3 Lean Practices of Leading Construction Firms

In the early 1990s the construction industry became aware that cost overruns and delays were caused by the longstanding and antiquated construction management model in practice. At that time a group of leading thinkers coalesced and formed the International Group for Lean Construction to develop more efficient and effective practices for the construction industry based on the Toyota Production System, known today as Lean Manufacturing. They named the practices they developed for the construction industry Lean Construction. Today leaders in the construction industry across the value chain... architects, engineers, contractors and manufacturers... apply the following practices to produce superior value for the project owner and to improve their own profitability.

The essence of lean practice here is the same as lean manufacturing: focus on activities that create value for the customer, eliminate non-value creating activities where possible, and minimize waste in all activities. Three primary tools for this are:

1. Integrated Project Delivery

The American Institute of Architects (AIA) defines IPD as:

"...a method of project delivery distinguished by a contractual arrangement among a minimum of owner, contractor and design professional that aligns business interests of all parties. IPD motivates collaboration throughout the design and construction process, tying stakeholder success to project success..."

The AIA elaborates that successful implementation requires, at a minimum:

• Key participants bound together as equals;
• Shared financial risk and reward based on project outcome;
• Liability waivers between key participants;
• Fiscal transparency between key participants;
• Early involvement of key participants; and
• Jointly developed project target criteria.

2. Last Planner System

The Last Planner System is a value stream mapping and planning tool that is applied by participants involved in Integrated Project Delivery. A program licensed by the Lean Construction Institute, the Last Planner System incorporates lean production practices into the planning construction planning process, including:

• Master Scheduling (setting milestones and strategy; identification of long lead items);
• Phase "Pull" planning (specify hand-offs; identify operational conflicts);
• Make Work Ready Planning (look ahead planning to ensure that work is made ready for installation; re-planning as necessary);
• Weekly Work Planning (commitments to perform work in a certain manner and a certain sequence); and
• Learning (measuring percent of plan complete (PPC), deep dive into reasons for failure, developing and implementing lessons learned).

3. Value chain collaboration

The least tangible but the most important ingredient is the commitment to collaboration by all parties in the value chain. This starts with the architect and extends to every sub-contractor involved in the project. As the old adage goes, a chain is as only as strong as its weakest link. We've written extensively about the importance of alignment with the customer (Create Happier Customers With Lean Practices and How Lean Construction Wins More Bids to name two) but it is essential that all vendors collaborate effectively together to produce alignment with the customer.

With massive infrastructure investment needs in the next five years ($3.6 trillion in the US estimated by the American Society of Civil Engineers) and tightening public expenditure budgets, the clear winners of this historic market opportunity will be the construction firms that embrace these lean practices and others like them.

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