OIM Interim Assignment: Lean Principles and Process Types in Operation Management.

By Lucas Rodrigo Ribeiro Ostjen

(@00503777)

M.Sc. in Project Management Course Operations and Information Management

Tutor: Mr. George Thomas
University of Salford & Robert Kennedy College
Salford Business School

25th June 2017

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Summary

Nowadays become usual to face a situation where a project is delayed, it is common to deal especially
inside the construction industry, where 70% of the projects are currently over budget and delivered
late (Lean Construction Institute , 2008). This paper has the intention to demonstrate the ways the
lean principles can support the project managers to reduce the wastes (MUDA) in constructions and
improve the quality on project delivery. It will be mention the use of the Building Information
Modeling (BIM) which can be used as a resource for information, and basis for decisions.
Apart of the tools which will be introduce through this paper, there will be an analyses of the use of
the lean principles inside of the construction industry, and how does it can affect the production and
the supply network. What could be the improvements from productivity to quality, the effects and
the positive impact to deliver more value to customers more quickly.

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Table of Contents
A Broken Industry .................................................................................................................... 5
Why Go Lean? .......................................................................................................................... 5
Lean at Construction ................................................................................................................ 6
Just in time x Building Information Modeling ............................................................................ 7
Lean System ............................................................................................................................. 8
Breakthroughs and Conclusions .............................................................................................. 10
References ............................................................................................................................................ 11

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A Broken Industry
Construction productivity has decreased and it reflects on the number of projects efficient delivered,
even with managers pushing for long hours at work the same do not reflect in productivity, however
the overtime can impact on the other way around if an accident happen. So what can managers do
for the customer to be satisfied with the project delivery?
Subcontract is the only chosen option and the industry become addicted of subcontracting, a practice
that is common on the construction field in order to speed up the activities, however as the project
manager hire subcontractors with the lower price, in order to maintain the project cash flow and
profits, the quality which is promised never is achieved, what appear to be a smart decision to keep
the project margin, turns to be a time consuming resolution and on the building industry time is the
only thing which cannot be bought, time in this industry is a constant which is consumed without
control.

Why Go Lean?
Lean was born without necessity, however as back on the time after the second war, Japans
industry was small and had a fragmented market, an exhausted workforce, the country didnt have
too much natural resources to offer and in addition to that little capital. Facing that Eijii Toyoda and
Tayichi Ohno at the Toyota Motor Company in Japan pioneered the concept of lean production
(Womack, Jones, & Roos, 2007). The outline of Toyoda and Ohno was to catch up with the American
car industry in three years and for that, the challenge was on create a production system exploiting
central weakness of mass production model (Nightingale, 2005). From this point onwards the Lean
concept was created with basis on high productivity, production flexibility, efficient development
cycle, improved quality and the most important the elimination of waste on production.
Stevenson mention that a Lean system is the one which uses minimal amounts of resource
to produce a high volume of high quality goods with some variety (Stevenson, 2012) in other words
we can say that Lean is a system that search for eliminate waste achieving value for a companys
stakeholders as a goal.
Besides Lean was created by the manufacturing and production industry its concepts and solutions
have been successfully imported into different field such as the service industry - retail, travel,
healthcare, government, financial services, etc. However impose its methods on exist systems may
cause pain and on the construction industry it will not be different, especially when we still can find
leadership with the always right thinking and the I know it all attitude.

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Lean at Construction
Aforementioned, eliminate MUDA (Japanese word for waste) is one of the main concerns to
develop the lean concept, said that, the lean principles mention that there are seven types of waste:
Inventory, Overproduction, Transport, Waiting, Over processing, Motion, Correction/Rework. Below
we have examples found at construction industry:

Inventory Material and/or information delivered before it is needed

Overproduction Order additional material because of poor quality

Transport Moving material from one place to another before installing it

Waiting For material, information, pre requisites to perform work

Over processing Unacessary reports / Excessive coordination with multiple suppliers

Motion Hunting for information / Material or tool not on site

Rework Perform work more than once because of mistakes

Waste then could be defined as any activity that consumes resources and add no value.

