Evaluation and Background to Lean Construction - Case Study Example

Chapter Introduction In July 1998, the ‘Construction Task Force’ led by Sir John Egan produced its report Rethinking Construction. The need for the construction industry to improve its performance was highlighted. The report suggested that the current thinking and practices need to be drastically changed. Suggesting a need for a ‘movement for change’ that would be dynamic, inspirational and non-institutionalised in order to bring about a radical improvement in one of the most burning issues of today – “Lean Construction”. The report also led to further action with the launch of the Movement for Innovation (M4I) in November 1998 (Azobuild, 2006). The ambition of the Task Force was to bring about a Radical change in all the industries and by their experience bring about efficiency and improvements within the construction environment which would benefit all. (Paragraphs 15, 16 and 18) Background to Lean Construction: Lean Construction in general refers to a construction that would help maximizing the customer’s needs whilst satisfying the necessary and required parameters and in doing so, using the minimum amount of resources (Howell 1999). It is actually the “physics” of construction mainly based upon the principles of production management (Howell 1999). It refers to a whole new kind of project delivery system which can be utilized by any type of industry including construction though best suited for complex, uncertain and quick projects (Howell 1999). There are many definitions pertaining to Lean Construction. Some define it as a “way to design production systems to minimize waste of materials, time and effort in order to generate the maximum possible amount of value” (Koskela et al. 2002). According to Koskela the construction theory needed to be reviewed to centralize on optimizing the project by taking into account the flow of work between activities and the formation and release of value (Wright 2000). The Lean Project Delivery System (LPDS) and the Last Planner System of Production Control was developed by LCI where the principles pioneered in manufacturing were applied to construction (Pinch 2005). LPDS’s origins can be traced back to Lean Production Management which is a manufacturing approach brought into the limelight by Toyota Motor Company in the 1980s (Pinch 2005). The term was introduced by the Toyota engineer “Ohno” (Pinch 2005). His recommendation was to stop the production line instead of delivering a defective part downstream. This approach resulted in streamlining the workflow, minimizing inventory and obtaining an up-graded end-product of good quality (Pinch 2005). This design criterion of the Ohno’s production system has been considered as the standard of perfection and is therefore applied to Lean Construction (Pinch 2005). The emergence of Lean production can be traced within the framework of the ‘three treasures’ of lifetime employment, in-company ‘enterprise’ unions and promotion based on duration of service (Dohse 1988). Problems & Solutions pertaining to Lean Construction: Taking into consideration the Lean Production theory as a source for approaching construction processes is not that simple. (Hirota, Lantelme, & Formoso 2007). “The adaptation of concepts and principles from manufacturing to construction is not straightforward: the meaning of concepts, principles and approaches used to explain and improve manufacturing processes must be well understood in order to transfer them to the construction environment” (Hirota). It is imperative to leave behind the old thinking patterns so that these concepts can be applied in the construction environment (Hirota 2007). “Those patterns include the belief that construction industry is too particular to have any similarity with manufacturing as well as the focus on solutions exclusively drawn from new technologies and financial support when time and economic constraints are involved” (Hirota 2007). It is being said that “the current confidence in ‘Lean Thinking’ is based on an extremely selective sample of the available literature” (Green 1998). The objectives of Lean production mainly zero defects, zero waste and zero inventories challenged the 1970s Western practices of quality inspectors and ‘just-in-case’ buffer inventories (Oliver & Wilkinson 1992). According to Lauri Koskela and Ruben Vrijhoet, theory and practice of construction has not progressed as in manufacturing for the simple fact that without explicit theories it is not possible to obtain core ideas and concepts and methods of these templates which could be used in the construction environment. Aspects of the new metal model of Lean production appear to be both sensible – specify value and strange – stop the line (Howell & Ballard 1998). Problems which are solved by Lean such as unreliable work flow have been actually identified as problems in construction (Howell & Ballard 1998). However, there are no solutions provided by common sense (Howell & Ballard 1998). Among the three dimensions in Koskela’s transformation – flow – value – theory, the value dimension is considered to be the least understood and assessed (Bolviken 2006). “Within the Lean Construction “movement” the understanding and examination of the commercial dimensions of construction is far behind the understanding of more technical or organisational issues like planning and scheduling” (Bolviken 2006). The academia’s higher emphasis on the movement than the industry has been considered as one of the causes for this (Bolviken 2006). The lack of emphasis on the commercial dimensions of construction is primarily due to the absence of the commodity-term and the use of the value-term without clearly contradicting between the use and monetary dimensions of these terms (Bolviken 2006). The presence of peculiarities ((problems) is not only specific to the construction industry but it also encompasses all other industries. Hence, the strategies of elimination and mitigation of peculiarities with the view to lessen the drawbacks are no more enough (Bolviken 2006). Strong contradictions stand in the way of the Japanese model of Lean production with technocratic totalitarianism (Green 1998). Though the Japanese manufacturing transplants boast of huge achievements, yet the expression of flexibility, quality and joint effort translates into exercise to control, exploitation and observation (Green 1998). Moreover, it cannot be always taken for granted that every rise in productivity will always reap fruitful results for the end customers (Green 1998). The Lean Construction literature overlooks the insinuation of Lean production for labour autonomy (Green 1998). According to Sugimoto (1997) there exists the Japanese regime of long working hours and absence of provision for paid sick leave. The Lean Construction literature lacks these kinds of references to the human cost of Lean production (Green 1998). Both in UK and USA workers were found to be the victims of high risk, heavy stress due to work, loss of individual independence and discriminatory employment practices (Green 1998).The Lean Construction theory hardly ever recognizes the negative side of this issue (Green 1998). We can therefore understand from the above discussion that the current debate on Lean Construction is actually dependent on an extremely one-sided interpretation of the available literature (Green 1998). A significant spectrum of critical opinions pertaining to the human cost of Lean production has been overlooked by construction researchers (Green 1998). The counter arguments must be seriously considered by the academic community (Green 1998). At present, Lean Construction which is independent of commercially vested interests needs urgent experiential research (Green 1998). Research Aims The Aim of the research is to analyse the problems facing the Industry towards meeting the vision of the Egan Report and to suggest ways for improvement in current practices and systems. Special emphasis shall be placed on the need for improvement in costs, time and reduction of defects - Questioning if this has been achieved through Lean construction and Modern Methods of Construction (MMC). Objectives The objectives of the research shall be achieved by following a structured approach consisting of the following steps: 1. A detailed survey of the available literature on the subject shall be undertaken, including publications of the Egan Report 1998 and subsequent industry reports and publications. 