155832730 Modern Construction methods and lean principles

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Modern

Construction

Lean Project Delivery

and Integrated Practices

Lincoln H. Forbes

Syed M. Ahmed

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Taylor & Francis Group, an informa business Boca Raton London New York

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Library of Congress Cataloging-in-Publication Data

Forbes, Lincoln H.

Modern construction : lean project delivery and integrated practices / Lincoln H. Forbes, Syed M. Ahmed.

p. cm. -- (Industrial innovation series) Includes bibliographical references and index. ISBN 978-1-4200-6312-7 (hardback)

1. Building. 2. Lean manufacturing. 3. Construction industry--Management. 4. Construction industry--Cost control. 5. Project management. I. Ahmed, Syed M. (Syed Mahmood), 1960- II. Title. TH145.F67 2011

690.068--dc22 2010034911

Visit the Taylor & Francis Web site at

http://www.taylorandfrancis.com

and the CRC Press Web site at

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To

My wife Laurel Forbes & son Richard Forbes For their patience and support

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Classroom Recommendations ... 451 Restroom Recommendations ... 452 Auditorium Recommendations ... 452 Meal Preparation/Distribution Recommendations ... 452 Security Recommendations ... 452 Handicapped Accessibility Recommendations ...453 Furniture, Fixtures and Equipment (FF&E) Recommendations ...453 HVAC Recommendations ...453 Quality Assurance Recommendations ...453 General Recommendations...454 Examples of Actions Taken Following POE Recommendations: ...454 References ...455 Bibliography ...455 Glossary of Lean Terms ...457 Index ...465

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Comments by Greg Howell, Co-Founder

of the Lean Construction Institute

This book, lead-authored by Lincoln Forbes, makes an important contribution to the con-struction industry. He has been an active participant in the Lean Concon-struction Institute since 2004 and with co-author Syed Ahmed brings a unique background in facilities design, construction management, quality management/assurance, and industrial engi-neering. He connects emerging lean construction theory and practices with its roots in industrial engineering. In this he saves the baby of lean construction and the bath water of more traditional industrial engineering and productivity improvement practices. The book also connects lean construction with the LEED movement. This makes great sense as lean construction rests on a conceptual foundation and understanding of waste that explains why projects managed on a traditional basis are so often adversarial and difficult to control. Where traditional practice tries to optimize the piece, lean aims to optimize at the project level. This requires a different approach to managing work. Our environ-mental problems arise from similar practices, locally optimizing at the expense of larger systems. Lean won’t save the planet but it does help us understand how to manage larger, more complex systems far more effectively than is possible with practices aimed at local optimization.

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Preface

This book was written to address a pressing need for performance improvement in the construction industry. The construction economy is a large sector of many countries, hence its performance directly influences their competitiveness. The book introduces the subject of lean construction as a methodology for improving the entire design and con-struction supply chain. It presents other tools and techniques for improving performance as well, and links them with lean construction as support activities, although they can enhance the performance of an individual stakeholder in the supply chain, such as a mechanical subcontractor. At the core of the lean philosophy is the aim of “global optimi-zation” where entire project performance is maximized, in contrast with “local optimiza-tion” where an individual stakeholder benefits, often at the expense of others. For this very reason, the book advocates an understanding of such techniques as quality man-agement, BIM, ergonomics, and sustainable practices, but that construction professionals should use them to transition from local to global optimization as lean construction is increasingly adopted.

Several members of The Lean Construction Institute shared concepts, experiences, and cases during the development of the manuscript, notably Greg Howell and Glenn Ballard, co-founders of the Lean Construction Institute. They were most generous with their time, ideas, and encouragement, and the book has benefited significantly from their support. Valuable input and sharing of ideas came from several other leading members of the lean construction community, including Will Lichtig, Peter Gwynn and Tariq Abdelhamid. (Their contributions and many others are recognized in the Acknowledgments section.)

During the past several decades, the manufacturing and service industries have greatly increased their levels of productivity, quality, and profitability through the application of process improvement techniques and information technology. A major contributor to the competitiveness of these sectors is their embrace of the lean production philosophy that evolved from the “Just-In-Time” system that was the foundation of Toyota’s success in automotive manufacturing.

