Lean Project Delivery

1
Lean Project Delivery

• Glenn Ballard
• Project Production Systems Laboratory
• Engineering and Project Management
• University of California at Berkeley

2
Workshop Objectives

• Understand Lean Project Delivery
• Where did it come from?
• What is it? How is it different?
• Prepare for the pre-construction phase of your
  projects
• Coordination and control through reliable
  promising
• Set based design strategy
• Maximizing value for money through target costing
  
• Collaborative design process
• Launch project planning
• Business case, stakeholder map, stakeholder
  values
• Constraints financial, location, regulatory
• Organizational and contractual structure project
  governance
• What will we start doing? What will we stop
  doing?

3
Glenn Ballard a brief CV

• Experience
• Pipefitter, Foreman, Construction Engineer,
  Productivity Quality Specialist, Internal
  Management Consultant for Brown Root and
  Bechtel
• Independent Management Consultant for Petroleos
  de Venezuela, U.S. Dept. of Energy, Pacific Gas
  Electric, Koch Refining, BAA (Heathrow Terminal
  5), Channel Tunnel Rail Link (St. Pancras
  Station)
• Current Position
• Professor in the Engineering Project Management
  Program, Dept. of Civil Environmental
  Engineering, UC Berkeley
• Director, Project Production Systems Laboratory,
  UC Berkeley
• Education
• B.A. in Mathematics
• M.B.A.
• PhD in Civil Engineering

4
The Airplane GameAn exercise in production
system design

• Engineering and Project Management
• University of California at Berkeley

5
Phase 1-3 Assembly Layout
Incoming Queues
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Phase 1-3 Assembly Layout
WS1
WS2
WS3
WS5 (QC)
WS6
WS4
Incoming Queues
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Performance Metrics

• Planes the number of good planes produced in
  each 6 minute phase.
• Time the time it takes the first good plane to
  get through the system.
• Rework the number of planes turned upside to
  indicate defects in configuration or fit.
• Work-in-Progress Inventory (WIP) the number of
  subassemblies on the table at the end of the 6
  minute phase.

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Phase 1 Logistics

• Workstations in work flow sequence
• Materials located at workstation
• Workstations 2-5 have an incoming queue space
• Completed Batches of 5 placed in queue space of
  next station
• Batches remain together until final inspection

9
Phase 1 Policies

• Workers perform only their assigned tasks - NO
  THINKING
• Maintain Batch integrity - BUILD IT IF YOU CAN
  and PASS IT ON IF YOU CANT.
• QC Problems only detected by Inspector - NO
  FEEDBACK - NO TALKING
• All QC problems set aside as rework - TURN UPSIDE
  DOWN
• QC Inspector announces first good plane.
• Assemblers are paid by the piece.

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Your Hypotheses

• How many good planes will your team produce in
  Phase I?
• How long will it take for you to produce the
  first good plane?
• How much rework will you generate (planes turned
  upside down)?
• How much WIP will you generate (subassemblies
  left on the table)?

11
How could this system be redesigned for better
performance?
12
Phase 2 Logistics

• Workers may have only one assembly at their
  workstation
• Only 1 assembly allowed in queue space between
  stations (Batch size of 1)
• Assembly can only be placed in queue when it is
  empty (pull mechanism).
• Workstations in Work Flow Sequence
• Materials located at station
• Stations 2-5 have an incoming queue space

13
Phase 2 Policies

• QC Problems may be verbalized by any worker
• SOME THINKING and TALKING ALLOWED
• All QC problems set aside as rework at station
  discovered.
• TURN UPSIDE DOWN
• Everyone is paid hourly wages plus a bonus for
  team performance.
• Workers perform only their assigned tasks
• Workers cannot fix QC problems from upstream
• Inspector announces first good plane.

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Your Hypotheses

• How many good planes will your team produce in
  Phase II?
• How long will it take for you to produce the
  first good plane?
• How much rework will you generate (planes turned
  upside down)?
• How much WIP will you generate (subassemblies
  left on the table)?