The above list is a short examples of the wastes we found in the industry and this reflects either in
small and great budget projects. Eliminating these wastes is a painful job but its necessary, projects
are company based and when a project is developed the main concern for the companys stakeholder
is how this project can achieve a higher profit from which was planned. In the other hand the customer
concern is how to get the most from what hes paying or how to reduce the cost. Project managers
have a difficult task however bringing in the lean management concept for a project, can connect
three improvement opportunities:

Impeccable Coordination: Predictable Workflow, Freeing human capacity to focus

on Innovation and continuous improvement
Project as a Production System: Changing the structure of work, elevating cost &
other values to drive design
Projects as a Collective Enterprise: Align financial incentives, move money across
boundaries for project optimization rather than trade or silo focus
(Lean Construction Institute , 2008)
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 The improvements in such areas give to the project, time, which in the construction industry
is the most value asset to have. This time can be used for another key on the Lean concept: Kaizen
(Kai: Change Zen: for the better) or continuous improvement, and for an industry where the majority
of the workforce is formed by blue collar workers these improvements has to be made through the
application and upgrade on the available standards. Taiichi Ohno from Toyota quote: Without
standards there can be no improvement. Drive a construction project has to be lead with a team
where observation must be used for improvement of the work methods and these can reflect on waste
reduction. However the team must understand that to deliver a project with excellence there will be
a path where it is important to be reliable and reduce uncertainty, the work shall be managed as a
network of commitments, and share the risks and the rewards maintaining a free flow of
communication between all parts.
Although the value for any project is set as the customers specific dream, there is another
perspective where the value for the project should be defined by the team and what can be achieved
and what shall be improved to achieve beyond the expectations, aligned with this thought comes the
identification of the value stream, where each and every action which impacts in the project shall be
linked, the necessary processes for transforming inputs to outputs. Following this scenario the building
industry can take advantage of the Jidoka or automation with a human touch, nowadays the
technology has made its path into several industries and with the construction it wasnt different,
apart the products which are used, technology made it well when it comes into the design, the Building
Information Modeling (BIM) can be considered as a tool that bring to the project more flexibility and
visibility on the way different disciplines should be coordinated not only that it reduce the rework and
make faster the transition of the requirements to supply chain.

Just in time x Building Information Modeling

The main pillars of the Lean concept are, flexibility and responsiveness, waste reduction, trust
based relationships, continuous improvement and striving for perfect quality and into construction
industry it can be achieved using the Building information Modeling, of course there are other actions
which shall be taken however the BIM model can help manager to achieve excellency when delivering
a project.
Most of the constructions projects available today have their workflow running as silo based model
and this is reflect of the subcontracting, a usual procedure in this industry, the cost reduction implies
on hiring different subcontractors to perform works in different disciplines of the project. The
customer expects the different parties to coordinate with each other in order to avoid clashes

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however this coordination is never done as during the design stage there is no information exchange
between subcontractors, instead this coordination is performed during the construction stage and
clashes becoming common, and it reflects on a huge amount of rework, wasting time and additional
material that should be installed. Construction projects nowadays goes completely in the other way
when it comes to Lean management. Thus the BIM model can avoid most of the coordination
problems, however some customers and managers do not see its value and avoid to use it, thinking
that they are reducing the design cost but paying a higher price afterwards.
The fact is that doing the BIM model, 90% of the coordination work will be done during the design
period, the construction flows smoothly and theres a significant reduction on the time during the
construction phase.
There is a positive impact on the supply chain network when the BIM is used, as the design has much
more integration it generates a list of material, which the supply network can use to order the
production of the right products observing the right time and quantity, ordering exactly what the
project need in order to avoid inventory. Therefore the BIM model is a tool which should be used
inside the construction, it brings benefits to the project to avoid waste of time however this tool is
more usable if the environment where it is applied works under the lean system.

Lean System
The main target of every company is to generate profit, and in the construction industry it would not
be different. Profit is reflected when customers demand is satisfied, usually having the best quality,
and the best prices, which shall come from lowest cost, and supplying on time.