The construction industry lags far behind the manufacturing and service industries with regard to the application of performance improvement and optimization techniques. According to the Bureau of Labor Statistics (BLS), in the past 40 years the productivity of non-farm industries has increased by over 100%, while that of the construction industry has stagnated. Several research studies have shown that at least 30% of wasted resources are caused by entrenched attitudes in the management of projects. Waste in construction occurs especially in the interaction between trades, and in the handoffs of work from one trade to another. Studies by the Construction Industry Institute have identified that 10% of project costs is typically spent on field work, and that only 43% of the time spent on construction activity may be considered productive.

As global competitiveness increases, so will the expectation of higher levels of produc-tivity in the delivery of constructed facilities. Increasingly, customers in other industries expect their suppliers to be flexible, communicative, and responsive to their needs in today’s fast-paced business environment. Construction organizations that fail to utilize the foregoing approaches will find themselves at a competitive disadvantage.

Construction industry practitioners have been continually seeking to apply better tech-nologies and processes to improve project delivery, but there is a lack of unified strategy

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and there is little incentive to change. Most construction contracts place the parties to construction in adversarial roles, although approaches such as “design–build” and “part-nering” have diminished this challenge to a limited extent. Most recently, initiatives such as Lean Project Delivery and Integrated Project Delivery have been adopted successfully on a relatively small number of projects. This success has been largely attributable to the interest of willing project owners who have set the stage for the close integration among all parties that is needed to create a so-called lean environment. Although the parties to a construction project are interdependent, they tend to make decisions that further their own self-interests. Industry specialization has separated designers from the management of the production process, and this is perpetuated by the potential legal ramifications of apportioning project risk.

Given this industry scenario, innovation is still possible—in the internal operations of each party as well as within the combined activities of the project team, depending on the extent to which they are willing to optimize the entire supply chain for delivering the project. This book recognizes that the supply chain is as strong as its weakest link and encourages innovation within the operations of each of the parties, as a prelude to making these parties strong, effective links.

The book provides a dual approach for improving construction processes: (a) several chapters are devoted to describing lean construction and its applications; and (b) process improvement approaches are presented in other chapters that relate to lean construction but may also improve projects in a so-called traditional environment. It is hoped that read-ers in a traditional construction environment will be encouraged to use the principles described to develop readiness for a lean environment.

It is recognized that true lean construction can best occur when all the construction stakeholders—especially general contractors, construction managers, subcontractors, and material suppliers—are committed to the concept of optimizing the flow of activities holis-tically. It is also recognized that optimizing the performance of individual actors in the construction supply chain does not ensure that the overall process will be optimized or greatly improved if the handoffs from one trade to another do not observe lean principles. Design activities should address the construction process as well as the finished product. This adoption of lean construction is progressing gradually with the passage of time. It is being applied selectively to projects where a small number of owners, designers and con-tractors are aware of its benefits and include it in their design and construction contracts. Lean practices enhance the utilization of resources, reducing waste, and overall costs. They also enable practitioners to improve the quality of the built environment, secure higher levels of customer/owner satisfaction, and simultaneously improve their profitability. This book also explains how industrial engineers may position themselves to play a vital role in the construction industry. Readers are encouraged to become actively involved in the lean construction movement by joining a chapter of the Lean Construction Institute (LCI). LCI may be contacted at www.leanconstruction.org/

What’s in This Book

This book provides tools and techniques designed to enhance the project management process. The treatment of lean methods provides specific procedures for the

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modifica-Preface xxix

tion of planning, and scheduling activities to improve the interaction between the parties, reduce waste, and improve performance.

In order to accommodate a wide variety of readers, the book explains the basis of a number of tools and techniques. It is assumed that, for example, some construction prac-titioners may not have a detailed knowledge of tools and techniques. By the same token, nonpractitioners of construction are provided with an overview of construction delivery methods as a foundation for applying process improvement techniques that may already be familiar to them. This book should serve as a contemporary reference for construction practitioners and as a supplementary text for students.

