2014 lci conference wa tgriffin public

Early Implementation of LeanEarly project phase planning for an integrated Lean

implementation and its impact on project value optimisation

Lean Construction Institute ConferenceAugust 2014

Tim [email protected]

0408 815 623

SECORA Pty Ltd

Adding the Human Touch

Trademarks and Copyrights

The contents hereof contain proprietary trade secrets that are the private and confidential property of SECORA. Unauthorized use, disclosure, or reproduction of any kind of any material contained in this presentation is expressly prohibited. The contents hereof are to be returned immediately upon termination of any relationship or agreement giving user authorization to possess or use such information or materials. Any unauthorized or illegal use shall subject the user to all remedies, both legal and equitable, available to SECORA© 2014 by SECORA Consulting Inc. All Rights Reserved.

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SECORA Americas• 3 Partners• 4 Managers• 25 Consultants• Office: Tampa

SECORA Europe• 3 Partners• 4 Managers• 25 Consultants• Office: Frankfurt

SECORA Asia-Pacific*• 5 Partners• 50 Consultants• Offices: Sydney - NSW

Perth - WA

Company Regional Overview - Global Organisation

* Current regional focus area for SECORA growth14

SECORA Singapore*• 2 Partners• 10 Consultants• Office: Singapore


Company Overview - Our Methodology

SECORA is a global consulting company specialising in delivering measurable productivity improvement and lasting change through knowledge transfer, process analysis, optimisation, training and process design.

We typically engage with our clients using a 3 phase process: First we seek to understand the client’s environment, organisation,

challenges and problems by collecting qualitative and quantitative data.

We then analyse the data and translate it into useful insights and diagnostic information that can be used to identify opportunities and develop improvement solutions.

Finally we support* implementation (& execution) so that our clients realise genuine business impact and benefits from the engagement and the new knowledge and experience is retained by the team.

Support *= As much or as little support as the client requires.

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www.secora.com.au


The deployment philosophy of ABI is shownin this simplified diagram on the right.The ABI Model shows how you can improvethe efficiency & competitiveness ofprocesses and how they can be modified toimprove performance & overall capability.Imagine the 9 ABI building blocks areforming a pyramid. Each layer builds on,and enhances, the one below forming aBusiness Improvement Culture.

SECORA Applied Business Improvement (ABI)

The SECORA Modular Approach to ABI

See www.secora.sg13

Note: the ABI methodology is used in projects but client personnel can/ w ill be trained in ABI if required


Tim Griffin

Mechatronic Engineering and Commerce Background

6 Sigma Black Belt with BHP Billiton at Olympic Dam

Business Improvement Manager with Origin Energy’s Major Development Projects group

Senior Engineer on the Olympic Dam Project responsible for Value Improvement Practices

Vineyard and Wine Label Manager


Purpose & Outcomes

This presentation will…. Highlight the benefits of early integration of Lean

Construction in the project delivery life-cycle Demonstrate how Value Optimisation can be

augmented using Lean Construction Principles Discuss the changes in approach, methods, behaviour

& thinking which are required to integrate Lean Construction into the early stages of the project life cycle

By the end of this presentation you’ll have an appreciation of where Lean Construction fits in the early stages of a project & the change required to integrate it.


Lean Construction – Early ExampleVenice’s Arsenale

Venice developed methods of mass-producing ships in the Arsenal, including the frame-first system to replace the Roman hull-first practice.

The Arsenal Novissimo was begun in 1473. It enabled the creation of a system similar to an assembly line, in which hulls were constructed in the newer areas of the Arsenal before being fitted out in the old Arsenal.

At the peak of its efficiency in the early 16th century, the Arsenal employed some 16,000 people who were able to produce a whole ship each day

The Arsenale could fit out,arm, and provision a newly-built galley with standardized parts on a production-line basis not seen again until the Industrial Revolution.