2. The changes, in thinking and practice, following the Egan report and case histories of demonstration projects (Castle Vale Birmingham) will be considered to understand whether the industry has benefited and how much has been learnt and assimilated so far. 3. An analysis of how far the Industry has been able to adopt Modern Methods of Construction in its approach to satisfying Egan’s suggestions. Hypothesis Based on the above objectives the author’s hypothesis is that, if the construction industry embraces the concept of Lean Construction then it will achieve the targets set down in the Egan 1998 Report. Methodology of Research Firstly, the research shall be confined to the construction industry and its primary clients, namely housing. Other types of construction where the client commissions a building or any other kind of Civil Construction, in order to carry on some other business activity are specifically excluded from the scope of the study. Secondly, the report shall concentrate on addressing the basic questions raised in both the Egan Reports -(Rethinking Construction ‘98’ and Accelerating Change ‘02’),addressing issues like profitability, client-centred, quality, and efficiency of costs and respect for the work force. Rethinking Construction Egan Report The Egan Report was introduced into world of construction by Sir John Egan, Chairman of the Construction Task Force in the year 1998. It was this report that created ripples and later on a furor where the construction industry was concerned. The Egan Report intended to change the face of construction once and for all. Despite the countries under achievement in the construction industry in the past decades, it was surprising to note that the United Kingdom (U.K) held its own reservations of “at its best is excellent.”(Egan Report,). However, the Egan Report brought out the genuine characteristics of the present day construction business and challenged the heads of the industry to give up their traditional and counter productive practices and propel its ideology into the 21st century. It urged them to embrace a more productive and customer-centered approach stating that -“propose to initiate a movement for change in the construction industry, for radical improvement in the process of construction. This movement will be the means of sustaining improvement and sharing learning” (Egan Report, 1998,). According to the Egan Report - “We have identified five key drivers of change which need to set the agenda for the construction industry at large: committed leadership, a focus on the customer, integrated processes and teams, a quality driven agenda and commitment to people” (Egan Report, 1998,). The report does not pin point the areas that lack in the industry but it rather systematically categorizes the different sectors for improvement and re-vamping. In order to achieve this, the industry has to undergo a total transformation as such by re-inventing itself for its progress, not only within its own market but more importantly globally. It urges the working class in the industry not to sit on their laurels but to undergo additional training and experience to achieve the high level of efficiency set down by the Egan Report. The fact of the Egan Report still remains, that it would prove successful only if the whole industry works in tandem holding the same lofty vision as laid down in the report. The economy will have a good boost in growth if the industry is open to new approaches, practices and theories. Five Key Drivers: In his Report to the Deputy Prime Minister on the improvement and efficiency of the U.K construction industry, Sir Egan expressed – “We look to the Government, as the largest client, to join us. But, we are also issuing a challenge to the construction industry to commit itself to change, so that, working together, we can create a modern industry, ready to face the new millennium.” Egan in his report identified five key drivers of change that would set the agenda for change. 1 committed leadership, 2) a focus on the customer, 3) integrated processes and teams, 4) a quality driven agenda and 5) commitment to people. (Paragraph 17) Their targets included a reduction of construction cost and time by 10%, a reduction of defects by 20% per year, decent and safe working conditions and improvement of managerial skills at all levels. (Paragraphs 23, 26, 53 and 61) The Task Force invited the Government to join hands in leading public sector bodies towards the goal of seeking the best improvements in efficiency and quality through the methods proposed by them. (Paragraphs 86 and 87) The Construction Industry of the U.K: Construction in the U.K is one of the pillars of the domestic economy and its ingenuity and flair for design demonstrated through the likes of Lord Foster and Lord Rogers work which is applauded not only there, but also overseas(CIOB 2007). The industry is extremely flexible and boasts of a work force that is adaptable to work, in the harshest of conditions (Egan 1998). It also possesses the capability to deliver the most innovative and difficult projects better than any other construction industry in the world.(McIntee 2007). Never- the- less the U.K Construction industry is not without its problems and therefore has an urgent need for a “Radical Change”. It faces problems like very marginal rate of profitability; very little money is pumped into research and development using modern technology, then there is a dearth for skilled labor and not much importance is given to training; fragmentation that inhibits improvement and progress and last but not least, the clients who unabashedly equate price with cost. The causes for the low rate of innovation has been analyzed and investigated and the conclusions drawn were that institutional factors and peculiarities in construction posed as hindrances. Therefore the final outcome is that the construction industry fails to meet the standards that are expected and falls short of the competition in the International market. A Sea of Change: With this vision in mind and after implementing the methods laid down by the Egan Report, it is clearly seen that there has been a steady increase in efficiency as well as good quality and faster and better production, using limited but sufficient resources. It is evident that successes come from a background of rising world class standards. The Primary fundamentals in the processes led to these changes. These drivers of change are of great consequence, not only to the construction business but to any other business concern or industry. The following are the key drivers responsible in bringing about this radical change- The Drivers of Change: Leadership: The Management and other officials are committed to driving forward an agenda for the improvement of the whole organization. These people are a committed lot who strive hard behind the workers building not only solidarity but a commitment to the job. Focus on the customer: The best companies are customer-centered and it strives to ensure that the customer receives good value for his money. Once the customer decides what he wants, the company goes all out to guide the customer in their choices and there after they do their best to see that the goods are delivered well in time with minimum costs. In doing this they could always gain favor with good customers and in doing so, expand their customer base. Integrate the process around the team and around the project: All successful enterprises never fragment their operations; instead they focus on the customer’s needs and the value of the product. Once