Chapter 1 provides an overview of the construction industry and the relationships among its participants—designers, general contractors, construction managers, contractors, sub-contractors, material suppliers. It explains the construction sector as a significant portion of a nation’s economy, pointing to the consequences of comparatively low productivity. The chapter briefly describes current design processes and construction delivery methods and advances the adoption of lean methods to address industry underperformance.

Chapter 2 describes productivity measurement in construction as a foundation for improving performance regardless of the means used—lean construction or quality-based initiatives. It provides the theoretical background for comparing work produced by construction processes to the resource inputs—labor, materials, energy, etc. This chap-ter explains productivity concepts and how they relate to performance measurement in construction organizations. It also provides examples of productivity and performance measurement methods.

Chapter 3 explains lean theory and provides a very important foundation for the book by explaining how lean concepts apply to the construction environment. It provides a historical background of the Toyota System and the production management concepts that grew from it. The chapter chronicles the major contributions made by a number of researchers, and lists milestones in the development of the lean construction movement. The principles of reducing waste and adding value, as well as meeting the requirements for a lean environment are presented.

Chapter 4 builds on the previous chapter by describing The Lean Project Delivery System™ as a proven framework for delivering projects on time, within budgets, with high-product quality, and minimal safety incidents. The application of The Last Planner®

System is explained in detail, including the process of learning from performance mea-surement and analysis. The chapter explains the foregoing systems in detail, including related topics such as designing for lean operations and target value design.

Chapter 5 explains lean process measurement including PPC determination, charting of reasons for non-completion (RNC), five-why analysis, rolled PPC and plus/delta analysis. The chapter also introduces readers to lean tools and techniques such as value stream mapping, Kaizen methodology, 5S, and A3 reports.

Chapter 6 explains how to create an environment that is conducive to lean construc-tion. Lean coaching and how it prepares project participants for adopting lean beliefs and lean practices are described. Detailed cases explain the activities of subcontractor organizations.

Chapter 7 devotes considerable detail to the deployment of lean techniques in construc-tion projects. The book discusses relaconstruc-tional contracting and its deployment as a proven vehicle for lean construction. It presents case studies of project delivery methodologies that have evolved from The Lean Project Delivery System™, such as Integrated Project Delivery and Lean Production Management.

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Chapter 8 describes information technology applications to the management of the design and construction processes for benefits similar to those experienced in the manu-facturing and service industries. Information technology–based systems integration and building information modeling among other topics are discussed. Two cases by Professor Salman Azhar of Auburn University, Alabama, illustrate the application of BIM to con-struction projects.

Chapter 9 addresses quality improvement initiatives in construction and describes total quality as an approach to doing business that attempts to maximize the competitiveness of an organization through the continual improvement of the quality of its products, ser-vices, people, processes, and environments. The application of Six Sigma techniques in construction projects is also described.

Chapter 10 first presents sustainability as an important foundation for lean construction, based on principles advanced by the U.S. Green Building Council and the Department of Energy. “Green Construction” and “Sustainability” have become a major concern in the design, construction, and operation of facilities as increasing attention is focusing on global warming and other environmental phenomena. Commissioning is described as serving two important roles, ensuring sustainable building performance through “Green” certification, and supporting project-wide quality control.

Chapter 11 makes available a variety of industrial engineering–related performance improvement tools and techniques. While these tools and techniques have been tradition-ally used in other industries to improve performance, this chapter explains how the tech-niques may be used more extensively to improve construction processes, both in a lean environment as well as in a traditional environment.

Chapter 12 addresses construction site safety practices. It is an area of concern for employers of construction workers; this concern for safety is extended to the employees of subcontractors as well. Successful project delivery requires that safety incidents be mini-mized. The chapter describes several strategies for improving safety, beginning with the design process, especially as a foundation for lean construction.

Chapter 13 presents several topics that relate to human performance in the work envi-ronment, such as motivation, diversity, and ergonomics. These topics can have a signifi-cant impact on a construction team’s ability to maximize its performance, especially with lean construction.

Chapter 14 explains the application of systems integration to design and construction projects through three cases presented by industrial engineers in the construction indus-try. The strategies described are integrated to improve project performance in a traditional environment and further explain how a transition can be made to lean construction. The chapter also discusses possible roles for IEs in the construction industry, and how they might prepare themselves.

