Is the Construction Industry Broken? Lean Construction Works!

Is The Construction Industry Broken?

Take these facts into consideration:

If it takes six months to build a house. Studies show that 85% of the time is spent on two activities: waiting on the next trade to show up and fixing mistakes.
Clemson’s Professor Roger Liska conducted an analysis of productivity on the construction industry and found that the average construction worker operates at only 40% efficiency.
Even during the past construction boom, Business Week’s 2007 Investment Outlook Report indicates the return on equity (ROE) for all U.S. industries was 17.9%, while the ROE for the construction industry was a mere 9.7%.
Current economic conditions have reduced available work which has increased competition cost pressure on available projects.
Today’s few industry customers are frustrated with poor quality, confrontation, excessive change orders in quantity and dollar value, scheduling delays and litigation.

Why Build with Lean?

Lean construction works because it focuses on maximizing value to all three groups (the owner, the contractor and the worker) and eliminating waste. Only 27% of consumers are totally focused on price. Lean drives focus on ways to provide the best value to the other 73%.

People are willing to pay for the perceived value they receive. Therefore, when they say your price is too high, they really mean you haven’t delivered enough value for the price you are asking.

Therefore, lean construction focuses on identifying and delivering products or services on which the client places the highest value. A few things that clients often place high value on are:

No change orders
High quality – Meaning conformance to requirements
On-time Project Completion

When contractors focus on delivering maximum value to clients, they usually find that profit margins increase.

This is because of two reasons:

In any industry the cheapest products usually produce the smallest profit margin. Therefore, if a contractor competes on price alone, the contractor is forced into a low margin sector of the industry.
Lean construction is about reducing waste, this means lower costs and increased efficiency. Studies show that loss efficiency on job sites breakdown as follows: 20% on waiting for materials, 20% due to inefficient company processes, and 15% from congested work areas.

How We Do It

Our Lean approach is not rocket science, no engineering degree is required. I’ll even keep the odd Japanese terms to a minimum. We will use some tools such as Value Stream Mapping, Lean Project Management, Job Site Organization (5S), and Standardized Work to only name a few. We will engage your team and build from their ideas. Once we’re started we will continue to help your team along the way. This could mean simply answering your questions as they come up via a phone call or showing up on a job site to mentor and coach.

Your risk is a minimum as our work is 100% guaranteed to meet your approval or you do not pay. It’s in every contract!

Let’s get started!

Contact me today for a free onsite Rapid Business Assessment that will help you pin point specific opportunities within your company.

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1. I am an objective outsider.When someone is hired into a business they often become subjected to the political nature of the organization. This can result in a change agent that has a tendency to “not cause waves”, sometimes diverting their focus from the most important items of change (and most controversial) to the more mundane that no one would challenge.

2. I will develop a self-sustaining system for your business. I am not focused on building a permanent position within your organization; instead my objective is to mentor your team into being a self-directed lean organization not dependant upon any one individual. Often when someone is hired, there exists an expectation that this person will BE the lean program. When the individual leaves for another position the program often falls apart and progress is lost.

3. I guarantee results – It’s in every contract. If at any time you should be dissatisfied with my services all fees are waived and your business has suffered no cost. Hire the wrong person for your lean deployment and the cost can be expensive.