15
Your Hypotheses

1. How many good planes will your team produce in
   Phase II?
2. How long will it take for you to produce the
   first good plane?
3. How much rework will you generate (planes turned
   upside down)?
4. How much WIP will you generate (subassemblies
   left on the table)?

16
Phase 3 Logistics

• Use phase 3 Instruction Sheets.
• Workers may have only one assembly at their
  workstation
• Only 1 assembly allowed in queue space between
  stations (Batch size of 1)
• Components can only be placed in queue when it is
  empty (pull mechanism).
• Workstations in Work Flow Sequence
• Materials located at station
• Stations 2-5 have an incoming queue space

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Phase 3 Policies

• Workers perform ANY step in the production
  process.
• QC problems can be fixed by any worker - Fix it
  when you find it.
• No restrictions on talking.
• Everyone is paid hourly wages plus a bonus for
  team performance.
• Inspector announces first good plane.

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Your Hypotheses

1. How many good planes will your team produce in
   Phase III?
2. How long will it take for you to produce the
   first good plane?
3. How much rework will you generate (planes turned
   upside down)?
4. How much WIP will you generate (subassemblies
   left on the table)?

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Lean Production Techniques in the Airplane Game

1. Minimize the movement of materials and workers by
   sequencing and positioning of workstations
   (layout) and by maintaining materials at the
   workstations.
2. Release work (materials or information) from one
   workstation (specialist) to the next by pull
   versus push
3. Minimize batch sizes to reduce cycle time.
4. Make everyone responsible for product quality
5. Balance the workload at connected workstations
6. Encourage and enable specialists to help one
   another as needed to maintain steady work flow
   (multiskilling)

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More Lean Production Techniques

• 1. Stop the line rather than release bad product
  to your customer.
• 2. Minimize changeover (setup) time to allow
  one piece flow.
• 3. Make the process transparent so the state of
  the system can be seen by anyone from anywhere.

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The Airplane Game

• What are the key points or lessons for you?
• How might these apply to designing and making
  buildings? How could you use what you have
  learned on your projects?

24
Lean Project Delivery What is it? Where did it
come from? Where is it going?

Graphic courtesy of Extemin
25
What is this thing called LEAN?
What has changed Manufacturing, and sharply
pushed up productivity, are new concepts.
Information and automation are less important
than new theories of manufacturing, which are an
advance comparable to the arrival of mass
production 80 years ago. Peter Drucker, The
Economist, pg 12, November 3, 2001

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Craft Production

• One Off, Custom Products
• Flexible, Simple Tools
• Highly Skilled Workforce
• Integrated Product Development
• Quality by tinkering and rework
• Build to Order
• High Cost - Low Volume

Source The Machine that Changed the World by
Womack, Jones Roos
Courtesy of Strategic Project Solutions Inc. 2005
27
Mass Production (Ford)

• High speed, automated tools
• Large batches and inventories
• Good enough quality
• Departmental organizations
• Lengthy product development
• Low innovation rate

Source The Machine that Changed the World by
Womack, Jones Roos
Courtesy of Strategic Project Solutions Inc. 2005
28
Toyota Production System (aka Lean)

• Started in the 1950s
• Chief Architects
• Taichi Ohno Shigeo Shingo
• Challenge
• Limited Cash Space
• Sophisticated Customers
• Goal
• A custom product, delivered instantly, with
  nothing in stores.

Source The Machine that Changed the World by
Womack, Jones Roos
Courtesy of Strategic Project Solutions Inc. 2005
29
Lean Compared to Mass 1980s
Metric Japan USA
Output Output Output
Productivity (hrs/vehicle) 16.8 25.1
Quality (defects/100 vehicles) 60.0 82.3
Work Force Work Force Work Force
of Work Force in Teams 69.3 17.3
Number of Job Classes 11.9 67.1
Suggestions/Employee 61.6 0.4
Layout Layout Layout
Space (Square.ft./vehicle/year) 5.7 7.8
Repair Area ( of assembly space) 4.1 12.9
Inventories (days) .2 2.9
Source The Machine that Changed the World by
Womack, Jones Roos
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Design Performance
Japan
USA