Chapter 15 describes the application of post-occupancy evaluation to construction proj-ects and links the techniques to the Deming cycle for continuous improvement. An impor-tant extension of the weekly review that is conducted on lean-based projects is promoted; learning from project outcomes is essential for improving design and construction pro-cesses. An enhanced model of the project delivery process is proposed, based on lessons learned in the ongoing evolution of lean construction applications.

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Acknowledgments

This book has materialized through the selfless sharing of ideas and experiences by many people in the construction industry, especially a number of members of the lean construc-tion community. Their kind support throughout the process of preparaconstruc-tion and publicaconstruc-tion is most highly appreciated. Lincoln Forbes wishes to recognize and thank the following people.

Greg Howell and Glenn Ballard, co-founders of the Lean Construction Institute, are owed a debt of gratitude for helping to make this book possible. Greg shared ideas in the early stages of the book’s development that helped in shaping its direction. He also participated in dialogue on best practices for lean coaching and lean implementation as a roadmap for future lean adopters. Glenn Ballard addressed the historical evolution of lean construc-tion, based on his participation since its inception. He also shared important findings from his many research studies over the years that influenced the content of the book.

William Lichtig, Chief Strategic Officer for McDonough, Holland & Allen, PC, made available his pioneer work with the Integrated Form of Agreement (IFOA). Peter Gwynn, principal, Lean Implementation Services and Dave Koester, Project Manager, Regional Contractors Alliance (RCA), documented a highly successful application of Lean Production Management. Matt Horvat, consultant with Lean Project Consulting, devel-oped illustrative cases with typical scenarios that may be faced by new adopters of lean construction. Hal Macomber, principal, Lean Project Consulting, kindly shared many articles and papers, including those on target value design and study action teams. Robert Blakey, principal, Strategic Equity Associates, made insightful observations on the process of introducing organizational change and coaching management and workers. Professor Tariq Abdelhamid, editor of the Lean Construction Journal, graciously read through a number of chapters and provided helpful feedback. Ed Anderson, principal, Anderson Technical Services, reviewed several chapters and assisted with relevant content. Ed also opened the door to a wide array of experiences, garnered from past assignments in lean projects. Professors Fred Aghazadeh of Louisiana State University and Jim Moore of the University of Southern California provided invaluable feedback by reviewing portions of the manuscript.

Dennis Sowards, principal of Quality Support Services (QSS), introduced associates and clients who were willing to share their lean journeys. They included Chris Warren, Director of Risk Management and Continuous Improvement, Tweet/Garot Mechanical Inc.; Ted Angelo, Executive VP, Grunau Company, Inc.; Tracy Dabrowski, CFO, Belair Excavating/ Contracting, and Paul Pasqua, former director. Other outstanding lean cases were pro-vided by Owen Matthews, President of Westbrook Air Conditioning and Plumbing in Orlando, Florida, recognized as the originator of the Integrated Project Delivery (IPD) methodology and Jay Berkowitz, President of Superior Window Company and a passion-ate lean advocpassion-ate. The following industrial engineers made a noteworthy documenta-tion of lean-related cases drawn from classical IE tools and techniques: Jeff Mason, CEO, Integrated Facility Services (IFS); Al Attah, President of Macval Associates, Dallas, Texas; Jorge Cossio, President, ITN de Mexico, S.A. de C.V.; and Dr. Larry Nabatilan, formerly of Louisiana State University, who provided an ergonomic study.

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Lincoln Forbes extends special thanks to Dr. Vincent Omachonu of the University of Miami, in appreciation for paving the way for this book and for his ongoing advice and guidance.

Both authors would like to thank the following supporters of a great team effort: Prof. Salman Azhar of Auburn University, who contributed cases and narrative in Chapter 8 on BIM and ICT. Rizwan Farooqi, PhD scholar in the construction management program at Florida International University, who deserves special recognition. He dedicated many hours to leading a team of graduate students to investigate a number of topics, and actively participated in the process of developing synopses and summaries that represented a sig-nificant contribution to the book. Thanks and appreciations are also extended to the follow-ing students who were an important part of the research team: Lakshmi Priya, Saraswathi Vadali, Vishval Mehta, and Farhan Saleem. The authors would also like to thank students Virushali Davakhar and Christina Jordan for their support.

