Lean Project Delivery

Lean Project DeliveryLean Project Delivery

Glenn Ballard

Project Production Systems LaboratoryEngineering and Project Management

University of California at Berkeley

Glenn Ballard

Project Production Systems LaboratoryEngineering and Project Management

University of California at Berkeley

Workshop Objectives• Understand Lean Project Delivery

– Where did it come from?

– What is it? How is it different?

• Prepare for the pre-construction phase of your projects

– Coordination and control through reliable promising

– Set based design strategy

– Maximizing value for money through target costing

– Collaborative design process

• Launch project planning

– Business case, stakeholder map, stakeholder values

– Constraints: financial, location, regulatory

– Organizational and contractual structure; project governance

– What will we start doing? What will we stop doing?

Glenn Ballard – a brief CV• Experience

– Pipefitter, Foreman, Construction Engineer, Productivity & Quality Specialist, Internal Management Consultant for Brown & Root and Bechtel

– Independent Management Consultant for Petroleos de Venezuela, U.S. Dept. of Energy, Pacific Gas & Electric, Koch Refining, BAA (Heathrow Terminal 5), Channel Tunnel Rail Link (St. Pancras Station)

• Current Position– Professor in the Engineering & Project Management Program,

Dept. of Civil & Environmental Engineering, UC Berkeley– Director, Project Production Systems Laboratory, UC Berkeley

• Education– B.A. in Mathematics– M.B.A.– PhD in Civil Engineering

The Airplane Game

An exercise in production system design

The Airplane Game

An exercise in production system design

Engineering and Project ManagementUniversity of California at Berkeley

Engineering and Project ManagementUniversity of California at Berkeley

Phase 1-3 Assembly Layout

Incoming Queues

WS1

WS2

WS4

WS3

WS5(QC)

WS6

WS1WS2

WS4

WS3

WS5(QC)

WS6

Phase 1-3 Assembly Layout

Incoming Queues

Performance Metrics• Planes: the number of good planes

produced in each 6 minute phase.

• Time: the time it takes the first good plane to get through the system.

• Rework: the number of planes turned upside to indicate defects in configuration or fit.

• Work-in-Progress Inventory (WIP): the number of subassemblies on the table at the end of the 6 minute phase.

Phase 1 Logistics• Workstations in work flow sequence

• Materials located at workstation

• Workstations 2-5 have an incoming queue space

• Completed Batches of 5 placed in queue space of next station

• Batches remain together until final inspection

Phase 1 Policies• Workers perform only their assigned tasks

- NO THINKING• Maintain Batch integrity - BUILD IT IF YOU

CAN and PASS IT ON IF YOU CAN’T.• QC Problems only detected by Inspector -

NO FEEDBACK - NO TALKING• All QC problems set aside as rework -

TURN UPSIDE DOWN• QC Inspector announces first good plane.• Assemblers are paid by the piece.

Your Hypotheses• How many good planes will your team

produce in Phase I?

• How long will it take for you to produce the first good plane?

• How much rework will you generate (planes turned upside down)?

• How much WIP will you generate (subassemblies left on the table)?

How could this system be redesigned for better performance?

Phase 2 Logistics• Workers may have only one assembly at their

workstation• Only 1 assembly allowed in queue space

between stations (Batch size of 1)• Assembly can only be placed in queue when

it is empty (pull mechanism). • Workstations in Work Flow Sequence• Materials located at station • Stations 2-5 have an incoming queue space

Phase 2 Policies• QC Problems may be verbalized by any worker

– SOME THINKING and TALKING ALLOWED

• All QC problems set aside as rework at station discovered.– TURN UPSIDE DOWN

• Everyone is paid hourly wages plus a bonus for team performance.

• Workers perform only their assigned tasks• Workers cannot fix QC problems from upstream• Inspector announces first good plane.

Your Hypotheses• How many good planes will your team

produce in Phase II?

• How long will it take for you to produce the first good plane?

• How much rework will you generate (planes turned upside down)?

• How much WIP will you generate (subassemblies left on the table)?