• Avg. Engineering Hours (millions) 1.7 3.1
• Avg. Development Time (months) 46.2 60.4
• Employees in Project Team 485 903
• of Body Types per New Car 2.3 1.7
• Supplier Share of Engineering 51 14
• Ratio of Delayed Products 1 in 6 1 in 2
• Prototype Lead Time (months) 6.2 12.4
• Prod. Start to First Sale (months) 1 4
• Return to Normal Quality (months) 1.4 11

Source The Machine that Changed the World by
Womack, Jones Roos
Source The Machine that Changed the World by
James P.Womack and Daniel T. Jones
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Lean Project Delivery System
Purposes
Design Concepts
Product Design
Fabrication Logistics
Commissioning
Alteration Decommissioning
Constraints
Process Design
Operations Maintenance
Detailed Engineering
Installation
Project Definition
Lean Design
Lean Supply
Lean Assembly
Use
Production Control
Work Structuring
Learning Loops
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Traditional versus Lean

• Decisions are made sequentially by specialists
  and thrown over the wall
• Product design is completed, then process design
  begins
• Not all product life cycle stages are considered
  in design
• Activities are performed as soon as possible

• Downstream players are involved in upstream
  decisions, and vice-versa
• Product and process are designed together
• All product life cycle stages are considered in
  design
• Activities are performed at the last responsible
  moment

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Traditional versus Lean

• Separate organizations link together through the
  market, and take what the market offers
• Participants build up large inventories to
  protect their own interests
• Stakeholder interests are not aligned
• Learning occurs sporadically

• Systematic efforts are made to optimize supply
  chains
• Buffers are sized and located to perform their
  function of absorbing system variability
• Stakeholder interests are aligned
• Learning is incorporated into project, firm, and
  supply chain management

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Profitability Increase
36
Waste reduction in a design office
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Moving from lean projects to lean enterprises
the Toyota Way

• Base management decisions on long-term philosophy
  even at the expense of short-term financial goals
• Create continuous process flow to bring problems
  to the surface
• Use pull systems to avoid overproduction
• Level out the workload (heijunka) work like the
  tortoise, not the hare
• Build culture of stopping to fix problems to get
  quality right the first time
• Standardized tasks are the foundation for
  continuous improvement and employee empowerment
• Use visual control so no problems are hidden
• Use only reliable, thoroughly tested technology
  that serves people and processes
• Grow leaders who thoroughly understand the work,
  live the philosophy, and teach it to others
• Develop exceptional people and teams who follow
  your companys philosophy
• Respect your extended network of partners and
  suppliers by challenging them and helping them
  improve
• Go and see for yourself to thoroughly understand
  the situation (genchi genbutsu)
• Make decisions slowly by consensus, thoroughly
  considering all options implement rapidly
• Become a learning organization through relentless
  reflection (hansei) and continuous improvement
  (kaizen)

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Summary

• What is Lean Project Delivery?
• A third form of production system design, neither
  craft nor mass, adapted for capital projects.
• The lean ideal Give customers what they want,
  deliver it instantly, without waste.
• Where did it come from?
• Lean production was invented by Toyota, then
  adapted for construction by researchers and
  practitioners associated with the International
  Group for Lean Construction.
• Where is it going?
• From manufacturing to all industries,
  including those in which production systems take
  the form of projects construction, product
  development, research, software engineering, air
  and sea shipbuilding, custom fabrication, work
  order systems, health care delivery, oil field
  development.

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Workshop Objectives

• Understand Lean Project Delivery
• Where did it come from?
• What is it? How is it different?
• Prepare for the pre-construction phase of your
  projects
• Coordination and control through reliable
  promising
• Set based design strategy
• Maximizing value for money through target costing
• Collaborative design process
• Launch project planning
• Business case, stakeholder map, stakeholder
  values
• Constraints financial, location, regulatory
• Organizational and contractual structure project
  governance
• What will we start doing? What will we stop
  doing?

