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Overview of Lean Construction Lean Construction Institute Stan Chiu - RTKL Julie Dobyns - DPR Construction Dennis Sowards - LCI

Workshop Objectives At the end of this session you will be able to: Explain the background, benefits and principles of Lean thinking Understand how Lean techniques and tools work Learn how Lean thinking has been used in Construction Identify which Lean techniques apply to your operations Think Lean!

How do we bid a job today? Estimate the Costs $$ Profit margin + = Bid Price The Lean way to bid a job: Market Price - Profit margin = Cost to do the Job Is this Possible? Why Lean?

Where Would You Cut? Direct costs Labor 60% Materials 25% Equipment 6% Sub Contractors 7% Indirect Costs 2% What would be the possibilities if you could reduce your Cost of Goods sold (Direct Operating Costs) by 15%? Why Lean?

Lean Companies have seen improvements: Manufacturing Lead Time - less than 1 day Delivered Quality – 3 PPM Delivery Performance – 99+% Inventory Turns – Greater than 50 turns per year Manufacturing space - reduced 35 to 50% New product development – less than 6 months Source: Lean Transformation by Bruce A.Henderson and Jeorge L Larco,1999. Why Lean?

Why Lean? Air Strut Assembly Process Before Event 1 Event 2 Event 3 Part Travel Distance (ft): 4300 2900 80 75 # of Tubs locations: 24 13 3 1 Dirt Shields Lead time 18 days 4 days 0.2 days 39 sec. Work in Progress - Dirt Shields 9,078 2,000 100 10 - # of Process Steps 42 33 15 14 # of Forklift moves 16 9 2 1 Inventory Floor space (sq.ft.) 288 80 20 0 IndustryWeek, Best Practices from American’s Best Plants , Chicago, IL, Oct. 26-28 1998.

FACT 1: Lean Works in Manufacturing

Studied 50 jobs all over $300,000 in labor average productivity ratio Jobs not using Last Planner 0.97 Jobs using the new approach 0.88 Lean construction techniques saved 17% of their Projects' labor budget - a savings of $1,511,544! Source: Jim Teston's master thesis at Clemson University: Evaluating the Benefits of Lean Construction on Productivity August 1998. TDIndustries Lean in Construction

A customer in the Southwest Region Pilot Project : Using LPS on Two tools (Nov. 1999 - March 2000) Results - The customer said: “ Durations have been reduced on major tools by 29%” Actual Usage: Wet Bench Tool Install – Beat the standard by 300 hours! Lean in Construction

Waste Reduction in a Design Office Reduced design time by 18 days Generated $1.3M annually to EBIT

FACT 2: Lean works in AEC Industry too!

Customer Expectations General Motors is challenging the industry to develop, embrace and implement Lean Principles: Expect construction firms to be proactive in applying Lean Concepts SMWIA/ SMACNA - 2006 Partners in Progress Conference

Sutter Health Capital Program The Executive Challenge: Successfully execute the design and construction of resultant $5.5B program using Lean Project Delivery Methods

Construction Users Roundtable (CURT) says: Education is key; There needs to be a shift in everyone’s way of thinking; LEAN targets the best workforce, forms solid relationships and builds trust; Owner’s must be the agents of change and must demand change; and LEAN must become the new culture of the industry. Issued June 2007

FACT 3: Customers are beginning to see the value of Lean Construction!

Toyota’s goal: “ Give customers what they want, deliver it instantly, with no waste.” What is Lean?

Lean History Henry Ford Toyota - Taiichi Ohno & Shigeo Shingo Kaizen - Masaaki Imai Lean Thinking - James Womack & Daniel Jones What is Lean?

Lean Thinking is a concept of Continuous Quality Improvement Lean Thinking is a shift in management's focus to differentiate between Value and Waste AKA: JIT & Toyota Production System (TPS) Lean Construction applies the principles and techniques of Lean Thinking to develop a better way to deliver the job. AKA: Lean Project Delivery System What is Lean?

Lean in the Construction Industry: Three Connected Opportunities IMPECCABLE COORDINATION WORKFLOW BASED OPERATING SYSTEM 2. ORGANIZING PROJECTS AS PRODUCTION SYSTEMS 3. THE PROJECT AS A COLLECTIVE ENTERPRISE. © Lean Construction Institute, 2009

What the customer is actually willing to PAY for (USEFULNESS/COST) Includes Functions, Features, Time & Price Relates to the whole product or service received Is the opposite of WASTE. What is Value?

