Lean Principles in Construction

Executive Summary

Toyota is a name that when seen brings an image of high quality, durability, cost/fuel efficient and best value for money in the car industry. The reason for such a high standard is that Toyota Production System has Pioneered and Implemented Lean Principles in Production system. These principles didn’t have the effect immediately in the start but at the last stages, it proved to have a greater worth for it. By implementation of Lean Theories and Philosophy, Toyota had got rid of much wasteful activities using Just In Time approach.

The understudy report consists of the Implementation of Lean Principles on a Construction Project which was significantly delayed due to lack of managerial qualities. The Client built a new Head office to shift all the activities from the previous offices in to the new one, but a delay to all activities was observed. It has been analyzed that the construction companies fail to give proper time to the initial Pre-Design and Design Phases and are more reluctant towards starting their construction.

The current method of working of the company is mapped and explained with the possible issues and problems are being enlisted. The Design & Build approach of Procurement was appraised and further improvements have been suggested. The second part of the report consists of the major and applicable Lean Principles and how they can be implemented in Construction Projects. This not only reduces the wasteful activities but also prove to be cost efficient as mapped. Lastly some merits of Lean Implementation on the construction project have been enlisted and conclusions are drawn.

NEW HEAD OFFICE OF COMMERCIAL BANK OF KUWAIT (CBK)

Introduction

The Commercial Bank of Kuwait is a well known Bank in Kuwait having its roots back in 1960’s. It began with a simple minded policy from just a small part of the property with the aim to handle the financial burden on the main bank of Kuwait; the National Bank of Kuwait. Being an old player in the country, the CBK decided to shift its old head office to the new location as the old building had many issues like less working space creating hurdles in modernizing the banking facilities. The old office was in the region of Maidan Hawally which is considerably famous for foreigners living in the region. The new head office of CBK is in the Centre of Kuwait i.e. Kuwait City which is the economic hub of overall State of Kuwait. In this project, Commercial Bank of Kuwait was the main funding source. The Project began in January 2007 and the construction of the Bank lasted till March 2009. Although the project was expected to be completed by June 2008 whereas only the construction phase had just finished till March 2009 and the final building being handed over by September 2009. The study of the project indicated that the Project was not only delayed yet was significantly over budgeted. The Project was approximately 30 % over budget and 15 months delayed. Moreover not only these issues affected the project but too many changes by the client were also a reason for the delay.

The delay in the completion of the CBK Project was due to two reasons. One being that the Chief Executive Officer of the CBK resigned due to some personal issues with Managing Director of the Bank and the other reason was due to the Financial Crunch throughout the globe. These two reasons caused changes in the project after a long halt to the construction till the new CEO was assigned as the requirements of the project were altered accordingly. Therefore only one person cannot be held responsible for the overall delay caused in the CBK Project.

According to Tucker (1998), a high level of management in Construction is very much essential for smooth flow of project. Thus it can be said that there were flaws in the design phase of the project and the lack of good management resulted in overall failed on-time delivery of the project. The Procurement method of the project was Design – Build keeping in view the needs and outcomes of the project. The Client (CBK itself) had future plans for further development which all seemed to be left in vain of further initiation due to such a mess created. There fore the Client took keen interest to map the overall processes of the project in order to learn the flaws that delayed the Project so as to further smoothen up its activities.

Working Philosophy in the CBK Project

Being appointed as an Assistant Project Manager by the Client (Commercial Bank of Kuwait), the task allocated was to analyze the overall performance of the CBK Headquarters project and prepare a report to learn the flaws and outcomes of the project. Such an exercise was done in order to generate preventive measures so that future projects may not be delayed much.

The report consists of a comprehensive analysis of methodology used for the Development of Headquarter of CBK and the maximum emphasize is given to the changes in the design i.e. the overall management of the design. The first step taken into consideration is the feasibility report or the outline of the project which is the first process in a project. A detailed approach in investigation is taken therefore, the Contractor (Ahmadiah Contracting-Kuwait), the team of Client (CBK), stakeholders and other parties involved in the project were consulted. All the processes are shown are Appendix – 1.