Finally, the authors extend sincere thanks to the following individuals for their help with illustrations: Darrlyn Choate, Charlene Thompson, and Richard Forbes.

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Authors

Lincoln H. Forbes, PhD, PE, LEED®_AP,_{is an adjunct professor at Florida International} University (FIU), Miami, in the College of Engineering and Computing’s Construction Management and Engineering Management programs. A registered professional engineer in Florida, Dr. Forbes has over 30 years of experience in various aspects of facilities design, construction, and maintenance as well as quality/performance improvement. He has been administrative head of several facilities-related departments and functions in Miami-Dade County Public Schools, the nation’s fourth largest district. These positions included in-house construction, design services, construction quality control, post-occupancy evaluation, project warranty services, and quality management. He has also provided research and technical support on sustainability practices, commissioning, construction systems, and methods and materials. Dr. Forbes has also been involved in strategic plan-ning and performance improvement. Earlier in his career, he worked in consulting as a senior electrical-mechanical design engineer and site engineer with ADeB Consultants (International), and later as Chief, Management Analysis with the Dade County Public Works Dept., Florida.

Dr. Forbes is a member of The Lean Construction Institute, a non-profit organization dedicated to promoting knowledge and awareness of lean construction principles. He is the founding president of the Construction Division of the Institute of Industrial Engineers (IIE). The division promotes IE’s active involvement with construction performance improvement. Earlier roles in the IIE included director of the government division and president of the Miami chapter. Dr. Forbes is a senior member of ASQ and the American Society for Healthcare Engineering (ASHE). He has served as an examiner for the Florida Sterling Council’s Quality Award.

Dr. Forbes received his PhD from the University of Miami, specializing in the improve-ment of quality and performance, including healthcare facilities design and construction. Previously, he obtained an MBA and an MS in industrial engineering at the University of Miami. He earned a BSc in electrical engineering at the University of the West Indies.

Dr. Forbes has published and presented many papers internationally on the application of lean techniques and quality and productivity improvement in construction. He authored a first-time chapter on construction in the 2005 Handbook of Industrial Engineering. He has chaired several IIE conference tracks on IE applications in construction. He has served as a columnist on continuous improvement in the construction industry for the ASCE publi-cation Leadership and Management in Engineering, and as a reviewer for the ASCE Journal of

Construction Engineering and Management.

Syed M. Ahmed, PhD, is a full professor and chairperson of the Department of Construction Management at East Carolina University (ECU) located in Greenville, North Carolina. Prior to that, he was an associate professor and graduate program director in the Department of Construction Management of the College of Engineering & Computing at Florida International University (FIU) in Miami. He was also an affiliated faculty mem-ber of the Department of Civil & Environmental Engineering at FIU. Dr. Ahmed received his PhD in 1993 and his MSCE in 1989 from Georgia Institute of Technology majoring in construction management, with a minor in industrial engineering and management

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science. He also holds an undergraduate degree (BSCE) in civil engineering from the University of Engineering & Technology in Pakistan (1984).

Dr. Ahmed has over 25 years of international experience in teaching, research, and consulting in the United States, Hong Kong, Pakistan, Mexico, and Jamaica. His areas of interest and expertise are construction scheduling, quality and risk management, project controls, construction safety, construction procurement, and construction education and information technology. He has received over $500,000 from various funding agencies including the U.S. Agency for International Development, U.S. Department of Defense, and Florida Department of Education. He is the author of several books and has published extensively with over 125 publications in international journals and conferences in his areas of expertise.

Dr. Ahmed is currently on the editorial board of more than six international journals and serves as the associate editor of American Society of Civil Engineers (ASCE) Journal

of Construction Engineering & Management. In the past 10 years, Dr. Ahmed has been invited to conduct numerous workshops, and to give lectures and presentations at dif-ferent international seminars in Hong Kong, Pakistan, Australia, and India. In 2002, Dr. Ahmed conceived, planned, and organized the First International Conference on Construction in the twenty-first century (CITC) (http://www.fiu.edu/~citc). Dr. Ahmed has chaired five CITC conferences with various conference themes including Challenges and Opportunities in Management and Technology; Sustainability and Innovation in Management and Technology; Advancing Engineering, Technology, and Management; Accelerating Innovation in Engineering, Technology, and Management; and Collaboration and Integration in Engineering, Technology, and Management.