Defects in products: Rework, Field orders & Punch Lists Overproduction: Fabricating material or ordering it too soon, JIC thinking. Ordering extra material because of poor quality or fit Inventory: Material stored at site or yard, work in process, unused tools & parts, forms and stashes Unnecessary processing: Double & triple estimates from suppliers, redundant or unnecessary reporting, multi signatures on forms, material requisitions or time sheets, any non-value added steps Unnecessary movement of people: Treasure hunts, looking for files, drawings and poor layout of work area (ergonomics) Movement Not = WORK! Transport of goods: moving material, tools or parts, handing off work between crews Waiting: Crews waiting for equipment, plans, RFI’s, field orders, or material, payroll waiting for time sheets, equipment waiting to fabricate material 7 Basic Types of Waste (Muda) What wastes have you seen today?

What Lean is NOT! A smoke screen for downsizing BIM A big capital or systems investment Don’t focus on the improvements that cost a lot - focus on the many improvements that don’t cost a lot! Some tools Something you do to your employees The pace of improvement is directly related to the square of the number of employees participating.

Why Do We Need Change? Current Manufacturing Current Construction Compelling reason to change from Construction Industry Institute (CII) Value Added 10% Support Activity 33% Waste 57%

Value vs. Waste Pursue Perfection Pathway to Lean Flow Pull The Value Stream

Look at Value Added & Non-Value Added Time VALUE NON VALUE ADDED ADDED TOTAL TIME Typically Value added time is about 3% of the Total Time! (Yet we tend to focus our improvement efforts on the value added steps.) Value Stream Analysis

Flow Want to make Value Flow Batch and Queuing VS Flow Flow is Counterintuitive

Sign & date cards Flow Exercise Value of Flow: Faster + Improves Quality + Surfaces Problems - so can solve them!

Means no one upstream should produce a good or service until the customer downstream asks for it. Products and services are created only on demand. PULL Flow where you can - Pull if you must!

Pursue Perfection What if there were no WASTE at all? The paradox is that perfection can never be achieved, but must be pursued. Continuous Improvement

Operations vs. Processes Lean Principles Lean focuses on the space between the steps Managing the handoffs in critical to flow. Estimating creates the material take-off list Detailing Prepare & Submit Submittals Foremen reviews Plans, do constructability analysis Foreman fills out Material Req. (MR) Material installed Materials received at site Materials stored at site until needed Materials ordered by Purchasing

Lean Principles Lean focuses on maximizing the whole project NOT on maximizing individual performance.

PDCA & Experimentation Lean Principles Plan Do Act Check

Basic Lean Tools & Techniques Five S’s Muda Walk - “Chalk Watch” Last Planner System Kaizen Event Kanban Poka-Yoke Process Mapping/Value Analysis Rules of Release Spaghetti Chart Visual Controls A3 Reports

Lean Tools & Techniques S orting S implifying S weeping S tandardizing S elf-discipline The 5 S's

S ORTING Sort out the necessary from the unnecessary , discard the unnecessary. The 5 S's

How to Sort? NECESSARY ITEMS USED OR LIKELY TO BE USED UNNECESSARY ITEMS (NOT USED OR NOT LIKELY TO BE USED) NO VALUE & EASY TO DISPOSE OF SOME VALUE NO VALUE BUT COSTLY TO DISPOSE DISPOSE OF IMMEDIATELY LOOK FOR BEST USER TO GIVE OR SELL FIND LEAST COSTLY WAY TO DISPOSE RARELY USED (1 - 2 times per year) FREQUENTLY USED (daily or weekly use) OCCASIONALLY USED (1 - 2 per month) RED TAG USE AUCTION

S IMPLIFYING Create and identify a place for everything based on how often we use it The 5 S's

The 5 S's Simplifying Steps: 1. Review all frequently used items and put those used most often closest to the work area, those used less often, further away. 2. Develop a way to label or show where everything goes. Consider: · Shadow board · Marking the item and the location · Color-coding · Labels on drawers with list of contents inside 3. Develop ways to daily replace usable items · Establish lead times for replacement of daily usage supplies · Determine minimum and maximum supply levels and mark them

Unfiltered Spec Job Specific Spec Size Set @ 2” 18 Choices 2 Choices CAD

The 5 S's S WEEPING Physical and visual control of the work area

Sweeping Actions Sweeping is done when regular sweeping processes occur and areas are clean, safe and neat. Actions: · Determine regular schedule for cleaning the yard, work & break areas. · Orient everyone including new employees with daily 5S’s activity responsibilities and expectations. · Post area cleaning guidelines and schedules. · Perform safety inspections on a regularly schedule.

The 5 S's S TANDARDIZING is creating standard ways to keep the work areas organized, clean and orderly and documenting agreements made during the 5S’s.

How to Standardize? Standardize: Labeling Tools & equipment Forms Gang boxes layout Yard Layout Trailers Have clear instructions for people who deliver goods or materials to the site. Clearly mark and post where the material, tools & equipment are to be placed.

