Why should construction company managers even consider Lean as a way to improve their business? Here is some information about the US construction industry:
- 60% to 85% of construction time is spent waiting or repairing mistakes
- The average construction worker operates with an efficiency of 40%
- There are critical shortages of skilled and skilled workers
- Return on equity for construction is fading compared to all other US industries
- Customers are frustrated by poor quality, confrontation, excessive change orders and scheduling delays
These are some of the same or similar problems that Japanese companies like Toyota faced in the 1950s. Weak construction can help remedy the terrible conditions described above. While Lean is not a silver bullet, weak construction offers substantial improvements to the problems facing the construction industry. If construction companies want to thrive in the 21st century, then they should be moving towards poor thinking.
Why so much waste?
Why do you waste so much? Construction projects are so fragmented. Often subcontractors do their job ignoring how what they do impacts the work of other subcontractors. We call this the “throw it over the wall” mentality. A functional department (in this case a subcontractor) completes its part of the project and throws it over the wall to the next department (subcontractor) who throws it back over the wall because it is not correct. This mentality sub-optimizes the performance of the whole project, creating quality and programming problems.
Poor thinking is a new way to manage construction. Many people object because they consider the weak to be a manufacturing strategy and have no application in a “unique” industry, such as construction. The goal of improving the Lean process is to maximize value and eliminate waste using techniques such as one-piece flow, timely delivery and reduced inventory.
There is a small but growing movement to apply the weak principles of construction. Applying weak principles to construction really means applying them to project management. This transformation involves mapping construction processes, determining the most efficient workflow and establishing a firing system. How do you create a shooting system? As an entrepreneur, you can start by examining what the completed project should be and then work back, identifying each previous step. Downstream processes determine what upstream processes will be and when they should take place. Having this view of the project will help you control your workflow. You should also look at creating the value stream or process maps of job assistance processes as well as project processes. Processes such as job setup, estimation, payroll, accounts payable, procurement,
The need for change
The construction industry is broken and the following five facts demonstrate why the industry needs to change:
- If it takes six months to build a house, then 85% of the time is spent in two activities: waiting for the next transaction to appear and fixing the mistakes.
- Clemson’s professor, Roger Liska, conducted an analysis of the productivity of the construction industry and found that the average construction worker operates with an efficiency of only 40%.
- It is expected that the critical shortage of skilled and skilled workers will worsen.
- Despite growth in construction in 2006, the Business Week Report on Investment Outlook in 2007 indicated that return on equity (ROE) for all US industries was 17.9%, while ROE for the construction industry was only 9.7%.
- Industry customers are frustrated by poor quality, confrontation, excessive change orders in quantity and value in dollars, scheduling delays and litigation.
Weak construction focuses on identifying and delivering products or services that the customer / owner places great value on. Customers often value:
- There are no change orders or they are limited
- High quality-sense compliance with requirements / specifications
- Timely delivery of the project
To find out what a particular customer values, the contractor must communicate effectively and then work with the client to achieve those desired results. Although it may be easier to accept this concept in the negotiated arena, it also works in the highly competitive auction market.
Although there are fewer options on the bid market than in the negotiated environment, there are still many ways in which contractors can add value to the construction process for owners that cost the contractor little or nothing. Simply by eliminating confrontation and contacting through better communication and collaboration, the contractor can substantially increase the value for the owner.
When contractors focus on providing maximum value to customers, they usually find that profit margins increase. This is not surprising, because in virtually any industry the cheapest products usually produce the lowest profit margin. Therefore, if a contractor competes for price, the contractor is forced to enter a low-margin industry. Industry data supports the belief that highly competitive auction markets are the least profitable. Secondly, because poor construction aims to reduce waste, it means lower costs. Therefore, the entrepreneur is under less pressure to reduce his profit margins. Toyota managed to double its productivity almost immediately. When you consider that the average construction worker works with an efficiency of only 40%, the construction industry should expect dramatic improvements. Before blaming the worker,
Lack of skilled workers
Another challenge facing the industry is the lack of skilled workers. If the industry wants to attract workers, it must change the perception that construction work is undesirable. Again, weak construction is a valuable tool in that battle. When there is a shortage of workers, there is a tendency to reduce job requirements to find additional workers. For this to work, the requirements tend to be revised downwards so that less skilled workers can qualify. Although this works in the short term, it creates boring jobs that highly skilled workers do not want. In addition, this approach tends to reduce productivity and increase downward pressure on wages, as wages reflect productivity. Throwing money at a problem is never a solution, but wages are a factor in the equation. Therefore, the emphasis must be on increasing productivity so that highly skilled workers and rising wages can be attracted. This is not an illusion, as weak manufacturers have already proven that this concept works.
Although there are no panacea, Lean offers substantial improvements to the challenges facing the construction industry. Those entrepreneurs who want to thrive in the 21st century should move towards poor thinking to improve their processes.
Weak power in construction
Weak construction is a systematic application of poor thinking to the design and construction of buildings that do what customers and end users want to deliver value. Evolved over the last 50 years, poor thinking has revolutionized some parts of production and now facilitates significant improvements in the way service organizations such as hospitals, banks, etc. meet customer requirements.
Adopting poor thinking requires sustained work over several years. There are no instant solutions. For most people, weakness requires a change in the way they think and the behaviors that support their actions. There are many things that weak organizations can copy – partnership, supply chain management, value stream analysis, flow, and so on. – but they are weak only when they are made with weak intention . This requires poor thinking about how the organization works.
Not all construction companies accept waste as a prerequisite for doing business. Minimize or eliminate it using Lean tools and techniques. Some examples of companies that use Lean principles and tools to overcome poor quality, poor delivery and lower than stellar profits are: Boldt Construction, Linbeck Construction, Mortenson, Sutter health, Veridian Homes and Walsh Group.
Improving the Lean process is not a new concept, but it is relatively new to construction. There are many skeptics who believe that Lean is a manufacturing strategy and is not suitable for the construction industry. Many aspects of the Toyota production system and other lightweight tools can be applied and are applied to the construction process.
Brave, ready-to-deliver construction organizations such as Boldt, Turner Construction and Messer Construction, among others, are leading the way by demonstrating that improving the poor process can reduce construction waste, with results that reflect other industries.
Weak principles hold the promise of reducing or eliminating wasteful activities, costs and inefficiencies in construction, creating a system that adds value to customers.
Willie L. Carter is the president and CEO of Quantum Associates, Inc., Northbrook, Illinois. He is the author of the book “Improving processes for administrative departments – the key to achieving internal customer satisfaction”, available on Amazon.com. Carter is Lean Sensei certified, certified quality / organizational excellence manager and ISO 9000 certified lead evaluator.