CII Lean Construction Final Report

7/24/2019 CII Lean Construction Final Report

1/333

APPLICATION OF LEAN

MANUFACTURING PRINCIPLES TOCONSTRUCTION

byJames E. Diekmann, Mark Krewedl, Joshua Balonick,

Travis Stewart, and Spencer Won

A Report toThe Construct ion Industry InstituteThe University of Texas at Austin

Under the Guidance ofProject Team Number 191

Austin, Texas

July 2004


2/333

Executive Summary

Over the past three decades, the US construction industry has seen a decline in both its share of

the gross national product and its annual productivity growth rate. The quality of construction

has faltered during this period as well. In contrast, the US manufacturing industry has made

significant progress in increasing productivity and product quality while lowering product lead

times. Manufacturing has essentially made the transition from second class to world class.

The improvements in manufacturing processes have included reducing the amount of human

effort, space and inventory required in the factory and increasing the quality and variety of

products and the flexibility of manufacturing operations. The application of lean production

principles to manufacturing processes has been instrumental in achieving these results. Lean

principles were developed in postWorld War II Japan at the Toyota Motor Company. These

principles evolved from geographic and economic constraints, from top-down, management-led

innovation and from bottom-up pragmatic problem solving. They became collectively known as

the Toyota Production System (Womack et al. 1990).

The principles of lean theory are conceptualized at the process, project and enterprise or

organization levels. Various principles, methods and tools can be applied at each level, so that

lean production becomes an inclusive philosophy aimed at continuously improving the entire

production organization as well as the physical production process.

If manufacturing can make such vast improvements in quality and productivity, while reducing

costs and lead times, why not construction? This report identifies the core principles of lean

production, compares and contrasts the manufacturing and construction industries, and identifies

the potential for implementing lean principles in the construction industry.

The research team started with the following definition of lean construction:

Lean construction is the continuous process of eliminating waste, meeting orexceeding all customer requirements, focusing on the entire value stream and

pursuing perfection in the execution of a constructed project.

This definition includes many fundamental aspects of a lean philosophy. It is a philosophy that

requires a continuous improvement effort that is focused on a value stream defined in terms of the

needs of the customer. Improvement is, in part, accomplished by eliminating waste in the

process.

Lean philosophy, broadly defined, can apply to design, procurement and production functions.

To help define and direct research efforts and to present an elemental contribution to

understanding lean principles in construction, the scope of this report was limited primarily to

construction field operations. Although the focus of the inquiry was field operations, researcherswere sensitive to the effects of policy and actions that occur at the enterprise, project and process

levels. Two considerations led the research team to focus primary attention on construction field

operations. First, field operations are where most of the value is added from the customers point

of view. Cognizance of customer value is central to a lean philosophy. Second, other researchers

have studied value streams and other aspects of lean philosophy.

iii


3/333

From this basis, the following questions were developed:

Are lean principles as defined in manufacturing applicable to the construction

industry? If not, are there other principles that are more appropriate for

construction?

What is the nature of the typical construction production value stream?

How should conformance to lean principles be measured?

Are lean principles commonly used in the construction industry?

What is the path forward to becoming lean?

What are the roadblocks to adopting a lean culture?

These questions were investigated using a multifaceted approach. First, lean literature was

examined from manufacturing, construction and other industries such as shipbuilding, aerospace,and software engineering. Second, advice from lean manufacturing pioneers was used, and the

construction production value stream was studied. Next, contractors (both lean and non-lean)

were surveyed to learn about lean practices that are currently employed in the construction

industry.

Using all of this information, a set of lean principles was developed that is appropriate for

construction. In general, it can be concluded that construction owners and contractors would

significantly benefit from the adoption of lean principles and behaviors. The value added portion

of the typical field construction value stream is exceedingly small, comprising approximately

10 percent of all crew level activities. It was determined that lean behavior among construction

contractors is rare, even with contractors who are actively pursuing the lean ideal, because being

truly lean requires changes to every aspect and level of a company. Additionally, becoming alean contractor is difficult in part because of the dynamic nature of construction, but mostly

because construction contractors control such a small portion of the construction value stream.

For those wishing to start the lean journey in their company, a lean workplace can be created

using the following steps:

Identify waste in field operations.

Drive out waste.

Standardize the workplace.

Develop a lean culture.

Involve the client.

Continuously improve.

iv


4/333

Becoming lean is a long-term, comprehensive commitment; it amounts to a cultural change for

the company. Construction is no simple deterministic system. Lean principles must be

understood and applied in a context and require a comprehensive understanding of a complex,

interacting and uncertain construction system. Many lean principles can be understood as

attempts to increase preplanning ability, improve organizational design and increase flexibility.

In this light, the final conclusion is that lean cannot be reduced to a set of rules or tools. It mustbe approached as a system of thinking and behavior that is shared throughout the value stream.

Given that contractors control such a small portion of the construction value stream (as comparedto their manufacturing counterparts), this is the challenge that faces the potential lean contractor.

If successfully applied, however, lean has the potential to improve the cost structure, value

attitudes and delivery times of the construction industry.

v


5/333

Contents

Executive Summary ....................................................................................................................... iii

1.0 Introduction ........................................................................................................................ 1

1.1 Are Lean Manufacturing Principles Useful in Construction? ............................... 11.2 History of Lean Production ................................................................................... 11.3 The Diffusion of Lean Ideas.................................................................................. 51.4 Research Questions ............................................................................................... 51.5 Organization of Report.......................................................................................... 7

2.0 Lean Theory and Literature................................................................................................ 82.1 Predominant Types of Manufacturing in the 20th Century: Conversion

Model Versus Flow Model.................................................................................... 82.2 Fundamental Lean Principles .............................................................................. 122.3 Beyond Lean Manufacturing............................................................................... 16

3.0 Differences Between Construction and Manufacturing ................................................... 253.1 Lean Principles.................................................................................................... 253.2 Core Manufacturing Lean Principles................................................................... 253.3 Core Construction Lean Principles...................................................................... 273.4 Comparison of Construction and Manufacturing................................................ 27

4.0 Research Methodology..................................................................................................... 344.1 Restatement of Research Questions .................................................................... 344.2 Developing Lean Principles for Construction..................................................... 34

4.2.1 Goals.....................................................................................................344.2.2 Approach ..............................................................................................34

4.3 Measuring Lean Conformance ............................................................................ 35

4.3.1 Goals.....................................................................................................354.3.2 Approach ..............................................................................................35

4.4 Value Stream Mapping........................................................................................ 384.5 Bringing It Together............................................................................................ 39

5.0 Creation and Use of a Lean Assessment Instrument ........................................................ 415.1 Foundation/Design of the Questions ................................................................... 415.2 Design of the Questionnaire Using Field Studies................................................ 435.3 Case Study Interviews......................................................................................... 445.4 Early Adopter Interviews .................................................................................... 445.5 Validation of the Questionnaire .......................................................................... 45

5.5.1 Stage One: Pilot Work.........................................................................45

5.5.2 Stage Two: Focus Group Responses ...................................................455.5.3 Stage Three: Statistical Reliability Analysis .......................................46

5.6 Use of Lean Principles in Construction............................................................... 475.6.1 Customer Focus ....................................................................................475.6.2 Culture/People ......................................................................................495.6.3 Workplace Standardization...................................................................495.6.4 Waste Elimination ................................................................................495.6.5 Continuous Improvement/Built-In Quality...........................................49

vi


6/333

Contents (Continued)