they undertake a project, it goes without saying that all of them work as a team to achieve the maximum benefit to the customer. A Quality driven agenda: Here quality entails time and budget management, after sales care with reduced costs. Quality also means “the total package” which offers more than the customer’s expectations and provides real service. Getting a good project is not the criteria here, but the way in which the package is delivered is more important. “Quality” therefore should be the keyword. Commitment to people: It ensures fair wages, safety and health care, decent working conditions, commitment of good development and training to managers, supervisors and others, respect for work as well as workers and a culture based on mutual interdependence and trust. Unless the workers are well and happy, how could the company make progress or achieve anything? Workers should be a satisfied lot, only then they would work efficiently. The working class cannot live on love and fresh air or even the good will and smiles of the management – they need a good salary, incentives for the hard workers and a lot of encouragement. The construction industry’s representatives of the Task Force had this to say after visiting Nissan in the U.K to see the advanced approach in production -“we see that construction has two choices: ignore all this in the belief that construction is so unique that there are no lessons to be learned; or seek improvement through re-engineering construction, learning as much as possible from those who have done it elsewhere”,(Egan 1998). The major clients represented on the Task Force have systematically agreed to take the lead by demonstrating their own commitment in improving performance based on the ideas and tools set out by them. Success despite setbacks: Watton Green, a stylish development was developed by Prime Focus in partnership with Castle Vale Housing Action Trust. Its project coordinator Penny Downing had this to say- “Our experience in Castle Vale has made us appreciate how important the Egan principles are and we are committed to look at other innovative methods.” The concept used was that the Tradis elements could be assembled at one house per day. Due to unfortunate circumstances, the 11 units took 18 weeks to erect. The managing director of Kingfisher Peter Davis had this to say about it –“ With hindsight it would have been useful to have a mock up in the factory, we could have identified the shortfalls sooner.” Despite their problems with the frame, Penny Downing, the Focus project coordinator said –“Our experience in Castle Vale made us feel how important the Egan Principles are and we are committed to look at other innovative methods”. The Parliamentary Office of Science and Technology, when speaking of the Modern Methods of House Building stated - “a steep change in the construction industry to produce the quantity and quality of housing we need.” Modern Methods of Construction: (MMC) During the 20th century, approximately 1 million houses were built in times of heavy demand. Initially, problems arose about defective building material and poor workmanship. This consisted of pre- fabricated material used to build homes, hospitals, hotels and schools. MMC now stands as a new term reflecting major improvements in fabrication and construction methods. It also includes innovative methods such as concrete moulds and materials like steel, wood and concrete. Advantages of using MMC: Both the Government and manufacturers suggest that the main advantages of MMC are- Economic: Typically, MMC houses have fewer defects and can be built very quickly with limited costs. Environmental: The houses are more energy efficient, involve less transport of materials and produce less waste. Social: During construction, there may be fewer accidents and lesser impact on local residents. The Current trend of MMC: The government and industry sponsored “Rethinking Construction” programme has been encouraging the use of MMC, but still research is going on about the relevant benefits like cost, quality, environmental benefits and public acceptance. On the International front, countries like Japan and other European countries like Scandinavia and Germany are all using MMC. Some of the reasons for the greater use of MMC are that the materials are easily available, employs quick construction which avoids disruption to neighbors and allows early occupancy. Lean Construction: The generic version of the Toyota Production System is called Lean Production. It is recognized as the most efficient production system in the world today. It was started in 1950’s and it lays down and describes the core principles underlying this system that can also be applied not only to the construction business but to every other business activity – from designing new products and working with suppliers to processing and implementing orders from customers. Using the Tool Box of Lean techniques, the work is distributed in such a way that all the processes are organized to flow through all the value added stages without obstacles or interruptions. As this takes place, the areas of wastage are removed and this finally leads to perfection. The philosophy of Lean Construction is based on Lean Manufacturing whose main aim is to profitably deliver the goods that a customer needs through improving and managing its construction process. It has been successfully implemented and has gained considerable success from the American, Japanese and European Manufactures. Lean Construction has left a deep imprint on the Construction business. The Lean Principles: Lean Construction strictly follows certain principles that have enhanced its success. They are – Eliminate waste Specify precise value from the customer’s point of view. Clearly identify the value stream and eliminate the non-value processes. Allowing free flow of value added steps without interruption. Allowing customer pull – i.e. not making anything that is not needed, but when needed making it quickly. Pursue perfection through continuous development and improvement. Gregory Howell and Glen Ballard on Lean Construction: In the late 1980’s, the Civil Engineer and Executive Director of Lean Construction institute of Idaho, together with Research Director Glen Ballard began to investigate the working of Project Planning Systems. Since they found the system to be lacking they saw good potential in applying the work of Lauri Koskela, a researcher with VTT Building Technology in Espoo. Koskela recommended that the construction theory should focus on optimizing the flow of activities with creative ideas and delivery of value. The key element of Lean Construction is the “Last Planner” system of production control. It is the responsibility of the Last Planner to create only “quality projects”. A Linbeck Vice President, Ed Beck stated – “However, most design and construction problems, inefficiencies and wastes result from breakdowns in the flow of activities”. Therefore to sum it up, Lean Construction has made excellent progress in the construction Industry and is still gaining fame as it spreads far and wide to other countries. Chapter 3 History of House building The House building construction industry is a “special kind of production in its own right” (Bertelsen, 2000). It is a complex and dynamic system that continuously undergoes transformation as it adapts to the changes and challenges that are part and parcel of the construction industry. As such, influential personnel within the industry have to constantly keep themselves abreast with the current trends and developments in order for it to have a significant effect. There is also a need to maintain continued professional management and development which will ensure that each individual keeps pace with the advancements and innovations that are taking place in the other sectors of society. It is with this framework that the industry warms to the idea of Lean production in construction. Lean construction is a very recent concept utilised in understanding the dynamics of the