The 5 S's S ELF-DISCIPLINE Follow through with the 5Ss agreements

How to create self-discipline: Self-discipline is done when: The 5S’s rules for Sorting, Simplifying, Sweeping and Standardizing are being followed. All changes have been documented. A daily 5S’s activity checklist is posted and used. The work area is being kept neat and clean & the Work Flows! The 5 S's

Self Discipline often includes an Self Audit/ Score Card Do 30 second test!

Contractors doing 5S’s report: Freed up a space on both sides of the shop (3 foot wide and the length of the shop) Reduced daily mobilization for trucks from 20 - 30 minutes to 5 minutes Returned $5,000 in materials Saved 90 field man-hours on one job by reducing crew time getting ready for job An accounting department got rid of 18,000 duplicate copies of shop invoices freeing up file space and saving administrative time. Reduced warehouse space by 40%

5Ss Applied to Engineer Design Sort - out old standards Simplify - where files are stored, color codes Sweep - Monitor how used Standard - Templates, spec sheets, etc Self-discipline - Monthly self-audits.30 sec tests

Assume -the best way we do it today is the worst way tomorrow! Find a better way to do it. CEO of Toyota Do a Muda Walk Go to Gemba & do “Chalk Watch” Flow (Don’t watch the work - watch for what gets in the way of value!) Treasure Hunts Waste Standards/systems/methods (can’t improve if no standard way exists) Equipment maintenance & utilization Ask Why? (5 times) - Root Cause Analysis Ask: How can we make it easier for you to do your job? Fix Problems Now

Parade of Trades: Setting the stage The project has 35 units of work to be processed. There are seven trades, each of which must process all 35 units of work in order for the project to complete. The trades come onto the project a week apart. The trades work in sequence, with each following trade able to work only on what was produced in the previous week by the prior trade. Work is done by rolling a dye (singular of ‘dice’) and passing the number of units rolled—up to the number of units the trade has to work on. The number rolled represents the number of workers brought to the site that week by the trade rolling the dye. Each worker is able to process one unit of work in the week.

Parade of Trades Move 35 units of work through 7 trades. Work is completed at the end of the week and passed to next trade. Place materials on table as shown. Chips (the units of work) & Score Sheet Die Concrete Mason Facade Paint Electrical Plumber Carpenter © 2009 Lean Construction Institute

Week 1 Concrete Pass the Die to the Left! Painter says, “ Beginning week 2” Die passes left to Mason.

Moving one chip through one station requires 1 “crew” work unit costing $1000. How much will it cost to complete the project? (Hint: 35 Units of work are required at each station and there are 7 stations.) What would you bid – markup on labor? A die has an average production of 3.5 units per roll (week). How long will it take? Scheduling and Estimating

When work is complete…. Record the week each Trade finishes. Sum and record the Available Capacity for all Trades. Sum and record the total Remaining Inventory for all Trades except Concrete. Note the highest amount of Inventory in any week for each trade. Bring die and score sheet to the front. © 2009 Lean Construction Institute Craft Week Complete Total Capacity (Sum "Column 1") Total Inventory (Column 3) Highest inventory in any week for this trade Concrete Mason Façade Carpenter Plumber Electrical Paint Sum of Column Circle Color of Dots on Die Blue Black Red

20 Most Recent Red 233445 Black 123456 Blue 122556 333333 Duration Weeks 19 21 23 18 Total Capacity $ 294 332 361 252 Inventory Units 55 112 120 0

RESULTS # Weeks to Complete Average Worst Best As reduce workflow variability (more reliable)- Outcomes improve & risk goes down! 1.2.2.5.5.6 1.2.3.4.5.6 2.2.3.4.5.5 2.3.3.4.4.5 3.3.3.4.4.4 1.1.1.6.6.6 # Weeks to Complete

Question for Discussion What would be the specific advantages of improved work flow reliability on your projects? For 10 minutes, discuss at table. Select a spokesperson to report.

Reducing workflow variability Improves total system performance Makes project outcomes more predictable Simplifies coordination Reveals new opportunities for improvement Point speed and productivity of a single operation doesn’t matter – throughput does. Strategy: Reduce variation then go for speed to increase throughput. Key Points

Basis of Last Planner System Which way will your crew be more productive: Doing work as planned? Doing unplanned work? Research shows that on the average crews are doing the work they planned to do for the week - only 54% of the time. Which type of work is your crew doing today?

Last Planner System Starting Point: All plans are forecasts and all forecasts are wrong. The longer the forecast, the more wrong it is. The more detailed the forecast, the more wrong it is. Plan in greater detail as you get closer to doing the work. Produce plans collaboratively with those who will do the work. Reveal and remove constraints on planned tasks as a team. Make reliable promises. Declare and then learn from breakdowns.

