Total Construction Management

Lean Quality in Construction Project Delivery

John S. Oakland, Marton Marosszeky

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781317439325
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

A convergence of lean management and quality management thinking has taken place in organizations across many industries, including construction. Practices in procurement, design management and construction management are all evolving constantly and understanding these changes and how to react is essential to successful management. This book provides valuable insights for owners, designers and constructors in the construction sector.

Starting by introducing the language of total quality, lean and operational excellence, this book takes the reader right up to the latest industry practice in this sector, and demonstrates the best way to manage change. Written by two of the world's leading experts, Total Construction Management: Lean quality in construction project delivery offers a clearly structured introduction to the most important management concepts and practices used in the global construction industry today.

This authoritative book covers issues such as procurement, BIM, all forms of waste, construction safety, and design and construction management, all explained with international case studies. It is a perfect guide for managers in all parts of the industry, and ideal for those preparing to enter the industry.

Part I

The foundations of lean quality

1
Understanding lean construction

LEAN QUALITY IN CONSTRUCTION

Two major management movements have swept over the construction sector in the past 25 years: first of all, the Quality movement initiated by public sector clients mandating compliance with ISO 9000 in the early 1990s and more recently the Lean Construction movement. Currently leading clients for construction services are beginning to require their suppliers and their supply chains to demonstrate a lean approach to their businesses. Some, like Highways England and Crossrail, are even supporting the transformation with a maturity model, performance measures, metrics and resources/training. Both of these significant transformational philosophies, quality and lean, have taken root in other industry sectors well before early adopters in construction have recognized their value. Today we have mature examples of successful lean quality implementation in the construction sector, though we do have to look around the world to find our examples. This book presents the lead adopters in the form of a series of case studies of lean quality management. The book also postulates that lean and quality are two slightly different lenses through which we view management excellence and argues that these perspectives are merging. For example, the 2015 version of the International Standard on Quality Management System Requirements ISO 9001 introduced continuous improvement into the quality framework in a formal sense for the first time.

A case study

We start this book by exploring the unique characteristics of construction and developing an understanding of the specific challenges faced by design and construction organizations in implementing lean quality. Let us begin with an interesting vignette. In 1913, the Commonwealth Bank of Australia, one of Australia’s leading banks at the time, commissioned a new building at the corner of Martin Place and Pitt Street in Sydney. The building was six stories high, had a massive sandstone façade, its footprint was approximately 100 metres square with a light well in the centre for ventilation and natural light.

The drawings for this building, which would cost some $200 million in today’s terms, consisted of a single A1 sheet with three images on it, a dimensioned plan, an elevation and a dimensioned cross section, all neatly coloured (Figure 1.1).

The entire contract documentation for the project consisted of:

• these three drawings on one sheet;
• a handwritten statement on the back of this single sheet stating: I hereby undertake to build the building described overleaf for $700;
• 53 pages of scope of work/specification; and
• 4 pages of contract conditions.

Figure 1.1 Photograph of the Commonwealth Bank of Australia building at its opening in 1916

Today such limited documentation is unimaginable (of course, the services in our buildings are much more complex), we would have many hundreds of drawings and thousands of pages of contract documentation. What has changed?

When this building was commissioned and built, the architect would have had the quantity surveyor and design engineers in-house as a part of his team. Similarly, the contractor would have had the major trades in-house, with construction teams led by master tradesmen. This story tells us a number of things:

• There was one way of building and master tradesmen had the skill and knowledge to build major buildings from simple depictions, and quality was ensured by the high standard and integrity of the master tradesmen.
• The brief contract (4 pages of contract conditions) demonstrates that there was a high level of trust between the client and contractor for this project. A simple contract such as this for a project of this size is unimaginable today.
• The organizations designing and building were integrated and had control over their resources. They could plan the workflow in detail as they had control of all of the resources required to undertake the work.

DISTINGUISHING FEATURES OF CONSTRUCTION PROJECTS

The construction industry does have a number of unique features which create challenges for the sector:

• projects are uniquely designed or modified to fit a specific site, the needs of a specific client or client group;
• constructed products are large and fixed in location; hence, in contrast to manufacturing, here it is the work teams that move past the product progressively adding value rather than the product moving through a number of work stations;
• generally, the work teams are from different subcontracting organizations rather than from a single organization, creating challenges for coordination and integration of the product design and the production and assembly process;
• the time frame for larger projects is measured in years, and, increasingly, the design phase and construction are, to some extent, concurrent;
• because of the long time frame of projects, the people involved will invariably change over time;
• on larger projects, in particular, the relationship between the parties is mediated by varying commercial terms and organizational arrangements; this diversity creates further significant variables which alter organizational structures, risk allocation, and the responsibilities of the parties from project to project;
• the client is often involved both in the design and construction phases, defining needs and choosing between alternative solutions, hence, influencing function, cost, and risk while the project design is under development and during construction;
• importantly, when the client has an ongoing interaction with the designers and constructers, the quality of the services will influence relationships and can distort customer perceptions of product quality: either positively or negatively;
• the corollary to this is that clients’ approach to their role and function can significantly shift the culture and cost of the project: once again, in either a positive or negative direction; and finally,
• quality is considered almost entirely in product terms, yet the creation of a quality design and construction process, an effective collaboration between numerous suppliers from the early design stage to completion of construction is the greatest challenge – this is not owned by any one party; rather, it is achieved through the negotiations and collaboration of the many players; and it is the industry’s processes which determine key outcomes.