5.7 Case Study Interview Results.............................................................................. 505.7.1 Customer Focus ....................................................................................505.7.2 Culture/People ......................................................................................50

5.7.3 Workplace Standardization...................................................................505.7.4 Waste Elimination ................................................................................515.7.5 Continuous Improvement/Built-In Quality...........................................51

5.8 Early Adopter Interview Results ......................................................................... 515.8.1 Customer Focus ....................................................................................515.8.2 Culture/People ......................................................................................525.8.3 Workplace Standardization...................................................................525.8.4 Waste Elimination ................................................................................525.8.5 Continuous Improvement/Built-In Quality...........................................53

5.9 Survey of Lean Implementation in Construction Literature................................ 535.9.1 Lean Implementation Case Studies at the Process Level......................535.9.2 Lean Implementation Case Studies at the Project Level ......................55

5.9.3 Lean Implementation Case Studies at the Organization Level.............57

6.0 Evaluating a Construction Value Stream ......................................................................... 596.1 Constructions Production Value Stream ............................................................ 596.2 Categories of Work ............................................................................................. 59

6.2.1 VA Definition.......................................................................................596.2.2 NVAR Definition .................................................................................596.2.3 NVA (Waste Definitions).....................................................................60

6.3 Data Collection Procedure................................................................................... 616.3.1 Hand Data Collection Method..............................................................616.3.2 Video Data Collection ..........................................................................64

6.4 Case Studies ........................................................................................................ 64

6.4.1 Case Study No. 1 ..................................................................................646.4.2 Case Study No. 2 ..................................................................................646.4.3 Case Study No. 3 ..................................................................................666.4.4 Case Study No. 4 ..................................................................................666.4.5 Case Study No. 5 ..................................................................................666.4.6 Case Study No. 6 ..................................................................................666.4.7 Data Analysis........................................................................................66

6.5 Value Stream Analysis Results ........................................................................... 696.5.1 Structural Steel Case Studies ................................................................706.5.2 Process Piping Case Studies .................................................................736.5.3 Comparison of Processes......................................................................756.5.4 Value Stream Analysis .........................................................................76

6.6 Identifying Constructions Value Stream............................................................ 766.7 Developing a Construction Value Stream Map................................................... 776.8 Building a Value Stream Map............................................................................. 776.9 New Approach to Value Stream Mapping .......................................................... 78

6.9.1 Level Three...........................................................................................786.9.2 Level Two.............................................................................................826.9.3 Level One .............................................................................................84

6.10 New Idea for Displaying the Construction Value Stream ................................... 876.11 How Do the Value Stream Maps Differ Between Processes?............................. 90

vii


7/333

Contents (Continued)

7.0 Results - Lean Principles for Construction....................................................................... 917.1 Assessing Lean Principles for Construction........................................................ 91

7.1.1 Customer Focus ....................................................................................92

7.1.2 Culture/People ......................................................................................957.1.3 Workplace Organization/Standardization.............................................987.1.4 Waste Elimination (Aspect 1: Process Optimization) .......................1017.1.5 Waste Elimination (Aspect 2: Supply Chain)....................................1067.1.6 Waste Elimination (Aspect 3: Production Scheduling) .....................1067.1.7 Waste Elimination (Aspect 4: Product Optimization) .......................1107.1.8 Continuous Improvement and Built-In Quality ..................................112

7.2 An Information-Based Perspective on Lean Principles..................................... 1157.3 Applying Lean Principles to Construction ........................................................ 117

8.0 Conclusions and Recommendations............................................................................... 1218.1 Reasons to Apply Lean Principles to Construction........................................... 121

8.2 Path Forward to Becoming Lean....................................................................... 1218.2.1 Identify Waste in Field Operations.....................................................1218.2.2 Drive Out the Waste ...........................................................................1228.2.3 Standardize the Workplace.................................................................1228.2.4 Develop a Lean Culture......................................................................1228.2.5 Get the Client Involved with the Lean Transformation......................1228.2.6 Continuously Improve ........................................................................122

8.3 Barriers to Developing a Lean Company .......................................................... 1228.3.1 Little General Understanding of Lean ................................................1238.3.2 Unique Projects and Unique Design...................................................1238.3.3 Lack of Steady-State Conditions ........................................................1238.3.4 No Control of the Entire Value Stream ..............................................123

8.4 Future Research................................................................................................. 1238.4.1 Lean Coordination ..............................................................................1238.4.2 Economics of Lean .............................................................................1248.4.3 Importance of Repetition ....................................................................1248.4.4 Reliability in Construction..................................................................1248.4.5 Metrics for Lean Construction............................................................124

Appendix A Case Study No.1 - Structural Steel .................................................................... 125Appendix B Case Study No. 2 - Structural Steel ................................................................... 152Appendix C Case Study No. 3 - Structural Steel ................................................................... 192Appendix D Case Study No. 4 - Process Piping.................................................................... 227Appendix E Case Study No. 5 - Process Piping.................................................................... 252

Appendix F Case Study No. 6 - Process Piping.................................................................... 274Appendix G Lean Questionnaire and Principle Cross-Reference.......................................... 277Appendix H Interview Notes ................................................................................................. 285Appendix I Worker Movement Study No. 1 ........................................................................ 300Appendix J Worker Movement Study No. 2 ........................................................................ 308

References ................................................................................................................................... 313Glossary....................................................................................................................................... 318Acknowledgments....................................................................................................................... 325

viii


8/333

List of Tables

Table 2.1 Comparison of the Conversion Model and Flow Model ......................................11Table 2.2 Knowledge Areas of Management Theories ........................................................19Table 3.1 Comparison of Lean Manufacturing to Lean Construction Principles.................28

Table 3.2 Lean Construction Principles ...............................................................................32Table 5.1 Cronbachs Alpha Results ....................................................................................48Table 6.1 Comparison of Lean Manufacturing to Lean Construction Waste.......................62Table 6.2 Advantages and Disadvantages of Different Data Collection Methods ...............65Table 6.3 Typical Results for Welder Completing an Eight Inch Diameter Spool

Section..................................................................................................................67 Table 6.4 Typical Results for an Entire Crew ......................................................................68Table 6.5 Results for Case Study No.1 - Structural Steel Erection Process.........................70Table 6.6 Quick Summary for Case Study No. 1 .................................................................70Table 6.7 Results for Case Study No. 2 - Structural Steel Erection Process........................71Table 6.8 Quick Summary for Case Study No. 2 .................................................................71Table 6.9 Results for Case Study No. 3 - Structural Steel Erection Process........................71

Table 6.10 Quick Summary for Case Study No. 3 .................................................................72Table 6.11 Results for Case Study No. 4 - Piping Installation Process..................................73Table 6.12 Quick Summary for Case Study No. 4 .................................................................73Table 6.13 Result for Case Study No. 5 - Piping Installation Process ...................................74Table 6.14 Quick Summary for Case Study No. 5 .................................................................74Table 6.15 Comparison of Different Processes......................................................................75Table 6.16 Work Distribution Lifecycle Data ........................................................................89Table 7.1 Principles that Reduce Uncertainty in the Production Environment

without Increased Planning or Information Handling ........................................118Table 7.2 Principles that Require Added Planning or Information Handling but

Reduce Uncertainty in the Production Environment..........................................119Table 7.3 Principles that Require Added Planning or Information Handling but

