Note that I will capitalize and italicize the word LEAN as a way to differentiate it from the norm

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During this presentation I will be asking you several questions. In some cases we will see your responses. Most we will not.

You might find it useful to keep a pencil and paper handy and when I ask a question, note the slide number and the question number and write down your answer. Doing this might reinforce what you learn in the next hour.

Also, we will make the presentation available on the website in PDF format for you to download later. And Nicole advises that you can also request a recorded version as well.

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There are many business drivers for LEAN, and much research and field study has been done on the subject. Without going into detail, here are six examples.

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These are just a few excerpts from Barry LePatner’s book.

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The problem is not restricted to USA as evidenced by this British survey.

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These two key not-for-profit organizations are doing research every day on real projects and sharing these experiences with their members.

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Having forgotten so much of our history, some of which we will review shortly, we find that New-Old Thinking is required if we wish to make a paradigm shift in the way we get benefit from projects.

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These are but a few of the New-Old Thinking ideas. In fact, what we will discover is that these “new” ideas are actually rooted in Henry Ford’s production systems which are over 100 years old. You will see, in the next few slides why these ideas are not as new as they might appear to be.

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1. The classic definition of LEAN is …

2. The term “LEAN Manufacturing” was coined by Womack and Jones in their 1990 landmark book “The Machine that Changed the World.” We can see that their crystal ball was spot on.

3. It is interesting to note, however, that the person who is given credit for being the architect of the LEAN manufacturing movement, Taiichi Ohno, gave all the credit to Henry Ford.

4. When we read Henry’s 1926 book “Today and Tomorrow”, it is evident that Taiichi was not just being modest. When Henry wrote this book he was 2 years past producing the 10 millionth Model T Ford automobile.

Let’s therefore go back to the beginnings of the LEAN movement and discover why many call Henry “The Father of Lean Manufacturing.”

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It is very important to understand that Henry did not just make automobiles. Many people say “Well, LEAN is just for manufacturing mechanical items like cars” but we see that Henry was into many, many industries. And all utilized his LEAN work processes.

So what exactly was Henry doing that was radically different than what others were/are doing?

With respect to chemicals manufacture, the following are examples of his products or use of chemicals in his processes: ammonium sulphate fertilizer, benzol (benzene), cement, Fordite (artificial rubber made from straw, sulphur, and silica), artificial leather (castor oil, ethyl acetate, benzene, linen cloth), wood distillates (pyroligneous acid, charcoal briquettes, tar, pitch, creosote, flotation oils, methyl alcohol, methyl acetone).

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1. Henry’s fanaticism began with eliminating waste. Henry’s greatest criticism of Fredrick Taylor and Scientific Management was “Why is Taylor so obsessed with getting people to work harder and more efficiently to do things that actually didn’t need to be done?”

1.a. It also stands to reason that by eliminating waste one becomes naturally Green in their work habits. We mention this because we hear today that it costs more to be Green. This is a myth.

1. One example of waste reduction in Henry’s factories: engine shipped on pallet, but not in a crate:

• Henry expected his transportation personnel to take care of his products, so there was no reason to pack against rough handling.

• Once the engine reached the assembly factory, it was carefully removed from the pallet, and the pallet was transformed into a floorboard for a Model T.

2. Henry coined the phrase “Wage Motive.” It is entirely different from “Profit Motive.” Henry was focused on service to the public, not what profit he could make. The public naturally included his employees. He worked his people only 8 hours per day, leaving them time to enjoy the fruits of their labor.

3. So what kinds of results were these strategies able to produce? How long do you think it took to go from iron ore at the mines to a finished Model T automobile rolling off the assembly line? Nicole please poll the audience.

4. But let me ask another, very revealing question… Yes, the answer is NONE.

So why do I interrupt this story to talk about IT?

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1. Because so many people think that IT is the solution to their problems. But deep down, we all know that there must be a sound basis for applying IT, and that is what this history lesson is about.

