Line Meets Curve

In an article at IndustryWeek.com entitled “Manufacturers Need to Look at Lean Construction,” the LEAN approach to manufacturing facility construction project management is described. The manufacturing sector has embraced quality processes, with great productivity gains, and resulting increases in profitability.

Lean construction applies many of the quality process improvements used in the manufacturing process to the construction of the manufacturing facility itself. Of course, if it works for a manufacturing facility, then Lean construction will be successful in any construction project. One tool mentioned is Kanban Scheduling, a Just-In-Time approach to materials acquisition. Cost savings can be enhanced in project management by a more timely flow of materials, with less waste or pilferage due to long term on-site material storage, or delays that increase the time material is sitting idle.

The materials issue is just one facet of Lean construction. The Last Planner System (LPS), developed by the Lean Construction Institute, uses a “Last Planner” as the person/entity who assigns work to the crews. The goal is to smooth the flow of work, with a better flow of work from one task to another, and less interruption and delay due to poor planning.

The Quality Process Gurus like Edwards Deming and Philip Crosby brought about a revolution in American manufacturing. They proved that quality does not cost more…to the contrary, it decreases costs dramatically. A basic tenet of every quality improvement process is communication. In a manufacturing company, the embrace of a full process will involve many meetings of employees in management, on the line, as well as supplier representatives. This is much easier done in a contained environment, where most of the participants are employees at the site. It becomes a more daunting task when the participants are almost all independent contractors with business locations far from the site of construction.

Online project management collaboration is poised to facilitate these new Lean construction activities. Many of the meeting and planning functions can be accomplished via online collaboration. Process flow is enhanced more easily when remote participants can access current job status and specific task progress online on a daily basis.

In a paper entitled “Improving Knowledge in Projects,” Eric D. Brown speaks to consulting with Information Technology clients to align technology, strategy, people and projects. The parallels between a large IT development project and a commercial facility construction job are readily apparent.

Specifically, the task of knowledge transfer and knowledge management are discussed thoroughly, as the author considers it one of the most challenging aspects of IT project management. Surveys were conducted with results that showed organizational culture plays a key role in knowledge transfer within projects and should be the main area where organizations focus when looking at knowledge transfer methodologies capabilities.

For construction project management, multiply the organizational culture issues by the number of independent sub-contractors and other project participant companies. If it is difficult in a single IT company to bring a new software product to market due to poor knowledge transfer, it is a tribute to our industry that any complex building project makes it to completion.

While the IT development project must be concerned with the duplication of effort and wasted programmer time when knowledge is transferred poorly, the construction project management team and the owner must be concerned with other factors. When project status and process delay knowledge isn’t properly transferred to all whose work is affected by it, extra costs are involved in labor, material storage, and possibly damages for excessive delays.

Knowledge doesn’t just mean status and sub-contractor progress information. With new materials, green building, and equipment innovations, knowledge about their interaction and influence on related trades is developed on the job. If not captured for the future, the process is repeated with resulting costs duplicated on each new project.

While we’re comparing the challenges of bringing new software to market with the completion of a complex building project, there is a place where they come together for our benefit. New online construction project collaboration systems facilitate the recording and transfer of knowledge for the current project, as well as for the future. Thanks to the IT software development that creates this cost-saving service tool for AEC.

Municipal and Institutional projects are not nearly as plentiful as a few years ago. Financing is one problem, with current pressures on banks and lenders from the residential mortgage crisis. There is ample evidence of this trend, with one illustration from the San Diego area. SignOnSanDiego.com, in an article about the San Diego Community College District, says:

“Last week, officials announced they saved $4 million at the Mesa College campus when twice as many bids than they expected came in below what they expected to pay on the college’s new $16 million allied health building.”

This is a bit different from headlines not that long ago about project bids well in excess of estimated budgets for municipal projects. It seems that there is a huge amount of competition in the San Diego area for large project work. Actually, it appears to be the trend in much of the state.

There is no reference to the companies doing the bidding, nor whether they are placing bids on a shoestring to keep subs and crews around and working. If, as in other past lean periods, the same old work and management methods are employed in low profit keep-busy projects, it’s unfortunate.

With studies proving that better project communications can cut costs significantly, we certainly hope that the low bidder in this case is using an online AEC project collaborative solution. The construction contractors and project management professionals who embrace new technology solutions can prosper in a highly competitive market. The credibility developed with municipalities when you not only bid low, but come in on budget and on time, is gigantic.

The same article also states: “even though production costs have risen, ‘the trajectory has flattened.’ Also, labor and profit margins are going down.” Scary statement…costs up/profits down. There is the strategy of taking the work at break-even to pay overhead and stay around for better times. However, improving collaboration and project communication through technology to lower costs is another…and infinitely better for the bottom line.