Reduce the Negative Effects of Instability in Production ..................................120

x


9/333

List of Figures

Figure 1.1 Manufacturing Performance (Anecdotal)...............................................................2Figure 1.2 The Beginnings of Lean Production.......................................................................4Figure 2.1 Conversion Process ................................................................................................8

Figure 2.2 The Conversion Model of Production....................................................................8Figure 2.3 Generalized Flow Model ......................................................................................10Figure 2.4 Simplified Value Stream ......................................................................................10Figure 2.5 The Flow Model of Production ............................................................................10Figure 2.6 Delineation of Activities ......................................................................................12Figure 2.7 Lean Production Conceptualization .....................................................................17Figure 4.1 Overall Lean Construction Research Plan............................................................36Figure 4.2 The Lean Wheel (after Tapping, Luyster et al. 2002) ..........................................37Figure 5.1 Example of a Seven-Point Likert Scale Question ................................................42Figure 6.1 Hand Data Collection Sheet .................................................................................63Figure 6.2 Typical Results for Welder Completing an Eight Inch Diameter Spool

Section..................................................................................................................68

Figure 6.3 Typical Results for an Entire Crew ......................................................................69Figure 6.4 Traditional Value Stream Map.............................................................................79Figure 6.5 Structure for a New Value Stream Map ...............................................................80Figure 6.6 Level Three Data..................................................................................................81Figure 6.7 Level Two ............................................................................................................82Figure 6.8 Typical Setup for a Substage Box in the Value Stream .......................................82Figure 6.9 Main Stage from Level One Along with Required Substages from

Level Two ............................................................................................................83Figure 6.10 Level One .............................................................................................................86Figure 6.11 Work Distribution Life Cycle Graph....................................................................88

xii


10/333

1.0 Introduction

1.1 Are Lean Manufacturing Principles Useful in Construction?

Over the past three decades, the US construction industry has seen a decline in both its share ofthe gross national product and its annual productivity growth rate. The quality of construction

has faltered during this period as well, with studies showing the cost of construction

nonconformance reaching as high as 12 percent of total project costs (Koskela 1992). In contrast,

the US manufacturing industry has made significant progress in increasing productivity and

product quality while lowering product lead times:

How have manufacturing organizations achieved the following results?

Half the amount of human effort required in the factory.

Half the manufacturing space required.

Half the engineering hours to develop a new product.

Less than half the inventory needed onsite.

Increased quality of products.

Increased variety of products.

Increased flexibility of manufacturing operations.

Decreased lead times.

(Womack et al. 1990)

The application of lean production principles to manufacturing processes has been instrumental in

achieving these results. This report explores whether these same principles may be applied to

construction processes to effect similar production improvements.

1.2 History of Lean Product ion

Over the past three decades, US manufacturing has seen a resurgence in quality, flexibility and

productivity, while also managing to lower product lead times and the cost of production. In

other words, US manufacturing has made the transition from second class to world class

(Schonberger 1996). According to Richard J. Schonberger, World Class Manufacturing: TheNext Decade, much of this rebirth has been the result of an increased focus on production cycle

times and quality. Subsequently, manufacturing management has seen a shift from conventional

practices of planning and control to a focus on interactive sets of principles aimed at achieving

and facilitating benefits, such as lower cycle times. Figure 1.1 (adapted from Schonberger 1996)

illustrates the described performance trend in US manufacturing over the last half of the 20th

century.

1


11/333

Figure 1.1: Manufacturing Performance (Anecdotal)

Schonberger provides the v-pattern to illustrate the fall and rise of US manufacturing

performance caused by both internal and external factors. The figure is not a direct depiction of

economic indicators, but rather a representation of anecdotal evidence (Schonberger 1996). The

negative trend seen between the 1950s and 1970s occurred at a time when manufacturing in theUnited States was just coming out of what is known as the postWorld War II production era. At

this time, product shortages within the United States increased demand and, subsequently,

manufacturing was focused on producing large quantities of products. When supply had finally

surpassed demand, the nation began to see the proliferation of excess capacity. During the early

1960s, international competition also began to increase its share of the world manufacturing

market. With the immediate threats of excess capacity and foreign competition, the focus of

manufacturing in the United States needed to change from producing volume to producing higher

quality products at minimal cost and lead times. But how was the United States going to change

from large-scale mass production pioneered by the late Henry Ford to more agile, customer-

focused production?

The answer to this question has been the diffusion of Japans highly successful production andmanagement system termed lean production (Womack et al. 1990). The term was coined by

John Krafcik, a researcher on the team from the International Motor Vehicle Program (IMVP)

(Womack et al. 1990). IMVP was a team organized at the Massachusetts Institute of Technology

during the mid-1980s with the objective of studying the innovative techniques used by the

Japanese in their highly successful automotive industry (Womack et al. 1990). The logic of using

the term lean will become clearer as the principles are clarified. The fundamental ideas of lean

production have been described under numerous names as researchers and practicing

professionals have sought to study and diffuse the core ideas. Names such as World Class

Manufacturing (Schonberger 1997), New Production Philosophy (Koskela 1992), Lean Thinking

(Womack and Jones 1996), Just-in-Time/Total Quality Control, Time Based Competition, and

many similar methods and principles have been used to describe the same fundamental collection

of ideas (Koskela 1992).

The foundations of lean production were developed in postWorld War II Japan, when the

Japanese manufacturing industry underwent a complete rebuilding (Womack et al. 1990). Lean

pioneers Kiichiro Toyoda, Eiji Toyoda and Taiichi Ohno of the Toyota Motor Company

developed many of the underlying principles of lean production in response to pragmatic

considerations and existing geographic circumstances. The impetus for lean production occurred

when Kiichiro, president of Toyota at the time, demanded that Toyota catch up with America

in three years. Otherwise the automobile industry of Japan will not survive (Ohno 1988; Hopp

2


12/333

1996). At the time, limited supply of raw materials and inadequate space for inventory in Japan

fostered an atmosphere in which concepts such as just-in-time (JIT) and zero inventories became

necessary. During the spring of 1950, Eiji Toyoda visited American manufacturers, namely

Fords Rouge Plant in Detroit, to study mass production and perhaps look for ways to improve

the countrys own rebuilding industry (Womack et al. 1990). This was the second visit to study

US manufacturing practices made by the Toyoda family; the first was made by Kiichiro in 1929.

What Eiji Toyoda found was a system rampant with muda, a Japanese term that encompasseswaste (Womack 1996). He noted that only the worker on the assembly line was adding value to

the process. Another striking feature was the emphasis placed by their American counterparts oncontinually running the production line. This common practice was thought to be justified by the

expense of purchasing such equipment. To the Japanese, this practice appeared to compound and

multiply errors, a mistake the Japanese could not afford to make.

Japans labor productivity at the time was one ninth that of the United States, and it becameobvious to Toyota that it could not compete with the United States by depending on economies of

scale to produce massive volumes for a small market that did not have the same type of demand

(Ohno 1988; Shingo 1981; Hopp 1996). Toyota then made the strategic decision to focus its

manufacturing efforts not on massive volumes of a product but, rather, on many different

products in smaller volumes. In his numerous experiments focused on reducing machine setuptimes, Ohno, Toyotas chief production engineer, noted that the cost of producing smaller batches

of parts was less than that of producing larger quantities as practiced in the United States. This

was true because making small lot sizes greatly reduced the carrying costs required for huge

inventories, and the cost of rework was reduced because defects showed up instantly in smaller

batches (Womack et al. 1990). Ohno also managed to reduce the amount of time required for

machine setup from an entire day to three minutes, a task that enabled Toyota to increase the

flexibility of its production lines as well as reduce production times. The concept of JIT was

developed to complement this new production philosophy undertaken at Toyota. The model for

JIT was the American supermarket, a relatively new idea to the Japanese in the 1950s (Hopp

1996). The American supermarket provided customers with what they needed, when they needed

it and in the right amount needed. JIT further evolved to include concepts found to be crucial to

the effective operation of the JIT system and that would later become goals of the system. Theseconcepts are referred to as the seven zeros: zero defects, zero lot size, zero setups, zero

breakdowns, zero handling, zero lead time and zero surging (Hopp 1996).