Your Hypotheses1. How many good planes will your team produce in Phase II?

2. How long will it take for you to produce the first good plane?

3. How much rework will you generate (planes turned upside down)?

4. How much WIP will you generate (subassemblies left on the table)?

Phase 3 Logistics• Use phase 3 Instruction Sheets.• Workers may have only one assembly at their

workstation• Only 1 assembly allowed in queue space

between stations (Batch size of 1)• Components can only be placed in queue

when it is empty (pull mechanism). • Workstations in Work Flow Sequence• Materials located at station • Stations 2-5 have an incoming queue space

Phase 3 Policies

• Workers perform ANY step in the production process.

• QC problems can be fixed by any worker - Fix it when you find it.

• No restrictions on talking.

• Everyone is paid hourly wages plus a bonus for team performance.

• Inspector announces first good plane.

Your Hypotheses

1. How many good planes will your team produce in Phase III?

2. How long will it take for you to produce the first good plane?

3. How much rework will you generate (planes turned upside down)?

4. How much WIP will you generate (subassemblies left on the table)?

Throughput

0

5

10

15

20

25

30

35

40

Phase 0

Phase I

Phase II

Phase III

Phase 0 4 1 0 10 3 9 8 3 5 5 4 4 4 2 5 3

Phase I 10 2 5 17 14 10 15 14 15 10 11 9 14 8 13 15

Phase II 17 5 17 19 19 20 23 20 26 23 12 13 17 16 28 19

Phase III 26 23 33 26 25 30 30 30 37 26 36 25 30 30 36 23

1 2 3 4 5 6 7 8 910

11

12

13

14

15

16

Phase 0 not played here

Cycle Time

0:00

1:12

2:24

3:36

4:48

6:00

7:12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Phase 0

Phase I

Phase II

Phase III

Phase 0 not played here

Lean Production Techniques in the Airplane Game

1. Minimize the movement of materials and workers by sequencing and positioning of workstations (layout) and by maintaining materials at the workstations.

2. Release work (materials or information) from one workstation (specialist) to the next by pull versus push

3. Minimize batch sizes to reduce cycle time.4. Make everyone responsible for product quality5. Balance the workload at connected workstations6. Encourage and enable specialists to help one another

as needed to maintain steady work flow (multiskilling)

More Lean Production Techniques

1. Stop the line rather than release bad product to your ‘customer’.

2. Minimize changeover (“setup”) time to allow one piece flow.

3. Make the process transparent so the state of the system can be seen by anyone from anywhere.

The Airplane Game

1. What are the key points or lessons for you?

2. How might these apply to designing and making buildings? How could you use what you have learned on your projects?

Lean Project Delivery What is it?

Where did it come from?Where is it going?

Graphic courtesy of Extemin

What is this thing called “LEAN”?

“What has changed Manufacturing, and sharply pushed up productivity, are new concepts. Information and automation are less important than new theories of manufacturing, which are an advance comparable to the arrival of mass production 80 years ago.”

Peter Drucker, “The Economist”, pg 12, November 3, 2001

Craft Production

• One Off, Custom Products

• Flexible, Simple Tools

• Highly Skilled Workforce

• Integrated Product

Development

• Quality by tinkering and

rework

• Build to Order

• High Cost - Low VolumeSource: The Machine that Changed the World by Womack, Jones & Roos

Courtesy of Strategic Project Solutions Inc. 2005

Mass Production (Ford)

• High speed, automated tools

• Large batches and inventories

• “Good enough” quality

• Departmental organizations

• Lengthy product development

• Low innovation rate

Source: The Machine that Changed the World by Womack, Jones & Roos


Toyota Production System (aka Lean)•Started in the 1950’s

•Chief Architects

– Taichi Ohno & Shigeo Shingo

•Challenge:

– Limited Cash & Space

– Sophisticated Customers

•Goal:

– A custom product, delivered

instantly, with nothing in stores.Source: The Machine that Changed the World by Womack, Jones & Roos


‘Lean’ Compared to ‘Mass’ – 1980’s


Metric Japan USA

Output:

