Lean’s Year of Validation

Research and testimonials justify the role lean construction can play in delivering value

Mark L. Johnson / April 2017

This time last year, Tim Wies, president of T.J. Wies Contracting, Inc. in Lake St. Louis, Mo., received tons of figurative pats on the back.

    
Featured in the April 2016 issue of this magazine, Wies’ company, T.J. Wies Contracting, Inc., was dubbed the “lean, mean, building machine.” Colleagues called Wies to say “That a boy!” for his success as a lean operator.
    
A year has passed. Wies’ company is as lean as ever. And it turns out, many lean building machines thrive in the marketplace.
    
“We have our own in-house white paper on the topic,” says Ed Sellers, president of OCP Contractors, Holland, Ohio.
    
Wall and ceiling contractors are ready to be lean players. Is the market chock full of lean projects?
    
“I think lean is a trend,” says Travis Winsor, president of Raymond – Southern California, Inc., Orange, Calif. “How strong a trend? Well, that’s debatable.”
    
Unless new research and a spirit of optimism have ended the debate.
    
“I’d like to think this year is the breakout year for lean,” Wies says.

Proof that Lean Works
Lean practices aim to make building construction proceed efficiently. The techniques involve beefing up team collaboration, systematizing the planning process and micro-managing materials. Even labor can be streamlined by properly sequencing the work of each trade and by prefabricating systems where possible.
    
“Lean is a preconceived, structured approach to a project,” Winsor says.
    
But something has held lean construction back from becoming the dominant form of project delivery. Wall and ceiling executives say that lean projects should be more common than they are. Owners may not see much value in lean processes, they say. And in fact, at last year’s Lean Construction Institute conference, only 9 percent of the attendees were owners.
    
“We don’t have critical mass data to show that lean pays,” Wies says.
    
But now, we do.
    
Recently, LCI sponsored two studies that corroborate how lean construction lowers project costs, speeds up project deliveries and enhances value for building owners. LCI’s research also confirms that Integrated Project Delivery, frequently paired with lean construction, is an effective contract type associated with successful projects.
    
The first LCI study conducted by Dodge Data & Analytics benchmarked 162 projects identified by owners as “best” or “typical.” Best projects had a “high lean intensity,” meaning they used multiple lean tools during pre-design, design and construction phases. The results showed that typical projects tended to finish late and over budget. In contrast, the “high lean intensity” projects regularly finished ahead of schedule and under budget.
    
The study found an empirical and statistically significant correlation between lean and best project outcomes. Dan Heinemeier, LCI’s executive director, explains: “If you use lean with a certain level of intensity and use multiple lean techniques, you’ll have a two times better likelihood of coming in at or under budget, and a three times better likelihood of coming in on or ahead of schedule.”
    
The same study also identified the timing of stakeholder engagement as the key differentiator between “typical” and “best” projects. Of “best projects,” 76 percent engaged the stakeholders early in the project timeline—specifically, on or before design conceptualization. In contrast, only 34 percent of “typical projects” engaged the stakeholders at this stage of design when they still had time to make cost-saving decisions.

Proof that IPD Works
The second LCI study, co-sponsored with the Integrated Project Delivery Alliance, was conducted by the University of Minnesota. “Motivation and Means: How and Why IPD and Lean Lead to Success” tracked lean practices on 10 building projects in the United States and Canada, each using an integrated form of agreement.
    
The research was exhaustive. It chronicled decisions made by each of the 10 teams, noting what they felt worked, what had limited value, how they structured their contracts and who signed them. The 255-page report included successful lean resolutions related to the wall subcontractors.
    
For example, the Mosaic Centre for Conscious Community and Commerce is an $11,355,667, 30,000-square-foot, commercial building located in Edmonton, Alberta. During the project, the IPD team discovered an unexpected cost of $270,000 related to the design of a structural shear wall. As soon as the cost overrun was discovered, the team gathered in the job site’s “Big Room.” The structural engineer, general contractor, wall subcontractor and others worked out a solution that reduced the cost of the shear wall to $80,000. And that amount was covered through savings found elsewhere on the project.
    
The owner couldn’t believe how well lean worked. He had popped his head in the Big Room meeting and overhead the discussion. “That’s when I said, ‘All right, this IPD thing’s on,’” he said.
    
In its annual report, LCI says the University of Minnesota also debunked several industry myths about lean construction and IPD.
    
One myth says that lean behaviors can’t be dictated by a contract. To the contrary, IPD was confirmed to be a superior contractual approach to projects.
    
Another myth suggests IPD works only with large health care projects. But the University of Minnesota found that IPD contracts can function with projects of any size and scope.
    
The case studies also found that IPD’s profit-sharing and risk-sharing approach can change behaviors of project team members for the better, despite the myth to the contrary.
    
“Regardless of project type, regulations or lean/IPD experience, the research found that teams are leveraging lean and IPD to foster and cultivate ‘project first’ behaviors,” states an LCI summary report.

