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What’s in it for me? Documenting the benefits of Lean

(Editor’s note: This is Part II of a two-part series. The intent of this article is to provide an overview of what Lean is all about and begin to answer the question: What’s in it for owners and others in the supply chain?)

by Dan C. Heinemeier, CAE, executive director, Lean Construction Institute

Calendar_x200“Lean Design: What’s it all about? presented an overview of Lean and many of its components. But now you may be asking, “What’s in it for me?” Documenting the benefits of Lean admittedly is a challenge, because no two projects are exactly alike and critics can point to the variables in questioning whether Lean techniques are really the root cause of success.

However, we have a substantial body of analysis that suggests the success realized on Lean projects is real and can be duplicated from project to project.

Results are real and replicable

Few, if any, organizations have implemented Lean to the extent and depth of Universal Health Systems (UHS), which builds medical facilities around the country. Results have been dramatic. Many projects possess comparable characteristics in terms of project size, complexity, and other factors.

A snapshot of 50 projects from $1M to $150M using Lean techniques and collaborative forms (albeit not pure-play Integrated Project Delivery) reveals 97 percent completed under or on budget (the worst at 103 percent of budget).

Over 20 percent cost reduction was realized on similar projects from 2009-2013: from $231k per bed to $175k per bed. In the process, the owner gained enhanced safety, better value decisions, and greater predictability of outcomes.

In a more recent example, the Temecula Hospital project in California, results were equally dramatic: delivery at 40 percent below market cost, 30 percent improvement in operational efficiency, and 200 percent labor efficiency. Participants even cited fun as being a direct benefit.

Lean also shines in complex public-sector projects

Another criticism often voiced about Lean is that even if it works in the commercial private sector, how can it possibly be used in the highly regulated state and federal public sector procurement environments? Yet there are significant examples of successful use of Lean in complex, regulated public projects.

Michigan State University used a true Lean Integrated Project Delivery (IPD) approach to transform its Shaw dining facility, a $12M project. As is the case in many Lean projects, the team invested significantly more than typically is done in design, including use of Target Value Design (TVD), and saved significant cost throughout the construction phase as a result. The design firm estimated 28 percent savings on its construction administration work alone. The use of RFIs was cut over 90 percent: just 12 were issued compared to an estimated average of 144.

Final costs per seat were cut roughly 15 percent, and operations commenced with minimal issues. The project was even LEED certified with a goal of silver. Last but not least, the team experienced an unusual level of friendship and camaraderie throughout the course of the project. MSU had a good basis for comparison since this was the fourth such dining hall renovation it has done in the last ten years.

Results: On-time delivery, predictable costs, end-user satisfaction

Another impressive example has been the remarkable track record of Lean project delivery at the University of California, San Francisco. In as complex a state regulatory environment as any other, UCSF has used Lean design and construction principles successfully for selected capital projects since 2007. This has included projects valued at more than $2 billion.

The university selected project teams who could use Lean tools to improve the process and the built product, and adapted its contracts to require that these tools be used during both design and construction.

What have been the benefits compared to traditional capital project delivery methods? Improvements cited include consistent on-time delivery; complete avoidance of claims and costly adjudication; competitive, predictable costs; improved design and building performance; crisp and effective start-up and commissioning; and improved end-user satisfaction.

For a complete article on UCSF’s experience by Michael Bade, associate vice chancellor and campus architect, see http://leanconstruction.org/media/docs/415GFRLeanConstruction.pdf.

Lean means commitment and discipline

We often hear that the Lean techniques espoused by LCI and other advocates are nothing new. “We’ve been doing that for years, we talk to our subcontractors and work collaboratively.” Well, maybe, but more likely, not really.

To effectively implement Lean requires true cultural change, and this is only accomplished through hard work, persistent follow-through, and a corporate-wide commitment to training and implementation that exceeds the norm.

The discipline required not just to embrace new tools, but to unlearn unproductive behaviors that previously served people well. This is not just hard to cultivate, it’s even harder to sustain. Done right, it requires a level of owner involvement throughout the process that is new to many organizations.

Lean drives successful outcomes

Once you take part in a successful Lean project, however, it’s easy to see why increasing numbers of owners and contractors are persevering in adopting the concept. To collaborate, truly collaborate as a team; to tightly couple learning with continuous improvement; to optimize the whole, not the parts; and to see projects as networks of commitments in which people promise boldly and then deliver consistently; these are features of Lean that drive successful outcomes for owners and competitive advantage for the supply chain.

Not to mention hearing participants using a new f-word—fun—in association with your projects. As the old TV commercial used to say, that’s priceless.

Learn more about how your company can implement lean principles at www.leanconstruction.org.