2. If you are looking for a quick fix, LEAN is not for you. LEAN is a journey, a journey of continuous improvement.

3. With respect to eliminating waste, there are only 8 universal types. You can explore these in more depth off-line.

4. Going back to slide 11, remember that Henry utilized his LEAN philosophies across his entire organization. We will re-emphasize this on the next slide, but we want to note the types of organizations we see, beyond manufacturing, who are getting value out of the basic LEAN concepts.

By the way, England’s National Health Service is on the road to recovery because of their use of LEAN methodologies. I have some very interesting case studies I can share on all of these industries.

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These were Henry’s basic “rules of engagement.”

Where does it say “automobiles “only?

Where does it say “manufacturing“ only?

Where does it specifically exclude design, engineering, construction, and project management?

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So while Henry gets some credit in some circles for LEANManufacturing, isn’t it surprising that he does not get credit for applying the same basic concepts to all his other business environments, including design and construction.

Having established what LPDS is and where its origins are, let’s explore what the Lean Construction Institute has added to this very important set of methodologies.

The Last Planner is a subset process of LPDS and divides planning and production control into essentially four phases. Each phase has specific requirements in order to not build in too much detail too soon.

The most important aspect is that WHAT and WHEN must be the focus during master planning, and WHO, HOW, AND SEQUECING must be the focus during the other, more detailed areas of planning and production control.

This is a key distinction made by The Last Planner System versus conventionalwisdom, and would be included under New Thinking.

Let’s explore another area that the Lean Construction Institute has enabled.

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I developed what I refer to as the Chase-up Syndrome while working on the Heathrow Terminal 5 project several years ago in London.

2. Q: Nicole, please take the poll for item 2 – “How much time do each of you spend, on the average, chasing other people to see if they will complete the work as they promised?”

2. A: Having asked this question to hundred’s of people, both in and out of construction, the answer I get is always between 25% and 100%. Foremen and superintendents will often tell me that is there job – they are “firemen” and very proud of it. On the average people say about 50%.

3. Q: Nicole, please take the poll for item 3 – “Now, how much time, on the average do you spend being chased by other people to see if you will meet your commitments?”

3. A: People typically answer in the 25% to 50% range, and have to rethink their first answer since some said 100% to the first.

When we add the answer to the 1st question with those of the 2nd, the answer is an average exceeding 50%.

4. Of course the answer is that no one has had formal training in how best to chase, yet it obviously is such a big part of everyone’s daily work that we should wonder why we have had no formal training.

How then do you get any real work done if you spend so much time chasing and being chased?

Chase-Up Syndrome copy right by EE Anderson Technical Services, 2004, all rights reserved.

2. These are not my answers, but what hundreds of people I have trained tell me. Notice that they have the option, they say, to work on all of the important issues and not just on one or two.

This is why we say that it is not necessary to trade cost for schedule or quality. By directing your time to value-added work as opposed to so much chasing, you can concurrently achieve cost, schedule, quality, and safety improvements.

What if there was a way to measure and track everyone’s commitments and make them visible so that chasing could be minimized?

There is a metric and its called Planned Percent Complete. Let’s explore this concept by playing a little game I call The Concrete Production Game..

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Chase-Up Syndrome , and Concrete Production Game copy right by EE Anderson Technical Services, 2004, all rights reserved.

I do not suggest that anyone measure chase-up as a day-to-day, metric. In fact I recommend against it, but listen to the conversation every time someone talks on the telephone or radio, and I’ll bet you 90% of the time it relates to chasing or being chased.

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Let’s look at a specific case study and see how this process works.

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In this case study, one foreman’s reliability was not as positive as others.

He asked for help.

Seeing this data does not tell him what specifically to focus on to make improvements, does it?

So we show him the next level of detail that was captured every time his team failed to meet a commitment.

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What should he be focusing on? Correct, Commitment/Planning.