•Productivity (hrs/vehicle) 16.8 25.1

•Quality (defects/100 vehicles) 60.0 82.3

Work Force:

•% of Work Force in Teams 69.3 17.3

•Number of Job Classes 11.9 67.1

•Suggestions/Employee 61.6 0.4

Layout:

•Space (Square.ft./vehicle/year) 5.7 7.8

•Repair Area (% of assembly space)

4.1 12.9

•Inventories (days) .2 2.9

Source: The Machine that Changed the World by James P.Womack and Daniel T. Jones

Avg. Engineering Hours (millions) 1.7 3.1 Avg. Development Time (months) 46.2 60.4 # Employees in Project Team 485 903 # of Body Types per New Car 2.3 1.7 Supplier Share of Engineering 51% 14% Ratio of Delayed Products 1 in 6 1 in 2 Prototype Lead Time (months) 6.2 12.4 Prod. Start to First Sale (months) 1 4 Return to Normal Quality (months) 1.4 11

Japan USA

Design Performance


1936 - Shewhart

1950 – Deming & Juran in Japan

1914 - Ford

1948 - Ohno’s

Challenge

1980 – TPS appears to the world

1990 – Publication of The Machine

That Changed the World

1992 – Koskela’s

challenge to construction

1993 – IGLC

formed1997 –

LCI formed

2006 – 14th annual IGLC conference in Santiago

2003 – T5 Civils

2005 -Sutter Health goes

lean

1992 – Last

Planner

1995 - PARC

1973 – Oil

Crisis1939 - WWII

Purposes

Constraints

DesignConcepts

ProcessDesign

ProductDesign

DetailedEngineering

Fabrication& Logistics

Installation

Commissioning

Operations & Maintenance

Alteration &Alteration &DecommissioningDecommissioning

Project Definition Lean Design Lean Supply Lean Assembly Use

Production Control

Work Structuring

LearningLoops

Lean Project Delivery System

Traditional versus Lean

• Decisions are made sequentially by specialists and ‘thrown over the wall’

• Product design is completed, then process design begins

• Not all product life cycle stages are considered in design

• Activities are performed as soon as possible

• Downstream players are involved in upstream decisions, and vice-versa

• Product and process are designed together

• All product life cycle stages are considered in design

• Activities are performed at the last responsible moment

Traditional versus Lean

• Separate organizations link together through the market, and take what the market offers

• Participants build up large inventories to protect their own interests

• Stakeholder interests are not aligned

• Learning occurs sporadically

• Systematic efforts are made to optimize supply chains

• Buffers are sized and located to perform their function of absorbing system variability

• Stakeholder interests are aligned

• Learning is incorporated into project, firm, and supply chain management

% Gross Margin

7.0% 7.2%

5.7%6.9%

10.3%11.2%

11.9%11.2%

-1.0%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

1997 1998 1999 2000 2001 2002 2003 2004

%Profitability Increase

Waste reduction in a design office

0,0

0,5

1,0

1,5

2,0

2,5

3,0

Before After

0,0

2,0

4,0

6,0

8,0

10,0

0,0

10,0

20,0

30,0

40,0

50,0

60,0

PRODUCT UNIT ERRORS

% OF WAITING TIME IN PROCESS

% NON VALUE ADDING ACTIVITIES

44% Decrease 53% Reduction 31% Decrease

PRODUCTIVITY INCREASE OF 31%

Moving from lean projects to lean enterprises: the Toyota Way

1. Base management decisions on long-term philosophy even at the expense of short-term financial goals

2. Create continuous process flow to bring problems to the surface3. Use “pull” systems to avoid overproduction4. Level out the workload (heijunka) – work like the tortoise, not the hare5. Build culture of stopping to fix problems to get quality right the first time6. Standardized tasks are the foundation for continuous improvement and employee

empowerment7. Use visual control so no problems are hidden8. Use only reliable, thoroughly tested technology that serves people and processes9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to

others10. Develop exceptional people and teams who follow your company’s philosophy11. Respect your extended network of partners and suppliers by challenging them and

helping them improve12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu)13. Make decisions slowly by consensus, thoroughly considering all options; implement

rapidly14. Become a learning organization through relentless reflection (hansei) and continuous

improvement (kaizen)

SummaryWhat is Lean Project Delivery?• A third form of production system design, neither craft nor mass, adapted

for capital projects. • The lean ideal: Give customers what they want, deliver it instantly, without

waste.