Dr. Ahmed also conceived and organized the First International Conference on Construction in Developing Countries (ICCIDC-I) in Karachi, Pakistan in August 2008 and the second conference (ICCIDC-II) in Cairo, Egypt in August 2010 (http://www.fiu. edu/~iccidc).

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1 Overview of the Construction Industry

This chapter provides background information on the relationships among the partici-pants in the construction industry. These relationships greatly influence the effectiveness of construction delivery, especially with projects involving lean-based delivery methods. It explains the recent history of the construction sector as a significant portion of a nation’s economy, pointing to the consequences of comparatively low productivity. The subsequent chapters provide tools, techniques, and approaches for improving the performance of the construction industry. The term “construction” is used in a general sense that includes both design and construction processes, unless specified otherwise.

Background on Industry Performance

The construction industry has traditionally been one of the largest industries in the United States. As reported by the Bureau of Labor Statistics (BLS), U.S. Department of Labor, the value of construction in 2006 was $1,260.128 billion, representing 8% of the gross domestic product (GDP) (Figure 1.1). The industry employed approximately 7.614 million people in 2007 (Figure 1.2). By its very nature construction activity in the United States has not been subjected to the trend toward offshoring that has plagued both the manufacturing and service industries. The BLS report titled “State of Construction 2002–2012” forecasts that 58.4% of U.S. jobs will be construction-related at the end of that decade. Although other industries have blazed a trail to higher levels of quality and performance, the majority of construction work is still based on long-established techniques.

Construction productivity has been lower than that of other industries. The BLS does not maintain an official productivity index for the construction industry, the only major industry that is not tracked consistently. Productivity in construction is usually expressed in qualitative terms and cannot be analyzed scientifically. A number of independent stud-ies estimated that construction productivity increased between 1966 and 2003, at a rate of 33%, or 0.78% per year.

This productivity growth is less than one-half that of U.S. nonagricultural productiv-ity gains during the same period, which averaged 1.75% annually. An estimate by the National Institute of Science and Technology (NIST) points to a decline in U.S. construc-tion productivity over a 40-year period to 2007 that was –0.6% per year, versus a positive nonfarm productivity growth of 1.8% per year. The increased productivity may be attrib-utable to mechanization, automation, prefabrication, less costly and easier to use materials, and a reduced real cost of labor.

Most of the improvement in construction productivity has been the result of research and development (R&D) work in the manufacturing industry related to construction machin-ery. Earthmoving equipment has become larger and faster; power saws have replaced handsaws. However, as the use of power tools increases the consumption of energy, their contribution to productivity improvement may be eroded.

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Tilt-up construction is one example of a technology that has improved construction pro-ductivity. According to the Tilt-up Concrete Association, tilt-up construction has proven to be a fast and economical construction methodology for small buildings of one to four stories, but is far from new. It became popular in California in the late 1950s, initially for ware-houses, then its use subsequently extended to shopping centers, churches, townware-houses, and so on. Successful introduction of the technique is credited to one Robert Aiken who con-structed several buildings using “lifting jacks” to raise building panels in Illinois and Ohio. It is believed by some that a Roman architect discovered—2000 years earlier—that it would be easier to “cast a slab of concrete on the ground, then hoist (tilt) it up into position, than to build two wood forms. Place concrete between them, and then remove the forms.”

Reasons for Low Productivity

There is evidence that improved productivity is related to the levels of R&D in an industry, but the extent of R&D effort in the construction industry has remained very low in the

1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 Gross output 200,000 0 1998 1999 2000 2001 2002 2003 Year

Construction gross output (millions of dollars)

2004 2005 2006

Figure 1.1

Construction gross output 1998–2006.

Thousands (seasonally adjusted)

Total employment 8000 7750 7500 7250 7000 6750 6500 2000 2001 2002 2003 2004 2005 2006 2007 Figure 1.2

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Overview of the Construction Industry 3

United States. The overall productivity in construction has been greatly affected by regulatory controls, the environment, climatic effects, cost of energy, and other factors. Productivity improvement has never been the focus of the construction industry, probably due to the lack of a model that can fit together all the fragmented components of the overall construction process.

