The Lean Construction Journal in a 2009 white paper pegs the ratio of non-value-added or wasteful activities in a typical construction project at 55% to 65%. The white paper-Creating Value: A Sufficient Way to Eliminate Waste in Lean Design and Lean Production goes on to say, “Creating value and only value is the best way to reduce waste in design and construction.”

Needless to say, the construction industry is badly broken and needs fixing. How does the industry rise up and meet the challenges of customer demand for higher quality, improved profitability, and the shortage of skilled workers? The first step is to cast aside the not invented here syndrome and embrace a time tested manufacturing solution -the Toyota Production System-commonly called Lean.

Why should construction company managers even consider Lean as a way to improve their business? Here are some eye opening facts about the U.S. construction industry:

• 60% to 85% of construction time is spent waiting or fixing mistakes
• The average construction worker operates at 40% efficiency
• Critical shortages exist in qualified and skilled workers
• The return on equity for construction pales in comparison to all other U.S. industries
• Customers are frustrated with poor quality, confrontation, excessive change orders, and scheduling delays

These are some of the same or similar issues Japanese companies like Toyota faced in the 1950’s. Lean construction can help remediate the dire conditions described above. While Lean is no silver bullet, lean construction offers substantial improvements to the problems facing the construction industry. If construction companies want to prosper in the 21st Century then they should move toward lean thinking.

Why so Much Waste?

Why so much waste? Construction projects are so fragmented. Many times subcontractors do their work disregarding how what they do impact the work of other subcontractors. We call this the “throw it over the wall’ mentality. One functional department ( in this case subcontractor) completes its part of the project and throws it over the wall to the next department (subcontractor) who throws it back over the wall because it isn’t right. This mentality sub-optimizes the performance of the entire project creating quality and schedule problems.

Lean thinking is a new way to manage construction. Many people object because they believe lean is a manufacturing strategy and has no application in a “unique” industry like construction. The goal of Lean Process Improvement is to maximize value and eliminate waste using techniques like one-piece flow, Just-in-time delivery, and inventory reduction.

There is a small but growing movement to apply lean principles to construction. Applying lean principles to construction really means applying them to project management. This transformation involves mapping your construction processes, determining the most efficient work flow and establishing a pull system. How do you create a pull system? As a contractor you can begin by looking at what the completed project should be, and then work backwards, identifying each preceding step. Downstream processes determine what the upstream processes will be and when they should take place. Taking this view of the project will help you control the work flow. You should also look at creating value stream or process maps of your job support processes as well as project processes. Processes like job setup, estimating, payroll, accounts payable, purchasing, tool and material handling are good candidates for mapping.

The Need for Change

The construction industry is broken and the five facts below demonstrate why the industry needs to change:

1. If it takes six months to build a house, then 85 percent of the time is spent on two activities: waiting on the next trade to show up, and fixing mistakes
2. Clemson’s Professor Roger Liska conducted an analysis of productivity on the construction industry and found that the average construction worker operates at only 40 percent efficiency.
3. Critical shortages of qualified, skilled workers are predicted to only get worse.
4. Despite the construction boom of 2006, Business Week’s 2007 Investment Outlook Report indicated the return on equity (ROE) for all U.S. industries was 17.9 percent, while the ROE for the construction industry was a mere 9.7 percent.
5. Industry customers are frustrated with poor quality, confrontation, excessive change orders in quantity and dollar value, scheduling delays and litigation.

Adding Value

Lean construction focuses on identifying and delivering products or services on which the client/owner places high value. Clients often place high value on:

• No or limited change orders
• High quality-meaning conformance to requirements/specifications
• On-time delivery of the project

To learn what a particular client values, the contractor must effectively communicate, then collaborate, with the client to achieve those desired results. While it may be easier to accept this concept in the negotiated arena, it also works in the highly competitive bid marketplace.

While there are fewer options in the bid market than in the negotiated environment, there are still numerous ways contractors can add value to the construction process for owners that cost the contractor little or nothing. Simply by eliminating confrontation and reaching out through better communication and collaboration, the contractor can substantially increase value for the owner.

