Lean construction creates a strategic advantage for both companies and supply and demand networks.
Glenn Ballard is a renowned construction performance developer and the father of the Last Planner System. He is currently the Director of Project Productions Systems Laboratory at the University of California Berkeley. He grew from a specialist in saving bad projects into a leading lean construction developer and educator.
How Companies can Benefit from Lean
“Organizations adopt the lean philosophy for a variety of reasons, depending in part on their initial objectives,” Ballard says. Consequently, value comes in many forms. For some, the driver is stress reduction and a better quality of working life, while others emphasize better products for less money and faster and more predictable deliveries, and for some organizations, their aim is to become more resilient and flexible by following the lean philosophy.
A UK hospital study showed that if the cost of construction is one unit, design costs are around 0.1 units, operation and maintenance costs in 20 years are 4.3 units, and the business costs of running the hospital are 42 units. Lean construction places an emphasis on design since that’s where you make the decisions that create or destroy the net benefits of the facility throughout its life-cycle.
Sutter Health, a client organization, demonstrated how lean can create value for the user and result in great project performance. In 2012, they reported completing 22 projects, each valued at least at $10 million. None of the projects were over schedule or over budget. All of them were fit for purpose without sacrificing quality or other desired benefits to achieve the cost results. On average, the cost savings were 3.4% against the budget that they had set using the Target Value Design approach. Half of the projects had a market cost estimation prior to the design. The completion costs of those projects averaged 15% below market.
Some designers, like Boulder Associates, have implemented the Last Planner System and seen a measurable increase in the percentage of completed work, at the same time as a reduction in working overtime. That means an improved quality of life and better business outcomes.
How to Implement Lean Successfully
Implementing lean construction is not a program, it is a way of living and doing your work. “Leadership at the top must see lean as a strategic advantage and live the philosophy. It’s not something that you can tell someone else to do if you don’t do it yourself,” he reminds. The consistent practice of supervision at every organizational level is also essential.
An attitude of learning rather than knowing means that you treat problems as opportunities for learning rather than evidence of incompetence. Collect ideas consistently and help people develop and test ideas through the plan-do-check-act process, as a kind of industrial experimentation. Finally, you must be patient and persistent.
Ballard co-founded Lean Construction Institute with Greg Howell in 1997. From there on, the lean movement has spread globally. Currently, Argentina, Australia, Canada, Chile, Denmark, Finland, France, Germany, India, Norway, Peru, Spain, the UK, and USA have active lean construction organizations. Brazil, Columbia, and Mexico are less organized, but have significant lean activities going on. “At this moment, I would think Finland is leading in Europe,” Ballard says.
Organizations generally, and projects certainly, are socio-technical systems. Ballard thinks that lean and IT, especially BIM, cannot succeed separately.
Lean will continue to invade new domains. Making government lean is under way in patches around the globe. Lean came into construction with the initial focus on projects. But Ballard has seen a shift in thinking: “There has been a considerable movement toward focusing on lean in the companies that participate in projects, the lean enterprises.” He argues that this is required to reach the full potential of lean in projects.
Ballard sees the next wave of lean emerging: “I think the next step is to extend lean to the demand and supply networks in which those enterprises operate. Managing the network will become the focal point of optimization; not the enterprises or the projects.”