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Traditional Management Increases Variability
Plan Reliability Data

• Company 1 33
• Company 2 52
• Company 3 61
• Company 4 70
• Company 5 64
• Company 6 57
• Company 7 45
• Average 54

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The Physics of Coordination
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The Last Planner System of Production Control
44
Master Schedule
45
Functions of Master Schedules

• Demonstrate the feasibility of completing the
  work within the available time.
• Develop and display execution strategies.
• Determine when long lead items will be needed.
• Identify milestones important to client or
  stakeholders.

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Reverse Phase (Pull) Scheduling

• Produce the best possible plan by involving all
  with relevant expertise and by planning near
  action.
• Assure that everyone in a phase understands and
  supports the plan by developing the schedule as a
  team.
• Assure the selection of value adding tasks that
  release other work by working backwards from the
  target completion date to produce a pull
  schedule.
• Publicly determine the amount of time available
  for contingency and decide as a group how to
  spend it.

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Functions of the Lookahead Process

• Make work ready by identifying and removing
  constraints
• Shape work flow sequence and rate
• Match work flow and capacity
• Maintain a backlog of ready work
• Develop detailed plans for how work is to be done

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Constraints Analysis Design
Project Mega Bldg Report Date 3 Nov
C o n s t r a
i n t s ______________________________
_________________________________________________
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The Last Planner System of Production Control
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Quality Characteristics of Weekly Work Plans

• Definition
• Soundness
• Sequence
• Size
• Learning

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Reasons for Non-Completion
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Summary Recommendations for Production Control

• Limit master schedules to milestones and long
  lead items.
• Produce phase schedules with the team that will
  do the work, using a backward pass, and making
  slack explicit.
• Drop activities from the phase schedule into a 3
  week lookahead, screen for constraints, and
  advance only if constraints can be removed in
  time.
• Learn to make reliable promises.
• Track PPC and act on reasons for failure to keep
  promises.

59
Plan Failure 1

• Failed to transmit site plan package to the
  general contractor as promised. Reason provided
  conflicting demandsI was overwhelmed during
  this period. 5 whys revealed that the required
  time was underestimated for collecting the
  information needed because the Citys
  requirements for traffic analysis were different
  and greater than had been assumed.

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Can Last Planner be Applied to Design?
61
PPC on a Design-Build Project
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Case Study - Theater Project

• PPC for the various project teams
• Site/Civil 78
• Structural 35
• Enclosure/Architectural 62
• Mechanical / Electrical 55
• Theatrical / Interiors 52
• Project Support 85
• Total Average PPC 61.6

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Plan Failure Analysis 1
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Plan Failure Analysis 2
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Plan Failure Analysis 3
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Plan Failure Analysis

• Failures were generally the result of not
  understanding something critically important-as
  opposed to mistakes in calculation or otherwise
  within the design act.
• The fundamental causes of non-completion were
  failure to apply quality criteria to assignments
  and failure to learn from plan failures through
  analysis and action on reasons.

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Nature of the Design Process Implications for
Design Production Control

• PPC of design processes is not very high.
• Some type of task explosion or decomposition is
  needed in order to identify what needs to be done
  to make assignments ready to be performed.
• Given the nature of the design process, such
  explosion must occur near task execution.

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The Physics of Design

• Design is essentially a value generating process.
• Design generates value within constraints and
  competing purposes.
• Design is the domain of wicked problems.
• The flow of work in design is iterative and
  generative.
• Design criteria are the critical issue in design
  work flow control.

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Questions or Comments?
70
Workshop Objectives

• Understand Lean Project Delivery
• Where did it come from?
• What is it? How is it different?
• Prepare for the pre-construction phase of your
  projects
• Collaborative design process
• Coordination and control through reliable
  promising
• Set based design strategy
• Maximizing value for money through target costing
• Launch project planning
• Business case, stakeholder map, stakeholder
  values
• Constraints financial, location, regulatory
• Organizational and contractual structure project
  governance
• What will we start doing? What will we stop
  doing?