Where did it come from? Lean production was invented by Toyota, then adapted for construction by

researchers and practitioners associated with the International Group for Lean Construction.

Where is it going?

From manufacturing to all industries, including those in which production systems take the form of projects: construction, product development, research, software engineering, air and sea shipbuilding, custom fabrication, work order systems, health care delivery, oil field development.





– Coordination and control through reliable promising– Set based design strategy








Linbeck Next Stage DevelopmentThe Texas Showplace

ActionItems

Log

As of December 2, 1998 Project Progress Meeting Revised: 12.14.98

Date Originated-Item No.

Item Description ActionBy

RNC

DateRequired

DateCompleted

A.Site/Civil

Texas Accessibility Standards:AA07.01.98.01 • Provide TAS requirements to ELS HA 07.07.98 07.07.98AA07.01.98.02 • Identify preliminary and final TAS review

process.ELS 07.14.98 07.14.98

AA07.01.98.03 Resolve building storm/sanitary sitecollection points and pipe inverts; stilllacking inverts. Coordinate profiles withwater line surrounding building to be deededto City.

CHPA/HA/

LCC/TSPH

2 07.10.9807.31.98

08.02.98

AA07.01.98.04 Develop site and parking lighting compatiblewith Lone Star Race Park for site plansubmission for Planning and Zoning approval(Control Road "B").

TEE/FE/HA

6 07.14.9808.12.98

08.12.98

AA07.01.98.05 Provide color rendering for submission forPlanning and Zoning review/approval;resolve landscape issues (IA07.01.98.05).

ELS 7 07.14.9807.27.98

07.27.98

Traditional Management Increases Variability: Plan Reliability Data

Company 1 33 %Company 2 52 %Company 3 61 %Company 4 70 %Company 5 64 %Company 6 57 %Company 7 45 %Average 54 %

Conditions of Satisfaction

&Date of

Completion

CUSTOMER

Request“Will You?”

Prepar

atio

n

1

3

4

PO

InquiryNegotiation

Clarification&

Negotiation

Signed

PROVIDER

2

Perfo

rman

ce

Declare Complete“I’m Done”

Accepted Submitted

COMMIT“I Promise I WILL”

Assurance

DeclareSatisfaction

“Thank you”

Conditions of Satisfaction

& Completion Date

The “Physics” of Coordination

Master Scheduling

Weekly Work Planning

Lookahead Planning

Learning

Phase Scheduling

Set milestones

Specify handoffs

Make ready &Launchreplanning whenneeded

Promise

Measure PPC &Act on reasonsfor failure tokeep promises

SHOULD

CAN

WILL

DID

The Last Planner System of Production Control

Master Schedule

Functions of Master Schedules

• Demonstrate the feasibility of completing the work within the available time.

• Develop and display execution strategies. • Determine when long lead items will be

needed.• Identify milestones important to client or

stakeholders.

C:\Documents and Settings\Glenn Ballard\My Documents\LCI\LCI Training\Courses\Introduction to Lean Construction I\seminar 2\107MVI.AVI

Reverse Phase (Pull) Scheduling

• Produce the best possible plan by involving all with relevant expertise and by planning near action.

• Assure that everyone in a phase understands and supports the plan by developing the schedule as a team.

• Assure the selection of value adding tasks that release other work by working backwards from the target completion date to produce a pull schedule.

• Publicly determine the amount of time available for ‘contingency’ and decide as a group how to spend it.