The contributions of quality pioneer W. Edwards Deming to postWorld War II Japan altered the

way Japanese manufacturers viewed quality. Demings Total Quality Management (TQM)

system permeated throughout organizations to create a quality culture, where quality became the

primary goal of producers. After World War II, quality had taken a back seat to production, and

it was reasoned that intensive inspection at the end of the process would be adequate. With its

focus on the entire organization, TQM addressed issues that were relatively new to the

manufacturing industry at that time, such as employee empowerment, continuous improvement

and the concept of proactively building quality into products versus the reactive nature of

inspecting for quality at the end of the process (Walton 1986). The Japanese would improve onthe teachings of Deming and create what is known as Total Quality Control (TQC). Thus,

coupled with the companys move toward multi-skilled teams, guarantees of lifetime employment

and pay raises linked only to seniority within the company, Toyota began to create a culture in

which the quality of its product improved dramatically. In addition to shifting the focus of

Japanese manufacturers to quality, Deming also equipped them with the statistical tools to

achieve it, such as Statistical Quality Control (SQC). The teachings of Deming and other quality

gurus, such as Joseph Juran and Philip Crosby, fueled a quality movement within the Japanese

manufacturing industry that would take decades to diffuse into mainstream Western

3


13/333

manufacturing and that would be highly influential to the development of lean production

techniques.

From this background, the Toyota Production System was created in the early 1960s through the

combination of compensation for geographical restrictions, astute observation of current

problems within the industry, development of JIT and the teachings of the quality movement,

among other factors. It seems that postwar Japan, in its state of chaos, provided a perfectlaboratory in which innovative thinking could be implemented and practiced (Womack et al.

1990). The actual process, however, took many years of trial and error. The Toyota ProductionSystem presents an outline of the foundations of lean production. Figure 1.2 illustrates the forces

that influenced the development of lean production.

Limited

Natural

Resources

Development

of JIT

Limited

Space

Lower

DemandQuality

Movement

AdditionalFactors

Beginnings of Lean

Production

Post World War II Japan (Toyota Motor Company)

Mass

Production

Practices

Figure 1.2: The Beginnings of Lean Production

In the late 1970s, this new production system was brought to the United States and contributed to

a manufacturing renaissance that continued within the United States for the next three decades

(Schonberger 1996). Studies have shown the incredible benefits lean production methods have

brought specifically to the automobile manufacturing industry where the ideas originated.

According to James P. Womack and Daniel T. Jones, two of the leading researchers of lean

production systems and coauthors of numerous lean texts such as The Machine That Changed the

World andLean Thinking, lean automobile manufacturing has been characterized as using the

following:

half the human effort in the factory, half the manufacturing space, half theinvestment in tools, half the engineering hours to develop a new product in half

the time. Also, it requires keeping far less than half the needed inventory on site,

results in many fewer defects, and produces a greater and ever growing variety of

products (Womack et al. 1990).

The visible success of lean principles in the automobile industry and in manufacturing generally

has prompted other industries to adapt and apply these concepts to achieve similar benefits.

4


14/333

1.3 The Diffusion of Lean Ideas

Lean principles have been amended and expanded over the decades by those in other industries

who are transferring lean ideas and successes to their respective industries. The software,

aerospace, air travel and shipbuilding industries all have extensive efforts directed at applying

lean principles to improve profitability and quality and reduce waste.

The architecture, engineering and construction (AEC) industry has a far-reaching, worldwide

effort to apply lean principles and practices. North America, Europe and South America have

organizations devoted exclusively to studying lean ideas and applying them. In fact, the efforts of

the AEC industry have led the way toward innovative ideas about the application of lean thinking

to the construction industry. Koskela (1992, 2000) originated the idea that construction processes

must be viewed as systems of transformations, flows and value adding actions, the so-called TFV

model. Bertelsen (2002) expanded the manufacturing model of lean to include the ideas of

construction as one-of-a-kind production, construction as a complex system and construction as

cooperation. Ballard and Howell (1998) in their paper, What Kind of Production is

Construction, describe differences between manufacturing and construction. In the United

Kingdom, the Construction Task Force produced Rethinking Construction (The Egan Report)

that applies the lessons of the manufacturing revolution to the construction sector in the United

Kingdom. Another innovation in the application of lean theory to construction was the

development of the Last Planner (Ballard 2000a) that emphasizes reliability in the planning

function. Others (Matthews 2003; Ballard 2002c; Tommelein 2003; dos Santos 1999) have

addressed the impact that lean principles have had on contracts, project delivery and project

supply chains.

In this way, the core idea of lean principles as originally set forth by Ohno was expanded and

adapted throughout the manufacturing sector. Other management thinkers have coupled diverse

management theories such as concurrent engineering and TQM to these core lean principles.

Lean theory and lean applications for AEC design, procurement and production functions

have received significant attention in many quarters around the world.

1.4 Research Questions

The goal of the research team was to take what is already known about lean theory and practice

from manufacturing and from constructions early adopters and distill that information into a

straightforward set of lean principles for construction. The research team started with the

following definition of lean construction:

Lean construction is the continuous process of eliminating waste, meeting or

exceeding all customer requirements, focusing on the entire value stream and

pursuing perfection in the execution of a constructed project.

This definition includes many fundamental aspects of a lean philosophy:

Lean requires a continuous improvement effort.

Improvement focuses on a value stream that is defined in terms of the needs ofthe customer.

Improvement is, in part, accomplished by eliminating waste in the process.

5


15/333

A lean philosophy, broadly defined, can apply to design, procurement and production functions.

Lean can apply to the enterprise or company level, to the project level and to the individual

process level.

To help define and direct research efforts and to present an elemental contribution to the

understanding of lean principles in construction, the scope of this report was limited primarily to

construction field operations. Though the focus of the inquiry was field operations, researcherswere sensitive to the effects of policy and actions that occur at the enterprise, project and process

levels. Two considerations led the research team to focus its primary attention on constructionfield operations. First, field operations are where most of the value is added from the customers

point of view, so cognizance of customer value is central to a lean philosophy. Second, others

have studied various aspects of lean philosophy, and this information could be used as a

foundation for this report. For example, Seymour (1996) and Ballard (2000c) have defined an

agenda for lean construction across the entire project life. Arbulu (2002), Tommelein (2003) andLondon (2001) have addressed construction supply chains. Likewise, aspects of the design

process to promote lean principles are discussed by Ballard (2000d), Koskela (1997) and Freire

(2002), who have all addressed different aspects of lean design.

Taking into consideration the history of lean principles and prior research, the following questionwas posed:

Are lean principles as defined in manufacturing applicable to the constructionindustry? If not, are there other principles that are more appropriate for

construction?

To explore how manufacturing principles map to the construction process, these questions were

defined:

What is nature of the typical construction production value stream?

What is the value stream for field production activities and for the field portion ofmaterial delivery and handling?

