-PresentersHüseyin Erol
Mert Bilir
19.12.2013-Middle East Technical University
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
OUTLINE
 Introduction
 Lean Production
 Toyota Production System
 Lean Thinking
 Benefits
 Lean Construction
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TFV Theory
Tools, Techniques, & Methodologies
Lean Project Delivery System
Last Planner System
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 Interactions of Lean Construction
 LC & BIM
 LC & Sustainable Concept
 LC & Design Management
 Lean Construction as a Strategy
 Literature Review
 Case Study 1
 Case Study 2
 Questions & Comments
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Introduction-Some Statistics
 Manufacturing;
 Productive Time: 88 %
 Waste Time: 12 %
 Construction;
 Productive Time: 43 %
 Waste Time: 57 % !!!
Source: Aziz and Hafez (2013)

CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Introduction-Some Statistics

 In Dutch construction industry;
 In terms of weight: 9 % of total materials are wasted on site
 1 % to 10 % of each material leaves site as solid waste.
Source: Bossink and Brouwers (1996)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Introduction-Some Statistics

 Among 258 major public transport infrastructure projects;
 Which were conducted between 1927 and 1998
 In USA, Japan, Europe, and many other developing countries
 Had total value of 90 billion US dollars
 Approximately 30% of them have exceed their budgets!
 40% of them failed to meet client revenues!
Source: Flyvbjerg et al. (2004)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Introduction-Problem Definition

 The construction industry does not achieve its goals in terms of;
 Schedule performance
 Budget performance
 Health and Safety
 Quality
 Sustainability
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Introduction-Proposal

Lean construction practices will lift construction industry
and provide competitive advantage to contractors by
minimizing waste and maximizing value to customer
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Introduction

 Taylorism: 1910s-1920s
 Fordism: 1930-1960s
 Post-Fordism: 1970s-1980s
Mass Production;
• Cheap products in high volumes.
• Do not require skilled workers
• High volume of inventories
• Too much waste
• Does not produce value to customer
 Lean Production: 1990s…
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Toyota Production System
(TPS)

 In year 1955, Toyota builds 23,000 cars per year while Ford builds more than
8,000 vehicles per day.
 In 2003, Toyota became second largest car manufacturer in the world as they
passed Ford.
 After three years, in 2006, Toyota took number one place by overtaking
General Motors
Source: Holweg (2007)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Toyota Production System
(TPS)

14 Management Principles of TPS
1) Management decision should be performed on a long-term consideration, even if short-term financial targets are missed.
2) In order to make problems clear, a continuous process flow should be created.
3) In order to avoid overproduction, pull systems driven by the customer must be used.
4) Workload should be fixed. (“Heijunka”)
5) An environment should be promoted to stopping the works to fix problems in order to get quality right the first time.
6) Continuous improvement and empowerment of employees should be developed by means of standardized tasks.
7) Visual control should be used to prevent hiding of problems.
8) Only properly tested technology which serves for people and processes should be used.
9) Leaders who thoroughly understand the work and philosophy and can teach it to others should be grown.
10) Extraordinary people should be grown to follow company’s philosophy.
11) Network of partners and suppliers should be interested in order to challenge and help them to enhance themselves.
12) The situation should be completely controlled and checked in-situ by directors. (“Genchi Genbutsu”)
13) When making decisions, all alternatives should be carefully considered by participation of all members but implementation of them
should be quick. (“Nemawashi”)
14) A learning organization should be developed by relentless reflection and continuous improvement. (“Hansei” and “Kaizen”)
Source: Liker (2004)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Toyota Production System
(TPS)

CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Toyota Production System
(TPS)

7 Types of Waste «Muda»
1) Waste of overproduction
2) Waste of waiting (time on hand)
3) Waste of transportation
4) Waste of over-processing or incorrect process
5) Waste of stock on hand (inventory)
6) Waste of unnecessary movement
7) Waste of making defective product
8) Goods and services which do not meet the needs of the customer (by Womack and Jones (1996))
Source: Ohno (1988)
CE726 - Strategic Management of Construction Companies
19.12.2013
Lean Production-Toyota Production System
(TPS)
METU

2 Pillars of TPS
1) Just in Time
The Just-in-Time (JIT) philosophy advocates;
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Producing and/or delivering only the necessary parts
Within the necessary time
In the necessary quantity
Using the minimum necessary resources.
2) Jidoka
“Jidoka” or autonomous machine concept;
 Stops to machines automatically
 Stops the production line.
Whenever an abnormal or defective condition arises in production process
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Toyota Production System
(TPS)

The Five S(s)
(Liker and Lamb, 2000)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Toyota Production System
(TPS)

The Five Why(s)
«The 5 Why(s) is a method to pursue the deeper, systematic causes of a problem to find
correspondingly deeper countermeasures.» (Liker, 2004)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Lean Thinking

 Oil crises,in 1973 and 1979, compel big three (Ford, GM, and Chrysler) to take
action
 International Motor Vehicle Program (IMVP) starts in 1979 at MIT.
 As a result of IMVP, TPS was translated to the west as Lean Thinking
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Lean Thinking