Functions of the Lookahead Process

• Make work ready by identifying and removing constraints

• Shape work flow sequence and rate

• Match work flow and capacity

• Maintain a backlog of ready work

• Develop detailed plans for how work is to be done

Constraints Analysis: DesignProject: Mega Bldg

Report Date: 3 Nov C o n s t r a i n t s

_______________________________________________________________________________Activity Respons-

ible PartyScheduledDuration

Directives Pre-requisites

Resources Comments Ready?

Designslab

StructuralEngineer

15 Nov to27 Nov

Code 98Finish?Levelness?

Soils report 10 hourslabor, 1 hrplotter

No

Get info.from clientre floorfinish &level

StructuralEngineer's gofer

3 Nov to9 Nov

OK OK OK Yes

Get soilsreportfrom Civil

StructuralEngineer

By 9 Nov OK OK OK Yes

Layoutfor toolinstall

MechanicalEngineer

15 Nov to27 Nov

OK Toolconfigurations frommfger

OK May needto coord.w/ HVAC

No

Master Scheduling

Weekly Work Planning

Lookahead Planning

Learning

Phase Scheduling

Set milestones

Specify handoffs

Make ready &Launchreplanning whenneeded

Promise

Measure PPC &Act on reasonsfor failure tokeep promises

SHOULD

CAN

WILL

DID

The Last Planner System of Production Control

Quality Characteristics of Weekly Work Plans

• Definition

• Soundness

• Sequence

• Size

• Learning

Linbeck Next Stage DevelopmentThe Texas Showplace

ActionItems

Log

As of December 2, 1998 Project Progress Meeting Revised: 12.14.98

Date Originated-Item No.

Item Description ActionBy

RNC

DateRequired

DateCompleted

A.Site/Civil

Texas Accessibility Standards:AA07.01.98.01 • Provide TAS requirements to ELS HA 07.07.98 07.07.98AA07.01.98.02 • Identify preliminary and final TAS review

process.ELS 07.14.98 07.14.98

AA07.01.98.03 Resolve building storm/sanitary sitecollection points and pipe inverts; stilllacking inverts. Coordinate profiles withwater line surrounding building to be deededto City.

CHPA/HA/

LCC/TSPH

2 07.10.9807.31.98

08.02.98

AA07.01.98.04 Develop site and parking lighting compatiblewith Lone Star Race Park for site plansubmission for Planning and Zoning approval(Control Road "B").

TEE/FE/HA

6 07.14.9808.12.98

08.12.98

AA07.01.98.05 Provide color rendering for submission forPlanning and Zoning review/approval;resolve landscape issues (IA07.01.98.05).

ELS 7 07.14.9807.27.98

07.27.98

Reasons for Non-Completion

Reasons/Date

7/1/98

7/15/98

7/29/98 8/12/98 8/26/98 9/9/98 9/23/98 10/7/98

10/21/98

11/4/98

12/2/98

All Weeks

Decision 1 1 3 1 1 1 3 3 3 17 Prerequisites

7 16 8 2 7 10 3 5 6 4 68

Resources 1 2 0 3 Priority Change

3 4 6 1 1 15

Insufficient Time

5 6 1 6 6 10 8 10 6 4 62

Late start 4 1 1 1 1 8 Conflicting Demands

7 7 3 1 7 2 4 6 5 42

Acts of God 3 0 3 Project Changes

0 1 1

Other 2 1 3

Summary Recommendations for Production Control

• Limit master schedules to milestones and long lead items.

• Produce phase schedules with the team that will do the work, using a backward pass, and making slack explicit.

• Drop activities from the phase schedule into a 3 week lookahead, screen for constraints, and advance only if constraints can be removed in time.

• Learn to make reliable promises.

• Track PPC and act on reasons for failure to keep promises.

Plan Failure #1

Failed to transmit site plan package to the general contractor as promised. Reason provided: conflicting demands—“I was overwhelmed during this period.” 5 why’s revealed that the required time was underestimated for collecting the information needed because the City’s requirements for traffic analysis were different and greater than had been assumed.

Can Last Planner be Applied to Design?

