Lean Construction - a Paradigm Change

The construction business is based on tenders and competitive bidding. It shall guarantee the best price. But this system became a nightmare.

Lean Construction Management and IPD (Integrated Project Delivery) put the project and the value for the client first.

Construction Industry Today

Today in most construction projects you will find that

  • They are over budget,
  • They are delayed,
  • Everyone tries to blame others if something goes wrong
  • Everyone hates the endless fights.

The main contractor doesn’t provide a single worker in building projects. He subcontracts all work. The sub-contractors again outsource the work if they can save money. At the end a busload of butchers from a low income country is doing the work (true story).

The client has a lump sum contract. But he needs to hire engineers who supervise the work and maintain the snag lists. He probably faces claims and will end in court.

A Different Way

Almost 10 years ago I read an article about an US client who wanted a large new campus building. They didn’t allow the contractors to start working until all trade contractors finalised their detailed design. They wanted to avoid rework. I was fascinated.

I followed this project and after a whopping 1.5 years of planning the construction finally commenced. But then it was incredibly fast. It was completed in just a year, ahead of schedule and with massive cost savings. There were no claims and no legal battle.

So it can be done differently.

Lean Construction Management

For detailed information about the principles of Lean Construction please see e.g. www.leanconstruction.org as I will only focus on the paradigm change in this blog.

The example described above shows what’s required for a successful project.

  • Design completion

    Rework means delay and increase of cost.

  • Collaboration

    All parties must work together. If the HVAC contractor faces problems due to design he needs to work with the architect and design changes will affect structural engineering and other trades. Today this is achieved by working on a shared BIM in the cloud.

  • Establish Pull and create a Flow

    A detailed plan of daily tasks is developed backwards (“Pull”) from a defined milestone. This ensures realistic durations and keeps the inventory small.

    The goal is a constant flow of tasks and resources without interruptions.

  • Incremental improvements

    It is important to discuss problems. The teams will find ways to improve continuously.

The Mindset Is the Problem

This all sounds logical and common sense. But after so many years working against each other not all can follow.

  • Clients

    Clients must be fully involved in the project and the driving force behind Lean methods. They must be patient and trust that a long design phase is beneficial for the project.

    And they must restrain from variations at least after the design is completed.

  • Contractors

    Contractors must disclose their work and their problems. Keeping information hidden is probably the most difficult mindset to overcome. There are projects where contracts were terminated mid way because of this attitude.

IPD - Money Incentivizes

Integrated Project Delivery (IPD) is a holistic approach to overcome these problems. It includes new forms of contracts.

In collaborative contracts the contractors share cost savings as their profit. The client agrees with them on a “Target Cost” for the project. During construction he pays agreed rates for resources spent. If the contractors deliver below target cost they make a profit.

Everyone is interested in helping others because his own profit might be affected.

Job done? Not that easy. The experience showed that repeated coaching by external consultants is required to keep people on target, especially if inexperienced in IPD projects.

The Paradigm Change

Eye watering results obviously are worth making the extra steps (just see investment company T. Row Price’s success stories at www.bdcnetwork.com).

In Germany Lean Construction and IPD are getting pace, too. At the GLCI’s (German Lean Construction Institute, www.glci.de) conferences all major players attend with their Lean teams and by far the biggest group are owners. The first IPD projects are underway (see this blog of developer ECE at www.ece.com