Lean Tools and Techniques
What lean methods are effective on projects? Here are the top eight methods that show up most often, according to LCI’s research:
    
Co-Location Big Room—The GC sets up a physical space on the job site where the stakeholders can gather to collaborate.
    
Target Value Design—This is about focus as a team. It’s the active management of the design and budget throughout the project in order to fulfill the owner’s wishes.
    
Prefab/Modularization—Wall contractors know this lean technique inside and out. The current prefabrication movement in wall framing fits perfectly with lean.
    
Conceptual/Continuous Estimating—This lean technique involves the way the project team layers cost management into its decision-making.
    
Full-Team On-Boarding—Full-team on-boarding involves team building through training, team assessments, individual assessments and continuous reflection.
    
BIM Design Authoring—Building Information Modeling is the digital representation of a facility and a kind of building directory. BIM helps the project team make decisions through a process that’s collaborative by nature.
    
A3 Thinking—Each firm on a project agrees to uses PDCA or Plan Do Check Act, a process of continuous improvement through advanced planning, problem solving, analyzing and periodic reviews.
    
Last Planner System—Multifaceted planning that includes pull planning, look-ahead planning, constraint analysis, reliable promising, plan percent complete and more.

Lean Company Culture
Travis Vap, president of South Valley Drywall, Inc., Littleton, Colorado, says lean construction is part of “the big picture of things” at his firm. Lean is a company choice and part of the company culture.
    
“As soon as someone is hired, we introduce them to lean principles,” Vap says. “It’s like safety. You start teaching it from day one.”
    
Winsor believes lean is essential for success in construction. Lean processes add an element of creativity to a company playbook and help it to focus.
    
“Lean gets me thinking in different directions,” Winsor says. “You have your internal operations, things we can control—our warehousing and prefabrication operations. This is where we measure our output and try to improve our processes.”
    
Winsor advocates that Lean practices be used in all phases of a project. Wall and ceiling firms need to be invited early to participate with the project team, he says.
    
“Your success is only as good as the weakest partner on site,” Winsor says.
    
Heinemeier agrees that more project teams should include wall and ceiling subcontractors in design.
    
“An enlightened GC who embraces these techniques would definitely bring them in early,” Heinemeier says. “You want to start at the beginning of the design phase. Get everybody to the table, including the major trades.”
    
Collaboration among the trades makes the value of lean construction “go up a quantum leap for the team,” Wies says.
    
“When seven team members talk regularly and work closely together, does the value get seven times better? No, it gets 30 times better,” he says.

Collaborating Early On
Winsor shares the story of a recent large project that started out “with a lot of lean hoopla.”  The GC’s project manager was an advocate of the lean philosophy.
    
“He tried to structure the project so that everyone practiced lean principles,” Winsor says. “But it wasn’t embraced by all of the trades, so it didn’t work.”
    
In other words, project efficiencies and productivity don’t develop unless collaboration exists with all of the players. Wies explains why this is the case.
    
“The activity of the other trades—how they perform, sequence and prefab their stuff—requires us to be involved,” Wies says. “If we’re supposed to put up fire-rated walls, and they have 30-foot long pipe racks, 8 feet wide and 8 inches down from the deck, then we need to know that before we seal up that wall. Every one of our walls interferes with something they do.”
    
But, how can wall and ceiling firms get invited to design meetings?
    
“We tell owners and GCs that if you want more efficient delivery, then bring us to the table early,” Winsor says. “This often happens through BIM.”
    
Winsor says the use of BIM is on the rise and is more the norm than the exception on large projects. Others agree.
    
“BIM gets people together to collaborate with the framing contractor. You see opportunities to stick-build versus prefabbing the project,” Vap says. “Ultimately, BIM allows the GC to be efficient in recovering material.”

Educating Owners, a Global Movement
Yes, this may be the year for lean.
    
The impact of today’s manpower shortages in the trades might force more owners to reexamine their company culture, structure lean project teams and lock in integrated contracts for those projects now. Lean, by definition, is a way to run a job with a smaller crew, so owners who favor lean construction in a time of labor shortage stand to come out ahead.
    
For these reasons, the wall and ceiling industry needs to educate building owners about the value of lean construction.
    
“An advanced owner and buyer of construction is our best customer,” Wies says.
    
A global movement already exists to do things efficiently. People want buildings to feature green products. They prefer recycled materials with low carbon footprints. They want buildings to go up efficiently with less impact on the environment. Lean fits into society’s priorities.
    
“People naturally want to minimize waste and maximize output,” Vap says.
    
In other words, lean systemization and continuous improvement should be happening by default. And if it hasn’t happened yet in your firm, or with the stakeholders on your projects, then it’s time for it to get started.
    
“I have a hard time understanding why people don’t want to be lean and continuously improve,” Vap says. “We always want to get better.”

Mark L. Johnson writes regularly about lean construction. Catch him at @markjohnsoncomm and linkedin.com/in/markjohnsoncommunications.