Exploration of parallels in Lean and VM methodology in construction

Exploration of parallels in Lean and VM methodology in construction Steve Parker, Institute of Value Management

Our credentials Me Value Management Risk Management Benefits Management Lean Six Sigma You Lean? VM? Both?

Definitions Lean Construction is a production management-based project delivery system, emphasizing the reliable and speedy delivery of value. The goal is to build the project while maximizing value, minimizing waste, and pursuing perfection – for the benefit of all project stakeholders. Value Management (including VE) is the process of making explicit the functional benefits of a project and appraising those benefits against a value system determined by the stakeholders. VM is strategically and organisationally focused and ensures strategic fit. VE is technically focused on space, elements and components and provides the necessary functions at the lowest cost and at a specified quality.

Core proposition Lean focuses mainly on process (how something is done) Organisational or operating process; management process; design process; production process or a project delivery process (main drivers - increased efficiency, reduced waste and cost) Value management focuses mainly on product (what something is) Project scope, project design, system design, component design or widget design (main drivers – required function, reduced waste and cost)

Approach to improving value Lean (Six Sigma) DMAIC phases – How to run a process improvement project Define the problem and the objectives. What do we need to improve? Can we measure this? Analyse the process. Define factors of influence. Identify and implement improvements. Assure that improvements will sustain. Value Management (VE) Job Plan phases – How to run a product improvement project Review and define the current project conditions. Define, chart, analyse and prioritise the project functions. Identify other ways to perform the project’s functions. Select the ideas that offer the potential to improve value. Develop the best ideas with supporting business cases. Report or present the ideas and how they should be implemented.

Objectives of value improvement Lean Construction Value Management Improve predictability Reduce design and construction cost Identify vision and objectives Define aligned scope Improve function Distinguish between needs vs wants Reduce design and construction time Rationalise resources Identify blockers to activity Eliminate over design Better performance visibility Reduce whole-life cost Option evaluation

Benefits of value improvement Lean Construction Value Management Shorter programme Demonstrable ‘line of sight‘ Design process cost savings Platform for benefits modelling Construction process cost savings Appropriate design Efficient design with regard to function Valued intangibles Decision audit trail Lowest whole-life cost Increased programme reliability Better working practices efficiency

Tools for value improvement Lean Construction Value Management DMAIC (PDCA, Kaizen) VM Job Plan (Charrette) Voice of Customer Value Tree Critical to Quality Client Value System Process Mapping Function Analysis Value stream mapping FAST Diagrams 8 Wastes Function/Cost Analysis 5Y’s Relative importance Statistical analysis Brainstorming

More tools . Lean Construction Value Management Pugh Matrix Multi-Criteria Analysis Quality Function Deployment Value metrics / Value Index Value for Money Ratio Discounted Cash Flow Cost Benefit Analysis Functional Performance Specification Contract value engineering clause Visualisation Management 5S’s Collaborative planning and buffer scheduling NEC (or other) collaborative contract

In common, they focus on . What the client precisely needs or wants Value improvement and value for money Facilitating stakeholder engagement and consensus War on waste Eliminating unnecessary cost

Causally, they both . Drive learning and knowledge transfer Drive continuous improvement Deliver innovation Improve communication Improve team working and morale

But individually . Lean focuses on improving process or production effectiveness and efficiency Value Management focuses on improving product function and form

Discuss . Should the Lean Practitioner in construction have Value Management techniques in his/her toolbox and vice versa?