Quality Assurance in Quality Assurance in Japanese ConstructionJapanese Construction

Henry Loo Henry Loo BSc MSc FRICS MAPMBSc MSc FRICS MAPM

► Ex CE Honorary Deputy Chairman - Japanese affairs► BSc Quantity Surveying (South Bank Polytechnic) ► MSc Project Management (University of Reading)► Chartered Surveyor (FRICS)► Qualified Project Manager (MAPM)► 30 years UK & Overseas construction experience► Previous roles as client, consultant & contracting► Project Manager with Kajima between 1990 to 2000► Visited Japan 8 times since 2007, led 3 delegations, to

study and learn from Japan’s construction industry► Hands on experience with the style and workings of

Japan’s Prime & EPC Contractors► Passionate to improve UK Construction Industry by

promoting the application of lean business operation principles and technique into construction projects

盧 仲力 副会長 - 日本事務特

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Introducing Henry Loo

Nov 2013 QA in Japanese Construction

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Rethinking ConstructionRethinking Construction

The 1998 Egan report made The 1998 Egan report made uncomfortable reading for UK uncomfortable reading for UK construction industry:construction industry:►For every £1 we spent, we waste anotherFor every £1 we spent, we waste another►Deliver poor customer satisfactionDeliver poor customer satisfaction►Fragmented organisation, training, skills, & Fragmented organisation, training, skills, & silo mentality kills communication silo mentality kills communication ►Much of the waste is caused by non-Much of the waste is caused by non-collaboration and lack of integration within the collaboration and lack of integration within the supply chainsupply chain►Important to get the SME market right Important to get the SME market right ►Wolstenholme’s report highlighted 4 major Wolstenholme’s report highlighted 4 major blockers to change agendablockers to change agenda►Evidential proofs that we are reverting back Evidential proofs that we are reverting back to our traditional stereotype of the ‘food to our traditional stereotype of the ‘food chain’chain’►Industry needs to improve in 3 key areas: Industry needs to improve in 3 key areas: QualityQuality, , Productivity, Customer SatisfactionProductivity, Customer Satisfaction►Construction industry have got to sort itself Construction industry have got to sort itself outout►Something has got better since e.g. H&SSomething has got better since e.g. H&S

Nov2013 QA in Japanese Construction 4

KPI’s Comparisons between Japan & KPI’s Comparisons between Japan & UKUK

Scoping Study Results, Japanese Corporations, Compared to UK Construction Industry KPI's: Average and Demo Projects

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Today’s Presentation Today’s Presentation

Quality embedded within Lean ThinkingQuality embedded within Lean Thinking Context of Quality within Japan’s Context of Quality within Japan’s

construction industryconstruction industry ReflectionReflection Q & AQ & A

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A simple definition of Lean?A simple definition of Lean?

Making that direct connection Making that direct connection between customer’s value and between customer’s value and the product and services, in so the product and services, in so doing, remove any wasted doing, remove any wasted efforts and processes that do efforts and processes that do not contribute to the value of not contribute to the value of the solution the customer paid the solution the customer paid for (i.e. eliminate Muda)for (i.e. eliminate Muda)

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TPS – Toyota Production TPS – Toyota Production SystemSystemToyota Production SystemToyota Production System (TPS) ( (TPS) ( トヨタトヨタ

生産方式生産方式 ) is the philosophy which ) is the philosophy which organizes manufacturing and logistics at organizes manufacturing and logistics at Toyota, including the interaction with Toyota, including the interaction with suppliers and customers. TPS is known suppliers and customers. TPS is known more generically as more generically as Lean Lean manufacturingmanufacturing. It was largely created by . It was largely created by the founder of Toyota, Sakichi Toyoda, his the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer son Kiichiro Toyoda, and the engineer Taiichi Ohno; they drew heavily on the Taiichi Ohno; they drew heavily on the work of W. Deming and the writings of work of W. Deming and the writings of Henry Ford. When these men went to the Henry Ford. When these men went to the United States to observe the assembly line United States to observe the assembly line and mass production that had made Ford and mass production that had made Ford rich, they were unimpressed. While rich, they were unimpressed. While shopping in a supermarket they observed shopping in a supermarket they observed the simple idea of automation in a can’s the simple idea of automation in a can’s drink dispenser; when the customer takes drink dispenser; when the customer takes a drink, another one drops down and a drink, another one drops down and replace it automatically. The main physical replace it automatically. The main physical goal of TPS is to eliminate wastes efforts & goal of TPS is to eliminate wastes efforts & process.process. At The Heart of TPS is Customer

Satisfaction

5 basic components of Lean 5 basic components of Lean Thinking*Thinking*

► Customer ValueCustomer Value► Value StreamValue Stream► PullPull► FlowFlow► Continuous Continuous