* ©Lean Construction Institute, 2009 Activity Focus ignores value creation and the flow of work. Collaboration in design is limited Fails to produce predictable work flow Command and Control planning cannot coordinate the arrival of the wherewithal or work of specialists . Opportunities for trading ponies for horses are lost Push systems are commitment free zones. Control begins with tracking cost and schedule. Efforts to improve productivity leads to Unreliable Work Flow further reducing project performance. Protecting activities leads to adversarial relations. Problems with Current Practice

Two Ways to Manage Projects: Flexibility - throw resources at the project to overcome variation. (FPS) OR Lean - Manage variation through LPS and Shield crews from variation.

To get the construction to flow we must have reliability of the work performed. Reliable work is that work which is done as promised allowing the next work assignment to be started as planned. Control - A project is under control when we can do what we say we are going to do! Task 1 Task 2 Task 3

The Last Planner System * * ©Lean Construction Institute, 2001 Common Practice: Some Assignments Cannot be Completed CAN Will 60% 40% SHOULD

Should Do Look Ahead Plan Weekly Work Plan Review accomplishments & constraints (PPC) Action to prevent repetitive errors Can Do Will Do Shield The Last Planner System (LPS) * * ©Lean Construction Institute, 2001 Master Schedule Phase Plan Phase Schedule Perform Work & Daily Huddles

The Last Planner® System of Production Control 5 - Connected Conversations Set milestones Set strategy Identify long lead items Specify handoffs Identify operational conflicts Make ready & Launch replanning when needed Promise Measure PPC & Act on reasons for failure to keep promises SHOULD CAN WILL DID Weekly Work Planning Make Work Ready Planning Learning Master Scheduling Milestones Phase “Pull” Planning

Pull Planning: Designing the Network of Commitments Produces the best possible plan by involving the team of people who manage the work in that phase. Rehearsing together Aligns understanding, reveals unexpected interactions, problems and value adding opportunities: Builds relationship. Assures that everyone in a phase understands and supports the plan by the working as a team. Assures the selection of value adding tasks that release other work by working backwards from the target completion date to produce a “ pull” schedule. Establishes the amount of time available for ‘contingency’ and how it should be allocated.

Phase Schedule Common way we schedule work: My Schedule vs Your Schedule Reverse Scheduling: Our Schedule

Look Ahead Plan Can Do * ©Lean Construction Institute, 2001 Should Do The Last Planner System (LPS) * Master Schedule Phase Plan Phase Schedule

Look Ahead Plan Weekly Work Plan Can Do Will Do * ©Lean Construction Institute, 2001 Should Do The Last Planner System (LPS) * Master Schedule Phase Plan Phase Schedule

Perform Work & Daily Huddles Look Ahead Plan Weekly Work Plan Can Do Will Do * ©Lean Construction Institute, 2001 Should Do The Last Planner System (LPS) * Master Schedule Phase Plan Phase Schedule

Daily Coordination Meeting Opportunity for performers to declare complete on the day's promises Keeps the work flowing from one performer to the next Timely recording of plan failures and the reasons Setting for re-promising Time for adjusting plans for the coming day

Perform Work & Daily Huddles Look Ahead Plan Weekly Work Plan Review accomplishments & constraints (PPC) Action to prevent repetitive errors Can Do Will Do * ©Lean Construction Institute, 2001 Should Do The Last Planner System (LPS) * Master Schedule Phase Plan Phase Schedule

The Last Planner System (LPS)* * ©Lean Construction Institute, 2001 Project Management is all about Communications! How does LPS do it? The Weekly Coordinating Meeting

PPC = Percent of Plan Completed = The planned assignments that are completed within the week (planning period) divided by the total planned assignments. If not completed each assigned task is tracked, recorded & reasons identified. LPS Measure of Effectiveness

Last Planner Variance Tracking ©Lean Construction Institute, 2001 CATEGORIES OF VARIANCE

Project performance improves with improved work flow. Work Flow improves with improved Reliability of the work Reliability comes from the Make Ready process The Look-ahead Plan and Weekly Coordinating Meetings make work assignments ready to be performed. ( Should Do’s become Can Do’s ) The Weekly Work Plan only commits to Can Do Assignments ( Will Do’s ) PPC and Constraint Analysis provides feedback for improvement Summary of LPS

Why Last Planner ® ? Without Last Planner®: only half the tasks on weekly work plans are completed as planned. so called ‘project control’ is after-the-fact identification of variances, not proactive steering toward objectives. projects are a commitment-free zone; promises are neither requested nor made. (If you can’t say ‘no’, you can’t make a promise.)