Profitability

When contractors focus on delivering maximum value to clients, they usually find that profit margins increase. This is not surprising, since in virtually any industry the cheapest products usually produce the smallest profit margin. Therefore, if a contractor competes on price, the contractor is forced into a low margin sector of the industry. Industry data supports the belief that highly competitive bid markets are the least profitable. Secondly, since lean construction is about reducing waste, this means lower costs. Therefore, the contractor is under less pressure to lower its profit margins. Toyota was able to almost immediately double its productivity. When you consider the average construction worker is working at only 40 percent efficiency, the construction industry should expect dramatic improvements. Before blaming the worker, it should be noted that Roger Liska’s studies revealed that the majority of the lost efficiency was due to poor management-20 percent results from waiting for materials or supplies, 20 percent results from inefficient company processes and 15 percent results from work rules or congested work areas.

Shortage of Skilled Workers

Another challenge the industry faces is a shortage of skilled workers. If the industry wants to attract workers, it must change the perception that construction work is undesirable. Again, lean construction is a valuable tool in that battle. When there is a lack of workers, there is a tendency to reduce the job requirements to find additional workers. To make this work, the requirements tend to be revised downward so lower skilled workers can qualify. While this works in the short term, it creates boring jobs that highly skilled workers don’t want. Further, this approach tends to reduce productivity and increase the downward pressure on wages because wages reflect productivity. Throwing money at a problem is never a solution, but wages are a factor in the equation. Therefore, emphasis must be placed on increased productivity so highly skilled workers can be attracted and wages increased. This isn’t a delusion because lean manufacturers have already proved this concept works.

While there are no panaceas, Lean offers substantial improvements to the challenges facing the construction industry. Those contractors that want to prosper in the 21st century should move toward thinking lean to improve their processes.

The Power of Lean in Construction

Lean construction is a systematic application of lean thinking to the design and construction of buildings that do what clients and end-users want-provide value. Evolved over the last 50 years, lean thinking has revolutionized some parts of manufacturing and is now facilitating significant improvements in the way service organizations like hospitals, banks, etc. are meeting customer requirements.

Adopting lean thinking requires sustained work over a number of years. There are no instant solutions. For most people, lean requires a change in the way they think and the behaviors that support their actions. There are many things that lean organizations do that can be copied — partnering, supply chain management, value stream analysis, flow, etc. — but they are only lean when they are done with lean intent. That requires lean thinking around how the organization works.

Not all construction firms accept waste as a necessary prerequisite for doing business. They minimize or eliminate it by using Lean tools and techniques. Some examples of companies using Lean principles and tools to overcome poor quality, poor delivery and less than stellar profits are: Boldt Construction, Linbeck Construction, Mortenson, Sutter health, Veridian Homes, and the Walsh Group

Conclusion

Lean process improvement isn’t a new concept, but it is relatively new to construction. There are many skeptics who believe Lean is a manufacturing strategy and is not suited for the construction industry. Many aspects of the Toyota Production System and other lean tools can and do apply to the construction process.

Courageous, out-of-the-box thinking construction organizations such as Boldt, Turner Construction, and Messer Construction along with others, are leading the way by demonstrating that lean process improvement can reduce waste in construction with results mirroring other industries.

Lean principles hold the promise of reducing or eliminating wasteful activities, costs, and inefficiencies in construction, creating a system that provides value to customers.

The term commercial construction is used to refer to any kind of construction project where the eventual outcome will be a commercial property rather than a residential property or industrial property. It can include warehouses, hospitals, sports centres, shopping centres and hotels, as well as some types of reconstruction and refurbishment of historic buildings. One commercial construction firm may not necessarily be responsible for all aspects of the creation of a commercial property from conception to completion, and a variety of different people may be involved, however some well-established construction firms are able to take complete control of all aspects of the construction process.