construction industry. The long history behind the construction industry will provide an idea as to what is it in Lean Construction that is now gaining acceptance and support all across the industry. Its supporters are claiming that it is “the method” of the future. The long history of the construction industry will showcase that the demand for housing is the same since time immemorial but the current trends in our ever changing world demands a newer approach. Not because traditional approaches are struggling to succeed but because it is now not feasible or suitable to contemporary needs and demands. Building Industry: Twentieth Century During the early part of the twentieth century, from the period of 1919 – 1939, the UK government had to take immediate steps in response to the pressing concerns in the housing industry which included the “housing conditions of the working class” (Bowley, 1966,), “Home for the Heroes of the first world war” and lastly the low supply of the traditional constructing materials ‘bricks and timber’, coupled with the high supply of steel and cement, had steered the UK government officials into seeing the wisdom of employing a faster and yet safer means of constructing houses. Thus, they were not hesitant in encouraging innovations in the industry. This came to be known in the annals of construction history as the First Experiment. However, changes were not as fast as the government would have liked them to be. Initially, they had to acknowledge that the cause for the seemingly slow-paced construction was due to shortage of skilled workers. In addition, the market was in a hurry to construct new buildings because of the damage caused during the war. This resulted in a high demand for buildings but with a very low supply of the same. With this scenario, the government had introduced the idea of coming up with a material that is as “efficient as bricks but larger in the form of slabs or blocks” (Bowley, 1966,) in order to fast track construction. By 1944, the government again took the initiative to look for means and methods of making houses in the non-traditional way. Learning from the experiences gained during World War II, builders had already appreciated and incorporated the uses of concrete slabs and “concrete and precast piers and panels” (Bowley, 1966,) which were well-known construction methods at that time. They were also slowly introducing the use of metals to the construction industry but unfortunately, it was not well accepted because of the increase in the price of metals. Nevertheless, local governments regarded “practically all non-traditional houses as inferior, (even if), some systems met with more success than others” (Bowleg 1966,). This was aggravated by the fact that some major companies in the industry which included architects and designers were not active participants in the desire to create a better and more cost effective means by incorporating new materials for the construction industry. By the 1950s things had changed. The market had taken a turn in terms of their appreciation of precast or prefabricated building materials. The use of prefabricated concrete had already been accepted as the more viable alternative in construction since “it satisfied the basic requirements of traditional appearance, for they are rendered externally and thus superficially resemble brickwork” (Bowley, 1966,). In addition it was cost effective and time efficient. Together with this, the perceived benefits of such materials was the underlying principle that developers had been riding the bandwagon of mass production. With Le Corbusier’s statement that a house is “a machine to be lived in” (Egan, Rethinking Construction,), the call for a more innovative and responsive means of construction came into the fore. But it should be noted that the idea of “houses being manufactured in a factory as opposed to being built on a plot of land dates back to the 1920’s when ‘trailer coaches were invented” (Elliot, 2005). However, this strength found in the industry during the 1950’s was short-lived. By the mid 50’s the withdrawal of government support to innovations plus the high cost of precast materials had again made this method of construction unpopular to the housing industry. The tide was fast changing however, “by the late 50’s to the early 60’s in the UK, a particular combination of social, political, and economic factors emerged to give renewed impetus to manufactured housing systems.”(Rethinking Construction). In an effort to remove the slums and to provide housing for the displaced people who incorporated the returning soldiers and the victims of the air raids, an array of prefabricated materials came to the rescue. Then again, because of the economic situation in the 60’s the interest in pursuing a more aggressive stance and support for the industry, waned and once more the industry was relegated to the periphery of social standing. For 30 years up to the early 90’s, the state of the industry was impervious to change. But then finally, in the form of Latham’s Report, Constructing a Team and Egan’s Report, Rethinking Construction and finally the Barker review 33, innovations in the Constructing Industry started to raise its head. Chapter 4 The Egan Report The construction industry “has been changing in a way that is unknown in its past history” (RIBA). Following the change in attitudes that has reshaped the world of mass production; the construction industry is being thrust into a fusion of redefined concerns in construction with a concept shift in focus and attention. The Egan Report is a response made by UK government, as it saw that the construction industry had been lagging behind the other sectors of the economy. Sir John Egan in his report states that “a background of deep concern in the industry and among its clients that the construction industry is under-achieving, both in terms of meeting its own needs and those of its clients” (Egan Report, 1998). Furthermore, the need to focus on the industry is necessitated by the supposition that it does not present the true picture of UK’s construction industry. Since “UK construction at its best is excellent. We applaud the engineering ingenuity and design flair that is renowned both here and overseas. The industry is also eminently flexible. Its labour force is willing, adaptable and able to work in the harshest conditions. Its capability to deliver the most difficult and innovative projects matches that of any other construction industry in the world” (Egan Report, 1998). With the true nature of the industry uncovered, it is nothing but surprising that initiative from all the players in the industry should be working hand in hand in adapting strategic approaches that will secure and maintain the good reputation of the industry. Sir John Egan recognises the fact that the industry should learn from the development that has been influencing the world of production and services: the concept known as “Lean production”. This concept, which is primarily developed in car production, has technically changed the face of the manufacturing industry world wide. Under this particular principle, the system of production recognises the important roles of people involved in production, the entire process of production is shifted away from the “robotic monotony of production” towards the creativity achieved in teamwork and team effort. (Womack, 1985) The Egan Report for its part recognises the viable possibility of Lean production being applied to construction. This is a big leap considering that common opinion regarding the construction industry as a whole - that it is a “special kind of production in its own right” (Bertelsen, 1998). For this reason, The Egan report challenges all the leaders of the industry. If the notion is held, that the industry is in fact different, to what it implies, then it can no longer learn form the current developments that are happening around the world. Is the construction industry so special and unique that it has its own dynamics and complexity that is totally