The Last Planner System * Construction Services Company in Business Since 1889. - $500 - 600 Million Project Completed Annually - Largest Constructor in Wisconsin and operates 7 regional offices throughout the Midwest, Southeast and West. Used Last Planner on over 200 Projects since 1999 Shorter schedules, up to 20% reduction on some projects that really commit to the process Improved concrete productivity - up to 30% Improved profitability due to shortened schedules(reduced general conditions) and improved productivity – “a good amount of our work is negotiated GMP so we also see savings going back to the customer in the form of growing contingencies.” Source: Annual Lean Construction Congress (August 2000/2001)

PPC & Productivity Productivity Crews with PPC >50% Crews with PPC <50% 1.15 times budget 0.85 times budget ©Lean Construction Institute, 2001 Lean in Construction

It Works!!! 5 mo - $15M 14 mo - $17M 15 mo - $12.6M 12 mo - $4.6M 6 mo - $15M 5 mo - $15M 18 mo - $18M 14 mo - $17M 18 mo - $13M 15 mo - $12.6M 18 mo - $5M 12 mo - $4.6M

It Works!!! SSM Cardinal Glennon Children's Medical Center, St. Louis A $60 million of upgrades to a functioning facility Lean Construction Results Designs were 100% signed off by the users of the documents. They attribute this to making and keeping commitments. The project only had 63 RFIs. At the usual administrative costs of $600 per RFI they are incurring far lower costs> For a usual project of this type they would expect about 1,000 RFIs. Safety - had 1.45 ORR compared to Ind. Average of 5.9 ORR They finished the project 45 days ahead of schedule Unspent construction contingency was 2.1% of the construction budget and was shared with owner and Lean partners. General Contractor ran job with half of normal staff for same type jobs A Preferred job site: morale was high; quality was high; no facility interruptions; subs made a fair profits; and they had fun! PPC = 74% Alberici Constructors & Lyon Sheet Metal Works

Percent Plan Complete (PPC) Chart Rasacaven: Electrical Power Distribution

Dave Koester, BMW Senior Project Manager, on using Lean Production Management on the BP ULSD Project “ Every large industrial project in Northwest Indiana and the south suburbs of Chicago has been over budget and has missed schedule for the last 20 years. This method broke the cycle.” “ We have been striving for employee involvement and empowerment; this method gave us a vehicle to achieve it.” “ We now utilize the entire bodies of our field crews, not just from the neck down.” “ If we didn’t use the method on this project, I would have been begging for mercy [from the owner] months ago.”

Courtesy of Strategic Project Solutions COST CONTROL BP's APPROPRIATIONS BUDGET (SEE NOTES 1 & 2) FORECAST ACTUAL @ COMPLETION (SEE NOTES 1, 2 & 3) FORECAST SAVINGS @ COMPLETION (SEE NOTES 1,3 & 4) Direct Labor $20,000,000 $15,400,000 $4,600,000 23% Indirect Labor, Misc. Material & Supplies, Management & Support Staff Expense, Implementation Support $22,000,000 $21,140,000 $860,000 4% TOTAL COST $42,000,000 $36,540,000 $5,460,000 13% NOTES 1) Base Scope 2) Does NOT include Implementation Support Investment of $400,000 3) Includes actual Implementation Support Investment of ~ $400,000 4) at 85% Complete

Kaizen Event Identify the process Gather metrics Identify & Schedule Team Day 1 AM - Lean Principles and tools PM - Go to Gemba & map the process, look for waste - Discuss possible changes applying Lean - Make changes Day 2 AM - Observe changes PM - Discuss more changes & make them - Compare metrics (improvement?) - Summarize - Report to management

Kaizen Event - Burn table in welding and sheet metal shop. Already running two shifts and were not keeping up with the workload demands. The team found ways to reduce the total cycle time (set up + burn + take down), allowing them to run more jobs. The actions they took included: Having an apprentice (burn buddy) clear off the table while the burn table operator encoded the next job. Having the burn buddy help stage all material so it was ready to be put on the table once it was prepared for the next job. Making the nozzles ready to change for the upcoming job. Clearing off all unneeded scrap material near the table, giving more walk space. Moving some racks of specialty metal closer to the use area. Putting tools needed at the table in an easy place to reach and marking location for each tool.

Kaizen - Quick & Easy Everyone to come up with improvement ideas that: Makes the work safer, easier and work more interesting Improves skills and capabilities Improves the work environment Improves quality, customer services, schedule and saves money Employees are to implement the idea, write it down and share it with supervision and fellow employees. Also, to look at the ideas others have implemented and to copy and use them where possible.

Kaizen - Quick & Easy One construction company 405 employees 2005 - Zero Ideas 2006 - 11,000 Ideas Challenge >> 2 implemented ideas per employee per month! Everybody - Everyday 100 x1% better than 1x100%

Kanban System Dual Bins Min/Max Replace Signal & card Part #; 2318F2990 Quantity to order: 100 Vendor: Sunset Supply Phone: 555 801-2199

Process Mapping/Analysis Basic Lean Tools & Techniques What you think your process looks like: What the real process looks like: What your Customer is willing to pay for (Value added)

Process Mapping/Value Analysis Map the steps for a core process. Include all steps including ‘wait’ times Do one product line at a time - rectangular straight/fittings Measure distance traveled & cycle time Categorize all steps into: 1) Value added 2) Non Value Added But Necessary 3) Non Value added & Not Necessary Eliminate all #3’s and look for ways to improve #2’s by making the product flow; reduce set-up time & do 5S’s.

