crew to another, as those promises become more

reliable, the downstream crews can prepare and plan to do the work they know will be

available tomorrow or next week. When production plans are not accurate predictors of

future work load, everyone who is dependent on others for something needed to do their

own work (materials, information, work space, equipment, etc.) is robbed of the ability to

plan. Since the release of work from crew to crew was not examined in this study, even

greater impact of production planning on productivity can be expected, and should be

explored in future studies.

These findings are predicated on the conditions of the case study examined, which

included the ability to shift workers from one work area to another each week.

395
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Lean Implementation at the Project Level Research Team
* Glenn Ballard, University of California, Berkeley (academic co-chair)
Carlos E. Braga, Petrobras
Steve L. Campbell, CDI Engineering Solutions
John Y. Chen, Bechtel Group, Inc.
Stephen P. Eisel, E. I. du Pont de Nemours & Co., Inc.
Harold L. Helland, Abbott
Scott S. Hill, Air Products and Chemicals Inc.
Jinwoo Jang, State University of New York – ESF
* Yong-Woo Kim, University of Washington (academic co-chair)
Min Liu, University of California, Berkeley
Greg Knutson, M.A. Mortenson Company
Walt Norko, P.E., US Army Corp of Engineers
Robert C. Schulz, Dow Chemical Company
Lawrence J. Stival, Air Products and Chemicals Inc.
Jerry Theis, General Motors Corporation (industry co-chair)
David J. Tweedie, Fru-Con Construction Company
Roger Webb, Baker Concrete Construction, Inc.
William Wells, Rohm and Haas Company

Past Members

Steve Morse, Walbridge Aldinger Company (industry co-chair)

Everett Chatham, Rohm and Haas Company
Michael J. Cook, E. I. du Pont de Nemours & Co., Inc.
Cynthia Lee, E. I. du Pont de Nemours & Co., Inc.

* Principal authors

Editor: Rusty Haggard, CII

409
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