different from other industry? And the answer to all of these queries by the Egan report is a resounding no. The report suggests that the industry can learn from the trends of Lean production In fact the report exhorts the industry leaders to drop the conventional way of construction and to start embracing the other studies that “all suggest that there are significant inefficiencies in the construction process and that there is potential for a much more systematised and integrated project process in which waste in all its forms is significantly reduced and both quality and efficiency improved. These ties with our observation are that manufacturing has achieved performance improvements by integrating the process and team around the product.” (Egan Report, 1998). As such, Sir John Egan recognises that the construction industry, “when compared to other industries” is only superficially different and that on many occasions it shares the same process and methods as the other industries, “We have repeatedly heard the claim that construction is different from manufacturing because every product is unique. This is not so. Not only are many buildings, such as houses, similar in their method of construction they are also essentially repeat products which can be continually improved, more importantly, the process of construction is itself repeated in its rudiments from project to project. Indeed, research suggests that up to 80% of buildings designs are repeated, along with any repair and maintenance work that may be needed of time. This can plainly be seen on any large housing estate. The parallel is not with building cars on the production line; it is with designing and planning the production of a new car model.”(Ibid.) Being such, The Egan Report has already seen that the future of construction industry lies not in the conventional approaches of the industry. Rather it has seen that the future of house building construction is for the industry to embrace the integrated process of construction. This can be seen when partnering agreements are formed. All of these ideas, together with the notion that “the construction market is becoming a service market place, rather than a commodity market place.”(Abi-Karam, 2006) are technically redefining the face of the construction industry. The Egan Report, has offered an explanation on how the application of Lean production to construction will help to minimise waste, improve the process of production, minimise the risk of health hazard and most of all, sharing the knowledge that is acquired across all levels. This is the single most important factor to ensure success throughout the process of the project. Being such, the Egan Report claims that it “will be the means of sustaining improvement and sharing learning” (Egan Report, 1998). Furthermore, the Egan Report also challenges the architects and designers, who have been in the past, the figures of authority in the industry. “At its core, therefore, any rethinking of the construction process must involve placing a high value on design. However, it also places a responsibility on designers to understand and engage in the delivery of the product. That is the Egan challenge.” (RIBA) Thus, the Egan Report houses the principles that will help to propel the construction industry forward in the twenty-first century responding to the demands and challenges of an increasingly demanding world. They concluded that the framework that best suits these demands is Lean Construction Chapter 5 Lean Construction In the early 1990’s Lauri Koskela first alerted the construction industry to the revolution in manufacturing - challenging it to explore and adopt these new concepts and techniques (Ballard & Howell, 1998). Out of this, emerged the principle that is now known as (Lean Construction). Moreover, since Lean Construction follows the principles set down by Lean Management, the following are considered, as the guiding factors of the influential within the construction industry Elimination of waste Precisely specify value from the perspective of the ultimate customer Clearly identify the process that identifies what the customers values are (the value stream) and eliminate all non-value adding steps. Make the remaining value adding steps flow without interruption by managing the interfaces between different steps Let the customer pull – do not make anything until it is needed, then make it quickly. Pursue perfection by continuous improvement Source: Lean Construction, 2006 Together with these Lean Principles, the essential features or characteristics of Lean Construction include “a clear set of objectives for the delivery process, aimed at maximizing performance for the customer at the project level, concurrent design of product and process, and the application of production control throughout the life of the product from design to delivery” (Howell, 1999). All of these innovations are set to redefine the construction industry. More over, as Lean Construction adopts the philosophy of Lean production, which developed its strategy in the manufacturing industry, it also embraced the concept of “the automation with a human touch”(Just-in-time and Autonomation: Applying TPS in Vertical Housing, n.d). Being such, it is perceived as a non-static approach. As a methodology, it is capable of being approached from different angles. As such, it “results from the application of a new form of production management to construction.” (Howell, 1999) The application of Lean management to construction has opened doors to the development and progress of the construction industry. However, there is a need not to underestimate the task and the energy needed to achieve the desired outcome. It necessitates the alteration of the older, more traditional approaches in construction and the acceptance of the newer theories and studies found in Lean Construction. A need exists to modify existing concepts and theories as it is claimed to be a hindrance to the industry itself. In fact, Koskela and Vrijhoef 2006 (in their article The Prevalent Theory of Construction is a Hindrance for Innovation) argued that there is significant evidence that points to the notion that the current theories and practices in management within the industry are counter productive and “lead to creation of systematic added costs and reduced functionality” . They conclude the article with an uncompromising claim that the existing theories and practices being utilised in the construction industry are inefficient, and see this as the main cause that has been dragging down the industry since the 1950’s. The need for a current theory or solution that technically overhauls the entire industry from top to bottom is vital and Lean Construction may just provide the solution. The example of Cruden Construction is a case in point. When the company shifted to Lean Construction, the company posted a “growth of 27%, as they were able to utilize 85% of their workers improving not only the business but also the processes as well” (St Duke Terrace – Liverpool project). This story, ‘along with all other BRE assisted projects’,(BRE, Lean Improvement Programme) post excellent results (BRE, Lean Not Mean, 2006) when Lean Management principles are incorporated into the clip program - this provides evidence of Lean Management principles at work when practiced. The application of Lean Principles to construction, which in turn paved the way for what is known as Lean Construction, are the responses from academics to the plight of the industry. In effect, it is an option that has been developed as they try to respond to the challenges in the industry itself, in the social and political situation within the country and the market place. These factors are largely contributory to the impetus of change, or development. However, caution against complacency must be given since “Lean Construction is still in its early stages” (Salem et al, 2005) and the tendency to bring to a halt the continuous search for improvement and development may start to slip within the industry. Rising to the Challenge of Egan’s Report and Lean Construction For the past ten years, “the industry has been rising to the challenge of Lean Construction, with some success, but still too many companies are struggling with how to achieve this change” (Hollingworth, 2002). Indeed, it can be argued that almost all leaders in the industry do agree with the Egan Report but the challenge is on the hands of the people who will be actually implementing the principles and points raised in the report. What is in great demand from them is not just a mastery of theory or a mastery of skill but “a mastery of theory along with mastery of practical skills of the field” (Koskela & Howell, 1999). Together with the principles of Lean Construction is the application of modern methods of construction or MMC, which “primarily involves the manufacture of homes in factories, with potential benefits such as faster construction, fewer housing defects, and reductions in energy use and waste.”