After an understanding is gained about how lean principles apply or can be modified for

construction, these questions may be addressed:

How should conformance to lean principles be measured?

Are lean principles commonly used in the construction industry?

Finally, to benefit the Construction Industry Institute (CII) membership, the following two

questions were considered:

What is the path forward to becoming lean?

What are the roadblocks to adopting a lean culture?

6


16/333

1.5 Organization of Report

This report is organized into eight chapters and 10 appendices. Chapter 2 presents a

comprehensive review of both manufacturing and construction literature on lean principles.

Chapter 3 explores the differences between the manufacturing and construction domains.

Chapter 4 describes the methodology used for this study. Chapter 5 describes the development of

a questionnaire that can be used by a contractor to self-assess lean behavior. Chapter 6 describes

the results of the value stream mapping studies. Chapter 7 communicates the study findings

regarding lean principles for construction. Finally, Chapter 8 describes research team

recommendations for the future of lean principles in construction. The appendices contain the

details of each of the value stream case studies as well as information on the validation of the

questionnaire and questionnaire interview notes. Additionally, the appendices contain two

studies on the impacts of excess worker movement.

7


17/333

2.0 Lean Theory and Literature

2.1 Predominant Types of Manufacturing in the20th Century: Conversion Model Versus Flow Model

To fully understand lean production, it is important to become familiar with the two predominant

types of production systems of the 20th century. Traditionally, US manufacturing has been

viewed as a mass production system focusing primarily on the process of conversions (Koskela

1992). Figure 2.1 (adapted from Figure 3, Koskela 2000) illustrates this basic concept.

Figure 2.1: Conversion Process

The conventional breakdown of the manufacturing process into a series of activities, eachundertaking the conversion of an input to an output, referred to as the conversion model or

transformation model, is illustrated on Figure 2.2 (adapted from Rother 1998). This type of

production system historically uses what is called a batch and queue theory (Womack 1996).Batch and queue refers to the theory that for machines to achieve a high utilization rate, they must

be run continually. As a result of this, parts are manufactured in large batches at one process

within a plant and then queued for the next process. Batch and queue theory leads to many

manufacturing problems, such as bottlenecking and large inventories from high work-in-progress

(WIP) levels.

Figure 2.2: The Conversion Model of Production

The inventories created by WIP are referred to in manufacturing as buffers (Womack 1996).

Buffers generally reduce the variability of workflows within a plant by shielding downstream

activities from uncertainties that might occur upstream, such as machine failure or differing

machine output rates. Such buffers may be the result of WIP or even planned into the

8


18/333

manufacturing process. Buffers can be viewed as an advantage if high degrees of variability exist

within the manufacturing process. Disadvantages associated with overbuffering include

increased product lead times, increases in required working capital, as well as increased space

requirements to produce and store the additional parts and components acting as the buffers. By

using such queuing techniques, manufacturers also become susceptible to quick changes in the

marketplace. For example, if demand in the market for a certain product decreases, the

manufacturer may be caught with high levels of WIP acting as buffers and be forced to decidewhether it would be financially feasible to complete the production of the product or to terminate

production and scrap the partially completed work.

The concept of manufacturing a product based on forecasted sales data and then selling it is

referred to as push production (Womack 1996). This differs greatly from the idea of producing

an item only when it has been ordered or purchased, which is pull production. In other words,

the market for the product is pulling the production versus pushing the product out to thecustomer. The view of manufacturing as a process of conversions tends to emphasize push

production. Thus, products are created because demand has been forecasted and then pushed

onto the market.

The conversion model of production views improvement of the production process as asubprocess task. For example, to improve the process on Figure 2.2, the producer would make

efforts to improve each subprocess individually by either reducing the cost of the specific activity

and/or by increasing the efficiency of the activity. Thus, in theory, by improving each activity

(A, B, C), the entire conversion process will improve. This view is termed reductionist because

it uses analytical reduction to break the process into its individual components and view each as a

separate entity in need of improvement (Koskela 1992). Historically, improvements to the

conversion model have focused on the implementation of new technologies such as automation

and computerization (Koskela 1992).

In their book, The Machine That Changed the World, James P. Womack, Daniel T. Jones and

Daniel Roos provide an excellent descriptive summary of the typical mass producer:

The mass producer uses narrowly skilled professionals to design products made

by unskilled or semiskilled workers tending expensive, single-purpose machines.

These churn out standardized products in very high volume. Because the

machinery costs so much and is so intolerant of disruption, the mass producer

adds many buffers extra supplies, extra workers, and extra space to assure

smooth production. Because changing over to a new product costs even more,

the mass producer keeps standard designs in production for as long as possible.

The result: The consumer gets lower costs but at the expense of variety and by

means of work methods that most employees find boring and dispiriting

(Womack et al. 1990).

The view of production as a series of conversions is fundamentally different from the seconddominant type of production in the 20th century, the view of manufacturing as a flow model

(Koskela 1992). Production as a flow process is one of the core ideas of lean production.

Figure 2.3 (adapted from Rother 1998) represents a generalized flow model of production.

9


19/333

Figure 2.3: Generalized Flow Model

Unlike the traditional view of production, the flow process does not view the production stream

solely as a series of conversions. The conceptualization of manufacturing as a flow model

delineates between those activities that add value to the process (conversion) and those that do

not (Koskela refers to them as flow activities) (Koskela 1992). It should be noted that to avoid

confusion about flow, this report will refer to activities that do not add value as non-value adding.

By defining the different types of activities that occur in production, the focus of improvement

does not become compartmentalized as on Figure 2.2, but rather envelops the entire value stream

(Womack 1996). The value stream of a particular product consists of all activities and parties

involved in its creation, from raw material suppliers to the customer as illustrated on Figure 2.4.

Compartmentalized improvements can become troublesome to downstream activities if the

particular cycle times of sequential operations are not matched. In other words, if Process A has

half the cycle time of Process B, a material buffer will occur at Process B because it cannot keep

up with the amount of work produced by Process A.

Figure 2.4: Simplified Value Stream

Examples of non-value adding activities, or muda, are large inventories, wait times, inspection

time, WIP and overproduction (Womack 1996). Improvement to the system would then entail

not only reducing the cost and improving the efficiency of the value adding activities, but alsoreducing and/or eliminating the non-value adding activities. Figure 2.5 (adapted from Koskela

2000) illustrates these concepts.

Figure 2.5: The Flow Model of Production

10


20/333

Improving the system through waste elimination and conversion activity improvement allows all

elements of the entire production process to be enhanced.

The flow process tends to focus on the elimination of the large buffers found within mass

manufacturing by emphasizing the constant movement of components from one value adding

activity to the next. This type of system, also referred to as single-piece flow (Womack 1996), is

associated with several benefits. First, the WIP levels are dramatically reduced, which alsoreduces the inventory space required as well as the capital to produce and stock extra inventories

of partially completed products. Combined with reducing equipment setup times, low WIP levelscan help a manufacturer become more responsive to market conditions. As a result, the producer

lets the customer, or market, pull the production.

Compared to the conversion model, flow operations are much more tightly controlled in terms of

production times and supply chain coordination to minimize variability within the process. Infact, the introduction of time as an input to the production process is fundamentally different from

the conversion model of production because the process is no longer conceptualized as solely an

economic abstraction, but rather as a physical process (Koskela 1992). Time was considered

important before the advent of the flow model, but the entire production system was not centered

on time as a goal. This view of time is important because the flow process does not contain thebuffers necessary to minimize variability within the manufacturing process and, therefore, must

rely on the coordination of processes both internal and external to the plant. Table 2.1 and

Figure 2.6 summarize the major differences between the two predominant production theories of

the 20th century.