Commercial properties differ from residential properties because commercial properties are not intended as full time homes, and therefore the needs, rules and regulations connected to commercial properties differ from those associated with residential properties. Those who are wishing to build a commercial property, or adapt a former residential property into a commercial property are usually required to get planning permission in order to be able to do this. If special planning permission is required, it must be properly obtained before any physical work is carried out, or else the owner may be required to undo or remove all the work which has been carried out.

There are different types of commercial construction companies available. Some construction companies will only be contracted once planning permission is received, and once all surveying etc has been called out at the place where the construction will take place. These companies will work according to the pre-approved architectural blue prints which have been commission by outside investors who wish to develop or build a property for commercial use. Other types of commercial construction company will take charge of the whole process from conception to completion, having either designed and funded the project themselves, in the hope that they will be able to sell or lease the property when it is completed, or having been contracted out by a private investor.

It is one of the construction company’s responsibilities that all commercial properties adhere to all local commercial building regulations, and if any of these regulations are not adhered to fully, then the construction company may be liable for any damages. In recent years, building regulations for commercial properties in many countries have been extended to take into account changing environmental standards.

As well as being partial responsible for the health and safety of those who will use the commercial property once it is completed, commercial construction companies must take partial responsibility for the health and safety of its own workers. Any building site is a dangerous place to be, so it is important that all workers in construction companies understand the rules and regulations which are put in place and designed to help to keep them safe. All construction workers should be taught the importance of wearing the correct protective clothing whilst they are on the building site or using building equipment: hard hats and high visibility jackets can help to save lives.

The overall outcome of any build structure relies on a single, very important decision – choosing the right commercial construction contractor. A poorly selected commercial construction contractor is likely to build a poor quality commercial building that will end up costing more than what was budgeted for and may not be what was originally intended. Therefore, there are a number of important attributes individuals should look for in any prospective commercial construction contractor.

A good commercial construction contractor must always present them self and operate their construction business in a business-like demeanor. A good contractor will respect the schedule of the business owner and always show up on time and ready to do whatever needs to be done that day. They will be competent, organized and able to deal directly with any questions or concerns the business owner may have. They will create a sense of confidence because they will not break any promises. Individuals should look at how a contractor deals with them before they sign the contract. It will say a lot about how that individual expects to be treated throughout the duration of the project.

Communication is a key attribute in any commercial construction contractor. Construction is considered a “people business.” A good contractor is also a good listener and communicator. They will translate the ideas of the individual and their goals into a very workable plan and then provide insight on what can be expected. They will create a strong base for a good working relationship and build positive rapport. If an individual does not feel as though they are communicating with a contractor effectively during the interview process, chances are it will continue through the project.

Commercial construction is a complex task. The contractor needs to demonstrate the experience and skills needed to get the job done. They need to have years of experience before they can manage a large project. There are different kinds of projects and it is important to find a contractor that has the experience in that type of commercial construction work. If they do, ask them to deliver proof in the form of referrals and recommendations.

A good, well established commercial construction contractor will have a professional reputation. This can be determined through the use of references. Ask the contractor to provide references. Have them include not only references for themselves, but any other businesses they may work with, including material suppliers. It is important to know that all companies involved have a professional reputation.

Lastly, look into the business practices of the commercial construction contractor. Ask for a certificate of insurance to ensure they have necessary coverage, including liability insurance and workers’ compensation coverage. Call the insurance company to ensure the coverage has not lapsed. Also check out their licenses and call the state licensing board to see if the license has ever been suspended or if there are any claims against the commercial construction contractor. Make certain they are able to get all necessary building permits and follow all zoning laws.

Our Company was established after recognizing the need for excellence in the construction field. We are dedicated to customer satisfaction and hold ourselves to a high standard of quality services. From preliminaries to completion; our team encompasses, financial assistance, zoning, designing, permitting, and construction, all your construction needs under one roof. We offer all construction services, ranging anywhere from a complete turnkey project to a simple renovation. We have completed many projects such as retail spaces, general offices, warehouse spaces, restaurants, and build-outs.