(Modern Methods of House building 2003). The Modern Method of Construction which may also be referred to as non-traditional construction, is not very popular among UK clients when compared to other countries namely Japan, Germany and Sweden, (Parliamentary Office, 2003) all of whom have an enviable environmental record within the construction industry. Although over the last three years, more house building companies have started to embrace MMC methods. For example Persimmon Homes, through a buy-out of Westbury Homes, Barratt moved into steel MMC with a joint venture with Terrapin-Advance Housing and Redrow formed a joint partnership with Corus. Modern Methods of House Building: (Bellenger Way, Kiddlington, Oxfordshire) This project was a pilot study of Modern Affordable Housing to evaluate the potential of construction methods for efficiency and as well as quality and wastage while complying with the aims of the Egan Report. Through a combined partnership, the “Brownfield” development project used both traditional as well as modular construction techniques, maximizing its off site use of manufacturing in a factory environment. The on site works were limited to ground work and external finishing of brick walls and roofing. When compared to traditionally constructed houses, the building time was reduced by 58%. It made off-site checks possible and thus avoided unnecessary reworking. This particular process paved the way to better standardization and reduced cost, time and high quality, speed and satisfaction. Egan heavily endorsed “Off-Site” construction and studies proved that “modular” forms of construction maximized the advantages and offered the greatest benefits. This pilot project was undertaken by R.J Leighfield and Rollalong Ltd in a partnership approach. A case study done on this project proved that it was a tremendous success in terms of beauty and cost- effectiveness. In the end, modern methods of construction “are about better products and processes. They aim to improve business efficiency, quality, customer satisfaction, environmental performances sustainability and the predictability of delivery time scales. MMC is therefore, more broadly based than any particular focus on the product. They engage people to seek improvement, through better processes, in the delivery and performance of the construction” (Barker 33 Review, 2006) Off-site fabrication or OSF is technically seen as the production side of construction, since almost all of the major parts of the house are no longer assembled on site. What happens in OSF, is that the materials for the construction of a house are delivered to the factory where sections of the house are made. This allows tighter controls where quality is concerned (Appendix 1, ISO 9000) streamlining and integration of the supply chain and smooth Just In Time (J-I-T) delivery from the factories to the site. Once on the site, it is then that it is finally assembled in its entirety. It presents to us the idea that houses are more like a puzzle of which the factory creates the pieces. Although it is in this manner with which the OSF works, it adds value to the walls, panels and bathroom fixtures. It has been said the twentieth century building site has become “more and more of a site where workers assembled pieces that already had value added to them through craft and /or manufacture” (Kavanagh, Mulles, & O’Brien, 1978,) Chapter 6 Application of Lean Construction Introduction So far we have discussed, Lean Construction as a form of management style, as well as influencing theory and practical skills in the construction industry to provide an alternative method that is capable of responding to the needs and demands of today’s industry. In this chapter, we will examine the actual application of Lean Construction in the UK market with a definitive focus on costs, time and reduced defects. Looking ahead, Lean Construction is beneficial to anyone from any industry if they embrace its principles and theories. From the moment Lean Construction moved away from the rigid and more traditional methods of building structures of mass production or the elitism that is attached to craft production, it has been presented as striking the needed balance between craft and mass prefabrication (OSF) as it fulfils the ideals of teamwork. When workers are empowered to make their own decisions pertinent to the job and act on whatever needs an immediate response without having to wait for the managers to look into the matter at hand, gives workers the opportunity to take ownership of the problem and removes the chance of people being treated as robots. Such is the scenario under Lean Construction, what should be kept in mind is that it has to be well anchored on actual data and studies for us to be able to know whether Lean Construction and MMC are really capable of delivering a platform for modern homes similar to the stability and comfort that traditional construction has done in the past, be it with all its limitations. Image Helping to tackle the negative perceptions and limitations of (OSF) within the industry “Bluestone” is constructing a new training facility in East Anglia (Contract Journal, 2005) the aim of which is to educate the workforce in MMC and promote sustainable building practices. As with every argument there is a for and against and in this case, Prince Charles is against. In a speech addressed to Architects, Planners and Heritage Experts (Building Design 2004) he questions the “expensive and incredibly wasteful mistakes”, talking of past generations claiming MMC and off-site fabrication “has more to do with ideology than practicality” Prince Charles goes on to say, “it would cost twice as much to build components in factories and transport them to the site as to put up scaffolding and build house in the conventional way”. Where as Smart LIFE UK manager John Holmes says “offsite will be an important tool in coping with this demand”(Contract Journal, 2005). Costs The cost of construction is the most important factor when an individual client or a group of clients are trying to consider a new project. This is described by (Phil, 1976) “cost is the principal dimension in value analysis. With out cost for comparison, the analysis of value must necessarily be subjective, and consequently fall short of the full potential” Further more, (Barker 33 review, 2006) it has been found that in the traditional way of construction, cost of individual housing projects are reported usually as £/m2 or £/unit but it is not always clear on what basis the costs of floor area are measured. With this discrepancy, it does not allow the buyer to know with confidence what the other calculations included in the formula are, or on how the formula is arrived at. This particular problem is eradicated in houses that employ the MMC methods. This is given credit based on the supposition that “MMC houses are 7 – 10% cheaper compared with the traditional house building methods” (Modern Methods of House building, 2003). Although there are others who claim that, ‘no sufficient evidence is given