Method of Procurement

The method of procurement in this project was Design and Build. It is very much necessary to understand what this approach is by analyzing the method. From the client’s point of view, the success of the project is nearly decided by choosing appropriate method of procurement in the beginning. The common layout of the system can be seen in the figure below.

Fig.2 indicates that this system is very much suited for clients who typically pass their risk to the contractor and a close coordination is developed between the design and the contractor team. This enables to synchronize the time, cost and quality of the project in the true sense of good project management perspective. As the cost is pretty much decided in the beginning, the client is confident that all the further process is smoothen up. But the point to be concerned is that all teams should have proper knowledge of design and build approach. Mostly clients which have Design Build approach new into their project end up with the sentence that the contractor has made a lot of money out of this project. This can be true only if the client finds that the things mentioned in the proposal are not same as they should have been. According to Morledge et.al (2006), client should be in notice that:

* Design and Build method may change the formal aspect of most of the parties involved throughout the project.

* The contractual accountability of the involved parties can change according to the environment and need of the project.

Therefore according to Morledge et.al (2006), the client should study the procurement route to be selected from the technical, financial and legal angle, well in advance before the commencement of the bidding stage. By this not only the client but also the other stakeholders involved in the project can proceed safely which having loose much money.

From the explained context it can be seen that before initiating any step into the start of the project, if the client spends some time in understanding the possible pros and cons of the selection of procurement method, much discrepancies can be tackled easily. Moreover, the early involvement of the clients design team can lend a helping hand to the client in correct decision making. This type of activity seems to be very scarce in the CBK Project.

Processes of CBK Project

The working of the CBK Project can be seen in the form of a process map with each activity corresponding to a task. It can be seen that the working standard of the overall project is in the form of a three phase Design & Build method. The three phases can be as:

a. Pre-Tender Phase

b. Tendering Phase

c. Implementation Phase

The three phases of the project are mapped as processes and sub processes and the roles of different parties involved in the overall project are elaborated (Appendix -1). This exercise enables to understand the whole process easily.

Detailed Analysis of Processes

The main processes of the New Headquarters of Commercial Bank of Kuwait are discussed as follows:

§ Concept of the Project

The Chief Executive of Commercial Bank of Kuwait had a vision towards modernization in the country and the Bank it self. Therefore in order to compete the competitive banks in Kuwait the decision was taken to develop a state of the art building which will serve as an headquarter and economic backbone for the organization. Modernization was in the sense that latest high performance computers with ultra high-tech security were to be operated in the building.

§ Financial Issues

The Commercial Bank of Kuwait being the client as well as the funding authority finalized the concept of the project in order to have a brief overview of required budget of the project. For this, closed group meetings and seminars were arranged in order to clear any queries in the mind of the staff of the bank.

§ Planning Phase

The top management of the Commercial Bank of Kuwait was keen to modernize its new headquarters. For this to happen, special sessions were arranged in collaboration with Ministry of Planning, Kuwait and State Bank of Kuwait. International Banks like Barclays and HSBC were taken as role model and one model being finalized for the future development. This was a good step as to bring Western standards into an Arab Country.

§ Consultant Team

The consultant team (Al-Injaz Architects and Engineers) selected by the client was through competition and the team selected was an experienced one in modern construction.

§ Feasibility Report

A feasibility report was made in order to study the potential outcomes of the project and what could be the difficulties faced by the teams.

§ Integrating Clients Objective

The Consultant team enlisted the requirements of the client and steps were taken to meet the client’s goals. Mainly the client’s focus was a state of the art modern building and the whole project to be finished quickly without compromising Quality Standards. Therefore quality standards were also a must for the client. Through critical analysis of the data, the consultant team came out with the Design & Build approach of procurement.

§ Design Phase

The consultant team started their work in the perspective of Design & Build approach so that the tendering process can take place on time. Initial plan setup, architectural designs along with structural designs, cost estimation; all were done right on time.

§ Project Documents

The Projects brief long with all the details of the project including deadline of the project, estimated cost, drawings and plan etc are documented.

§ Document Review

The first document review meeting was held in which the top management of the CBK took part. All the project documents were critically analyzed and the Chief Executive and Chairman of Commercial Bank of Kuwait were briefed by the Project Manager about the findings of the report. It was decided that the design of the bank was little more luxurious as per the standard set and was exceeding the budget. So minor changes were made and final documents were setup.