Achieving Improvement is about Common

Sense


Resource Projects Success Criteria

Maximising Net Present Value (NPV) Minimising Total Life Cycle Cost (TLCC) Optimising project development cycle times

Undertaking project development activities in the shortest possible duration whilst maintaining an appropriate balance between quality, operability, cost and schedule

Achieving or exceeding planned production rates Meeting the market requirements for the product

specification


NPVProject Value

Revenue

Capital Expenditure

OtherContingency

Indirect Costs

Direct Cost

e.g. LabourMaterials

Plant Equipment

e.g. SubcontractorsCommon Distributables

Owners Team

Operating Expenditure

OtherContingency

Sustaining Capital

Fixed Costs

e.g. OverheadSalaries

Variable Costs

e.g. MaterialsUtilities


Project Delivery Processes

Project Definition

Concept Design

Func-tionalDesign

DetailDesign Sourcing

/ TenderExecution(Delivery) Operation

Engineering & Design

Identify Select Define Execute Operate

Identification Selection Definition Execution Operation


Opportunities to Impact Value

Technology SelectionProcess Simplification

Fit for Purpose

Constructability ReviewsProcess Reliability

Minimum Standards and SpecificationsPredictive Maintenance

Design-to-CapacityEnergy Optimisation

Value EngineeringConstructability Reviews

Constructability Reviews

Project Definition

Concept Design

Func-tionalDesign

DetailDesign Sourcing

/ TenderExecution(Delivery) Operation

Engineering & Design

Rigorous Project & Risk Management

User Requirements Specifications

Impa

ct o

n Pr

ojec

t Val

ue

Waste Minimisation

Based on IPA Value Improvement Practices


Lean Impact on Cost Performance

Exceptional cost performance with early Lean integration

Target Cost PerformancePossible utilisation of BIM

technology etc.

Cost Performance – Relative value for each dollar spent


Project Performance

Completed EarlierCost Less

Lean introduced as a recovery fix

Poor front end loading and delivery

Execution


TIM WOODS – Categories of Waste

1. Transportation 2. Inventory 3. Motion

Inefficient, non-necessary, non-value adding movement of material, information or peopleE.g.: Poor crane management , low speed lift ing systems or unsuitable transport & logistic methods/ systems

Inappropriate levels (high or low) of material, goods or work in process (including paperwork ) and informationE.g.: Entire draw ing sets at workplace. M ixed/ unidentified materials or storage areas.

Excessive people movements, actions & effort driven by poor ergonomics, process layouts, workplace design/organization or configuration Example: Materials & information not located at the work area. Stairs, obstacles no ‘Point of use’ storage.

5. Over Production4. Waiting 6. Over Processing 7. Defects / Rework

Delays & waiting resulting in idle people or assetsExample: Queuing, unbalanced activities, over allocation of people, sharing of tools and equipment

Difference between what is produced and the specification, resulting in scrap or reworkExample: Adjusting pre-assembled pipes, cutting & re-welding, return of components which have been ordered w rongly

Inappropriate levels of processing, complexity or non standardization that results in doing more than what the customer values (or requires..and wants!)Example: Special welding procedures & testing due to lack of standards. 10 hr fire-resistant doors in a 2 hour fire-resistant wall.

Difference between what & when the customer requires the product and what is actually producedExample: Pre-assembled material transported to the work area too early. Parts of the job getting too far ahead of the rest.

The miss application of skills and/or overloading resources. Lack of workforce engagement in CI.

8. Skills

Example: How & Why Lean Works During Construction.

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Managing Resistance to Lean in the Early Phase

Resistance to change, such as a Lean implementation, is highly probable

On a large project the timeframes are long and cause and effect is elastic

Barriers to implementation include: Perception that Lean is seen as too complicated A lack of knowledge of how it works Lack of interest in participating Seen as too time consuming


The Transition Curve

Early integration starts with a smaller project team

Late adoption will coincide with a team expansion/ mobilisation

Early introduction of Lean on a Project can help create a critical mass

The earlier Lean processes are implemented and proven the more they become part of the project’s culture