But the data still does not tell him specifically what he needs to do to improve making commitments and improving his planning, so we expose the next level of detail captured with every failure. We remind him that the reasons for the failures were his words, not ours.

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The root cause analysis data is filtered to only show “Commitment/Planning” failures.

From this he was able to see where he was having the same problems over and over.

He took action to correct these issues, with the following results.

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After improving his planning, his PPC improved, and at the same time his crew productivity, safety and quality were all improving, thus he knew his crews were not just “playing the game.”

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LPDS goes beyond The Last Planner and provides a complete project delivery system.

Glenn Ballard and Greg Howell knew that in order to be fully effective that LPDS must extend beyond construction as shown here. There is much written on this topic and time does not permit anything more than making you aware of another level of detail.

This LPDS process also breaks the paradigm “Sub-optimizing the parts will optimize the whole.” This sub-optimization occurs in most conventional contract bidding scenarios since the owners are led to believe that by minimizing costs on each phase the cost of the whole will be minimized.

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To summarize then…

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Time did not permit reviewing items #7, #8, and #9, and we suggest they are great topics for a follow-on discussion at a later date.

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Please take a few minutes to send me an email with your suggestions for improvements in this webinar.

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This chart represents many industries, but especially the process & power industries. The actual percentages on any specific project may vary, and your industry may be different. You must do some homework to see where the opportunities lie for your situation. You must also determine what drives what and not sub-optimize a part of the process at the expense of the whole. Usually design and engineering drive the rest of the process.

Both major equipment and construction costs, and project duration are DEPENDANT on Professional Services: design, engineering, project management, construction management, etc.. This is well known. But what we find is that engineering and design are sub-optimized by many owners to get the lowest cost in these areas. Further, these owners assume that engineering and design firms know what construction needs are. We find this assumption, in most cases, to be very wrong.

We see this sub-optimization process practiced in many companies in many countries. It results in people getting paid for their part of the project as opposed to getting paid for the project “product.” This causes everyone to focus on their own environment to the exclusion of all others, and fosters adversarial relationships.

The LEAN Construction Institute has done much field research on projects, and publishing of papers on methods to REALLY incorporate/integrate all stakeholders into the design process, as one method for ensuring improved end results. This is currently referred to as the Integrated Project Delivery Process, and we find many owners are beginning to adopt this win-win-win process.

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When one sub-optimizes engineering and design this is the type of problem that becomes apparent.

I have been on many construction sites where I see the use of magnifying glasses as a basic tool for reading construction drawings. This picture is neither staged nor a joke.

It reinforces the fact that many engineers and designers create construction drawings that do not meet the needs of construction. The objective seems to be to minimize paper, as opposed to optimizing constructive information. This is not the fault of the engineers and designers. The root of this problem usually lies with the owners who have been led to believe that sub-optimization of the parts will result in the least cost project solution.

You might say “What does this have to do with my situation? I’m not in construction.”

The Japanese term, Gemba, means “go to the place where the truth is told.” In the 1940’s, Dave Packard & Bill Hewlett, created what is called “Management By Walking Around.” Gemba and MBWA are synonymous in their meaning and intent. Leadership cannot effectively communicate if they have no clue about what really occurs where the work gets done – the Gemba. Remember that good old Henry Ford invented “going to the Gemba.”

The point is “You must go to the Gemba, your Gemba, and use your eyes and your ears to determine exactly what the truth is. You cannot manage multiple projects through email sitting behind a desk.

Nor can you expect project costs, schedules, quality and safety to be optimized by sub-optimizing the parts.

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Here is another example of a “design” drawing created by a well respected engineering firm. This is from a project I was consulting on in late 2007.

I witnessed an engineer giving this drawing to a construction foreman. Notice that is says “issued for construction” in the upper right corner. This was the only document to be given to the foreman.