Profit

Satisfy Customer demand

Best Prices Supply on time

Based on that when working in a project, the project manager should implement and create a Lean
Project delivery environment and for that happen the team should understand that collaboration will
be important, relatedness shall be increased, and the project has to be faced as a network of

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commitments and learning has to be applied with actions. With emphasis on the lean concepts the
building industry practice the lean connecting these concepts into the construction perspective:

Set Based
Design
Virtual Target
Design & Value
Construction Integrated Design
Project Relational
Built-in Delivery Contracts
Quality
Work
Standard
Structuring
work &
Kaizen

Lean has to be seen as an enabler which eliminate waste, especially across the design, fabrication, and
construction supply chain. Improve consistency across the supply chain, level the production, the
inputs from the building team come earlier and a real time review model can be implemented along
with the value stream mapping which is the missing link that support and help on the waste
elimination as well as it is an essential tool as it provides a common language, managers can visualize
the project not just in a single process level, the flow can be seen. Value stream mapping ties lean
concepts and techniques and it form the basis of an implementation plan.

Value stream mapping is a qualitative toll by which you describe in detail how your facility should
operate in order to create flow (Rother & Shook, 1999)
The creation of the value stream map, involves the entire team and walk the process, following the
material and information through the process, each and every step is important and the team must
be disciplined on its implementation.
Integrated project delivery should have a collaborative workflow, the risks shall be minimized and
monitor by their owners, normal profit must be restored however for an extraordinary team
performance if possible to enhance it can be a win/win victory optimizing efficiencies across the
design, and construction value stream eliminating wasteful practices especially in supply chain
network.

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Breakthroughs and Conclusions

The combination of Lean practices along with an integrated team and the use of tools as the
building information modeling can bring several benefits for the building industry, as discussed here
the mitigation of wastes is the main key to optimize time and cost. The impact which can be seen is a
safer, and greener construction site, there are a reduced field overtime putting down the cost and
speeding up the construction process. The use of the Building Information Modeling reduce scrap,
increase off-site fabrication, virtually the rework can be avoided in advance. Decisions related to
changes can be made in an earlier stage using full discipline 3D schematic models. The collaboration
between parts is more effective using a Lean system where a trustable network of commitment is
created. Moreover it improves trades morale as installation are done once only.
Lean management system is totally applicable and recommendable on the building industry,
the usage of the value stream map, helps to find point out where exactly are the wastes and helps to
describe them over the waste types as defects, transportation, movement, waiting, inventory, over
production and over processing which are all found inside this industry.
Visual management is another element that helps on the improvement of standards, which must
applicable and upgraded in order to maintain wheel of improvement running.
A Lean system should be built planning to have highest quality, lowest cost and shortest lead time,
and the just in time philosophy has to be carried along with the process. Ohno Taichii mention making
only what is needed, when it is needed, and in the amount needed. It reflect on achieve the lowest
true cost on the right amount of work that should be done in order to deliver the project with a normal
or increased profit.
Something that managers have to be aware, is the subcontracting as a normal practice in the industry,
a coordination between all parts is everyone job and managers has to make it clear to their
subcontractor from the first day they start work. The same level of detail, agreed standards, reference
files and information sharing with a team oriented to develop integration between interfaces.
Learning to see, is a significant sentence when applying the Lean philosophy, especially
because go Lean its a continuous process it never ends with a project. Lean system provide to the
ones involved a series of learning loops, gives more structure to the work and controls on production
moreover gives the feeling that everyone own the project and the team morale increase as they are
focus to achieve a better performance when improving the work processes.

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References
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Lean Construction Institute . (2008, September 15). www.leanconstruction.org/. Retrieved from

Learning: https://www.leanconstruction.org/media/docs/ktll-add-read/9-15-
08_Lean_Construction_Opportunites_Ideas_Practices_FINAL.pdf

Lean Enterprise Institute. (n.d.). Lean Enterprise Institute. Retrieved from Lean Enterprise Institute:
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Mauck, R. (2008, September 15). www.leanconstruction.org. Retrieved from learning:

https://www.leanconstruction.org/media/library/id55/BIM_and_Value_Stream_Mapping_R
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Maylor, H. (2010). Project Management Fourth Edition. England: Pearson.

Nightingale, D. (2005, September 12). Massachusetts Institute of Tecnology. Retrieved from

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Rother, M., & Shook, J. (1999). Learning to See. Massachusetts: Lean Enterprise Institute.

Sherman, A. (2017, February 22). Fictiv / HWG. Retrieved from fictiv.com:

https://www.fictiv.com/hwg/plan/design-for-lean-manufacturing

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Stevenson, W. J. (2012). Operations Management 11th Edition. New York: McGraw-Hill.

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