Consider the task of producing a piping isometric drawing versus the task of doing a piping layout for a given area. In order to do the layout, the designer must know where other objects are located in the space. She must know locations, dimensions, material compositions, and operating characteristics of end-points. Some of these constraints and conditions of her problem will not change. Some may well change in response to her difficulty achieving a satisfactory solution. Consequently, the final piping layout will emerge from a process of negotiation and adjustment, which cannot be determined in advance.

Percent of Plan Completed

0%

10%

20%

30%

40%

50%

60%

70%

80%

7/1/98 7/15/98 7/29/98 8/12/98 8/26/98 9/9/98 9/23/98 10/7/98 10/21/98 11/4/98

Week

% C

om

ple

ted

PPC on a Design-Build Project

Case Study - Theater Project• PPC for the various project teams

– Site/Civil: 78%– Structural: 35%– Enclosure/Architectural: 62%– Mechanical / Electrical: 55%– Theatrical / Interiors: 52%– Project Support: 85%

• Total Average PPC: 61.6%

Failed to transmit site plan package to the general contractor

as promised. Reason provided: conflicting demands—“I

was overwhelmed during this period.” 5 why’s revealed that

the required time was underestimated for collecting the

information needed because the City’s requirements for

traffic analysis were different and greater than had been

assumed.

Plan Failure Analysis: # 1

Failed to revise and submit site drainage for revised

commissary roof drainage. Reason provided: prerequisite

work. The mechanical contractor originally provided

drainage data on pipe sizes, inverts, etc., then discovered

that City codes required additional collection points. Civil

is waiting on Mechanical to provide data on these

additional collection points.


Failed to make an engineering determination from 3 alternative pavement

designs provided. Reasons provided: prerequisite work and insufficient

time. “This item was not anticipated. Why was it not anticipated? The City

refused to accept our pavement design. Why did they refuse to accept our

pavement design? Soil conditions were different from past projects. The

lack of prerequisite design work referred to the soil borings in the barrow

site. We also are investigating other sources for dirt. Why was time

insufficient? We neglected to plan for the time required to mobilize soils

testing.” The root cause was assuming soil conditions would be the same. A

process flow diagram might have revealed the significance of that

assumption.


Plan Failure Analysis

• Failures were generally the result of not understanding something critically important-as opposed to mistakes in calculation or otherwise within the design act.

• The fundamental causes of non-completion were failure to apply quality criteria to assignments and failure to learn from plan failures through analysis and action on reasons.

Nature of the Design Process: Implications for

Design Production Control• PPC of design processes is not very high.• Some type of task explosion or

decomposition is needed in order to identify what needs to be done to make assignments ready to be performed.

• Given the nature of the design process, such explosion must occur near task execution.

The ‘Physics’ of Design• Design is essentially a value

generating process.• Design generates value within

constraints and competing purposes.• Design is the domain of wicked

problems.• The flow of work in design is iterative

and generative. • Design criteria are the critical issue in

design work flow control.

Questions or Comments?







– Set based design strategy– Maximizing value for money through target costing






Lean Design: An Overview* Involve downstream players in upstream decisions* Alternate between all-group meetings and task force activities* Create and exploit opportunities to increase value in every phase of the project

Organize in Cross Functional Teams

Pursue a set based strategy

* Select from alternatives at the last responsible moment* Share incomplete information* Share ranges of acceptable solutions

Structure design work to approach the lean ideal

* Simultaneous design of product and process* Consider decommissioning, commissioning, assembly, fabrication, purchasing, logistics, detailed engineering, and design* Shift detailed design to fabricators and installers

Minimize Negative Iteration

* Pull scheduling* Design Structure Matrix* Strategies for managing irreducible loops

Use Last Planner System of Production Control

* Try to make only quality assignment

* Make work ready within a lookahead period* Measure PPC* Identify and act on reasons for plan failure

Use technologies that facilitate lean design

* Shared geometry; single model* Web based interface

Needless (Negative) Iterations

x de

h

P ro jec t P a rtne r d e h x (m m ) (m m ) (m m ) (m m )

A rch itec t 550 650 650 500S tee l F abrica to r 550 900 650 1100E ng ineer 200 900 650 1100A rch itec t 200 900 650 1000H V A C S ubcon trac to r 450 800 650 600E ng ineer 400 900 730 700S tee l F abrica to r 400 900 730 800

..... ..... ..... ..... .....