ImprovementImprovement

*Lean thinking got its*Lean thinking got itsname from a 1990’s bookname from a 1990’s book"The Machine That"The Machine ThatChanged the World : TheChanged the World : TheStory of Lean Production“Story of Lean Production“by Womack & Jones. Theby Womack & Jones. Thebook chronicles thebook chronicles thetransitions of automobiletransitions of automobilemanufacturing from craftmanufacturing from craftproduction to massproduction to massproduction to lean production to lean

productionproduction

The essence of Quality in Lean is looking at ways to

reinforce Customer Value in the most efficient manner

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The Lean FundamentalsThe Lean Fundamentals

The 4 P’s of Lean:The 4 P’s of Lean:

► PPhilosophy - a way of seeing & living changehilosophy - a way of seeing & living change► PProcesses – break down the end product into rocesses – break down the end product into

predictable & deliverable interconnecting tasks predictable & deliverable interconnecting tasks ► PPeople & Partners - involvement & engagement eople & Partners - involvement & engagement ► PProblem Solving - collectively and roblem Solving - collectively and

collaborativelycollaboratively

Quality is inherently embedded within these 4P’sQuality is inherently embedded within these 4P’s

The Zen of LeanThe Zen of Lean

► MuriMuri ( ( 無理無理 ) )

Overburden or unreasonableness Overburden or unreasonableness ► MuraMura ( ( 斑 斑 or or ムラムラ ) )

Unevenness leading to inconsistency in the Unevenness leading to inconsistency in the physical production output physical production output

► MudaMuda ( ( 無駄無駄 ) )

Activity that is unproductive or doesn't add Activity that is unproductive or doesn't add value i.e. wastefulvalue i.e. wastefuli.e. the environmental root causes of bad qualityi.e. the environmental root causes of bad quality

The 7 Wastes +1The 7 Wastes +1►TransportationTransportationEach time a product is moved it stands the risk of being damaged, lost, delayed, etc. ref: Toyota Home Each time a product is moved it stands the risk of being damaged, lost, delayed, etc. ref: Toyota Home off site approach off site approach ►InventoryInventoryWork-In-Progress (WIP) represents a capital outlay that has not yet produced an income either by the Work-In-Progress (WIP) represents a capital outlay that has not yet produced an income either by the producer or by the consumer.producer or by the consumer.►MotionMotionAs compared to Transportation, Motion refers to the producer or worker. This has significance to As compared to Transportation, Motion refers to the producer or worker. This has significance to damage, wear, safety. It also includes the fixed assets, and expenses incurred in the production damage, wear, safety. It also includes the fixed assets, and expenses incurred in the production process.process.►WaitingWaitingRefers to both the time spent by the workers waiting for resources to arrive, the queue for their Refers to both the time spent by the workers waiting for resources to arrive, the queue for their products to work on, as well as the capital sunk in goods and services that are not yet delivered to the products to work on, as well as the capital sunk in goods and services that are not yet delivered to the customer.customer.►Over processing Over processing Using a more expensive or otherwise valuable resource than is needed for the task. There is a Using a more expensive or otherwise valuable resource than is needed for the task. There is a particular problem with this item as regarding people. People may need to perform tasks that they are particular problem with this item as regarding people. People may need to perform tasks that they are over qualified for so as to maintain their competency. This training cost can be used to offset the waste over qualified for so as to maintain their competency. This training cost can be used to offset the waste associated with over processing.associated with over processing.►OverproductionOverproductionOverproduction is the production or acquisition of items before they are actually required. Batching is a Overproduction is the production or acquisition of items before they are actually required. Batching is a derivativederivative►DefectsDefectsQuality defects prevent the customer from accepting the product produced. New processes must be Quality defects prevent the customer from accepting the product produced. New processes must be added in an effort to reclaim some value for the otherwise scrap product.added in an effort to reclaim some value for the otherwise scrap product.►+ Skill+ SkillOrganizations employ their staff for specific skills that they may have. These employees have other Organizations employ their staff for specific skills that they may have. These employees have other skills, it is wasteful to not take advantage of these other skills as well. "It is only by capitalizing on skills, it is wasteful to not take advantage of these other skills as well. "It is only by capitalizing on employees' creativity that organizations can eliminate the other seven wastes and continuously employees' creativity that organizations can eliminate the other seven wastes and continuously improve their performance."improve their performance." ►RedundancyRedundancy is also a waste - of employee’s knowledge and experience of the organisation that they is also a waste - of employee’s knowledge and experience of the organisation that they built up.built up.

Total Quality ManagementTotal Quality Management

Deming laid the foundation in the 50’s:Deming laid the foundation in the 50’s:(a) When people and organisations focus primarily on quality, defined (a) When people and organisations focus primarily on quality, defined

as:as:

Quality = Results of Work Efforts/Total CostsQuality = Results of Work Efforts/Total Costs

quality tends to increase and costs fall over time.quality tends to increase and costs fall over time.

