How will Lean Construction Management change the industry?-RefineVVC

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It is not only in the construction industry that the term lean is often used in connection with the topic of digitalisation. Originally, it comes from the automotive industry, where, among other things, there is great pressure to meet deadlines and where lean was introduced into project planning as early as the 1980s. Patrick Theis from refineVVC also has this vision: to make lean construction the standard in the construction industry. Patrick Theis is a digitalisation consultant and BIM expert and, as co-founder of refineVVC, is working to bring digitalisation and lean together in the construction industry. As a trained carpenter and as part of his construction project management studies, he gained an early insight into the processes and procedures in the construction industry. He describes the impression he gained: "I thought, it can't be that people build like this. The biggest industry in the world still builds like in the Middle Ages. My passion is to transform that." His approach is to bring the value chain together as an integrated network. What exactly does lean construction mean and how does it relate to the digital value network?

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Lean Construction: a definition

There are already various definitions of lean. Lean management and lean construction are terms that come up again and again when it comes to making processes more efficient. It depends above all on the level at which lean is viewed: As a philosophy, as an improvement system or as a tool? The level of consideration is therefore one of the biggest challenges when it comes to making Lean understandable. Using lean as a tool at some points in the value chain is not enough to achieve sustainable benefits, says Patrick Theis. He makes clear:

"You are only lean if you live lean." 

Living lean means looking at lean as a holistic approach, and streamlining processes is the overarching goal in lean management. For the successful implementation of lean, it is important that the entire processes are aligned to focus on customer added value. To achieve this, according to Theis, there must be a change in mindset within the industry. He sees lean construction as a philosophy that can minimise waste along the value chain with the help of digital tools. What exactly are the wastes that can be counteracted with lean?

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Savings potential along the entire value chain

In general, lean management talks about eight types of waste: Overproduction, inefficient transport routes, warehousing, inefficient movement, inappropriate processes, errors and defects, waiting time and unused employee potential. However, in Theis' opinion, it is not about analysing a company's value chain from the outside and showing which processes can be optimised. Rather, it is about bringing the described change in mindset, Lean as a guiding principle, into the companies and to the employees themselves. It is a matter of abandoning classic structures and processes and putting the value-creating activities and people in the foreground. The potential for improvement in work processes should be recognised by those employees who are directly involved in these processes. In many companies, management tries to find a quick remedy through software, but this often fails because the implementation is costly and complicated. According to Theis, this is primarily because these solutions do not start at the right place. Without a more detailed analysis, a product is often chosen that promises automation and efficiency. Theis comments: 

"In the end, the user who creates value, who is supposed to use the product, is not asked at all. 

The focus here must therefore be directed more towards people again. Digitalisation does not only mean the implementation of innovative solutions. A sustainable optimisation of processes can only be achieved if the actual added value for the customers is in the foreground of this solution. If this is achieved, users can easily be convinced of the advantages of such innovations. But starting in the wrong places is not the only challenge in establishing lean construction. 

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Making processes transparent: Opportunity or hurdle? 

Lean Construction is only being applied in a few companies. It was already clear from our e-book that despite the pandemic and the progress made in other industries, the digitalisation of the construction industry is still in its infancy. Nevertheless, more and more companies are realising the benefits of digital transformation. In addition, acute problems such as a lack of skilled workers and a shortage of resources are forcing project managers to plan more efficiently. When it comes to practising lean construction, difficulties quickly become apparent. Even the approach of making processes transparent in order to network all project participants with each other and to be able to coordinate the sequence of trades more precisely causes problems. This is often due to the fear of control, Theis deduces. Disclosure of processes leads to accountability, for example, if deadlines are not met. Everyone knows what work is to be done and in what time frame, to show where time or costs could be saved. This inevitably leads to direct attention if a job has not been done accordingly. The question arises: What can be done better in the future so that this does not happen again? This question again alludes to a collaborative way of thinking, which should be brought about. He also describes trust as a decisive aspect for successful cooperation, e.g. trust of all participants that processes will be adhered to as discussed and that all project participants can rely on each other. 

Another challenge is the loss of power that comes with the implementation of lean construction. Currently, most decisions are made by managers, who are used to having control over all processes, says Theis. Another important factor is time; many project managers and decision-makers are constantly working under time pressure, so there is no opportunity to think about other methods. In addition, there is a fundamental scepticism towards everything unknown, says Theis:

"When you do something new and it goes badly - which can always happen, whether it's due to external influences or something like that. What is to blame, of course? The new thing. But you just have to be honest with yourself. If you didn't have that and it went very traditionally, then the project would have failed just as much." 

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Collaboration before cost efficiency 

But how can the aforementioned reservations of the companies be countered? Patrick Theis lists clear advantages that arise from the implementation of Lean Construction: Time savings, cost reduction, less stress. These have become visible in projects he has supervised with refineVVC. Processes are made transparent with the help of the Last Planner method, in which all participants are involved to agree exactly which trades require which time and which preliminary work. Weekly meetings and regular agreements mean that it is possible to react at short notice if a service is not provided as planned. As a result, some projects have been completed earlier, subcontractors have had capacity for other jobs and the general time pressure that prevails on construction sites has been counteracted. Stress is also something that is often mentioned, according to Theis: "Currently, the standard is that you are relieved when a project is completed because things are going badly in many places and you are under stress all the time." 

In addition, there is strong competition in the industry; people often work against each other rather than with each other. The focus is on profit, not on the success of the project. Subcontractors in particular, who only carry out individual orders for contractors, do not necessarily feel responsible for the overall success. This way of thinking is to be transformed with Lean Construction so that there is more collaboration, which ultimately results in increased value creation. Digital solutions and platforms can also help with the collaboration aspect. 