Productivity in the construction industry is largely unmeasured, and those measures that do exist are contradictory and conflicting. Research has pointed to a significantly high level of wasted resources in the construction industry—both human and material (Figures 1.1 and 1.2). An article titled “Construction and the Internet” in The Economist, dated January 15, 2000, noted that up to 30% of construction costs is due to inefficiencies, mistakes, delays, and poor communications.

The Construction Industry Institute (CII) estimates that in the United States, 10% •

of project cost is spent in one rework.

Between 25 and 50% of construction costs is lost to waste and inefficiencies in •

labor and materials control.

Losses are incurred in errors in information when translating designs to •

actual construction. Inadequate interoperability accounts for losses of $17 to 36 billion per year. This problem is due to communication difficulties between software used by different operators in the design and construction supply chain.

Need for New Approaches to Construction

Global competition is increasing rapidly; in 2007 construction contracts won by Chinese companies increased in the United States and Europe by 160%. In the case of the United States, this trend would suggest that the competitiveness of domestic construction orga-nizations is being challenged on its home turf. Construction spending is moving east to China, India, the Middle East, and Africa (CRIMEA). Construction organizations that are the most competitive are likely to benefit from this trend.

Clearly, new approaches are urgently required to address the construction industry’s ills. Construction is said to need a greater sense of mission, focus, and industry support. There are several obstacles to its competitiveness in the United States:

Declining productivity •

A mindset for minimum first cost •

Prescriptive standards and codes that stifle productivity •

The industry is said to need more R&D, and to move beyond a reliance on historical sur-veys to identify new approaches for getting the job done. This problem is not confined to the United States. Sir John Egan’s report in 1998 “Rethinking Construction,” identified many shortcomings in construction practices in the United Kingdom and advocated radi-cal change. The government in the United Kingdom appointed a construction task force that was comprised of a chairman and nine members representing senior representatives of construction organizations and their clients.

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The task force studied several industries, including auto manufacturing and grocery retailing to accomplish the following objective:

Quantify the scope for improvement of construction efficiency •

Examine current construction practice and assess the potential for its improve-•

ment by way of innovation

Identify specific actions and good practice that would help achieve more efficient •

construction

Identify projects that might help to demonstrate the improvements that can be •

achieved

Sir John Egan’s 1998 report, also called “The Report” made positive observations about the UK construction industry, citing its ingenuity and capacity to handle difficult and innovative proj-ects (Egan 1998; Table 1.1). At the same time, the report pointed to many industry weaknesses such as: low profitability, the urgent need to train the work force, inadequate R&D investment, and clients’ misunderstanding of cost and value relationships. At the heart of the report was a desire to develop a change of style, culture, and process in the industry as opposed to rec-ommending mechanistic activities. Proverbs, Holt and Cheok (2002) conducted a follow-up analysis of fifteen recommendations from the Egan report, using a sample drawn from the Managing Directors of 100 UK contractors. The study was intended to rank the recommenda-tions with regard to the construction industry based on a) Impact, i.e., potential effectiveness (b) Effectiveness, i.e., the potential to achieve the intended purpose, and (c) Perceived potential for success, computed as the product of scores for impact and effectiveness.

Impact was correlated most highly •

with Development of long-term relationships •

Table 1.1

Construction Initiatives

Number Recommendation

1 The commitment of leadership from all parties 2 Greater customer focus

3 Application of products and services from other industries 4 Promote best practice in health and safety

5 Provide decent working conditions and promote people as the construction sector’s greatest asset 6 Measure and assess own performance, set performance targets, and share information

7 Development of an integrated process instead of reliance on convention 8 Improved quality and fewer defects

9 Use of demonstration projects to develop and illustrate innovations 10 Rethinking (i.e., reengineering) the construction process

11 Adopt lean thinking as a method of sustaining performance improvement 12 More and better training

13 Development of technology (e.g., standardization and prefabrication) 14 Development of long-term relationships

15 Greater use of performance improvement tools and techniques (e.g., value management, benchmarking, etc.)