From Lottaz, et al. “Constraint-Based Support for Collaboration in Design and Const.” Jrnl of Computing in Civ.Eng., 1/99

Set Based Design‘Set-based engineering’ has been used to name Toyota’s

application of a least commitment strategy in its product development projects. That strategy could not be more at odds with current practice, which seeks to rapidly narrow alternatives to a single point solution, but at the risk of enormous rework and wasted effort.

It is not far wrong to say that standard design practice currently is for each design discipline to start as soon as possible and coordinate only when collisions occur. This has become even more common with increasing time pressure on projects, which would be better handled by sharing incomplete information and working within understood sets of alternatives or values at each level of design decision making; e.g., design concepts, facility systems, facility subsystems, components, parts.

Set-Based Design

“Preventing engineers from making premature design decisions is a big part of my job.” (Toyota’s Manager of Product Engineering)

Set Based Design

Toyota’s product development process is structured and managed quite differently even than other Japanese automobile manufacturers. Toyota’s product development:– Develops multiple design alternatives.– Produces 5 or more times the number of

physical prototypes than their competitors.– Puts new products on the market faster than

their competitors and at less cost.

Negative vs Positive Iteration

We suspect that Toyota’s superior performance is a result of reducing negative iteration, and that the reduction is more than sufficient to offset time ‘wasted’ on unused alternatives. Negative iteration occurs as a result of each design discipline rushing to a point solution, then handing off that solution to downstream disciplines in a sequential processing mode.

Making Decisions at the Last Responsible Moment

Whether or not one has the time to carry alternatives forward, would seem to be a function of understanding when decisions must be made lest we lose the opportunity to select a given alternative. We need to know how long it takes to actually create or realize an alternative. Understanding the variability of the delivery process, we can add safety-time to that lead-time in order to determine the last responsible moment. Choosing to carry forward multiple alternatives gives more time for analysis and thus can contribute to better design decisions.

Advantages of Set-Based Design

1. Enables reliable, efficient communication. – Vs point-based design, in which each change may

invalidate all previous decisions.2. Waste little time on detailed designs that can’t be built.3. Reduces the number and length of meetings. 4. Bases the most critical, early decisions on data.5. Promotes institutional learning.6. Helps delay decisions on variable values until they

become essential for completion of the project.7. Artificial conflicts and needless iterations of negotiations

are avoided.8. The initiator of a change retains responsibility for

maintaining consistency.

A Set Based Design Strategy

• Identify and sequence key design decisions

• For each decision, generate alternatives and the criteria for evaluating them

• Determine the last responsible moment for decision making

• Evaluate and choose from alternatives• Document each key design decision:

alternatives, criteria, evaluation & selection








– Maximizing value for money through target costing• Launch project planning





Making a Virtue of Necessity

• ‘Lower the river to reveal the rocks’– Systematically stress the production system to

identify needed improvements– Buffer the production system so experiments

can be performed without risk of violating commercial agreements

• ‘Price – Profit = Cost– Artificially manipulate constraints to drive

innovation

Project Definition* Business Planning* Feasibility Study

Set the Target Cost

Design* Design Development

* Detailed Engineering

Design to the Target

Cost

Construct

Commission/Turnover

Build to the Target

Cost

How to “lower the river” on capital facility projects

1) reduce the amount of money made available for design and construction of facilities with pre-specified functionalities, capacities and properties;

2) increase the minimum acceptable ROI, or

3) increase the valued facility attributes required beyond what current best practice can deliver for a given cost.

St. Olaf’s College Field House

Comparing Projects

Carleton Recreation Center

St. Olaf Field House

Completion Date April 2000 August 2002

Project Duration 24 months 14 months

Gross Square Feet 85,414 114,000

Total Cost (incl. A/E & CM fees )

$13,533,179 $11,716,836

Cost per square foot $158.44 $102.79

Setting the Target Cost

1. Assess the business case (demand, revenues), taking into account the cost to own and use the facility (business operations, facility operations, facility maintenance, adaptability, durability) as well as the cost to acquire it.