Table 2.1: Comparison of the Conversion Model and Flow Model

Description Conversion Model Flow Model

Conceptualization Manufacturing as a series of conversionactivities

Manufacturing as a combination ofvalue and non-value addingactivities

Basic Queuing Theory Batch and queue Single-piece flow

Inventory Implications Large inventories as a result of batchand queue production and WIP

Minimal inventories

Production Trigger Products pushed onto the market as aresult of forecasted demand

Products pulled onto the market bydemand

Focus on Improvement Improvement focused on lowering costand increasing productivity of eachactivity (analytical reductionism)

Improvement focused on loweringcost and increasing productivity ofvalue adding activities andreducing/eliminating non-valueadding activities

Variability Control Buffers used to control variability Use of coordination among internaloperations as well as supply chain

management to reduce variability

Focus of Control Cost and time of activities Cost, time and value of valueadding and non-value addingactivities

11


21/333

Figure 2.6: Delineation of Activities

2.2 Fundamental Lean Princip les

The work of Lauri Koskela has yielded the following list of principles believed to be crucial to

lean production:

Meeting the Requirements of the Customer. Attention must be paid to quality

as defined by the requirements of the customer. The success of production

hinges on the satisfaction of the customer. A practical approach to this is to

define the customers for each stage and analyze their requirements.

Reducing Non-Value Adding Activities. Non-value adding activities generally

result from one of three sources: the structure of the production system, which

determines the physical flow that is traversed by material and information; the

manner in which the production system is controlled; and the nature of the

production system such as defects, machine breakdowns and accidents.

Reducing Cycle Time. Cycle time is defined as the total time required for a

particular piece of material to traverse the flow. Cycle time can be represented as

follows:

Cycle Time= Processing Time +Inspection Time +Wait Time +Move Time

Research has identified the following activities that reduce cycle time:

Eliminating WIP.

Reducing batch sizes.

Changing plant layout so that moving distances are minimized.

Keeping things moving; smoothing and synchronizing flows.

Reducing variability.

Isolating the main value adding sequence from support work.

Changing activities from sequential to parallel ordering.

Solving problems caused by constraints slowing down material flow.

12


22/333

Reducing Variability. Variability of activity duration increases the volume of

non-value adding activities. It may be shown through queuing theory that

variability increases cycle time. Variability reduction is aimed at reducing both

the nonconformance of products as well as duration variability during both value

adding and non-value adding activities. A few strategies aimed at variability

reduction are as follows:

Standardization of activities by implementing standard procedures.

Mistake-proofing devices (poke yoke).

Increasing Flexibility. The ability of the production line to meet the demands of

the marketplace and change must be increased. Research has recognized the

following activities aimed at increasing output flexibility (Stalk 1990):

Minimizing lot sizes to closely match demand.

Reducing the difficulty of setups and changeovers.

Customizing as late in the process as possible.

Training a multi-skilled workforce.

Increasing Transparency. The entire flow operation must be made visible and

comprehensible to those involved so that mistakes can be located and solved

quickly.

Maintaining Continuous Improvement. The organization must continually

strive to incrementally improve operations and management methods. The

following methods have been classified as necessary for institutionalizing

continuous improvement:

Measuring and monitoring improvement.

Setting stretch targets (e.g., for inventory elimination or cycle time

reduction) by means of which problems can be found and solved.

Giving responsibility for improvement to all employees; steady

improvement from every organizational unit should be required and

rewarded.

Using standard procedures as hypotheses of best practices, to be

constantly challenged by better ways.

Linking improvement to control; improvement should be aimed at the

current control constraints and problems of the process. The goal is to

eliminate the root of problems rather than to cope with their effects.

Simplifying by Minimizing the Number of Steps, Parts, and Linkages.

Complexity produces waste as well as additional costs. When possible, the

process should be streamlined through efforts such as consolidating activities;

13


23/333

standardizing parts, tools and materials; and minimizing the amount of control

information needed.

Practical approaches to simplification include the following:

Shortening flows by consolidating activities.

Reducing the part count of products through design changes or

prefabricated parts.

Standardizing parts, materials, tools, etc.

Decoupling linkages.

Minimizing the amount of control information needed.

Focusing Control on the Complete Process. Segmented flow leads to

suboptimization and should be avoided; thus, control should be focused on the

entire process for optimal flow.

Balancing Flow Improvement with Conversion Improvement. Flow

improvement and conversion improvement are interconnected; therefore, theirindividual improvements should be analyzed to create balance within the process.

Benchmarking. Benchmarking can provide the stimulus to achieve

breakthrough improvement through radical reconfiguration of processes.

James P. Womack and Robert T. Jones (1996) have identified five fundamental and sequential

steps that create a conceptual outline of what they call lean thinking. A quick comparison with

the ideas outlined by Koskela reveals many similarities, as the works of Womack and Jones have

proven to be influential within this particular field of study. The steps are as follows:

Step 1. Specify valuefrom the standpoint of the customer:

Understand the customer.

Target cost.

Look at the whole.

Specify value by product/service.

Value must be defined for each product family, along with a target costbased on the customers perception of value.

Step 2. Identify the value streamfor each product family:

Understanding flow is the key technique for eliminating waste (muda).

Create a vision of flow.

14


24/333

Compete against perfection by eliminating muda.

Identify value adding activities.

Identify contributory non-value adding but required activities (Type I

muda).

Identify non-value adding activities (Type II muda).

Rethink operating methods.

Eliminate sources or root causes of waste in the value stream.

Step 3. Make the productflow:

Focus on actual object from beginning to completion and produce

continuous flow.

Ignore traditional boundaries (department).

Apply all three of these steps at the same time.

Work on the remaining non-value adding activity (Type I muda).

Synchronize and align so there is little waiting time for people and

machines.

Match workload and capacity.

Minimize input variations.

Step 4. Ensure that this happens at thepullof the customer:

Communicate.

Apply level scheduling.

Release resources for delivery just when needed.

Practice JIT supply rather than JIT production.

Continue to work on the remaining non-value adding activity (Type 1

muda).

Step 5. Manage towardperfection:

Increase transparency.

Form a picture of perfection.

15


25/333

Individually, the principles, methods and techniques have been applied with partial success, but

together, they create a powerful framework and philosophy for improving manufacturing

performance. It is important to realize that this framework affects not only the production

process; it requires a fundamental shift in how an organization thinks about itself. The ideas

behind these principles create the backbone of a lean production environment. The overlap of

ideas from JIT, TQM, Visual Management, Time Based Competition and other manufacturing

methodologies, philosophies and practices are explored in the following sections.

2.3 Beyond Lean Manufacturing

With the basic idea of flow production systems established, it is important to look beyond core

manufacturing ideas to the broader context of lean. Figure 2.7 illustrates an example of how

one might conceptualize lean production. First, it might be conceptualized as a grouping of

principles and goals crucial to the operation of a flow system, such as reducing lead times and

variability. Second, it might be conceptualized as a set of methods aimed at facilitating the

principles and goals of flow operations, such as pull scheduling. Third, it might be

conceptualized as a set of tools that aid the methods, such as utilizing Kanban cards to trigger pull

scheduling. The level of detail increases as one views the chart from left to right. Although the

figure does not include all elements of lean production, it does provide a basic outline of the lean

production process.

