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Lean Construction: As a Differentiation Strategy

Lean Construction: As a Differentiation Strategy

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Lean Construction: As a Differentiation Strategy

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  1. Lean Construction: As a Differentiation Strategy -Presenters- Hüseyin Erol Mert Bilir 19.12.2013-Middle East Technical University

  2. CE726 - Strategic Management of Construction Companies OUTLINE 19.12.2013 METU • Interactions of Lean Construction • LC & BIM • LC & Sustainable Concept • LC & Design Management • Lean Construction as a Strategy • Literature Review • Case Study 1 • Case Study 2 • Questions & Comments • Introduction • Lean Production • Toyota Production System • Lean Thinking • Benefits • Lean Construction • TFV Theory • Tools, Techniques, & Methodologies • Lean Project Delivery System • Last Planner System

  3. CE726 - Strategic Management of Construction Companies Introduction-Some Statistics 19.12.2013 METU 88 % 12 % 43 % 57 % !!! • Manufacturing; • Productive Time: • Waste Time: • Construction; • Productive Time: • Waste Time: Source: Aziz and Hafez (2013)

  4. CE726 - Strategic Management of Construction Companies Introduction-Some Statistics 19.12.2013 METU • In Dutch construction industry; • In terms of weight:9 % of total materials are wasted on site • 1 % to 10 % of each material leaves site as solid waste. Source: Bossink and Brouwers (1996)

  5. CE726 - Strategic Management of Construction Companies Introduction-Some Statistics 19.12.2013 METU • Among 258 major public transport infrastructure projects; • Which were conducted between 1927 and 1998 • In USA, Japan, Europe, and many other developing countries • Had total value of 90 billion US dollars • Approximately30% of them have exceed their budgets! • 40% of them failed to meet client revenues! Source: Flyvbjerg et al. (2004)

  6. CE726 - Strategic Management of Construction Companies Introduction-Problem Definition 19.12.2013 METU • The construction industry does not achieve its goals in terms of; • Schedule performance • Budget performance • Healthand Safety • Quality • Sustainability

  7. CE726 - Strategic Management of Construction Companies Introduction-Proposal 19.12.2013 METU Lean construction practices will lift construction industry and provide competitive advantage to contractors by minimizing waste and maximizing value to customer

  8. CE726 - Strategic Management of Construction Companies Lean Production-Introduction 19.12.2013 METU • Mass Production; • Cheap products in high volumes. • Do not require skilled workers • High volume of inventories • Too much waste • Does not produce value to customer Taylorism: 1910s-1920s Fordism: 1930-1960s Post-Fordism: 1970s-1980s Lean Production: 1990s…

  9. CE726 - Strategic Management of Construction Companies Lean Production-Toyota Production System (TPS) 19.12.2013 METU • In year 1955, Toyota builds 23,000 cars per year while Ford builds more than 8,000 vehicles per day. • In 2003, Toyota became second largest car manufacturer in the world as they passed Ford. • After three years, in 2006, Toyota took number one place by overtaking General Motors Source: Holweg (2007)

  10. CE726 - Strategic Management of Construction Companies Lean Production-Toyota Production System (TPS) 19.12.2013 METU 14 Management Principles of TPS 1) Management decision should be performed on a long-term consideration, even if short-term financial targets are missed. 2) In order to make problems clear, a continuous process flow should be created. 3) In order to avoid overproduction, pull systems driven by the customer must be used. 4) Workload should be fixed. (“Heijunka”) 5) An environment should be promoted to stopping the works to fix problems in order to get quality right the first time. 6) Continuous improvement and empowerment of employees should be developed by means of standardized tasks. 7) Visual control should be used to prevent hiding of problems. 8) Only properly tested technology which serves for people and processes should be used. 9) Leaders who thoroughly understand the work and philosophy and can teach it to others should be grown. 10) Extraordinary people should be grown to follow company’s philosophy. 11) Network of partners and suppliers should be interested in order to challenge and help them to enhance themselves. 12) The situation should be completely controlled and checked in-situ by directors. (“Genchi Genbutsu”) 13) When making decisions, all alternatives should be carefully considered by participation of all members but implementation of them should be quick. (“Nemawashi”) 14) A learning organization should be developed by relentless reflection and continuous improvement. (“Hansei” and “Kaizen”) Source: Liker (2004)