Shock

Denial

Frustration

Depression

Exploration

Integration

Problem Solving & Decision Making

Perfo

rman

ce

Time


Overview of Value Optimisation ToolsPhase Value Optimisation

ToolWhat ? Why ? Relationship to

LeanExpected ROI / Benefits

Project Definition

User Requirements Specifications

Sets businessrequirements

Define project deliverables

Specifies value Reduces scope creep, over specification

Project Framing Define critical success factors

Create teamalignment

Identifies key value drivers

Prevents rework through common understanding of project approach and priorities

ConceptDesign

Technology Selection Review and select technology options

Select best technology Lowest capital cost and through life costs

Process Simplification Eliminate items that do not meet business needs

Ensure all items of project add value

Core Lean philosophy Ensure process performance

Fit for Purpose Review design approach Define design specification

Reduce overproduction

Allows identification of over engineering

Waste Minimisation Reduce waste products Reduce emissionsfrom by product waste streams

Reduce overproduction

Reduce environmental impact

Construction Strategy/ Constructability Reviews

Specify how project is to be built

Ensure project can be built

Provides opportunity to specify Lean construction methodology e.g. modularisation

Reduce construction “waste”, optimise offsite labour

Process Reliability Review possible system failures and required maintenance

Generate maintenance cost forecast. Can meet requirements?

Opportunity to utilise 6 Sigma tools

Maximise revenue and reduce OPEX through reduction in unscheduled downtime and OPEX

Functional Design

Predictive Maintenance

e.g. utilisation of CBM where possible

Reduce planned maintenance and

Reduceoverproduction of maintenance

Reduced OPEX

Detail Design

Design-to-Capacity Ensure design can meet requirement

Identify excesscapacity

Will result in anunbalanced process

Reduction in capital spend

Energy Optimisation Analysis of energy use Reduce energy consumption

Identify waste Reduce OPEX


Identifying key value drivers and critical success factors.Understanding of business priorities

Project Framing

Project FramingWhat Is It?

A structured approach towards aligning objectives, value drivers and critical success factors.

WhyThe Deliverables?

Develop a coherent, decision driven road map. Reduce ambiguity and avoid planning inefficiencies early in the project phase.

Relevance to Lean


User Requirements Specification

User Requirements Specific

What Is It?

The User Requirement Specification, is a complete, clear and unambiguous statement of the project requirements in measurable terms. The User Requirements Specification should identify exactly what the business requirements are and lists all relevant issues and criteria with respect to delivering those requirements.


Avoids misunderstandings as to project deliverables and ensures that outcomes are consistent with the business objectives.

Relevance to LeanA key determinant of value when identifying value and non-value adding design elements.An opportunity to gain formal endorsement for Lean


Process Simplification

Process Simplification

What Is It?

A disciplined method used during design aimed at eliminating or modifying items that do not contribute to meeting business needs.


Confirm the value of selected components of a project.Improve the economics of the project by elimination of, reduction, or substitution of these components with lower cost alternatives that perform needed functions.

Relevance to LeanProvides an opportunity to utilise value stream mapping, understand production flows, analyse production and level process


Technology Selection

Technology Selection

What Is It?

Searches for production technology outside of the company (or, in some instances, in other divisions within the company) that may be superior to current practice.


Select technology that best meets business objective such as: Economic criteria, operability, on-stream time, integration, utilities consumption, flexibility, raw materials, environmental impact.

Relevance to Lean What can be brought across from other industries, e.g. Flow of information from automotive or defence to mining.

Slide 22


Fit for Purpose

Fit for PurposeWhat Is It?

Validation of project objectives and establishing the corresponding fit-for purpose design approach that best correlates with business needs.


Set what balance of cost vs. reliability, expandability, automation etc., best fits the project's needs.Sets design factors

Relevance to Lean Target over or under design (avoid overproduction)


Waste Minimisation

Waste MinimisationWhat Is It?

An approach used during design to minimize the production of waste products. Such an approach might add additional equipment or examine alternate process technologies that have lower waste sidestreams.


To add value to the project by reducing or eliminating non-useful streams that minimize environmental impact.Prevent, Recycle/ Reuse, Reduction, Treatment

Relevance to Lean

Slide 24


Design-to-Capacity

Design-to-CapacityWhat Is It?