to support this claim’ (Monica Elliot, 2005) a leading architect claiming that MMC reduces the costs of houses if OSF building methods are used in house construction. As such, the cost benefits that customers can gain from factory built houses are more favourable when compared with traditional methods of construction. However, perhaps, one may ask, if OSF is really that good why is it not as popular? One reason published in (Construction Management & Economics; 2007) was that the “barriers relate to a perceived higher capital cost, complex interfacing, long lead-in time and delayed planning process”, the article went on to mention the industry had been trying to recommend strategies, “centred on changing peoples perceptions, improving procurement, providing better cost data, tackling planning and regulations, encouraging political levers and providing practical guidance”. The major problems that hinders progress is the need for investors to put money up front, Also the pre-fabricated building methods, suffers from a poor image that is caused by outdated information and low valuation from the banks and insurance companies. In employing ‘integrated project delivery’, explained in (Accelerating Change 2004) one of the techniques developed as a response to the challenge of Lean Construction, was that the following costs are avoided: Change orders and claims, layered markups, large amounts of administration and legal time, disruption of work flow, delayed completion, poor performing building, and the hidden cost of money not saved (Integrated Project Delivery,) not to mention the reduction of costs on the environment. Time The time spent whilst completing the construction phase is a very important factor. Since the longer the time spent in this part of the overall project, the higher the costs. Moreover, as we all know, costs are the one thing that has to be kept to the minimum. Although people are working on a particular budget, the idea of constructing in the shortest possible time is the natural way to minimize the customer’s expenditure. A construction company called Javis found that using MMC house-building system yields an average time saving of 30% to 35% (Contract Journal, 2007). Lean Construction will no longer be an on site construction process but the actual construction will be preformed in the factory and the site will be perceived as the assembly point. It is therefore not surprising that the time of construction will be reduced. The term ‘Just-In-Time’ (JIT), used for instance to describe the delivery of materials to a construction site, suggests that materials will be brought to their location for final installation and be installed immediately upon arrival without incurring any delay due to problems in the offloading area (Tommelien & Li, 1999,). It will usually take about 4 months on average for a very simple single story house to be finished, using traditional construction method. Compare that to OSF, or a house, which is assembled using prefabricated building materials. This method is exemplified when we examine Castle Vale, Birmingham (See Case notes). In OSF, all you need is to assemble the fabricated slabs in the actual site and in 36days as the example proves you have a house with all the amenities and comfort of a house constructed in a traditional way. . All of this is made possible on the basis that there is regular meetings between all parties concerned (client, contractor and workers) allowing a free flow of information. This is best summed up in an article talking about structural steel supply by (Tommelein and Weissenberger, 2006) “Work Flow is important because work or materials that do not flow and sit idle are tying up money, including the procurement cost of materials plus labour and machine, time to bring them to the stage of completion they are in as well as space. They stand the risk of being damaged or becoming obsolete due to design changes or market competition.” As such, in Lean Construction, all people involved in the construction ensure there is a smooth work flow from the manufacturing stage (factory) to the assembling point (site) this guarantees to maximize time gain in the manufacturing stage and ensure that wastage is keep to the minimum. This is very important since one of the essential characteristics of Lean Construction is zero-waste. Further more, via effective workflow “efforts are optimised” (Ballard, 2000) making the process reliable and thus, “deliver what the customer needs, to deliver it instantly and to deliver it without waste”(Ballard & Zabelle, 2000). In the same manner, if the work flow is more reliable, “it seems an obvious way to reduce the unexpected events that lead to incidents” (Howell et al,) which are hazardous to the people working on the site. Another innovation that has been incorporated in construction is integrated project delivery (IPD).In this perspective, all persons involved in the project work as a team. The team members are united under one primary contract. The team has one price, and that is the price to the client (Matthews and Howell, 2005). Moreover, in IPD, all the members of the team are technically responsible for one another. As stated in (Saunders & Mosey, 2004) “…the contract puts the constructor, consultants, sub-contractors on the same terms and conditions”. It also ensures that all team members have the same liability. In working as teams, “team cooperation” (Integrated Project Delivery,) is palpable in the sharing of labour, and rented materials. Under this kind of arrangement each member of the team knows their responsibilities, their duties and as such avoids any duplication in the performance of tasks which is of primary importance in the delivery of the product. In the end, “a Lean value stream is managed as a single-focused system with all improved efforts are directed at improving the overall project performance” (Hollingworth, 2002). And value is basically determined from the viewpoint of the end customer. Defects One major concern in house construction is possible defects that may be caused during or even after construction. For instance, in traditional method of construction, enough water should be used so that the cement that is used to hold the bricks together will be in the right consistency to function as it is supposed to. This is important since improper combination of sand and cement may weaken the mortar and thus lead to failure and a weakening of the walls which in turn may put the house durability in question. However, in the modern method of construction, walls, roofs, floors, beams, panels, windows are constructed in manufacturing plants where a degree of quality can be guaranteed (See appendix 1 ISO 9000) and then assembled on site when planned. Being such, the quality of fabricated building materials is kept at a high standard. This is the reason why manufacturers of building materials can offer a variety of options and warranties of up to 20 years for the walls and roof panels and other building components that are created in the factory. A good example of this is ‘Kingspan pannels’. (add picture of panel system) These modules can be basic or fully finished and serviced units (Appendix 3). There is also a Hybrid method, called Semi-volumetric approach. This system combines the panel and pod approach to home assembly, a good example of this method is the German housing building company Huf Haus (Appendix 3a) who pioneered the Semi-volumetric system. All of these methods offer the clients, fewer worries regarding the possibilities of defects. There is, however, one reservation concerning off site production of building materials and that is the possible limitation of the options for the owners to choose from. The problem of unlimited choice is not something insurmountable however. In fact, what the industry can do is to continuously conduct surveys monitoring the changing requirements of their clients and respond accordingly. Incorporating the customer’s demands of new designs and structures may ingratiate the likely home buyer and