LEAN COMMERCIAL MANAGEMENT FOR CONSTRUCTION

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LEAN COMMERCIAL MANAGEMENT FOR CONSTRUCTION

• Christine Pasquire Glenn Ballard

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So whats it all about?
1940s
Quality Gurus
Quality Control
TQM
Toyota Production System
1970s
Lean Production
Lean Thinking
Lean Enterprise
Lean Construction
1990s
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Lean Construction
Lean Construction adapts Lean Production
approaches to improve construction project
delivery Is a state not a thing
Theory
Systems Approaches
Case Studies
Doesnt yet consider associated commercial
activities
Positional paper questions for the Lean
Construction community
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Lean fundamentals

• Optimise from end to end
• Specify value from the
• customers perspective
• Identify the value stream
• Make value flow
• Do this at the pull
• of the customer
• Pursue perfection
• Involve everyone

Lean is a personalised business health fitness
regime continuously working out to do better
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Commercial Management for Lean Construction

• Construction management mostly about maximising
  profit usually through risk contingencies and
  fire fighting (rewarded)
• Lean Construction maximises value through
  focusing on the customer, increasing certainty
  and removing waste
• Results in reduced cost time, increased quality
• Due to tendency of people to focus on own tasks,
  difficult to convince them to take alternative
  view required by a mindset change

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Challenges

• Improve existing approaches 95 of task waste
  significant business improvement delivered
  through this alone or
• Entirely new approaches the above misses the
  potential for step change that might be achieved
  by doing things differently
• MAIN QUESTION if lean project delivery is being
  practiced do we need new commercial management
  approaches to support this?

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New Approaches

• Some areas offering opportunity to do things
  differently include
• Target costing
• Performance measurement
• Expenditure accounting incentives
• Structuring contracts
• Developing systems to support new methods

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Target Costing

• Pursuing a target cost yields better results than
  pursuing endless cost reduction
• Makes cost a design criterion
• Some use in PFI projects
• Some relationship to BCIS cost planning
• BUT needs more definition working with Client to
  set more effective targets

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Performance Measurement

• When you measure something you focus attention on
  it therefore you must be careful what you
  measure.
• Site based performance is reliant on bonus and
  incentive measures
• Frequently these encourage operatives to focus on
  the bulk of the work and leave the awkward bits
  eg corners, fine cutting etc.
• For Lean Construction we should be looking to
  incentivise commitment and collaboration (share
  performance)

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Structuring the Contracts

• Clearly contracts should be used in a way that
  fosters commitment, collaboration and shared
  performance
• Do we need new contract conditions? (across the
  supply chain)
• Pathclearer presentation yesterday showed a new
  way is possible that clears out much waste

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Developing systems to support new methods

• traditional ways can hold back delivery
• new ways are needed
• research to establish gaps and possibilities,
  existing best practice
• development of new systems with clear goals
• training education to help people to change