An evaluation of the maximum capacity of each major piece of equipment. Tests if a “safety factor” is included to allow for additional catch up capacity of some production increases.


Clarify the impact of capacity decisions of major equipment on the capacity of the overall facility and future expandability.

Relevance to LeanCan be assessed via a value stream mapKey principle of process balancing

Slide 25


Value Engineering (VE)

Value EngineeringWhat Is It?

A method for optimising the cost and performance of a facility. A function oriented, systematic approach to eliminate and prevent unnecessary costs.


The purpose of a VE study is to improve decision making and obtain lowest life-cycle cost without reducing quality.

Relevance to Lean

Value Engineering draws heavily on user requirementsWorkforce levelling, supported by task levelling to ensure resources are optimisedCAUTION: Value Engineering can turn into Capital Cost Reduction, deleting elements that will result in higher productivity during construction and operation.


Value Engineering ProcessK

ey A

ctiv

ities

Option Generation and Discussion

Workshops

• Review of progress• Review boundary areas• Hold option generation workshops by area of focus

• List of options for further exploration

Modelling and Analysis

• Assess timing for individual options• Benefits validation and secondary impacts• Leverage engineering data, past experience to assess operability, risk

• Cost-benefit analysis allowing for:

• Timing• Capital required• Operability• Level of Risk

Option Refinement

• Review the outcomes• Narrow down options and identify areas for further investigation• Finalise recommended options based on criteria

•Assessments reviewed and vetted by:

• EPCMs• Owner’s Team• Business Eval.• RecommendationsD

eliv

erab

les

Initial Workshop

•Targets and Objectives• Process Briefing• Review of previous work• Brainstorming of potential opportunities

• Shortlist of the Top Opportunities


Value Engineering - Examples

Large mining operations planned airfield

Airfield built for long term peak capacity including taxiways and multiple parking areas

Initial use of the airfield was far below peak forecasts

Value Engineering identified an opportunity to build the airport in phases.• taxiways removed• Parking bays deleted• Terminal despeced


Workforce Levelling

High level analysis of work and identification of opportunities for sequencing, decoupling or offsite fabrication

Utilisation of pull planning to utilise available resources efficiently

Flow on requirement for work package level job levelling.

Reduce accommodation requirements (for remote projects)

Prevent loss of Lean culture

Date

Peak onsite workforce

Peak onsite workforce reduction


Job Levelling

Total Resource RequirementsBefore Levelling

Work Package 1

Work Package 2

Work Package 3

Total Resource RequirementsAfter Levelling

Cumulative impact of Job Levelling of multiple work packages, resulting in reduced peak labour demand

Levelling carried out through analysis, e.g. based on BIM or time in motion studies


Value Engineering - Examples

Permanent crainageto reduce mobile crainage use during construction shutdowns.

A relatively large capital cost that can be targeted during cost reduction activities.


Construction Strategy/ Constructability Reviews

Construction Strategy

What Is It?

Analysis of the design, usually performed by experienced construction managers, to reduce costs or save time in the construction phase.


Reduce Total Installed CostsReduce Schedule DurationsDevelop Construction Driven SchedulesEnsure the Project is Fundamentally ConstructibleDevelop an ongoing “log” for tracking ideas

Relevance to LeanPresents an opportunity to define strategy for modularisation, Pull Planning, JIT delivery, Standard work, 5S implementation, BIM

Slide 32


Building Information Management (BIM)


Summary

Early integration of Lean will increase the probability of meeting and exceeding your project targets.

The biggest challenge is generating the need and acceptance for Lean.

There are Project Management/ Engineering practices where Lean thinking and tools can be introduced

The best approach is to develop knowledge and demonstrate proven success


Understand, Analyse, Implement & Train

Tim Griffin [email protected] 0408 815 623

2014 lci conference wa tgriffin public

Documents

methodology secora

secora consulting

secora pty

human touch secora americas

business improvement

tampa secora europe

secora modular approach

abi methodology