  11. CE726 - Strategic Management of Construction Companies Lean Production-Toyota Production System (TPS) 19.12.2013 METU

  12. CE726 - Strategic Management of Construction Companies Lean Production-Toyota Production System (TPS) 19.12.2013 METU 7 Types of Waste «Muda» 1) Waste of overproduction 2) Waste of waiting (time on hand) 3) Waste of transportation 4) Waste of over-processing or incorrect process 5) Waste of stock on hand (inventory) 6) Waste of unnecessary movement 7) Waste of making defective product 8) Goods and services which do not meet the needs of the customer (by Womack and Jones (1996)) Source: Ohno (1988)

  13. CE726 - Strategic Management of Construction Companies Lean Production-Toyota Production System (TPS) 19.12.2013 METU Whenever an abnormal or defective condition arises in production process 2 Pillars of TPS 1) Just in Time The Just-in-Time (JIT) philosophy advocates; • Producingand/or delivering only the necessary parts • Withinthe necessary time • In the necessary quantity • Using the minimum necessary resources. 2) Jidoka “Jidoka” or autonomous machine concept; • Stops to machines automatically • Stops the production line.

  14. CE726 - Strategic Management of Construction Companies Lean Production-Toyota Production System (TPS) 19.12.2013 METU The Five S(s) (Liker and Lamb, 2000)

  15. CE726 - Strategic Management of Construction Companies Lean Production-Toyota Production System (TPS) 19.12.2013 METU The Five Why(s) «The 5 Why(s) is amethod to pursue the deeper, systematic causes of a problem to find correspondingly deeper countermeasures.»(Liker, 2004)

  16. CE726 - Strategic Management of Construction Companies Lean Production-Lean Thinking 19.12.2013 METU Oilcrises,in1973 and 1979, compel big three (Ford, GM, and Chrysler) to take action International Motor Vehicle Program (IMVP) starts in 1979 at MIT. As a result of IMVP, TPS was translated to the west as Lean Thinking

  17. CE726 - Strategic Management of Construction Companies Lean Production-Lean Thinking 19.12.2013 METU Main Principles 1. Precisely specify value by specific product. 2. Identify the value stream for each product. 3. Make value flow without interruptions. 4. Let the customer pull value from the producer. 5. Pursue perfection. Source: Womack and Jones(1996)

  18. CE726 - Strategic Management of Construction Companies Lean Production-Benefits 19.12.2013 METU • Reduction of waste • Reduction of production cost • Decreased cycle times of manufacturing • Reduction of labor • Reduction of inventory • Increase in capacity of facilities • Higher quality • Higher profits • Higher system flexibility • More strategic focus • Improved cash flows Source:«Kotelnikov»

  19. CE726 - Strategic Management of Construction Companies Lean Construction-Introduction 19.12.2013 METU • Conventional model of constructionproject management uses project execution techniques of Project Management Body of Knowledge (PMBOK-Duncan, 1996) • It uses following steps in project execution: • Determination of an overall plan. • Scope definition of work to be performed. • Breaking the scope into smaller packages or activities. • Management of time and cost for each activity. (Critical Path Method (CPM) Logic) • Management of quality and change. • Today’s complex, uncertain, and quick (CUQ) projects are most likely to fail when only thesetraditional approaches are used.