The ideas of lean can also be conceptualized on the following three levels (Koskela 2000):

1. Process Level--A set of tools, such as Kanban cards,poke yoke, etc.

2. Project Level--A production planning method, such as JIT.

3. Organization Level--General management theory, such as TQM.

Lean implementation may consist of applying lean principles at any of the three levels. A

comprehensive lean implementation will cover all aspects of the business directly related toproduction, transport, supply or service activities (dos Santos 1999; Schroeder 1993; Wild 1995).

An examination of several knowledge areas can aid in the understanding of how lean principles

affect the different aspects of a production organization. The knowledge areas of a production

organization can be generalized as follows (Fearon et al. 1979):

1. Design and Development. Design and development of products and/or services

that meet the needs of customers as well as the needs of the manufacturing

process (manufacturability) is one element of a production organization; it

typically includes product life-cycle analysis, value engineering, product

prototyping, market research and product specification.

16


26/333

Figure 2.7: Lean Production Conceptualization

2. Work Configuration. Work configuration refers to the design of the operating

system for an organization. Location of the facilities, plant layout and work

study are considered the three most important factors when determining aparticular organizations work configuration.

3. Scheduling and Planning. This portion of a production organization refers to

the determination of demand for a specific product and the planning of

production as well as the scheduling of resource requirements to meet that

demand.

4. Quality. Quality in a production organization includes the determination of what

constitutes quality in the process, what relevant costs are linked to quality, how

quality is to be achieved and ensured and what level of quality is desired.

5. Inventory Management. Inventory management refers to issues such as howmuch of a particular item should be produced to replenish stocks as well as how

stocks should be stored and handled.

6. Human Resources Management. This element of a production organization

concerns how a producer organizes and interacts with its employees. Human

resources management also affects the corporate culture of a company.

17


27/333

7. Supply Chain Management. Supply chain management involves the

management of internal and external sources of materials, supplies and services

to support operations.

Manufacturing has seen a proliferation of theories directed toward improving different aspects of

production and operations management. Many of these theories share similar fundamental goals

with lean production and, in many cases, were highly influential in the development of leanprinciples. It can be difficult to distinguish between overlapping concepts in these theories.

Table 2.2 organizes selected manufacturing theories, methodologies and techniques into therespective knowledge areas of the production organization to which they apply.

A brief review of the concepts of these methodologies reveals that there is a considerable amount

of overlap that occurs when these movements are compared to the principles identified as crucial

to lean. For example, Time Based Competition (TBC) directly relates to the principle of reducinglead times, while Visual Management (VM) strives to make the process transparent to those

involved. It can be concluded that lean, as it is understood today, is a conglomeration or

synthesis of many theories, philosophies, methods and techniques, many of which are individual

methodologies within the manufacturing community. The evolution of lean ideas within manu-

facturing has been a process of trial and error that has incorporated both top down (theoretical)and bottom up (pragmatic) problem solving and many of the ideas discussed in Table 2.2.

As a first step toward establishing a set of lean principles for construction, Chapter 3 considers

the similarities and differences between construction and manufacturing. Chapter 5.0,

Section 5.9, surveys available literature on the implementation of lean principles in construction.

18


28/333

Table 2.2: Knowledge Areas of Management Theories

1. Design and Development

A. Concurrent Engineering (CE) Concurrent (or simultaneous) engineering deals primarily

with the product design phase. The term refers to animproved design process characterized by rigorous up-

front requirements analysis, incorporating the constraints

of subsequent phases into the conceptual phase, and thetightening of change control toward the end of the design

process. Compression of the design time, increase of the

number of iterations (i.e., increase in the frequency of

information exchange), and reduction of the number of

change orders are three major objectives of CE.

B. Poke Yoke This is a manufacturing technique for preventing

mistakes by designing the manufacturing process,

equipment and tools so that an operation literally cannotbe performed incorrectly; an attempt to perform

incorrectly, in addition to being prevented, is usually met

with a warning signal of some sort; the termpoke yokeis

sometimes used to signify a system where only a warning

is provided.

C. Modular Design Modular design is organizing a set of distinct components

that can be developed independently and then plugged

together.

D. Value Engineering Value engineering is the systematic application of

recognized techniques by a multidisciplined team to

identify the function of a product or service, establish aworth for that function, generate alternatives through the

use of creative thinking, and provide the needed functions

to reliably accomplish the original purpose of the project

at the lowest life-cycle cost without sacrificing safety,

necessary quality and environmental attributes of the

project.

E. Standard Work Design Standard work design is the design of each work activity

specifying cycle time, work sequence of specific tasks

and minimum inventory of parts on hand needed to

conduct the activity.

19


29/333

Table 2.2: Knowledge Areas of Management Theories (Continued)

2. Work Configuration

A. Visual Management (VM) VM is an orientation toward visual control in production,

quality and workplace organization. The goal is to render

both the standard to be applied and a deviation from it asimmediately recognizable by anyone. This is one of the

original JIT ideas that has been systematically applied

only recently in the West.

B. Cellular Manufacturing Cellular manufacturing is an approach in whichmanufacturing work centers (cells) have all the necessary

capabilities to produce an item or a group of similar

items.

C. Flexible Manufacturing Flexible manufacturing is an integrated manufacturing

capability to produce small numbers of a great variety of

items at a low unit cost. Flexible manufacturing is also

characterized by low changeover time and rapid responsetime.

3. Scheduling and Planning

A. Line Balancing Line balancing is a means of balancing the appropriate

number of workers needed for a production line by

satisfying cycle time and precedence constraints.

B. Just-in-Time (JIT) JIT is a scheduling philosophy that emphasizes delivery

(when needed) of small lot sizes. JIT includes focusing

on setup cost reduction, small lot sizes, pull systems,

level production and elimination of waste.

C. Critical Path Method/PERT(CPM/PERT)

CPM/PERT is a method of determining the critical pathby examining the earliest and latest start and finish times

for each activity.

D. Aggregate Planning Aggregate planning includes the broad, overall decisions

that relate to the programming of resources for

production over an established time horizon.

E. Master Production Schedule

(MPS)

MPS is a time-phased plan specifying the number and the

time frame for building each end item.

F. Distribution Requirements

Planning (DRP)

DRP is the function of determining the need to replenish

inventory at branch warehouses over a period of time.

20


30/333


3. Scheduling and Planning (Continued)

G. Queuing Theory Queuing theory is a branch of mathematics that deals

with understanding systems with customers (orders, calls,

etc.) arriving and being served by one or more servers.Queuing theory models are usually concerned with

estimating the steady-state performance of the system

such as the utilization, the mean time in queue, the meantime in system, the mean number in queue and the mean

number in the system.

H. Theory of Constraints (TOC) TOC is a management philosophy that recognizes that

there are very few critical areas, resources or policies that

truly block the organization from moving forward. If

performance is to be improved, an organization must

identify its constraints, exploit the constraints in the short

run and, in the longer term, find ways to overcome theconstraints (limited resources).

4. Quality

A. Total Quality Management

(TQM)

TQM is an approach for improving quality that involves

all areas of an organization: sales, engineering,

manufacturing, purchasing, etc., with a focus on

employee participation and customer satisfaction. TQM

can involve a variety of quality control and improvement

tools and emphasizes a combination of managerial

principles and statistical tools.

B. Statistical Quality Control (SQC) SQC uses statistical methods to identify, prioritize and

correct elements of the manufacturing process that detractfrom high quality.