Recent decades have seen the rapid globalization in all sections of the construction sector. It started with the emergence of global materials businesses in areas such as cement production, concrete production, brick, plasterboard, construction chemicals and timber processing. At the same time, the specialist requirements of major energy and infrastructure projects led to the development of global EPC (engineering, procurement and construction) businesses such as Bechtel and Fluor Daniel. Also during this period, global specialist design, fabricate and install businesses emerged to supply, install and service elevators, air conditioning, fire systems, electrical and control systems. Most recently, global architectural and engineering consulting businesses have been created.

In today’s global construction sector, even mid-sized businesses can procure quite sophisticated products and services globally. Local design teams collaborate with others around the world creating the opportunity for 24/7 services. Often, back-office services such as accounting and call centres are relocated to more economical destinations within the country or internationally. Naturally, geographic diversification brings with it special challenges in terms of the seamless, defect-free delivery of complex products and services.

TODAY’S INDUSTRY

Among owners today there is a widespread belief that the lowest cost tendered on a project represents best value. On large complex projects nothing can be further from the truth. In fact, by adopting this method of procurement, owners have traded-off flexibility and the ability to collaborate and innovate across the supply chain for the illusion of cost certainty. We say illusion because large complex projects are almost inevitably time critical; they are unique; and they run over several years. Therefore, the final scope is rarely the same as the one priced at the outset.

Nowadays, clients are reluctant to invest in solution generation upfront; they are generally in a rush to start, and they tend to push decisions and risk down the supply chain. Under these circumstances, all risks are priced conservatively to cover the suppliers’ risk in the absence of information; and client changes during the project are priced as variations and usually command a price premium.

Today’s industry is extremely fragmented and specialized; numerous alternative technologies exist for each part of a building; and, for reasons of managing industrial relations risk and increased technical specialization, most of today’s large projects are built by a team of 100 or more (and on extremely large and complex projects, more than 1,000) different design, fabrication and construction specialist organizations.

This extraordinary fragmentation has brought with it significant challenges to coordination, integration and innovation. Each subcontract organization works on many projects concurrently; and there are competing demands for resources between different projects, making it difficult for subcontractors to make reliable commitments to each project. Subcontractors attempt to manage the widely fluctuating demand on their resources by adopting a pyramid subcontracting strategy. However, this further challenges the overall project team’s ability to effectively coordinate work and control critical outcomes such as safety, quality and productivity.

Coupled with the extreme fragmentation of their supply chains, many contractors in the sector favour short-term, cost driven relationships with their suppliers. Most head contractors are more interested in the speed of the job than smoothing out the resource requirements of their subcontractors because speed is the factor that has the greatest impact on costs and profits.

While in the past few decades major contractors have narrowed their supply chains, it is fair to say that their relationships with their suppliers are quite shallow. Almost all contractors collaborate with their suppliers only when working together on projects. Examples of deep, long-term commitment to collaboration with the supply chain are rare.

Within this fragmented delivery model, with low levels of trust between owners, suppliers and within the supply chain, open collaboration is further limited by the commercial terms of the contracts which tend to push as much of the risk and responsibility as possible down the supply chain. The outcome is that each party fiercely protects its margin and ensures that information is not shared openly. The tension between the self-interest of the parties and the common good of the project has never been higher.

During the tender stage, each subcontractor develops their own price in isolation. The head contractor chooses the lowest subcontract prices and submits a tender based on the aggregation of those prices plus a margin and an allowance for contingency. In this process, there is limited opportunity for collaborative innovation between the parties as they are all working in isolation. Once contracts are signed, collaboration between subcontractors working on the same project is limited as each fights to protect his/her own margin.

It is this broad scenario that has led the construction sector to stagnant productivity growth in the last half century while other sectors of the economy have improved their productivity by up to 200 per cent. Figure 1.2, from the US Department of Commerce, Bureau of Labor Statistics, plots the trend of construction sector productivity against the non-farm productivity index between 1964 and 2004.

Productivity improvement in all industries is driven by innovation in technology and through business process change. In today’s construction industry, with limited collaboration between the parties in...