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Regain Lean Momentum and Maximize Results Focusing on Lean Can Help Construction Contractors Generate Strong ROIs

Streamlining projects and improving performance are worthy goals for any company, but particularly for the construction industry, where meeting deadlines and budgets are essential keys to success. Since its development in the 1990s, the Lean methodology has helped companies across a wide range of industries increase profitability and productivity.

Despite demonstrable results and tangible benefits, however, the history of Lean and construction has been somewhat inconsistent. Large general contractors and construction management companies may use Lean methods, but small and medium-size construction firms, which make up the bulk of the industry, likely have never adopted or tried Lean and let the efforts backslide.

There is a reason that a synonym for Lean is “continuous performance improvement.” It is a dynamic process that requires ongoing engagement. Recognizing that Lean is not a set-it-and-forget-it exercise is critical to achieving successful outcomes. For construction firms that implemented Lean only for a specific project, or neglected the process over time, below are two ways to reignite Lean and generate a strong return on investment.

Take on a Project with Big Impact

The Lean methodology and its resulting outcomes are exponential—the bigger the improvement project, the bigger the payoff. One surefire way to infuse Lean efforts with new momentum is to tackle a high-profile project. Every company has an issue or a potential growth area that is well-known, but has never been addressed or leveraged. Identifying one of them and expanding Lean efforts to resolve or achieve it will reset focus and unite the team around the successful application of Lean. For the construction industry, one example of an impactful project is the visual management of materials.

Construction projects require a lot of materials, but many contractors and firms are not particularly efficient at managing inventory across the job supply chain. Lax materials management can result in waste, delays and higher costs. Often times, inspections of incoming materials and parts are not conducted until workers are ready to use the inventory, which can cause delays stemming from product shortages or incorrect items in stock. Conversely, carrying too much inventory is wasteful, costly and harder to organize and store at an already-cramped jobsite.

Implementing a visual management system helps organize materials and consumables at the shop and on the jobsite. A consistent system means less time is spent searching for the right materials because everyone knows where everything is. This helps reduce confusion on the job site as shifts change, new workers, trades or subcontractors join the project or a new job phase starts. This system also makes it easier to visually determine when a reorder is necessary, avoiding delays caused by out-of-stock items and preventing unnecessary overstock or unneeded ordering.

Update Key Performance Measures

Construction professionals know each job comes with its own unique set of challenges and opportunities. What sets the successful firms apart is the ability to deliver consistent results and maintain superior service from job to job. Key Performance Measures (KPM) demonstrate whether the company is performing efficiently and effectively. KPMs are essential to Lean success but, just like the methodology itself, it is important to regularly review these metrics and update them as needed to ensure relevance and gain insight into emerging areas for improvement. Here are two areas construction firms should consider adding to their KPMs.

Delays

How many delays does a firm experience during a given time period? What is the total duration of these delays? What is the average length of each delay? Consider diving deeper into these answers by applying the Pareto principle and charting the causes of delays. Doing so will help identify common causes of delays and allow the construction team to allocate resources more effectively and put corrective actions into place to prevent future delays.

Rework

Correcting an aspect of a construction project has significant consequences for both budgets and schedules, which begs the question: Why is rework not more widely tracked as a KPM in the construction industry? Firms that wish to gain an advantage in planning, coordination and execution of jobs should consider adding rework as a KPM. Doing so will provide objective information to identify trends where the process fell out of sync and refocus energy on preventing repeated mistakes. Was the rework caused by a lack of clarity around design or scope? Time to improve communication between project managers, engineers and trades. Did it stem from poor coordination between subcontractors or worker error? Additional training or facilitation may be needed. Construction companies that add rework to KPMs can reap the benefits of identifying root causes and opportunities for improvement.

The proven benefits of Lean are too valuable to squander with lack of focus or inertia. These tactics can help construction executives regain the momentum to maximize their Lean results.

One Reply
  1. How would you go about actually gathering the data to track delays and rework? A lot of small to mid-sized companies probably don’t do this sort of thing along with other Lean processes because they don’t have the resources to dedicate to this effort both time and money. Most small to medium sized contractors have 1-3 people at the top doing 80% of the day to day work to keep the company afloat and wouldn’t even have the time to dedicate to these more strategic practices. Furthermore, they don’t have the money to go out and hire 2-3 QC people to go around and, among other things, track these metrics. Relying on your field staff is impossible as well because it’s usually hard enough to get trades people to turn in a timesheet on time, including the Foreman, let alone track their job as well as metrics like rework and delays that have the potential to expose their short comings and hold them accountable. Maybe this article is more geared towards GC’s but for subcontractors, that are small to mid sized, how would you recommend going about collecting the data needed to measure KPM’s or other Lean Processes given the constraints that smaller contractors have of money, time and sophistication/willingness of employees to do these things?

    Also, could you describe the material management process a little more in depth as well as explain what is meant by a “Visual Management System?” Does this mean having visual inspections to count and validate material? If so, I think many companies preach that and have it as part of their official process but it comes down to having employees that will actually do that every time without having to be asked to by the boss. Maybe that is a whole different topic entirely of how to find, train and retain better talent but in the construction industry and certainly for trades and specialty trades, there are not a ton of high quality people coming into the industry that companies can hire and rely on. Especially today with a lack of people in the trades coupled with low unemployment rates, talent is scarce as it is so you have to make due with what you can find out there and taking the line of “well just fire those under performers and hire better people” is much easier said than done just from a sheer numbers and talent availability perspective.

    Anyway, just wanted to clarify these things as these are all things I have thought and have tried to do but actually gathering and tracking the data as well as enforcing these processes reliably is easier said than done. In no way am I trying to undermine this article as I agree with everything in it but it would be helpful to have a little more explanation on the actual execution of these processes because for small to medium sized contractors there are many resource constraints that make implementing and sustaining these practices very difficult even though some of these companies have this sort of thing on their radar and would like to implement these practices.

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