C. Taguchi Methods Taguchi methods were developed to improve the

implementation of TQC in Japan. They are based on the

design of experiments to provide near optimal quality

characteristics for a specific objective. The goal is to

reduce the sensitivity of engineering designs to

uncontrollable factors or noise. This is sometimes

referred to as robust design in the United States.

D. ISO 9000 ISO 9000 is a standard that provides an external

motivation to say what you do and do what you

document.

E. Quality Function Deployment

(QFD)

QFD is a method for ensuring that the customer has a

voice in the design specification of a product. QFD uses

inter-functional teams from manufacturing, engineering

and marketing. QFD is the only comprehensive quality

system aimed specifically at satisfying the customer.

21


31/333


4. Quality (Continued)

F. Total Quality Control (TQC) The difference between TQM and TQC is epitomized by

the phrase management vs. control. Most companies

control quality by a series of inspection processes, butmanaging quality is a continuous quality improvement

program. However, a good control system is the first step

in the development of a management system.

G. Acceptable Quality Level (AQL) AQL is a concept that holds that there is some non-zerolevel of permissible defects.

H. Six Sigma Six Sigma is a structured application of the tools and

techniques of TQM on a project basis to achieve strategic

business results. It is sometimes defined as a failure rate

of 3.4 parts per million.

I. Zero Defects Zero defects is a concept introduced by Japanesemanufacturers that stresses the elimination of all defects.

This concept contrasts with the idea of AQL.

J. Quality Circles Quality circles are teams that meet to discuss quality

improvement issues.

5. Inventory Management

A. Just-in-Time (JIT) This scheduling philosophy emphasizes delivery whenneeded of small lot sizes. JIT includes focusing on setupcost reduction, small lot sizes, pull systems, levelproduction and elimination of waste.

B. Material Requirements Planning(MRP)

MRP is a system to support manufacturing andfabrication organizations by the timely release ofproduction and purchase orders using the production planfor finished goods to determine the materials required tomake the product.

C. Manufacturing RequirementsPlanning (MRP II)

MRP II is a method for effective planning of all theresources of a manufacturing company. Ideally, itaddresses operational planning in units, financialplanning in money, and has a simulation capability toanswer what-if questions.

D. Economic Order Quantity (EOQ) EOQ deals with the optimal order quantity (batch size)that minimizes the sum of the carrying and ordering cost.

E. Period Order Quantity (POQ) POQ is a lot sizing rule that defines the order quantity interms of the periods supply.

F. Stock Keeping Unit (SKU) SKU is a unique identification number (or alphanumericstring) that defines an item for inventory.

22


32/333


6. Human Resources Management

A. Total Quality Management

(TQM)

TQM is a an approach for improving quality that involves

all areas of an organization: sales, engineering,manufacturing, purchasing, etc., with a focus onemployee participation and customer satisfaction. TQMcan involve a variety of quality control and improvementtools and emphasizes a combination of managerialprinciples and statistical tools.

B. Employee Involvement Rapid response to problems requires empowerment ofworkers. Continuous improvement is heavily dependenton day-to-day observation and motivation of theworkforce, hence, the idea of quality circles. To avoidwaste associated with division of labor, multiskilledand/or self-directed teams are established for

product/project/customer based production.

C. Cross Training and Job Rotation Under this theory, employees are rotated out of their jobsafter a certain duration and trained in new jobs. They arenot only trained how to do the job, but they are alsotrained about the quality and maintenance issues that goalong with the job. The principle here is that anemployee with a well-rounded background about how thecompany operates will be more valuable to the companyin making improvements.

7. Supply Chain Management

A. Outsourcing Outsourcing is that practice of procuring raw materials

and components externally rather than creating theminternally.

B. Strategic Partnering Partnering is a structured management approach to

facilitate teams working across contractual boundaries.

With such coordination, construction companies may

benefit from reductions in delivery times, improved

supplier responsiveness, improved quality of products

and services, as well as reductions in costs.

Miscellaneous

A. Kaizen Kaizenis the philosophy of continual improvement. This

approach proposes that every process can and should be

continually evaluated and improved in terms of time

required, resources used, resultant quality and other

aspects relative to the process.

B. Kanban Kanbanis a card or sheet used to authorize production or

movement of an item. The quantity authorized per

individual kanban is minimal, ideally one.

23


33/333


Miscellaneous (Continued)

C. Total Productive Maintenance

(TPM)

TPM refers to autonomous maintenance of production

machinery by small groups of multiskilled operators.

TPM strives to maximize production output bymaintaining ideal operating conditions.

D. Continuous Improvement Continuous improvement, associated with JIT and TQC,

has emerged as a theme itself. A key to this approach is

to maintain and improve the working standards throughsmall, gradual improvements. The inherent wastes in the

process are natural targets for continuous improvement.

The term learning organization refers partly to the

capability of maintaining continuous improvement.

E. Benchmarking Benchmarking refers to comparing ones current

performance against the world leader in any particular

area. In essence, it means finding and implementing bestpractices in the world. Benchmarking is essentially a

goal setting procedure.

F. Time Based Competition (TBC) TBC refers to compressing time throughout the

organization for competitive benefit. Essentially, this is a

generalization of the JIT philosophy.

G. Value Based Management

(VBM)

VBM refers to conceptualized and clearly articulated

value as the basis for competing. Continuous

improvement to increase customer value is one essential

characteristic of VBM.

H. Re-Engineering Re-Engineering is the radical reconfiguration ofprocesses and tasks, especially with respect to

implementation of information technology. Recognizing

and breaking away from outdated rules and fundamental

assumptions is a key issue of re-engineering.

I. Computer-Aided Design/

Computer-Aided Manufacturing

(CAD/CAM)

In this approach, engineering designs may be created and

tested using computer simulations and then transferred

directly to the production floor where machinery uses the

information to perform production functions.

J. Activity-Based Costing Activity-based costing attempts to collect cost data on all

activities that occur rather than on just the three primary

resources (i.e., materials, labor and machinery). This isan attempt to define the components of burden. The

objective of this system is to look at all areas where cost

reductions can be implemented.

24


34/333

3.0 Differences Between Construct ionand Manufacturing

3.1 Lean Princip les

The previous chapter clearly establishes the widespread consideration that has been given to the

lean idea in the manufacturing domain. Fujimoto (1999), Womack and Jones (1996), MacInnes

(2002) and others have codified sets of lean principles for manufacturing, some of which are

briefly listed in Section 3.2. The core principles of the concept emanate directly from the Toyota

Production System. However, as application of lean ideas became more prevalent, the

fundamental principles of the Toyota Production System were expanded to incorporate a broader

array of processes, tools and techniques (Schonberger 1996; Plossl 1991).

3.2 Core Manufacturing Lean Principles

Fujimoto (1999) summarizes the essence of the Toyota Production System into the following

three principles:

Routinized manufacturing capability--Standard ways of production.

Routinized learning capability--Standard ways of problem solving and solution

retention.

Evolutionary learning capability--Learning for system change and improvement.

Womack defines the following five principles:

Specify value from the standpoint of the customer.

Identify the value stream.

Make the product flow.

Ensure that this happens at the pull of the customer.

Manage toward perfection.

Both of these characterizations of lean are too abstract for the purposes of this report. MacInnes

provides a more comprehensive set of principles for manufacturing:

Reduce Waste:

Produce only to order.

Minimize product inventory.

25


35/333

Minimize the seven wastes:

a. Overproduction.

b

Documents

CII Lean Construction Final Report