LEAN is extremely likely to shape the future of construction

“Construction companies that have successfully applied lean methods have reduced construction time by up to 30% and reduced costs by up to 15%”

In a report published by World Economic Forum titled “Shaping the Future of Construction: A Breakthrough in Mindset and Technology”, the unimpressive track record of the Engineering and Construction (E&C) industry has been highlighted. Stagnated labour productivity and deflation is being attributed to various internal and external challenges.

The key internal challenges that a company needs to confront are:

1. Lack of innovation and delayed adoption
2. Informal processes or insufficient control and consistency in process execution
3. Insufficient knowledge transfer from project to project
4. Weak project monitoring
5. Barriers cross-functional cooperation
6. Conservative company culture

The report presents various areas of improvement at a company level for an industry wide transformation in the following areas.

1. Technology, materials and tools
2. Processes and operations
3. Strategy and business model innovation
4. People, organisation and culture

The extent of the benefits of digital technologies and full-scale digitalization in non-residential construction would, within 10 years, be capable of producing annual global cost savings of $0.7–1.2 trillion (13–21%) on E&C and $0.3–0.5 trillion (10–17%) in the Operations phase.

It has been highlighted that all the parties involved in the construction process — owners, contractors, subcontractors and suppliers — obviously have a vested interest in on-time performance and on-time payment, and would benefit by shifting away from the classic sequential design-bid-build approach to a more integrative approach. The emphasis on improving project planning and project management techniques has been highlighted under several categories.

The report suggests to establish a common framework for project management and suggests the following steps:

• Collect and consolidate project-management data.
• Standardize the identification of best practices.
• Ensure the best-practice standards actually get applied at the project level.

The report suggests using innovative lean digital tools for Enhanced management of subcontractors and suppliers. Lean and safe construction management and operations play a big role in improving productivity and lead to early completion of projects. A lean approach reduces complexity and uncertainty by reducing waste and non-value-adding activities throughout the entire value chain. It reduces, for instance, schedule deviations, waiting, stocks of building materials, transportation, rework and unused or underutilized resources. In that way, it makes processes more stable, predictable and efficient.

Report supports Lean methods and encourages companies to embrace its adoption and states:

“Construction companies that have successfully applied lean methods have reduced construction time by up to 30% and reduced costs by up to 15%”

It also states the irony that the adoption of lean methods which is still not widely prevalent in the construction industry, despite the relatively low investment needed. To make major and lasting productivity improvements, the report encourages the industry to embrace lean construction more broadly.

Four core principles of Lean methods in construction which have been highlighted, are the integral core of Lean PlanDo.

• Alignment of resources, material and information flows — Ensuring that the processes that led to successful outcomes can be repeated and smoother production flow can be achieved while minimizing wastes in the process.
• Coordination and harmonization of task speed — Task speeds or cycle times for activities can be reduced by breaking down the activities and identifying bottlenecks to ensure a timely start and completion of activities.
• Just-in-time pull of resources and materials — Ensuring the constraints associated with an activity is handled proactively just in time to achieve a constraint free execution and prevent delays and waiting times
• Continuous improvement of process — Lean PlanDo captures, crunches and analyses data and provides key information for improvement through a collective feedback loop in its management process — this allows for a continual improvement cycle for organizations

The report titled “Shaping the Future of Construction: A Breakthrough in Mindset and Technology” can be downloaded here.