New Process - start with only value added steps (9 out of 200) - Only add back real “needed but non value added steps. They reduced daily mobilization of trucks/vans in yard from 20 - 30 minutes to 5.

Lean in Construction Contractors doing value stream analysis Gained 9 hours a week in technician tool repair time Reduced non-valued added steps in process by 4% A mechanical contractor save $40,000 in one event.

Five S’s Muda Walk - “Chalk Watch” Last Planner System Kaizen Event Kanban Poka-Yoke Process Mapping/Value Analysis Rules of Release Spaghetti Chart Visual Controls A3 Reports Basic Lean Tools & Techniques

Use Rules of Release Release Order to Fabricate Kit/Fabricate/ Assemble Deliver Job To Site Rules of Release  Materials available - not necessarily on-hand but must be confident that will be on-hand when actually needed.  Latest spool drawing revision  Verified need date in drawing tracker  Scheduled - resource loaded/ available. (Shop Supt.)  Special equipment needs identified. (Shop Supt.) Rules of Release  Material assembled and packaged completed  Release from site (verified due date)  Shop Checklist (Shop Supt.)  All shipping information provided (Shop Supt.)  Packing Slip completed (driver) Basic Lean Tools & Techniques

Rules of Release for an Engineering Design Company Source: Peter Dumont, P. E. Application of lean Principles to Improve Engineering Performance , LCI Congress, Oct. 2008

Observations – look for waste Use a spaghetti chart Get Room order Get bagel Cut bagel Toast bagel Get butter & Cream Cheese Get juice cup Pour juice Get knife & napkins Check order Deliver To room

Storage Rack Spiral Duct machine Table Table Storage Rack Plasma Cutter Storage Rack Roller Spot Welder Swedge Beader Sealing & Painting Parts, odds & ends Rack Office & Files Lay Down area Lay Down area Lay Down area Lay Down area Assemble & Spot weld Lay Down area Finished Duct Lay Down area Spiral Fittings Flow Straight Spiral Flow Finished Duct Lay Down area D E L I V E R Y Loading to Trucks

Visual Controls Purpose: To put in plain view all tools, parts, plans, schedules and performance indicators so everyone can see at a glance what is happening. Posted daily/weekly schedules & progress Board Meeting Color code types of concrete / pipes Mark pipe/duct - one straight line Make it so can see if “normal” or?

Job Schedule Board & % OTD Plus Employee Skills Match

Elements of A3 Thinking Logical thinking process Objectivity Results & Process Synthesis, distillation and visualization Alignment Coherence within and consistency across Systems Viewpoint Sound Decision-Making Root Cause Analysis

Basic A3 Flow on 11 x 17 Paper

Five S’s Muda Walk - “Chalk Watch” Last Planner System Kaizen Event Kanban Poka-Yoke Process Mapping/Value Analysis Rules of Release Spaghetti Chart Visual Controls A3 Reports Basic Lean Tools & Techniques Which tools might work for your company?

Value vs. Waste Pursue Perfection Pathway to Lean The Value Stream FLOW PULL 5S’s Last Planner

Advanced Lean Approaches Target Value Design Set based design Lean & IPD Lean & BIM

Target Value Design Design is principally a social activity. -- Gregory Howell Dick Thompson Stan Chiu LCI Southern California May 18, 2009

The Big Questions for us What is Target Value Design? How has it been applied? What is the value to our industry and our customers?

What if? Rather than estimating based on a detailed design, we design based on a detailed estimate? Source: Malcomber, Howell, Barbiero

Rather than evaluate the constructability of a design, we design for what is constructable? What if? Source: Malcomber, Howell, Barbiero

Rather than design alone and then come together for group reviews and decisions, we come together to decide then design to those decisions? What if? Source: Malcomber, Howell, Barbiero

Rather than narrowing choices to proceed with design, we carry solution sets far into the design process? What if? Source: Malcomber, Howell, Barbiero

Traditional Project Delivery Level of Common Understanding Common Understanding CM/GC Hired Major Trades Hired Pre-Construction Services Architect Hired Engineers Hired ≤ 100% Construction Source: Will Lichtig SD DD CD

Integrated Project Delivery Level of Common Understanding Time Common Understanding CM/GC Hired SD DD CD Construction Architect Hired Engineers Hired 100% Major Trades Hired Pre-Construction Services Source: Will Lichtig

California Prison Receivership

Three Teams, On-Copetition 10,000 Bed Program 7 Facilities 5,000 medical beds 5,000 mental health beds 24 month construction schedule for each Staggered three month starts

