COAA Lean Construction.pdf

Sutter Health
A Practical Look at
Lean Construction
David Long, Sutter Health
Construction Owners Association of America
San Diego, California
Nov.9, 2006

Lean Construction
I. In the Context of Lean
II.
Traditional Project Management
III.
Initiative to Change
IV.
Pre-Requisites to Change
V. Sutter’s s Lean Program
VI.
Results
VII. Challenges Moving Forward

I. In the Context of Lean
The Toyota Way
Genchi
Problem
Solving
(Continuous
Improvement & Learning)
Genbutsu
Jeffery Liker
Kaizen
Respect and
Teamwork
People & Partners
(Respect, Challenge,
& Grow Them)
Process
(Eliminate Waste)
Challenge
Philosophy
(Long-Term Thinking)

II. Traditional Project Management
Change From The “Typical” Organization
Command and Control
• Over Budget
• Late
• Poor Quality
• Kill or injure too many during
construction
‣ Insanity:
Doing the same thing
over and over again
and expecting different
results.
Albert Einstein

III. Initiative to Change
Why
• Promise to Manage Within Budget
• Promise to Manage within Scope
• Promise to Manage within Time
Parameters
• Promise to Preserve and Better the Lives
of the Project Participants

IV. Pre-Requisites to Change
• Recognition and Acceptance that
Work can be Approached in New and
Better Ways
• Willingness to Experiment

V. Sutter’s s Lean Program
• Engagement of Consultants – LPC
• Adoption of a Lean Philosophy – From the Top
• Formation and Expression of the Mission – The
Five Big Ideas
• Challenge the Community to Join in Change
• Started by Applying a Production Control
Process to Projects – Last Planner
• Examined and Began to Improve Our Own
Management Behavior – Meetings, Promises,
Requests, Trust, Leadership.

Five Big Ideas
Emergent Outcomes
Collaborate;
Really Collaborate
Increase
Relatedness
Projects as
Networks of
Commitment
Innovation
Build
Trust
Reliability
Competitive
Continuous
Improvement
Optimize
The Whole
Tightly Couple
Learning w/ Action

Integrated Change to Team Concepts
Integrated Project Delivery
Team
Core Group
Other
Landscape
Other
Subs, vendors,
& consultants
Civil
Site
CPMC
Rep.
Framing
Structural
Mechanical
Mechanical
ARCH.
Rep.
Plumbing
Plumbing
SH FPD
Rep.
CM/GC
Rep.
Landscape
Electrical
Steel
Electrical

What is Lean Construction
In collaboration with LCI, LPC & Sutter Health
• Lean on projects means “doing more with less”
(Eliminate Waste).
• Shortens construction time.
• Reduces costs.
• Delivers more value and reduces wasteful surprises.
• Promotes safety. (Accidents are Dramatically Reduced)
• Creating reliable workflow is the initial focus of most
implementation efforts.
• Brings the responsible parties together to create and
activate the network of commitments necessary to
deliver the project.
• The Right people talk about the Right things at the Right
level of detail at the Right time.

Managing in a Lean Environment
What does it Look Like
• Trust
• Expose Breakdowns
• Communication
• Human Behavior – Manage Transparently
• Processes
– Target Value Design
– Budget Realignment (Up and Down)
– Last Planner – (Production Planning and Control)
– Integrated Form Of Agreement (Not a Positioning for
Litigation)
– Continuous Learning- Plus/ Delta

Target Value Design
Manage Costs Before Incurred

Target Value Design
Project Definition
Preproject Planning
P
r
o
j
e
c
t
D
e
f
i
n
i
t
i
o
n
Project Initiation
Project Business Plan: If we could build X with
which we could do Y and it cost us Z, would we do
it
Go /
No
Go
Project Design / Alignment Study: Can we build X
with which we can do Y and will it cost us Z
Go /
No
Go
Design
Conform
Conform
Set The
Target
Cost
Note: X, Y, and Z can all change
in the course of the conversation
between means, ends and
constraints, but these must be in
alignment for a “GO” decision.

Last Planner
Planning, Controlling & Correcting

Manage the Network
of Commitments
1
Request
“Will You”
Accepted
Inquiry
PO
Negotiation
Submitted
Preparation
CUSTOMER
4
Clarification
&
Negotiation
Signed
Declare
Satisfaction
“Thank you”
Conditions of
Satisfaction
&
Date of Completion
2
PROVIDER
COMMITMENT
“I Promise I WILL”
Assurance
Performance
3
Declare
Complete
“I’m Done”

Budget Realignment Process
Davies New-MOB
Version: 1 for the abov
341.460.20 WORKING BUDGET
Working (Cur-Work)
CPMC Quantity Unit Rate ST Baseline Current Budget Variance
100. Site/Entitlements/Development/Permits 666,794 - 476,435 666,794 (190,359)
Site/Entitle/Dev/Permits - Budget 1 ea $320,800 320,800 - - 320,800 (320,800)
City/County Plan Check & Permit 1 ea $166,080 166,080 - 296,117 166,080 130,037
OSHPD Permits 1 ea $21,714 21,714 - 30,318 21,714 8,604
Other Permits / Development Fees 1 ea $8,200 8,200 - - 8,200 (8,200)
Connection Fees 1 ea $150,000 150,000 - 150,000 150,000 -
200. Construction 30,729,982 - 28,974,832 30,729,982 (1,755,150)
Construction - Budget - - - -
Construction - PreConstruction Services 1 ea $800,000 800,000 - - 800,000 (800,000)
Construction - General Contractor 28,929,982 - 25,980,574 28,929,982 (2,949,408)
Construction #4 Neigborhood Improvement 1,000,000 - - 1,000,000 (1,000,000)
Construction - Offsite 0 - - - -

Integrated Form of Agreement
Build Relationships From The Beginning
• Defines Sutter’s
Lean Process
•Defines
Relationships
• Moves Away From
Preparation For
Litigation
•Establishes
Incentives
•Establishes Trust

Plus/ Delta
Continuous Improvement
• Good Meeting
PLUS
• Great Participation
• Good to have the Subs
DELTA
• Meeting Needs to be Shorter
• Need to Include the Engineers
• Have Food Next Time

VI. Results
• Prior to Lean Program
– Project 1
– Project 2
• After Lean
12 Mos. Late $ On Budget
12 Mos. Late $ 50M Over
– ARC - $58M On Time
$ On Budget
– MOB 1 - $20M 2 Mos. Early $ 100k Under
– MOB 2 - $24M 1 Mos. Early $ 1M Under
– Bed Tower $51M
1 Mo. Ahead $ On Budget

VII. Challenges Moving Forward
• Lots of Work – All Need to Help
• Make Sure The Basics Are In Place
• Continue to Encourage Innovation
• Continue Our Open Kimono Learning
• Manage Retraction Back to Old
Thinking

Thank You!
Questions