ACTIVE Principles of Lean Thinking

1

• ACTIVE Principles of Lean Thinking How they are
  applied in practice
• 1st July 2004

2
Overview of PROjEN

• Management owned, Founded in 1978
• 60 multi-disciplined project professionals
  (approx 70 staff)
• Key services include feasibility studies, capital
  justifications, front-end engineering, turnkey
  responsibility
• Additional services include capital planning
  support, training and legislation compliance
  support in ATEX, IPPC, CDM etc
• Key markets served are the Food and
  Pharmaceutical sectors, plus Waste, Chemical and
  General Manufacturing industries
• ISO 90012000, RoSPA Gold in 2002 2003 2004
• Voted European Construction Institutes ACTIVE
  Contractor of the Year for 2003, Project of
  the Year 2004

3
Recent Projectsand Clients

• 5 million R22 Refrigeration Replacement
• 250k New Sampling Facility
• 850k Automation of existing plant
• 90k Steam Main Upgrade
• 400k Packing Line Relocation
• 1.4 million Site Relocation
• 10k Capex Planning Consultancy
• 80k Custard Gravy Line Relocation
• 4.4 million Glass Condenser Replacement
• 25k Demolition Studies
• Onsite Alliance working at Kodak, AZ, Aventis,
  BNFL, Vauxhall

4
What is ACTIVE?

• Achieving
• Competitiveness
• Through
• Innovation
• Value
• Enhancement

5
ACTIVE 1996 Action Plan

• Inefficient business processes which have
  produced a culture of confrontation rather than
  co-operation must be eliminated
• Cultural change will be necessary at all levels,
  both throughout the entire supply chain and
  vertically throughout each of the organisations
  involved in the industry
• Within the project environment the greatest
  opportunities for effecting value improvements
  are to be found in the earliest stages of
  projects

6

ACTIVE Principles of Effectiveness
ACTIVE seeks to achieve a competitive world class
process engineering and construction industry
with satisfied clients, thriving contractors and
suppliers by transforming the way in which they
deliver projects worldwide. This will be
achieved through more effective

• Project Risk Management
• Using a structured process for managing risk and
  assigning responsibility to those in the supply
  chain best able to manage it
• Innovation Continuous Improvement
• Encouraging a challenge culture with processes
  for capturing learning and regarding innovative
  ideas throughout he supply chain
• Project Execution
• Managing the implementation process to integrate
  activities efficiently to successfully achieve
  project objectives
• Performance Measurement
• Defining key performance indicators which
  demonstrate the achievement of project goals and
  benchmarking performance to drive improvement

• Project Concept Definition
• Setting clear aligned objectives and scope with
  defined, well understood implementation
  strategies
• Project Team Management
• Establishing an maintaining a single integrated
  team with clearly defined roles and
  responsibilities and shared common objectives
• Supply Chain Relationships
• Ensuring that supply chain relationships work to
  maximise value and equitably share both risks and
  benefits
• Information Management Communications
• Timely management of relevant information using
  appropriate technology and clear documentation to
  aid communication throughout the team

7
Common issues encountered in Construction
Projects Production

• A complex supply chain precedes construction just
  as it precedes production
• Constructability processes ensure that the
  construction process is designed at the same time
  as the asset, which is fundamental to production,
  but is rarely used to its full extent
• Shortages of information, materials, equipment
  and resources reduce the efficiency of a
  construction project just as in production
• When delays occur resources are diverted to lower
  priority work or short term fixes reducing
  efficiency producing rework
• Project plans build in float which gets used as
  they do with pre-lean production plans
• Site area is wasted with excessive material
  storage just as production can hold excessive
  buffer stocks and WIP
• Each of the parties seek to optimise their part
  which results in sub-optimisation of the project
  as a whole because the interdependancies are not
  fully understood

8
Lean Project Delivery employing ACTIVE Principles

• Effective project selection and prioritisation to
  ensure strategic alignment
• Use of flexible stage and gate project framework
  with gates used as entry not exit points
• Work package overlap to shorten schedule
• Early decision making
• Integrated work teams with shared objectives
• Projects well defined and value streams
  identified
• Effective and flexible project teams
• Individuals with high level of competence and
  can-do attitude
• Excellence built into core project management
  techniques and controls

9
Lean Project Delivery employing ACTIVE Principles
(Contd)

• Higher than normal peak demands as a result of
  parallel approach
• Requirement for highly effective risk management
  techniques
• Strong ownership Project Sponsor
• Stakeholder involvement
• Value analysis to shorten schedules
• Constructability/Buildability 3D Modelling
• Elimination of waste
• Effective supplier selection
• Early commencement of operator training
• Projects closed formally
• Post-Implementation reviews

10
CASE STUDY

• ECI ACTIVE Project of the Year 2004
• for GlaxoSmithKline
• Stevenage RD Site

11
Background

• Modifications to refrigeration and Heat Transfer
  Fluid (HTF) distribution systems
• Existing compressors handling R22 refrigerant
  being replaced with ammonia refrigeration
  packages
• Environmental compliance
• Increased capacity
• New building
• New HTF pumps and associated controls integrated
  with existing plant
• Critical project timescales installation and
  commissioning must be completed during 30 day
  shutdown period

12
Lean Principles Employed

• Stage Gate process with parallel working
• Strong project sponsorship and business benefits
  focus
• Collaborative approach employing common systems
  and procedures with common objectives
• Empowered integrated Project Team on Site
• Identification of concurrent engineering
  opportunities
• Minimised shutdown period
• Front end design and long lead time equipment
  costs pre-sanctioned
• Suppliers and Construction Management involved in
  front end development phase
• Shortened design phase
• Minimised risk, maximised opportunities
• Constructability/Buildability focus

13
Lean Principles Employed (Contd)

• Commissioning considered at design phase
• High emphasis on risk management throughout
• Value engineering on building
• Cost savings
• Shortened schedule
• Suppliers selected with existing partnership
  agreements
• Location and layout of construction site
  carefully considered
• Increased efficiency
• Minimise on-site inventory
• 3D modelling employed

14
GlaxoSmithKline Medicines Research Centre Gunnels
Wood Road Stevenage Hertfordshire
PROJEN PLC Winnington Avenue, Northwich, Chesire,
CW8 4EE Telephone [phone] Facximile
01606 871133 E- mail mailbox_at_projen.co.uk
WEST - PRIMARY SYSTEM, TEMPORARY FEED RETURN
PIPING Doc. No SKETCH 42 19.03.04
15
ECI ACTIVE Project of the Year, 2004

• Judges comments
• An excellent example of contractor and client
  working together using ACTIVE Principles
• An excellent front end project with the
  contractor, PROjEN, using PDRI and an integrated
  team approach
• Two notable achievements were the vendor
  selection process and the project risk assessment
  process

16
Conclusions

• There are sufficient similarities between
  production and construction projects to adopt
  Lean Thinking concepts to project management
• ECI ACTIVE Principles and Lean Thinking overlap
  and compliment each other in a number of areas
• PROjEN and their clients have gained significant
  advantage from employing ACTIVE Principles in a
  spirit of collaboration to reduce both project
  timescales and costs

17

• ACTIVE Principles of Lean Thinking How they are
  applied in practice
• 1st July 2004