§ Tendering Process

After finalizing the Project documents, pre-qualification of contractors was done and tenders were called for the development of New Headquarters of Commercial Bank of Kuwait. This was done by the Bidding Committee assigned by the Client which was in close contact with the client during the tendering process.

§ Bidding Documents

Confidential bidding documents were received before the deadline and handed over to the client.

§ Bid Evaluation

The client selected the contractor with the lowest bid and consulted the consultant team and the project management team in order to approve the bid. Upon the approval from the teams, the client approved the Contractor (Ahmadiah Contracting, Kuwait) and informed the bidding committee.

§ Contract Sign

The Bidding Committee arranged a contract signing session in which the contract was signed between the two parties. It was assured that the detailed design would start immediately and the project would be finished on time and in budget.

§ Initial Design

The design team of the Contractor (Ahmadiah) started the initial design of the development of New Headquarters of Commercial Bank of Kuwait. The consultant team and the project manager of the client were also involved in this phase and regular meetings with the client were taking place. During this phase proper site survey and investigation was done and the design aspects were altered accordingly.

§ Interior Design

The interior designing of the CBK was given much more importance in order to meet the quality standards set by the client. The other reason was to meet the maximum security levels of the requirements of the project.

§ Provision for restaurant

In order to serve the employees of the CBK, it was mentioned in the objectives of the client to provide the catering service to the staff so that at lunch time, the staff can enjoy the atmosphere and have a chat and meeting at the same time along with lunch.

§ Design Proposal

After finalizing the initial design of the CBK, a design proposal was prepared along with the time and cost estimates for approval from the Client.

§ Final Review

The client, consultant team and the project manager set up a meeting in order to critically analyze the proposal and upon approval from the client, the contractor proceeds further.

§ Final Design & Plan Layout

Once the proposal was finalized, the design team of the contractor started to work on the detailed and comprehensive design of the project. The HVAC, electrical works, the building services including CCTV arrangements, the infrastructure of the building, all were done according to the sub-contractors co-ordination. The final layout of what is to be developed appeared on drawing charts and Auto-Cad drawing were prepared.

The Step wise proceedings of the design phase of the CBK project starting from the Client’s input and ending at the Contractor’s output can be seen in the Fig.3.

§ Final Agreement

With slight alterations in design and requirement by the client, the contract was review and the construction phase was to be started.

§ Construction Phase

The first step of the construction phase was the site acquisition, construction of temporary offices for the staff as well as design team. For this to happen the sub-contractors were put on job and the heavy construction machinery was brought on site.

§ Final Drawings Implemented on Site

With the start of working on the construction site, the first step was to excavate the area to be constructed upon. The construction phase started to be as smooth as predicted.

§ Time & Quality Checks

The project manager of the client (CBK) had frequent visits to the site which resulted in strict control over the time and quality issues. A few incidents took place in which the contractor was not up to the mark as stated in the detailed drawing specifications. For instance, the project manager managed to have a look at the steel standards adopted and found that in the beams, low quality steel was used and was further sent for testing in the laboratory.

The overall view of the working of the teams in the CBK Project can be seen in Fig.3.

§ Documentation and Review

A very important aspect of the CBK project was that every thing was documented and latest computer software such as Primavera was used on the site. The Client’s project manager had an access to it. Some clashes went up due to delay in the project beyond the critical path which was referred to the client.

Possible Issues with the Current Method of Working

Different types of issues arose during the project life cycle that lead to certain unexpected failures during the project. Following table enlists the main issues:

The above mentioned issues were found to have a significant impact on the working of the CBK project. The need of the future and to be successful in the field of construction is by analyzing the short comings of previously done processes. To enhance the working and construction processes by the client in the future, the forth coming recommendations in the form of Lean perspective in construction have been defined. All the working can be seen in Appendix -1.