Main Principles
1. Precisely specify value by specific product.
2. Identify the value stream for each product.
3. Make value flow without interruptions.
4. Let the customer pull value from the producer.
5. Pursue perfection.
Source: Womack and Jones (1996)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Production-Benefits

 Reduction of waste
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Source: «Kotelnikov»
Reduction of production cost
Decreased cycle times of manufacturing
Reduction of labor
Reduction of inventory
Increase in capacity of facilities
Higher quality
Higher profits
Higher system flexibility
More strategic focus
Improved cash flows
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Introduction

 Conventional model of construction project management uses project execution
techniques of Project Management Body of Knowledge (PMBOK-Duncan, 1996)
 It uses following steps in project execution:
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Determination of an overall plan.
Scope definition of work to be performed.
Breaking the scope into smaller packages or activities.
Management of time and cost for each activity.
(Critical Path Method (CPM) Logic)
 Management of quality and change.
 Today’s complex, uncertain, and quick (CUQ) projects are most likely to fail when only
these traditional approaches are used.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Introduction

 Impacts of lean production on manufacturing industry awaked construction
industry.
 The term “lean construction” was first introduced by Lauri Koskela in 1993.
 Organizations such as International Group for Lean Construction (IGLC-1993)
and Lean Construction Institue (LCI-1997) serves for reasearching, practicing,
and spreading lean construction principles.
 Tezel and Nielsen (2013) reported that countries including Australia, Brazil,
Denmark, Ecuador, Finland, Peru, Singapore, the United Kingdom,and the
United States, have strated to implement lean construction in their industries.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-TFV Theory

 Neither conventional project management approaches nor lean production
principles are enough to set a production theory for construction.
 Lean production principles cannot be directly implemented to construction
due to unique characteristics of it:
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On-site production
On-of-a kind projects
Complexity
Effects of external factors ( e.g. Weather conditions)
 Transportation-Flow-Value theory of Koskela (1992) combines necessary
characteristics of traditional approaches and lean production.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-TFV Theory
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19.12.2013
METU
Lean Construction-TFV Theory
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CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Tools, Techniques,
& Methodologies

CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Tools, Techniques,
& Methodologies

CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Tools, Techniques,
& Methodologies

CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Lean Project Delivery
System (LPDS)

CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Lean Project Delivery
System (LPDS)

CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Lean Project Delivery
System (LPDS)

Essential features of LPDS
 Management and structuring of the projects are based on value generation process.
 Downstream stakeholders are included the design and planning process through cross
functional teams.
 Project control has the job of execution in case of variance detection.
 Work flow is made more reliable by optimization efforts.
 Pull techniques are implemented to ensure flow of materials and information.
 Capacity and inventory buffers are utilized to absorb variability.
 Learning is realized through feedback loops.
Source: Ballard (2000)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Lean Project Delivery
System (LPDS)

Comparison of Traditional and Lean Project Delivery Systems
Source: Koskela et al. (2002)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Last Planner System (LPS)
of Production Control

 LPS is the work structuring and control meachanism of the lean construction.
 LPS’s components;
 Look ahead planning
 Commitment planning
 Learning
 Basic Rules;
 Activities are dropped from the phase schedule into a 6-week, in general, look-ahead
window.
 Constraint analysis is performed and they should be removed in order to advance.
 It is tried to be performed only the assignments that bring value.
 Percentages of completed assignments are calculated for each plan period.
 Reasons for plan failure are determined and tried to be fixed.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Last Planner System (LPS)
of Production Control

LPS serves for;
 Shaping work flow sequence and rate.
 Matching work flow and capacity.
 Maintaining a workable backlog of ready work.
 Developing detailed plans to determine how work will be performed.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Last Planner System (LPS)
of Production Control

Plan Percent Complete improvement of a construction project in Chile with Last Planner
Source: Ballard et al. (2002)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Last Planner System (LPS)
of Production Control

Learning Mechanism
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction-Last Planner System (LPS)
of Production Control

CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Part 2

Mert Bilir
• Interactions of Lean Construction
• Lean Construction as a Strategy
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Interactions of Lean Construction-LC & BIM

 Sacks et al. (2010) claim that integration of BIM and lean construction can
bring
a successful improvement of construction when they are in the
integrated project delivery approach.
 With the relevant principles of lean construction and the relevant key aspects
of BIM, Sacks et al. (2010) developed a framework.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Interactions of Lean Construction-LC & BIM

Relevant key principles of Lean Construction
(Sacks et al. ,2010)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Interactions of Lean Construction-LC & BIM

Relevant key aspects of BIM functionality
(Sacks et al. ,2010)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Interactions of Lean Construction-LC & BIM

Interactions of LC & BIM
(Sacks et al. ,2010)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Interactions of Lean Construction-LC &
Sustainable Concepts

 In order to have sustainable constructions, combination of lean and “green”
construction methodologies to reduce waste production is a beneficial way.
 According to Ahuja (2012), Kaizen is one of the main components of lean
production process which has meaning of continuous improvement.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Interactions of Lean Construction-LC &
Sustainable Concepts