The TVD Process Kickoff Vision Methodology Teams Interviews Field Research Share Stories Factors Charettes Creative presentations Winnowing Design Build the hybrid Build Model Evaluation Vision Research Hybrid Extremes Recombine Design Build the hybrid Build Model Reliable Backup

What are the Work Products? Big Ideas Extreme Sets Balanced Hybrid Selected Design Kickoff Vision Methodology Teams Interviews Field Research Share Stories Factors Charettes Creative presentations Winnowing Design Build the hybrid Build Model Evaluation Vision Research Hybrid Extremes Recombine Design Build the hybrid Build Model Reliable Backup

Set-Based Design is not Point Based Design Point-Based Design Set-Based Design Figures from Ward et al. 1995

A Set Based Methodology The Integration Events

Collaboratively planned All plans are forecasts All forecasts are wrong The longer the forecast, the more wrong it is The more detailed the forecast, the more wrong it is Plan in greater detail as you get closer to doing the work Produce plans collaboratively with those who will do the work Reveal and remove constraints on planned tasks as a team Make reliable promises Learn from breakdowns Source: Malcomber, Howell, Barbiero

Conditions of Satisfaction Profoundly Impact “Big 4” factors Through Synergistic Innovation Yet Balance the FPS Core Values And Operational Principles

TVD Targets Goal: Reduce program cost by $1.5B (to $ 6B) without compromising delivery of care

Big Ideas 8 Big Ideas 38 Rapid Response

The Three Sets The Whole Enchilada Safe Set Making 7 Work Target: $123M

Decisions must be made based up on the importance of advantages A disadvantage to one alternative is an advantage to alternative option For every dollar spent we need to identify that advantages that the money gets the project CBA: Value based decisions

LAB Process 15 Waiting Area Process Q Patient Check out and Scheduling Process Q Phlebot Process Q Draw Station Process Patient Leaves Process Process Steps Wait time Time track Space equip require Staff required Process Design / Improvement Time VA Time Time VA Time Time VA Time Time VA Time Time VA Time Time VA Time

Day Before Patient gets Schedule Process Patient Leaves Housing Unit Process Q Travel Time Process Q Patient Arrives Check In Process Q Travel Process Main Patient Exam Room Process Electronic Check in Patient goes to Room and wait Electronic Board / Wayfinding Desk Time VA Time Time VA Time Time VA Time Time VA Time Time VA Time Time VA Time Services to Patient Menthal Patient Process Time VA Time Waiting for Clinic Staff Time VA Time Q TX , Imaging – CT Special Clinic Follow up Process Real Time Epoe in Room Time VA Time Q Patient Check Out and Scheduling Process Electronic Schedule Appt . Time VA Time Q Patient Leaves Process Medication to Mall Time VA Time Universal Design Exam room Speciality Carts Process Design / Improvement

12/31 Baseline Target Value 7 Site Prototype Scope 860,615 GSF 655,000 GSF 690,717 GSF Schedule 28 Months 24 Months 28 Months Cost-Operating $150,666,592 $145,000,000 $144,239,489 Staffing 1372 FTE 1300 FTE 1318 FTE Results: 3/3/2009

Design to Budget / Schedule Site Bldg Fit-out Bldg Envelope Mechanical Electrical Sustainability BIM Leader : Architecture Team: Structure Music Acoustic Mechanical Electrical Leader : Architecture Team: Music Acoustic Mechanical Electrical Leader : Music Team: ArchitectureMechanical Electrical Acoustic Leader : Mechnanical Team: Architecture Structural Acoustic Music Electrical Leader : Electrical Team: Mechanical Architecture Structural Acoustic Music

Sutter Fairfield Medical Office Building Source: Boldt Construction Original Concept Construction Budget Start of Target Cost Process Added Scope of Monumental Stairs, Canopy and Trash Enclosure Increased Steel Cost Contingency for Design CompletionEstimating Removed from Target Cost Estimate Flashing / Sheet Metal and Structural Steel BuyoutAmendment to IFOA Savings from Aggressive Buy out Projected Savings from Field Productivity 10/06 4/08

Sutter Prototype Hospital Increase Throughput by 50% Reduce FTE’s by 40% Reduce Square Feet by 30% Reduce Time to Build by 50% Reduce Natural Resource Use by 25% 52 42 35 53 28

takeaways Understand players are beyond team that need to be integrated (BOD, Leadership) Carrying design through to bid gives false sense of value Independent cost estimation valued by leadership BIM as integrating tool Collaborative personality critical Contract challenges require committed client Work at the right level – not design to solve op’s issues Concurrent Operational, Program, Design, Constructability: high opportunity but high stress

Target Value Design Process Design Knowledge Based Design Visionary Leader Expert Workforce Responsibility Base Planning & Control Standardization A3’s CBA Site Visit / S.M.E Last Planner PDCA Set Based Design 5 Whys

Putting the pieces together Organization Commercial Terms Operating System Lean IPD

Revamp Project Governance Owner Stakeholder CM/GC PM Architect PM Owner’s Rep Senior Mgt . Senior Mgt. Senior Mgt . Senior Mgt . Core Group/Senior Mgt.