71
Lean Design An Overview
72
Needless (Negative) Iterations
From Lottaz, et al. Constraint-Based Support for
Collaboration in Design and Const. Jrnl of
Computing in Civ.Eng., 1/99
73
Set Based Design

• Set-based engineering has been used to name
  Toyotas application of a least commitment
  strategy in its product development projects.
  That strategy could not be more at odds with
  current practice, which seeks to rapidly narrow
  alternatives to a single point solution, but at
  the risk of enormous rework and wasted effort.
• It is not far wrong to say that standard design
  practice currently is for each design discipline
  to start as soon as possible and coordinate only
  when collisions occur. This has become even more
  common with increasing time pressure on projects,
  which would be better handled by sharing
  incomplete information and working within
  understood sets of alternatives or values at each
  level of design decision making e.g., design
  concepts, facility systems, facility subsystems,
  components, parts.

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Set-Based Design

• Preventing engineers from making premature
  design decisions is a big part of my job.
  (Toyotas Manager of Product Engineering)

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Set Based Design

• Toyotas product development process is
  structured and managed quite differently even
  than other Japanese automobile manufacturers.
  Toyotas product development
• Develops multiple design alternatives.
• Produces 5 or more times the number of physical
  prototypes than their competitors.
• Puts new products on the market faster than their
  competitors and at less cost.

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Negative vs Positive Iteration

• We suspect that Toyotas superior performance is
  a result of reducing negative iteration, and that
  the reduction is more than sufficient to offset
  time wasted on unused alternatives. Negative
  iteration occurs as a result of each design
  discipline rushing to a point solution, then
  handing off that solution to downstream
  disciplines in a sequential processing mode.

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Making Decisions at the Last Responsible Moment

• Whether or not one has the time to carry
  alternatives forward, would seem to be a function
  of understanding when decisions must be made lest
  we lose the opportunity to select a given
  alternative. We need to know how long it takes to
  actually create or realize an alternative.
  Understanding the variability of the delivery
  process, we can add safety-time to that lead-time
  in order to determine the last responsible
  moment. Choosing to carry forward multiple
  alternatives gives more time for analysis and
  thus can contribute to better design decisions.

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Advantages of Set-Based Design

• 1. Enables reliable, efficient communication.
• Vs point-based design, in which each change may
  invalidate all previous decisions.
• 2. Waste little time on detailed designs that
  cant be built.
• 3. Reduces the number and length of meetings.
• 4. Bases the most critical, early decisions on
  data.
• 5. Promotes institutional learning.
• 6. Helps delay decisions on variable values until
  they become essential for completion of the
  project.
• 7. Artificial conflicts and needless iterations
  of negotiations are avoided.
• 8. The initiator of a change retains
  responsibility for maintaining consistency.

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A Set Based Design Strategy

• Identify and sequence key design decisions
• For each decision, generate alternatives and the
  criteria for evaluating them
• Determine the last responsible moment for
  decision making
• Evaluate and choose from alternatives
• Document each key design decision alternatives,
  criteria, evaluation selection

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Workshop Objectives

• Understand Lean Project Delivery
• Where did it come from?
• What is it? How is it different?
• Prepare for the pre-construction phase of your
  projects
• Collaborative design process
• Set based design strategy
• Coordination and control through reliable
  promising
• Maximizing value for money through target costing
• Launch project planning
• Business case, stakeholder map, stakeholder
  values
• Constraints financial, location, regulatory
• Organizational and contractual structure project
  governance
• What will we start doing? What will we stop
  doing?

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Making a Virtue of Necessity

• Lower the river to reveal the rocks
• Systematically stress the production system to
  identify needed improvements
• Buffer the production system so experiments can
  be performed without risk of violating commercial
  agreements
• Price Profit Cost
• Artificially manipulate constraints to drive
  innovation

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How to lower the river on capital facility
projects

• 1) reduce the amount of money made available for
  design and construction of facilities with
  pre-specified functionalities, capacities and
  properties
• 2) increase the minimum acceptable ROI, or
• 3) increase the valued facility attributes
  required beyond what current best practice can
  deliver for a given cost.