produce customer loyalty. This method was used by Bovis Homes (Egan). It must be remembered that the construction industry is no longer thought of as a production industry but rather as a service industry, and as such, it is necessary for all concerned to maintain open lines of communication. Finance In fact, what has been the concern of clients regarding the MMC is not really the quality or the beauty and the efficiency or the manner in which they acquire the materials used rather their main concerns when they are dealing with MMC’s are the bankers and the insurance people. The researcher would like to raise this point because it is apparent in many articles and journals regarding Lean Construction that what really prevents the market from embarking on fabricated methods is the lack of knowledge and scepticism of insurance, banks and mortgages that the companies treat the prefabrication market with. Although you can see from the BRE list (Appendix 4) that a comprehensive list of the mechanics of non-traditional housing has already been compiled. In part, these concerns are fuelled by the memory of earlier prefabricated construction and earlier generations of what is called non-traditional construction methods (Appendix 2). Regardless of the type of construction method, the house and its components must be able to stand the test of time. (David Hylton, Nationwide Building Society 2007) said, “We need to know that they will retain their value and marketability in a similar way to conventional structures, without abnormal expenditure on maintenance and repair”. This is seen when lower valuations are given for houses using this method of construction. To address these concerns the Building Research Establishment (BRE) are working with the Council of Mortgage Lenders and the Association of British Insurers to launch a new standard ‘LPS2020 This standard is intended to address industry concerns by assessing innovative building systems. The tests will measure the building against the current building regulations for issues such durability, resilience, ease of repair and some aspects of its whole life performance. Along with these important criteria, the building must endure for at least 60years. One of the BRE scientists (Peter Bonfield) commented that, “The new standard will increase the confidence of insurers, mortgage lenders and regulators in innovative systems”. So hopefully this will help to disperse certain historic attitudes and encourage the UK housing industry to adopt innovative systems, which will contribute towards accelerated delivery within the housing sector. Chapter 7 Conclusion The success of the implementation of the principles of Lean Production in construction, which came to be known as Lean construction, has re-shaped the construction industry. The “result of an application (lean construction at that) included an increase of 31% in the share of value adding activities, 44% decrease of unit errors in the products, up to 58% decrease in waiting time and expansion of the utilisation of the cycle time” (Freire, & Alarcon, 2002,). The tools that have been created by the construction industry have been proven not only effective but also very useful in attaining its goals (Delgado-Hernandez & Aspinwall, 2005). However, Lean Construction and Modern Methods of Construction (MMC) still have a long way to go but it is showing that beneath the rhetoric there are hard arguments in its favour. These need to be applied cautiously, with lessons that have been learnt regarding the most appropriate use of MMC. As with any technique, it is not a one size fits all affair, especially given the potentially bewildering variety of MMC systems and components. By its very nature, it won’t be suitable everywhere, hence the cautious sober approach of those putting the materials into practice. Lean construction is not as easy as it appears. But, with support from the likes of Chief Executive Dennis Lenard, of Constructing Excellence stating “this still untapped resource could be bringing significant benefits to both contractor and end-user alike”, MMC is sure to succeed, especially when you consider the case for MMC through Bellenger Way in Oxfordshire. This housing association Brownfield site delivered a reduced build time by some 58% and reduced the cost by 20% (Bellenger Case History) whilst not compromising on the quality as they had to adhere to NHBC requirements (A comparison was made with traditionally constructed projects of similar size). The potential benefits are considerable, as the Bellenger site demonstrates much of this benefit and added value indirectly. Modern methods ensure greater certainty for a project with less dependency on the weather and greater opportunity to reduce risk by transferring work off-site. With a higher standard of quality from Off-Site-Manufacturing (OSM) and enhanced specification and building quality, occupancy cost can be reduced relating to energy use and repairs and maintenance. A study that gathered data showed that “lean construction principles improved construction labour performance” (Thomas et al, 2003) but the companies must be resolute and determined in their decision of going Lean. Being such, what this dissertation strongly advocates is the fact that as the construction industry tries to meet the need and demand for a more ample supply of affordable housing in the housing market and addresses the challenges raised by the Egan Report, it is also relying on the possibility of banks, insurance companies and investors to give the MMC a more positive outlook. This is necessary for the reason that keeps people from supporting MMC, is the low valuation given by financial institutions. In addition, since the house is the main asset of most people, it is sensible to assume that they will veer away from methodologies or means of construction that may reduce the value or worth of their major asset. As such, this study strongly encourages financial institutions and investors to stop looking at the value of the property from the perspective solely of short term profit but rather to start looking at the value of the property from the longer term perspective of the home owner – the customer. In the same manner, this paper would like to reiterate the great importance of the constant open communication and sharing of knowledge among and between all the different parties in the construction industry, this point been mentioned in the ‘Barker review’. Along with the outstanding barriers yet to be overcome namely:- Lack of understanding Lack of Confidence Cost perception Lack of positive track record to date Lack of agreement on product and process standards Traditional process management Design bias Supply chain immaturity Lack of skills Turning MMC from a requirement into a want Source (Barker 33 Review, 2006) With these barriers outlined the researcher feels the construction sector will allow (OSM) to play an essential role in providing the additional capacity in both housing and public sector construction. Pioneering companies such as Westbury Homes (Space4) (Parliamentary Office, 2003) and M-tech pay testament to the significant benefits that a wider adoption of MMC could bring and with that achieve the targets set by Sir John Egan, but no matter what the potential benefits, it cannot, and will not succeed without the commitment from within the industry. Certain clients, such as the Housing Corporation and English Partnership, ‘who are aiming for 25% of units completed by MMC’, are raising awareness of MMC by promoting the success stories. More will need to be done. Whilst industry profit margins and client satisfaction levels appear at the top of any contractors list, these sentiments are echoed by Sir Michael Pickard Chairman of the Housing forum, (House building 2002) “he emphasised the need to increase customer satisfaction whilst meeting the demand for new houses”. It is the recognition of this very important role of the customers in the entire process of ‘production’ and impact on the environment that is to be Read More