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Implementing Lean Construction: where to start and what is the added value? 

In a first step, platform economy means the networking of data within a company. This is the only way to create a basic prerequisite for collaborative work, but this is still hardly the case in most companies in the construction industry. Digital solutions that make it possible, for example, to work simultaneously on service specifications, but also to identify and use interfaces across departments, become enablers for digital collaboration. 

Lean Construction also aims at this networking, because an improvement of processes can only take place if data is collected and exchanged. This reinforces Patrick Theis:

"We always say what you can't measure, you can't improve." 

Collecting, analysing and exchanging data across programmes enables the creation of meaningful evaluation criteria to ultimately optimise processes. Interfaces should be established not only within the company, but also together with other project participants, such as subcontractors. Such interfaces enable seamless data exchange so that decisions can be made based on the analysis of this data. This is also about establishing metrics that simplify such decisions. Historical data on submitted bids or reliability should help to plan future projects more accurately. This approach is also pursued by refineVVC with so-called AEZ values. AEZ stands for "Percentage of Commitments Met" and is one of many metrics on the basis of which Lean Construction works. Theis comes back to the topic of trust, because in his opinion this is fundamental for a collaborative future. To make trust measurable, they have introduced the AEZ value. 

"So we always say: the currency of the future is trust.[...] Trust, that is the percentage of fulfilled promises." 

In this way, the focus is once again on people , and if Theis has his way, even before the price. Because the step towards the digital future first means investments, which are naturally reflected in the prices. A leap of faith is needed, says the expert, in order to be able to build trust at all. If the price is always the first criterion, no lasting partnership can be built that enables trust and transparent processes. So what can be deduced for small and medium-sized enterprises(SMEs) in particular, which tend to shy away from such investments?   

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Leave the comfort zone

When it comes to innovation and digitalisation, mainly larger construction and general contractors have already ventured the step towards software solutions and technological approaches. But in order to achieve a real transformation in the entire sector, SMEs in particular need to be taken along. Changes need to be initiated in order to achieve a change in thinking. Away from short-term turnover targets and towards long-term improvements. 

Many SMEs do not see an acute need for action because the order situation is good. Freeing up resources to initiate the process of digitisation within the company may mean having to forego one or two projects. This is not the first option for many of these companies. But the shortage of skilled workers will catch up with these companies very soon, if it hasn't already. "And then there will be companies that have already dealt with digitalisation and lean and can thus work much more efficiently with existing resources. But there will also be companies that haven't done this yet, according to Theis." But the mindset of collaboration and lean construction cannot be established in the company overnight, the expert says. This leads to the next problem, the demographics of the construction industry. Not only are there few young people coming in, but many current workers will retire in the next few years. The industry needs to be made more interesting for younger generations, many of whom are more likely to go to university than to train in the trades. Modernising companies through approaches such as lean construction and platform economies offers new incentives for future generations. There is also a need to close a gap that has emerged and is widening between older and younger people. SMEs in particular should make sure that they remain interesting as employers for younger, more digitally affine generations. Lean Construction will therefore have a significant impact on the long-term competitiveness of construction companies. It will determine whether they are able to keep up with others or are left behind. The foundations of digitisation are being laid now. More and more labour-intensive processes are being automated, which means that more people have capacity to engage in further research. 

Currently, many companies still find it difficult to recognise the added value of digitalisation. But without the basis, it is not possible, says Theis:.

"There are still many who say that they don't yet see the added value that digitalisation really brings, but that is now the foundation that is being created. And as soon as that is overcome, it will pick up momentum at some point and there will be exponential added value there as well. At the latest when the processes are networked and can be measured.

This creates benchmarks that can be used to optimise processes and thus save time and money in the first place.

But the data basis alone is not enough. In the future, too, people will remain at the centre. However, if the people in the sector do not know how to deal with digital solutions, it will not be possible to survive in the long run. That is why the expert appeals to bring together people with building experience and people with technical know-how. And that, above all, in a timely manner. This is where Theis appeals:

"To all the SMEs out there, if you can hear me, just start!"

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An investment in the future: lean construction and digitalisation as a declared goal

Building foundations for the future - this leads back to the initial definition of lean construction as a philosophy and mindset. Driving the change to collaboration with the help of digital solutions by initiating a rethink in the industry is currently the biggest challenge that tech start-ups in particular are struggling with. This is made more difficult by the scepticism towards everything new, because new things bring uncertainties with them. In addition, the shortage of skilled workers means that there is a lack of employees who can deal with innovations and drive their implementation. 

Despite everything, Patrick Theis is certain: 

"Lean Construction will become the new standard in the next few years. The more projects we implement, the more the message spreads that it's good, that it works." 

He derives this primarily from the project successes that already exist.

Thus, in the long run, a standardisation should take place that leads to the understanding that lean construction is an investment in an efficient future. This still means a lot of work, precisely because the term lean, as described, is still often used incorrectly. But quick successes are also possible, confirms Theis. For him, it's about taking a leap of faith, not closing oneself off to the new and thus possibly missing the jump. Because for him it is quite clear: 

"Lean, digitalisation and BIM, for me there is no reason why this should not happen. I would even say within the next five years."

Other industries have led the way, and forecasts of resource shortages and skills shortages point to the urgency of pushing the digitalisation process further. It is time for one of the world's largest industries to arrive in the present. But this change must come from within, companies must recognise the added value of lean construction and take responsibility for driving the transformation.