  20. CE726 - Strategic Management of Construction Companies Lean Construction-Introduction 19.12.2013 METU Impactsof lean production on manufacturing industry awaked construction industry. The term “lean construction” was first introduced by Lauri Koskela in 1993. Organizations such as International Group for Lean Construction (IGLC-1993) and Lean Construction Institue (LCI-1997) serves for reasearching, practicing, and spreading lean construction principles. Tezel and Nielsen (2013) reported that countries including Australia, Brazil, Denmark, Ecuador, Finland, Peru, Singapore, the United Kingdom,andthe United States, have strated to implement lean construction in their industries.

  21. CE726 - Strategic Management of Construction Companies Lean Construction-TFV Theory 19.12.2013 METU • Neither conventional project management approaches nor lean production principles are enough to set a production theory for construction. • Lean production principles cannot be directly implemented to construction due to unique characteristics of it: • On-site production • On-of-a kind projects • Complexity • Effects of external factors ( e.g. Weather conditions) • Transportation-Flow-Value theory of Koskela (1992) combines necessary characteristicsof traditional approaches and lean production.

  22. CE726 - Strategic Management of Construction Companies Lean Construction-TFV Theory 19.12.2013 METU

  23. Lean Construction-TFV Theory 19.12.2013 METU

  24. CE726 - Strategic Management of Construction Companies Lean Construction-Tools, Techniques, & Methodologies 19.12.2013 METU

  25. CE726 - Strategic Management of Construction Companies Lean Construction-Tools, Techniques, & Methodologies 19.12.2013 METU

  26. CE726 - Strategic Management of Construction Companies Lean Construction-Tools, Techniques, & Methodologies 19.12.2013 METU

  27. CE726 - Strategic Management of Construction Companies Lean Construction-Lean Project Delivery System (LPDS) 19.12.2013 METU

  28. CE726 - Strategic Management of Construction Companies Lean Construction-Lean Project Delivery System (LPDS) 19.12.2013 METU

  29. CE726 - Strategic Management of Construction Companies Lean Construction-Lean Project Delivery System (LPDS) 19.12.2013 METU Essential features of LPDS • Management and structuring of the projects are based on value generation process. • Downstream stakeholders are included the design and planning process through cross functional teams. • Project control has the job of execution in case of variance detection. • Work flow is made more reliable by optimization efforts. • Pull techniques are implemented to ensure flow of materials and information. • Capacity and inventory buffers are utilized to absorb variability. • Learning is realized through feedback loops. Source: Ballard (2000)

  30. CE726 - Strategic Management of Construction Companies Lean Construction-Lean Project Delivery System (LPDS) 19.12.2013 METU Comparison of Traditional and Lean Project Delivery Systems Source: Koskela et al. (2002)

  31. CE726 - Strategic Management of Construction Companies Lean Construction-Last Planner System (LPS) of Production Control 19.12.2013 METU • LPS is the work structuring and control meachanism of the lean construction. • LPS’s components; • Look ahead planning • Commitment planning • Learning • Basic Rules; • Activities are dropped from the phase schedule into a 6-week, in general, look-ahead window. • Constraint analysis is performed and they should be removed in order to advance. • It is tried to be performed only the assignments that bring value. • Percentages of completed assignments are calculated for each plan period. • Reasons for plan failure are determined and tried to be fixed.

  32. CE726 - Strategic Management of Construction Companies Lean Construction-Last Planner System (LPS) of Production Control 19.12.2013 METU • LPS serves for; • Shaping work flow sequence and rate. • Matching work flow and capacity. • Maintaining a workable backlog of ready work. • Developing detailed plans to determine how work will be performed.