The construction foreman said he could not read the drawing and didn’t know what he was being asked to do. The engineer seemed exasperated, but then relented and went to a nearby copy machine and blew up the original 8-1/2 x 11 to a larger 11” x 17” drawing .

Both the contractor and I were stunned that the engineer would actually think he had improved the content of the deliverable. The contractor again rejected the “drawing” as unreadable.

The final resolution was a de-speckled drawing and the contractor gave in since the owner representative, who witnessed the entire scene, would not support the contractor.

This is also a real life example of the owner’s representative not having adequate knowledge to direct the engineering firm to deliver value. When owners outsource all of their project management skills they will frequently assigned some of their more mature operations and/or maintenance personnel, who had never worked in projects before, to oversee design and construction. We would suggest in the face of all the evidence, that engineering, design, and project management are NOT commodity services.

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I am a leading business consulting and technology solutions provider specializing in high value applications associated with LEANProject Delivery Systems. My extensive experience includes all phases of project and program management, from conception throughdetail design, construction, commissioning, startup, and operations and maintenance. I am one of a handful of professionals that can bring value to the entire life cycle of a facility or business. My solutions fully integrate business and technology for all stakeholders for clients in the process, power, food, marine, BIM, and heavy industrial enterprises.

My underlying methodologies follow the powerful LEAN Manufacturing philosophies of Henry Ford and the Toyota Production System, and the LEAN Construction Institute. All of these prestigious philosophies embody Continuous Improvement as their mantra.

As a 41 year veteran of process and project engineering, and construction management, I retired from Air Products and Chemicals in May 2001 after 25 years. My last eight years with Air Products was as the PALADIN program manager. In this position, I served as an in-house information technology consultant and domain expert for both major capital projects performed by external EPC’s, and smaller, revamp capital projects performed by in-house engineering and design groups. After 9 months as VP of Business Development with INOVx Solutions I started my own technical services business focusing on projects and construction with the vision of “Putting LEAN and Information Technology to Work.” I have also served as a Senior Associate with the LEAN Construction Institute, a Senior Associate for Strategic Project Solutions, and as a project manager for FIATECH.

One of my most recent assignments was in association with Trinity Technologies developing a specification for SABIC (Saudi BasicIndustries Corporation) to provide SABIC with an Enterprise Project Management System. The specification addressed the functional areas of design, project controls, construction management, capital project program management, vendor and EPC qualifications, purchasing, and integration with SAP. A final report addressed the gap analysis between current practice against future requirements utilizing state-of-the-art Information Technology tools and methodologies to meet SABIC business needs. I was also responsible for completing a second task which was an implementation plan for implementing a Primavera Planning and Production Control Systemfor 21 SABIC facility maintenance affiliates. Trinity was selected as one of two primary consulting groups out of 29 considered.Through my marketing efforts, Trinity was able to capture this important assignment.

On another longer term assignment in association with Strategic Project Solutions, I consulted on the marquee London HeathrowTerminal 5 Project for 23 months teaching construction teams LEAN Construction methodologies and work processes.

I offer 1-day and 3-day courses that expand on what you have learned today. These can be tailored to your specific organization and needs, if you like

I also offer consulting services related to LEAN and the following specialties:

• Mentoring, training and coaching teams in LEAN Project Delivery Systems for all phases of capital projects for the purpose of achieving significantly new and paradigm-breaking levels of productivity in capital projects.

• 3D Model & Electronic Document Management utilization in all phases of facility life cycles with an emphasis on the design and construction phases to deliver a non-conventional Information Asset for extended and paradigm-breaking utilization by downstreamoperations and maintenance.

• Assist clients in delivering higher quality assets, both physical assets as well as the (often ignored) information assets.

• For the engineering and/or construction company, allow them to choose between increasing their margins and/or increasing their volume of work.

• For the owner-operator, concurrently deliver lower capital depreciation costs, higher ROI, and lower operating/maintenance costs.

My concepts are drawn from lessons-learned on real projects implemented in many countries, as well as extensive research.

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