The construction industry remained largely unaffected by the productivity revolution that led to a massive transformation in manufacturing. Where the manufacturing sector is progressing, the construction industry is not moving as fast when it comes to productivity. Capital projects, especially large ones such as highways, dams, and mines are not only costly, they also take up a lot of time. Studies have shown that 85% of projects usually go over their budget.
The root of these problems probably lies in the fact that the projects of today are becoming more and more complex with time. Reserves of raw materials in easily accessible locations are exhausting which is leading miners to work in increasingly harsh geological conditions. The improvement of road and rail network sometimes requires work in remote locations where even the best-laid schemes are put to the test by unpredicted difficulties. There is also the problem of shortage of skills on ground that increases complications in projects that are unusual and complex, meaning that a majority of workers learn while on the job.
Application of lean construction principles
Construction companies are reconsidering their decision-making, and management and execution of large projects to deal with the modern challenges. They are now building on those lean principles that have been adopted and implemented by the manufacturing industry. Lean construction aims to minimize the amount of variability that can often be seen in large scale construction projects. In order to apply the principles of lean construction, companies must steer away from traditional processes. This can be achieved by developing an improved model of interaction between owners and contractors, creating a healthy system of performance management, and focusing on enhancing the capabilities and skills of managers and their staff.
Improved model of interaction between owner and contractor
Engineering, Procurement and Construction, commonly known as EPC, is a type of arrangement in which the contractor is responsible for all activities from the first stage of designing to the last stage of handing over while the owner only pays for the project. This type of contracting has caused many investors to believe that they have transferred all risks to the contractor; in reality, owners often end up paying the price. Contractors have their own skill-set and although they might be able to find ways to alleviate cost overruns and delays, they lack the decision-making skills for proper implementation. In such cases, contractors increase their prices to accommodate the cost of delays and other complications.
Owners can mitigate cost overruns and delays by actively participating in their projects, and collaborating with the contractor to identify ways to improve project execution and cut down on costs. The owner is responsible for making realistic plans, participating actively in the management and execution of the project, help in solving operational issues, and decreasing risk.
Creating a healthy system of performance management
A large scale project consists of complex activities which makes it difficult for those on ground to see the big picture. Therefore, problems are often identified too late and that can prove costly both in terms of time and money.
To make a project more transparent, a company must create a strong system of performance management. A set of straightforward and clear metrics, such as comparing actual work with construction schedule, is really useful in building a robust system. The key is to keep a rigorous track of the work being performed combined with regular meetings for reviewing the project’s status, and getting to the root of problems whenever they are identified.
Focusing on enhancing capabilities and skills
The standard of project delivery is greatly determined by the skills of managers and their front line staff. A project needs people with technical skills that are necessary for proper execution. In main cities, acquiring the services of such people is comparatively easy, but in remote locations, finding people with the required skills can be quite difficult. Moreover, lean construction also requires skills such as experience in reducing waste, planning capabilities, and problem-solving. Companies that use a systematic and organized approach for the development of such skills are bound to be successful because they take advantage of ‘field and form’ methods that connect on-the-job training with classroom learning. These are further supported by mentoring and coaching.
The principles of lean construction refer not just to a different way of thinking, but also a different way of implementation, managing, and working. Companies that implement the principles of lean construction adopt a different approach when it comes to planning and execution of projects.
As companies move forward, they have learned that planning is best left to the experts. Contractors hire specialized engineers who are responsible for formulating plans. These engineers are able to do so because of experience that they have gained elsewhere on other projects.
However, leaving the planning to engineers while contractors work on the actual project can cause major drawbacks. Achieving synchronization between plans made by different people can be challenging. Sometimes, one contractor’s work might be delayed because of another contractor’s unfinished assignment. If there is a hindrance in the project, or errors call for changes in design, the delays can significantly increase when the different people involved struggle to cope with the disorder.