  33. CE726 - Strategic Management of Construction Companies Lean Construction-Last Planner System (LPS) of Production Control 19.12.2013 METU Plan Percent Complete improvement of a construction project in Chilewith Last Planner Source: Ballard et al. (2002)

  34. CE726 - Strategic Management of Construction Companies Lean Construction-Last Planner System (LPS) of Production Control 19.12.2013 METU Learning Mechanism

  35. CE726 - Strategic Management of Construction Companies Lean Construction-Last Planner System (LPS) of Production Control 19.12.2013 METU

  36. CE726 - Strategic Management of Construction Companies 19.12.2013 METU Part 2 Mert Bilir Interactions of Lean Construction Lean Construction as a Strategy

  37. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & BIM 19.12.2013 METU Sacks et al. (2010) claim that integration of BIM and lean construction can bring a successful improvement of construction when they are in the integrated project delivery approach. With the relevant principles of lean constructionand the relevant key aspects of BIM, Sacks et al. (2010) developed a framework.

  38. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & BIM 19.12.2013 METU Relevant key principles of Lean Construction (Sacks et al. ,2010)

  39. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & BIM 19.12.2013 METU Relevant key aspects of BIM functionality (Sacks et al. ,2010)

  40. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & BIM 19.12.2013 METU Interactions of LC & BIM (Sacks et al. ,2010)

  41. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & Sustainable Concepts 19.12.2013 METU • In order to have sustainable constructions, combination of lean and “green” construction methodologies to reduce waste production is a beneficial way. • According to Ahuja (2012), Kaizen is one of the main components of lean production process which has meaning of continuous improvement.

  42. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & Sustainable Concepts 19.12.2013 METU • Kaizen process has a goal of operational perfection by eliminating waste. • This approach can help to achieve desired outcomes of sustainable construction. (Ahuja, 2012)

  43. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & Sustainable Concepts 19.12.2013 METU Principles of sustainable construction Framework by Korandaet al. (2012)

  44. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & Design Management 19.12.2013 METU • It is a clear fact that design phase has an essential part in the construction projects. • According to Koskela et al. (2009), control and management of the design stage should be done properly in order to improve construction in general. • Lean construction principles are also dealing with improving construction project processes by considering customer needs. With this feature, Tzortzopoulos and Formoso (1999) argue the implementation of lean construction principles in the design process through the development of design models.

  45. CE726 - Strategic Management of Construction Companies Interactions of Lean Construction-LC & Design Management 19.12.2013 METU • Some prominent principles for this implementation • Reduce the share of non value adding activities • Simplifying by minimizing the number of steps, parts and linkages • Increase output flexibility • Focus on complete process • Other principles also exist such as process variability and cycle times, increasing process transparency, building continuous improvement into the process, balancing flow improvement with the conversion improvement and benchmarking

  46. CE726 - Strategic Management of Construction Companies Lean Construction as a Strategy-Literature Review 19.12.2013 METU • In the literature research, it is clearly seen that companies have been applying lean construction principles successfully in the operational level. However, Neto and Alves (2007) claim that these implementations have been utilized without relating strategic issues in the companies. • According to Neto (2002), strategic issues of the company should be considered while deciding to implement the principles of the new philosophy of production (i.e. lean construction techniques)

  47. CE726 - Strategic Management of Construction Companies Lean Construction as a Strategy-Literature Review 19.12.2013 METU • Senaratne and Wijesiri (2008) claim that with the features of cost leadership, differentiation and focus strategies, lean construction can be seen as a strategic option and evaluate with “Strategic Option Evaluation Tests” offered by Scholes (1999) in the Sri Lanka construction industry. • These tests comprised of 3 parts • Suitability • Acceptability • Feasibility

  48. CE726 - Strategic Management of Construction Companies Lean Construction as a Strategy-Literature Review 19.12.2013 METU Suitability Test by (Senaratne and Wijesiri, 2008)

  49. CE726 - Strategic Management of Construction Companies Lean Construction as a Strategy-Literature Review 19.12.2013 METU Suitability Test by (Senaratne and Wijesiri, 2008)

  50. CE726 - Strategic Management of Construction Companies Lean Construction as a Strategy-Literature Review 19.12.2013 METU Acceptability Test by (Senaratne and Wijesiri, 2008)