(b) However, when people and organisations focus primarily on (b) However, when people and organisations focus primarily on costscosts, , costs tend to rise and quality declines over time.costs tend to rise and quality declines over time.

Ishikawa’s 6 roots causes to Quality delivery:Ishikawa’s 6 roots causes to Quality delivery: Equipment, process, people, materials, environment and Equipment, process, people, materials, environment and

managementmanagement If a problem in quality occurs, go find and fix the root cause; not just If a problem in quality occurs, go find and fix the root cause; not just

fixing the problem presentedfixing the problem presented

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The 5s [The 5s [Hygiene of QualityHygiene of Quality]]► SeiriSeiri ( ( 整理整理 ): tidiness, organization. Refers to the practice of sorting ): tidiness, organization. Refers to the practice of sorting through all the tools, materials, etc., in the work area and keeping only through all the tools, materials, etc., in the work area and keeping only essential items. Everything else is stored or discarded. This leads to fewer essential items. Everything else is stored or discarded. This leads to fewer hazards and less clutter to interfere with producing quality works.hazards and less clutter to interfere with producing quality works.► SeitonSeiton (( 整頓整頓 ): orderliness. Focuses on the need for an orderly ): orderliness. Focuses on the need for an orderly workplace. Tools, equipment, and materials must be systematically workplace. Tools, equipment, and materials must be systematically arranged for the easiest and most efficient access. There must be a place arranged for the easiest and most efficient access. There must be a place for everything, and everything must be in its place. Use the right tool to for everything, and everything must be in its place. Use the right tool to deliver the right quality.deliver the right quality.► SeisoSeiso ( ( 清掃清掃 ): cleanliness. Indicates the need to keep the workplace ): cleanliness. Indicates the need to keep the workplace clean as well as neat. Cleaning in Japanese sites is a daily activity. clean as well as neat. Cleaning in Japanese sites is a daily activity. Everyone cleans up the work area at the end of each shift and everything Everyone cleans up the work area at the end of each shift and everything is restored to its place. is restored to its place. ► SeiketsuSeiketsu ( ( 清潔清潔 ): standards. Allows for control and consistency. Basic ): standards. Allows for control and consistency. Basic housekeeping standards apply everywhere in the facility. Everyone knows housekeeping standards apply everywhere in the facility. Everyone knows exactly what his or her responsibilities are. House keeping duties are part exactly what his or her responsibilities are. House keeping duties are part of regular work routines. Standards facilitate delivery of quality.of regular work routines. Standards facilitate delivery of quality.► ShitsukeShitsuke ( ( 躾躾 ): sustaining discipline. Refers to maintaining standards ): sustaining discipline. Refers to maintaining standards and keeping the facility in safe and efficient order day after day, year after and keeping the facility in safe and efficient order day after day, year after year. Quality is sustained by consistency year. Quality is sustained by consistency

"Sort, Straighten, Shine, Systemise and Sustain“, and "Safety" as a 6th "Sort, Straighten, Shine, Systemise and Sustain“, and "Safety" as a 6th optional Soptional S

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Strategic difference between Strategic difference between Japanese & UK construction Japanese & UK construction

industriesindustries► ALL contractors are licensed in JapanALL contractors are licensed in Japan► Over 50% business of ‘Big 5’ contractors are pure Prime Over 50% business of ‘Big 5’ contractors are pure Prime

Contracting – delivering customer value directlyContracting – delivering customer value directly► Designs by Clients’ consultants are considered as briefsDesigns by Clients’ consultants are considered as briefs► Detail design developed directly in collaboration with supply Detail design developed directly in collaboration with supply

chain i.e. shop drawings; hands-on control buildability, chain i.e. shop drawings; hands-on control buildability, quality and easing the interface between packagesquality and easing the interface between packages

► Most A&E design are done in house and let on ‘fit for Most A&E design are done in house and let on ‘fit for purpose’ basis i.e. performance base not specification basepurpose’ basis i.e. performance base not specification base

► Earthquakes are a major driver to technology investmentEarthquakes are a major driver to technology investment► Innovation is differentiatorInnovation is differentiator between General Contractors between General Contractors

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Strategic Business ApproachStrategic Business Approach► TQM are feedback to benchmark & improve processesTQM are feedback to benchmark & improve processes► O&M data are directly fedback into design departmentO&M data are directly fedback into design department► Payment in public sector projects tends to be simple:Payment in public sector projects tends to be simple:

30% at contract commencement30% at contract commencement 30% at structural completion & weather tight30% at structural completion & weather tight