2. Determine minimum acceptable ROI or maximum available funds.3. Answer the question: If we had a facility with which we could achieve our

specific purposes, and if we could have that facility within our constraints of cost, location and time, would we do it?

4. If the answer is positive, and if project delivery is not considered risky, fund the project. If the answer is positive and project delivery is considered risky, fund a feasibility study to answer the question: Can we have the facility we have in mind, will it enable us to achieve our purposes, and can we acquire it within our constraints?

5. Start a feasibility study by selecting key members of the team that will deliver the project if judged feasible.

6. Determine and rank stakeholder values.

Setting the Target Cost

7. Explore how the facility will perform in use through process modeling and simulation.

8. Scope the facility that will deliver the values.9. Determine the expected cost if the facility were provided at

current best practice.10. If expected cost exceeds available funds or violates ROI, attack

the gap with innovations in product/process design, restructure commercial relationships, etc.

11. If expected cost still exceeds available funds or violates ROI, adjust scope by sacrificing lesser ranking values.

12. If the scope and values that support the business case can be provided within financial constraints, fund the project. Otherwise, kill the project.

Purposes

Design Criteria

Operation Design

Funds,Time, Location, Regulations

Facility Design(s)

Values

Constraints

What’s Wanted (Ends) What Provides (Means)

Project Definition Process

Designing to the Target Cost

1. Allocate the target cost to systems, subsystems, components, …

2. Form teams by facility ‘system’: substructure, superstructure, envelope, HVAC, lighting, etc.

3. Establish a personal relationship between designers and cost modellers/construction experts in each system team.

4. Have cost modellers/construction experts provide cost guidelines to designers up front, before design begins.

5. Require designers to consult cost modellers on the cost implications of design alternatives before they are developed.

Designing to the Target Cost

6. Incorporate value engineering/value management tools and techniques into the design process.

7. Periodically convene all teams together to make sure they are not sacrificing project-level value to local optimization.

8. When previously agreed, by meeting or beating the target cost, release funds for adding back lower ranking values or other scope additions valuable to the client.

9. Schedule cost reviews and client signoffs, but develop design and cost concurrently.

10. Use computer models to automate costing to the extent feasible.

Tools• Feasibility Study With Detailed Budget (Target)• Engage all parties at earliest possible time• Scheduling (At SRMC the end users were divided into

clear groups for SD’s and beyond)• Use a room data sheet• Full engagement from the Affiliate• Estimating at the design table• Empowerment to declare a breakdown• Clear conditions of satisfaction to teams• Willingness to say no (need to have or want to have)• Target team matrix (Organize Teams) • Adopt a Budget Realignment Approach and Tool








– Collaborative design process• Launch project planning





Business planning

Idea

Design Workshop

Constraints Workshop

Values Workshop

Form project delivery team/holds kickoff workshop

Workshop to align values, designs and constraints

Set scope and cost targets

Workshop to identify misalignments between values, designs and

constraints

Project Definition Process

Launch Design Phase

*All understand in rough terms the starting points for values, designs, and constraints, and what is changeable. *All understand the project definition process and roles & responsibilities. *Agree on learning objectives and understand what’s required in order to achieve them

*Operations designs with potential for delivery of desired services more effectively and efficiently*Facility designs that enable operations as designed

*Ranked list of stakeholder purposes and values. *Design criteria

*Minimum acceptable ROI or maximum available funds*Timing requirements*Characteristics of alternative locations*Regulations

Notes:1. All workshops are one day or less in duration.2. Preparation occurs between workshops and other process steps.3. Multiple workshops may be required to achieve an objective.4. When multiple objectives can be achieved in a single workshop, following workshops can be eliminated.

*Identify misalignments*Assign actions to resolve

*Test & agree alignment*Assign actions to develop proposal for funding approval