Sharing of Risk Re-define basis of financial responsibility Owner takes first dollar risks IPD Team negotiates level of risk (profit) Fee informed by level of care and quality required Owner $$ (IPD Cont.) IPD $$ (Profit) Negligence (Insurance $$) or Owner

Sharing Project’s Innovation Incentive Pool = Metrics Owner = Target Cost Expected Cost Savings $$

Sharing Project’s Production Success Estimated Max Price Actual Cost Incentive Pool = Metrics IPD Contingency Savings Cost of Work Savings Owner = Savings $$

IPD Contracting Options IFOA = Integrated Form of Agreement AIA IPD Agreement ConsensusDocs Other: Contract Rider, Behaviors Plus = Alignment of Parties Deltas: Attorneys and Risk Management not necessarily on board Insurance products playing ‘catch-up’

Transformation Principles Assemble a high-performance cross-functional team as early as possible Focus the team on collectively exploring the project’s underlying human concerns and assisting the customer to define “value” Have the right person, do the right thing, in the right level of detail, at the right time (last responsible moment)

Transformation Principles Create a commercial structure that rewards the team for creating value, eliminating waste, and optimizing the project -- not discrete pieces Relentlessly innovate and continuously improve with the goal of increasing value and eliminating waste

Commercial Opportunities Pool Contingencies Trade Contractors’ Compensation Create Proper Incentives (Rewards) Create “Enterprise” Risk Sharing Eliminate trade-level GMPs Eliminate Project GMP

Relationship between BIM and Lean BIM facilitates pursuit of the Lean Ideal. Both BIM and Lean work best with organizational integration and aligned commercial interests. Lean planning and control helps BIM work better. BIM is a tool, but a complex tool that impacts the design and execution of socio-technical systems. Lean and BIM need each other!

SAT’s, Study Action Teams – Use Lean Books and/or Articles for discussion and alignment of team goals and values. Team-Building – Build camaraderie in collaborative teams – open up dialogue by getting to know team members and have some fun. Team-Building and SAT’s

Basic Rules to improve Construction Focus - 1. Keep the Crew Installing 2. Reduce Inventory 3. Reduce Costs Where to start? Define a Key Process - Value Stream Map it Identify the Steps - value added/non value added - Who Touches - Requirements Define/verify VALUE as seen by the customer > Improve Quality - Eliminate Defects - Where do we not meet the customer’s requirements? - DON’T GET IT > DON’T MAKE IT > DON’T SEND IT > Do Root Cause Analysis, do Poka Yoke

Does Value Flow - so one step leads immediately to the next with no batches? > Look at handoffs - Define Rules of Release Eliminate Treasure Hunts - Organize the Workplace > Use 5S’s, Spaghetti Chart & Kanban Try something Where to start?

No Muda - Attack waste with a passion like Ohno > Use the ‘chalk watch’ & Reduce inventory Standardize process step, tools & equipment Implement Quick & Easy Kaizen >> 2 implemented ideas per employee per month! Reduce Inventory > Use Kanban > Eliminate stashes > Use LPS Where to start?

Improve Project Management Learn & Apply Last Planner System * Pull Schedule Look Ahead Plan Weekly Work Plan Measure PPC Do Constraints Analysis Where to start? © Lean Construction Institute 2003

Implementing Lean on Projects Structure the project organization to engage downstream players in upstream processes and vice-versa. Allow resources (money, personnel, schedule float, etc.) to move across organizational boundaries in pursuit of the best project-level returns. 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. Implementing Lean on Projects

Becoming a Lean Enterprise: Getting Started Don ’t over-theorize. Learn by doing. Start with your own work where you have the power to make changes. Stabilize processes by making work flow predictable before attacking waste (muda). Change the company culture by changing management practice. 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.

No sense of urgency Lack of leadership Not communicating with employees Not creating short-term wins and celebrating Seeing this as a Quick Fix Not anchoring the Lean changes with the rest of the culture & systems Barriers to Implementing Lean The Real Barrier is thinking Lean can’t work in Construction!

Various Tools Systematic use of tools & training Lean in culture, people & enterprise Levels of Lean Implementation Companies ultimately progress or stall at these levels. To get people to change: What + Why + Believe

Change Management 20 - 60 - 20 Rule Are you in the boat? C ritical A gainst V irtually E verything

People Equation Involvement + Communications= Engaged Employees

Toyota’s goal: “ Give customers what they want, deliver it instantly, with no waste.” What do you want to do? Every successful Lean transformation began with a passionate leader - Are you that Leader?

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