► 40% on completion. No retention on MC but on subs40% on completion. No retention on MC but on subs► Subbies paid upon logical pre-agreed stage completion Subbies paid upon logical pre-agreed stage completion

e.g. floor by floor (not monthly); Saturdays handover e.g. floor by floor (not monthly); Saturdays handover incentivise quality, productivity & promote collaboration incentivise quality, productivity & promote collaboration amongst subbies amongst subbies

► Extensive use of IT in everything. Contractors involve in Extensive use of IT in everything. Contractors involve in design much earlier, deeper and last longer; with design much earlier, deeper and last longer; with shorter site duration. All strive to finish early. Savings shorter site duration. All strive to finish early. Savings not shared with clientnot shared with client

► Client satisfaction drives everything. Repeat business Client satisfaction drives everything. Repeat business bedrock of operationbedrock of operation

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Quality Function Deployment Quality Function Deployment (QFD)(QFD)

Simple Philosophy:Simple Philosophy:

► Everyone participates in Quality Everyone participates in Quality Management (rub off from the Management (rub off from the manufacture sector)manufacture sector)

► TQM system integration TQM system integration throughout its supply chainthroughout its supply chain

► Profits by finishing projects earlyProfits by finishing projects early

► Use data and facts as the basis Use data and facts as the basis for corporate & project planning for corporate & project planning and continuous improvementand continuous improvement

► Japanese process for Japanese process for construction: plan, study, design, construction: plan, study, design, construct (contrast with construct (contrast with Deming’s PDCA) Deming’s PDCA)

► What's ours?What's ours?

Corporate Philosophy

Vision

President’s Policy 3 - year Business Plan

Branch Office General Manager’s Policy

Department Manager’s Policy

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Research & DevelopmentResearch & Development► R&D are considered strategic critical to R&D are considered strategic critical to

competitivenesscompetitiveness► Huge R & D spend. 60 largest companies each spend Huge R & D spend. 60 largest companies each spend

an average of 0.5% of its turnover on R&Dan average of 0.5% of its turnover on R&D► Doctrine of long term future rest in constant Doctrine of long term future rest in constant

innovationinnovation

Kajima spends just over 1% Turnover. 15 years ago was 4% T/OKajima spends just over 1% Turnover. 15 years ago was 4% T/O

WHY?WHY?

Maintain its competitive edge (innovation as differentiator)Maintain its competitive edge (innovation as differentiator)

Life time guarantee its projects (use research to reduce risks)Life time guarantee its projects (use research to reduce risks)

Good marketing to enhance it’s quality reputationGood marketing to enhance it’s quality reputation

Identified the direct link to profitsIdentified the direct link to profits

Corporate culture of knowledge as cornerstone to long term Corporate culture of knowledge as cornerstone to long term successsuccess

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Overall impression of Japan’s Overall impression of Japan’s construction industryconstruction industry

· Delighted end usersDelighted end users· Deliver satisfactory returns to investorsDeliver satisfactory returns to investors· Consistently deliver defect free projectsConsistently deliver defect free projects· Time [and cost] predictable delivery are givenTime [and cost] predictable delivery are given· Provide a safe working environment for allProvide a safe working environment for all· Vastly higher productivity than UKVastly higher productivity than UK· A strong self believe of improving the society A strong self believe of improving the society

through aesthetically pleasing, safe and through aesthetically pleasing, safe and environmentally friendly buildings and environmentally friendly buildings and structuresstructures

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Race for ChangeRace for Change► Our systems need deep changeOur systems need deep change► Rise of the Prime ContractorRise of the Prime Contractor► Taking the first few small steps Taking the first few small steps

will lead to quantum leap will lead to quantum leap improvementimprovement

► Collaborative improvements Collaborative improvements together, supply integration together, supply integration laterlater

► Lean is not cultural. Japan is only Lean is not cultural. Japan is only a model to start us offa model to start us off

► Other industries adopted lean Other industries adopted lean with quick & spectacular resultswith quick & spectacular results

► Construction industry have to Construction industry have to develop own lean styledevelop own lean style

► The heart of Lean is customer The heart of Lean is customer value and customer satisfactionvalue and customer satisfaction

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Final word: Combined it’s a waste - Final word: Combined it’s a waste - separated it’s a resource; society-wide separated it’s a resource; society-wide

environmental philosophyenvironmental philosophy

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Your Reflection?Your Reflection?

► Where is UK construction industry heading?Where is UK construction industry heading?► Could we simply stay calm and return to business Could we simply stay calm and return to business

as usual now the economy is improving?as usual now the economy is improving?► Are we building for the better or for worse? Are we building for the better or for worse? ► What systemic changes are needed?What systemic changes are needed?► What’s stopping us to take the first step to change?What’s stopping us to take the first step to change?► What will the UK market outlook in 3 years time?What will the UK market outlook in 3 years time?