Nonetheless, there is a solution for every problem; the last planner system, designed by Greg Howell and Glenn Ballard, is increasing in popularity as companies adopt it to deal with just such situations mentioned above. The last planner system applies collaborative scheduling to develop a set of integrated plans that deliver major milestones in a project. This approach requires workers to put the different parts of a project in an order of priority so everyone knows which assignment must be completed before another can start. This allows for harmony between the different teams and tasks of a project.
This collaborative scheduling prevails throughout the project’s execution. All the workers and contractors involved participate actively on a regular basis to examine all the work being performed as well as the work scheduled over the following weeks. This helps ensure that project is proceeding as planned, and all the essential equipment and material is on hand or ordered for timely delivery. In these meetings, contractors clearly define the desired outcome which aids in achieving the specific milestones. Percentage Plan Complete, also known as PPC, measures the number of assignments that are completed as planned. Every day, contractors compare actual progress against planned to assess the status of the project.
The owner conducts a weekly review of a project’s progress and identifies areas that do not match with the schedule. After this review, owner and contractors work together so as to find the underlying cause of the delay, and come up with solutions to get work back on track. During these reviews and meetings, people also learn different lessons that can further be used for the betterment of the project.
Adopting these methods often results in better schedule compliance which is pivotal to achieving objectives and providing excellent customer service.
Applying the principles of lean manufacturing to construction results in an improved speed by standardizing main tasks, and this is called yard excellence. It is normal for large projects to contain many repetitive tasks. Yard excellence helps speed up project delivery.
Doing a repetitive task over a period of time makes workers very quick. Proper observation can improve the performance of such tasks. It is the responsibility of a project owner to observe each task and determine how long it takes and what material the task requires. The time that the task takes to complete can be further divided into value added and non-value added elements. Value added elements are those that contribute directly to the completion of the task such as adding a raw material. Non-value added element is that which does not contribute directly to the task such as waiting for a raw material. Normally, the percentage of value added elements is around 20 to 30.
Once initial assessment is complete, companies get important data that they can then use to come up with improvement tools for waste elimination and streamlining value added tasks. Optimized preparation helps to ensure that all the equipment and material is available for use and the job site is in the best condition. Methods can be changed according to project requirement and available resources. Tasks can be carefully designed for balancing workload so that employees do not waste time waiting for others to complete their work.
After designing and testing an approach, it is set down as a standard operation that aids in the planning and execution of task cycles. Operating standards define tools and resources required for cycle completion. There is always room for improvement and businesses can continue to do so by assessing compliance with set standards, identifying issues and then finding solutions.
Every business is faced with risks every now and then which is why companies examine, measure, and try to minimize risks as much as possible. When the project starts, management draws up a list of risks that a project might face, the probability of occurrence, the impact, steps for minimizing, and the cost of those risks. Most of the time, this is where risk management ends. Companies incorporate the expected cost of those risks into their budgets and are not shocked when those are spent in the project.
Companies that are successful and stand out from the rest are like that for a reason and the reason is their active approach towards risk management. They do so by running weekly meetings with workers on site to review the list of risks and compare current project status to it. Together, they answer questions such as what steps have been taken to mitigate risks and what new risks they have not anticipated. Companies have two important roles for an enhanced risk management: risk champions who are experts at managing certain risks, and risk managers who are responsible for drawing up the risk register and steps for mitigation.
Constant updating always helps in improving risk management, and results in significant cost reduction. Instead of expecting risks and incorporating their costs into existing budget, companies perform better when they deal with risks as they arise during execution, and also do a better task of staying on the lookout for new and unexpected risks.
Taking such an active approach towards risk management significantly reduces the financial impact of risks. Construction projects are complex and companies often have to face various challenges. For example, a project might need more of a raw material than it has estimated; this might result in higher costs. However, if an organization identifies this issue early on, it can mitigate risk by securing more raw material on time.
Applying principles of lean construction to capital projects in industries such as transportation, mining, telecommunications, and energy provides companies with significant value. It is possible by completing projects within the planned time frame and budget, and mitigating risks.