ENHANCED WAY OF HANDLING COMMERCIAL BANK OF KUWAIT PROJECT

Introduction to Lean

According to Egan (1998) and Latham (1994), the construction industry has changed significantly in the past decade, especially the UK’s construction industry. Much emphasis is now given to improve the construction industry by analysis the working methodology of the industry. By analyzing, one can rectify the short comings and further improve that to make a win-win situation. According to Koskela (1997), construction industry cannot be a regarded as a “rich cultured” industry, because the way of doing work, the procedures and outcomes are nearly same as they were years ago. To improve this, the construction industry had to be linked with production and manufacturing industry. The reason is that although the end product of both the industries is entirely different, yet if the working principles of both industries are studied, they can be regarded as identical.

According to Egbu (2010) and Towill (1997), construction industry can be regarded as a manufacturing industry. If we look at the production or manufacturing industry, for instance a car industry, the end product is a car, which was the project of the factory (Muhlemann et al., 1992). In construction industry, the end product is a building, house, a dam etc, which is the project for the construction factory/industry. Taking this, approach, Koskela (2000) introduced Lean principles in construction industry’s perspective. He argued that the manufacturing industry has set of production theories which when applied to the construction industry, the results can be significant. When seen the time-line of the car manufacturing industry, for instance, we can see that the car manufacturing has changed drastically over the past century. The reason being that the working principles adopted by production industry has polished itself over time again and again, when such principle be defined and implemented on construction industry, the end product can be enhanced (Koskela, 1992).

Lean thinking is the concept put forward by Womack and Daniel (1996) in which he describes to think every possible aspect in a leaner way. Thus by minimizing single repetitive step can be a step forward towards implementing lean in our daily life. Lean production system was adopted and implemented by Toyota Production System through out it’s time-line of production activities. Liker (1998) recognizes Toyota as the pioneers of lean principles which have brought a revolution in its production activities for more than a century. This is done by proper planning the supply chain activities, minimizing the wasteful activities, etc. By the introduction of 5S technique, Kanban and others, Toyota has flourished significantly in the production industry, whereas, the construction industry is far away from these concepts. Summary of 14 points as set by Toyota Production System and enlisted by Liker (2004), are as follows:

1. Base Your Management Decisions on a Long-Term Philosophy, Even at the Expense of Short-Term Financial Goals.

2. Create Continuous Process Flow to Bring Problems to the Surface.

3. Use “Pull” System to Avoid Overproduction.

4. Level Out the Workload (Heijunka).

5. Build a Culture of Stopping to Fix Problems, to Get Quality Right for the First Time.

6. Standardizes Tasks are the Foundation for Continuous Improvement and Employee Empowerment.

7. Use Visual Controls so no Problems are Hidden.

8. Use Only Reliable, Thoroughly Tested Technology That Serves your People and Processes.

9. Grow Leaders who Thoroughly Understand the Work, Live the Philosophy, and Take it to Others.

10. Develop Exceptional People and Teams who Follow your Company’s Philosophy.

11. Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping them Improve.

12. Go and See for Yourself to Thoroughly Understand the Situation (Genchi Genbutsu).

13. Make Decisions Slowly by Consensus, Thoroughly Considering All options; Implement Decisions Rapidly (Nemawashi).

14. Become a Learning Organization Through Relentless Reflection (Hansei) and Continuous Improvement (Kaizen).

Thus by closely looking and understanding the above mentioned principles, we can judge that how successful a company can be when adopted such principles. By using Kanban, much of the waste can be removed. The fact is to carefully see and analyse the company performance and take out the shortcomings.

Integrating Lean with the CBK Project

Construction industry is now in a phase of adapting new procedures and methods for its improvement and to increase its efficiency. This can easily be done by integrating lean philosophy in the construction industry (Jorgensen and Emmitt, 2008 & 2009). Liker (2004) has condensed the above enlisted 14 key principles of Toyota Production System into 4 main categories/sections according to their nature. These are:

1. Long-Term Philosophy

2. Selection of Right Process

3. People and Parners development can lead to value generation

4. Gradually problem solving

These 14 points of Toyota Production System are very well condensed in the above mentioned four points. When thinking about construction, Long-term philosophy can very much help in implementation of lean principles. According to Arbulu and Zabelle (2006), to standardize work it is very much necessary to follow a guideline. The five stages vision, skills, incentives, resources and action plan can be idealized according to the CBK Project. Thinking Lean while keeping in view these 5 stages can very well prove to be successful in the project.