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St. Olafs College Field House
85
Comparing Projects
Carleton Recreation Center St. Olaf Field House
Completion Date April 2000 August 2002
Project Duration 24 months 14 months
Gross Square Feet 85,414 114,000
Total Cost (incl. A/E CM fees ) 13,533,179 11,716,836
Cost per square foot 158.44 102.79
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Setting the Target Cost

• Assess the business case (demand, revenues),
  taking into account the cost to own and use the
  facility (business operations, facility
  operations, facility maintenance, adaptability,
  durability) as well as the cost to acquire it.
• Determine minimum acceptable ROI or maximum
  available funds.
• Answer the question If we had a facility with
  which we could achieve our specific purposes, and
  if we could have that facility within our
  constraints of cost, location and time, would we
  do it?
• If the answer is positive, and if project
  delivery is not considered risky, fund the
  project. If the answer is positive and project
  delivery is considered risky, fund a feasibility
  study to answer the question Can we have the
  facility we have in mind, will it enable us to
  achieve our purposes, and can we acquire it
  within our constraints?
• Start a feasibility study by selecting key
  members of the team that will deliver the project
  if judged feasible.
• Determine and rank stakeholder values.

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Setting the Target Cost

• Explore how the facility will perform in use
  through process modeling and simulation.
• Scope the facility that will deliver the values.
• Determine the expected cost if the facility were
  provided at current best practice.
• If expected cost exceeds available funds or
  violates ROI, attack the gap with innovations in
  product/process design, restructure commercial
  relationships, etc.
• If expected cost still exceeds available funds or
  violates ROI, adjust scope by sacrificing lesser
  ranking values.
• If the scope and values that support the business
  case can be provided within financial
  constraints, fund the project. Otherwise, kill
  the project.

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Project Definition Process
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Designing to the Target Cost

1. Allocate the target cost to systems, subsystems,
   components,
2. Form teams by facility system substructure,
   superstructure, envelope, HVAC, lighting, etc.
3. Establish a personal relationship between
   designers and cost modellers/construction experts
   in each system team.
4. Have cost modellers/construction experts provide
   cost guidelines to designers up front, before
   design begins.
5. Require designers to consult cost modellers on
   the cost implications of design alternatives
   before they are developed.

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Designing to the Target Cost

1. Incorporate value engineering/value management
   tools and techniques into the design process.
2. Periodically convene all teams together to make
   sure they are not sacrificing project-level value
   to local optimization.
3. When previously agreed, by meeting or beating the
   target cost, release funds for adding back lower
   ranking values or other scope additions valuable
   to the client.
4. Schedule cost reviews and client signoffs, but
   develop design and cost concurrently.
5. Use computer models to automate costing to the
   extent feasible.

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Tools

• Feasibility Study With Detailed Budget (Target)
• Engage all parties at earliest possible time
• Scheduling (At SRMC the end users were divided
  into clear groups for SDs and beyond)
• Use a room data sheet
• Full engagement from the Affiliate
• Estimating at the design table
• Empowerment to declare a breakdown
• Clear conditions of satisfaction to teams
• Willingness to say no (need to have or want to
  have)
• Target team matrix (Organize Teams)
• Adopt a Budget Realignment Approach and Tool

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Workshop Objectives

• Understand Lean Project Delivery
• Where did it come from?
• What is it? How is it different?
• Prepare for the pre-construction phase of your
  projects
• Coordination and control through reliable
  promising
• Set based design strategy
• Maximizing value for money through target costing
• Collaborative design process
• Launch project planning
• Business case, stakeholder map, stakeholder
  values
• Constraints financial, location, regulatory
• Organizational and contractual structure project
  governance
• What will we start doing? What will we stop
  doing?

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Workshop Objectives

• Understand Lean Project Delivery
• Where did it come from?
• What is it? How is it different?
• Prepare for the pre-construction phase of your
  projects
• Coordination and control through reliable
  promising
• Set based design strategy
• Maximizing value for money through target costing
• Collaborative design process
• Launch project planning
• Business case, stakeholder map, stakeholder
  values
• Constraints financial, location, regulatory
• Organizational and contractual structure project
  governance
• What will we start doing? What will we stop
  doing?