 Kaizen process has a goal of operational perfection by eliminating waste.
 This approach can help to achieve desired outcomes of sustainable
construction.
(Ahuja, 2012)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Interactions of Lean Construction-LC &
Sustainable Concepts

Principles of
sustainable
construction
Framework by Koranda et al. (2012)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Interactions of Lean Construction-LC &
Design Management

 It is a clear fact that design phase has an essential part in the construction
projects.
 According to Koskela et al. (2009), control and management of the design stage
should be done properly in order to improve construction in general.
 Lean construction principles are also dealing with improving construction
project processes by considering customer needs. With this feature,
Tzortzopoulos and Formoso (1999) argue the implementation of lean
construction principles in the design process through the development of
design models.
CE726 - Strategic Management of Construction Companies
19.12.2013
Interactions of Lean Construction-LC &
Design Management
METU

 Some prominent principles for this implementation
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Reduce the share of non value adding activities
Simplifying by minimizing the number of steps, parts and linkages
Increase output flexibility
Focus on complete process
 Other principles also exist such as process variability and cycle times,
increasing process transparency, building continuous improvement into the
process, balancing flow improvement with the conversion improvement and
benchmarking
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Literature
Review

 In the literature research, it is clearly seen that companies have been applying
lean construction principles successfully in the operational level. However,
Neto and Alves (2007) claim that these implementations have been utilized
without relating strategic issues in the companies.
 According to Neto (2002), strategic issues of the company should be
considered while deciding to implement the principles of the new philosophy
of production (i.e. lean construction techniques)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Literature
Review

 Senaratne and Wijesiri (2008) claim that with the features of cost leadership,
differentiation and focus strategies, lean construction can be seen as a
strategic option and evaluate with “Strategic Option Evaluation Tests” offered
by Scholes (1999) in the Sri Lanka construction industry.
 These tests comprised of 3 parts
 Suitability
 Acceptability
 Feasibility
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Literature
Review

Suitability Test by (Senaratne and Wijesiri, 2008)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Literature
Review

Suitability Test by (Senaratne and Wijesiri, 2008)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Literature
Review

Acceptability Test by (Senaratne and Wijesiri, 2008)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Literature
Review

Acceptability Test (for Kaizen)
by (Senaratne and Wijesiri, 2008)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Literature
Review

 Obviously, lean construction and its techniques could be regarded as a
strategic option with the suitability and acceptability of it in Sri Lanka
construction industry.
 However there is still a lack in studies about viewing lean construction as a
strategy in the literature.
 Discussions and researches related to this subject should be increased
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Case Study 1

 Objective: To implement and assess the values of different LC techniques for a
parking-garage project during a 6 month period in Ohio (Salem et al. ,2006)
 Six LC techniques were utilized
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Case Study 1

Salem et al. (2006)
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Case Study 1

 As a result of implementing these LC techniques,
 Under budget completion
 Completion three weeks ahead of schedule
 More satisfied relationships b/w subcontractors and general contractors
 No major injuries occured and lower incident rates when compared with similar projects
 This tool can be used as a self-assessment instrument for tracking improvements in any
project.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Case Study 2

 Sacks and Goldin (2007) offers alean model to be used for interior finishing
works of the apartments. The model has four main lean construction principles;
 Reduction of batch sizes
 Use of pull flow
 Work restructuring
 Process improvement with multiskilling
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Lean Construction as a Strategy-Case Study 2

 Based on 4 principles, a management game is played with several groups of people
 The game was also implemented in a discrete event simulation using STROBOSCOPE
software and the results of the computer simulation is consistent with those achieved in
the live game in terms of demonstrating the relative difference between the conventional
and lean models.
CE726 - Strategic Management of Construction Companies
19.12.2013
METU
Questions & Comments

Important References
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Howell, G.A., and Koskela, L. (2000). Reforming Project Management: The Role of Lean Construction, Proceedings of the 8th annual conference of
the International Group for Lean Construction, Brighton, UK.
Koskela, L., Howell, G., Ballard, G., and Tommelein, I. (2002). “The foundations of lean construction”, in Best, R., and Valence, G.D. (editors),
“Design and Construction: Building in Value”, Great Britain: Butterworth-Heinemann, Inc., 211-226.
Liker, J.K. (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, New York: McGraw-Hill, Inc.
Ohno, T. (1988). Toyota Production System: Beyond Large-Scale Production, Portland, Oregon: Productivity Press, Inc.
Sacks, R., Esquenazi, A., and Goldin, M. (2007). LEAPCON: Simulation of Lean Construction of High-Rise Apartment Buildings, Journal of
Construction Engineering and Management, 133, 529-539.
Salem, O., Solomon, J., Genaidy, A., and Minkarah, I. (2006). Lean Construction: From Theory to Implementation, Journal of Management in
Engineering, 22, 168-175.
Womack, J.P., and Jones, D.T. (1996). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, New York: Simon & Schuster, Inc.