Vision

Defining a vision is the first step towards the start of a project. These not only assist in the further journey, but also remove any questions that may arise in the overall team in the project. This exercise was found to be completely during the construction of New Head office of Central Bank of Kuwait Project because everything was mixed and jumbled up during the last stages of the project. Defining a vision thus give a road map towards success and the vision is usually giving for the next couple of years, which elaborates the broad thing of the company in front of others. Only thing that matters is the top management team to be strong to take decisions which lacked through out the CBK Project.

Skills

Skills come first after a vision is set. In fact a vision cannot be defined without the proper knowledge of the skills that a company possesses. In order to be successful in implementation of Lean in the construction industry, the company has to design or upgrade its staff development program. Thus skills very much distinguishes between the current adopted working methodology with the new working method i.e.; Lean. Furthermore, proper knowledge of the companies profile is also very beneficial in perusing successful projects. Although the staff of the CBK Project is very much skilled yet some lack in understanding of basics in construction industry is found, for instance the top management dealing first time with the Design & Build procurement method.

Incentive

Incentives are good in the sense that they keep the workers at work motivated. The incentives can be in the form of money or by applauding someone’s good work, this make the worker feel happing. To implement lean into the construction industry is something to make a great change into the system, thus by introducing incentives can encourage workers at work and be happy to work and accept the change.

Resources

Resources can be regarded as the backbone of a project. Insufficient resources and funds may load to a halt during a project. In order to smoothen the working and progress of the project, it should be made assure well in advance that there are enough funds to support the working. The financial crunch appeared during the construction of the CBK project which significantly halted the progress of construction activities.

Action Plan

Like setting up a clear vision right in the start of the project, a good action plan is also equally important as a right action plan sets up guidelines for the project team. Working on the correct action plan, incorporates any unsubstantial changes and alterations in a project. A good action plan cannot be seen in the CBK project which lead to some unwanted results in the last stages of the project.

Improvement by Implementation of Lean Principles

The 14 principles of Lean Production system used by Toyota Production System and stated by Liker (2004) are being implemented into the CBK Project which gives a more Leaner and good value of money look to the project. Not only the cost of the overall project is properly utilized but also it is a quicker approach Womack and Daniel (2005). The enlisted problems in the CBK Project (as stated in the start) can be resolved using the Lean Principles. Following are the Lean principles directly implemented to the improvement of CBK Project.

1. Long-Term Philosophy

The long term philosophy in the context of lean can be explained as:

I. Base Your Management Decisions on Long-Term Philosophy

Long term philosophy gives a plate form for an organization to initialize the start of future prospects. Long term approaches are usually declared in the form of upcoming 5, 10, 15 or 20 years in which it is clearly briefed about the future plans of the organization. Commercial Bank of Kuwait should introduce this approach right from the start of future projects. This will enhance the managerial skills of the organization and an approach to solve all the problems will be upgraded (Carroll, 2002) and hence shown in Fig.4 after application.

2. Process Improvement

The process improvement section of the Lean principles consists of following aspects:

II. Create Continuous Process Flow to Bring Problems to the Surface

This principle of Lean suggests that the working criteria of the company should be such that it is running smoothly, fast and in an accurate manner. In this way any problem that arises during the process, may be handled quite easily. This principle can be implemented in the design and the planning phase as it removes many problems which are caused by starting different activities at same time.

Such exercise was completely missing in the CBK Project. Multiple tasks were started at the same time, which lead to misunderstandings in the project. Smooth flow of work was least found and by implementing this technique the smooth flow of work can be seen.

III. Use “Pull” System

Pull system helps to reduce the un-necessary work that is done during the project. The use of pull system can be used in the pre-project and pre-construction phases during the design phases as this will help to control the time lapsed between the completion of the drawings and the designing.

Un-necessary meetings and suggestions were found during the execution of the Pre-Tender phase whose burden, the overall project planning had to face. By introducing Pull system, much waste full activities can be overcome.

IV. Level out the Workload

The workers at work shouldn’t be overburdened at any time of the project. This not only applies to the Labor but also to the Design Team. When it comes to the labor, it should be taken care off that every labor has equal work allocated to him and work load should be calculated according to the time available. Similarly the Design team should be