Lean in Infrastructure   Delivering more for less    Stuart Smith, Chairman    January 2013APM Jan 2013                  p...
Objectives for today   •       Provide an overview of Lean and Six Sigma   •       Discuss how organisations in the Constr...
Bourton Group We have a successful track record of improving complex processes in major public and private sector organisa...
Some of our clients       nationalgridAPM Jan 2013          page 4   © Bourton Group 2013
Challenges our clients face        Time                      Agility        Waste                     Internal Capability ...
Our recently published book•       What is Lean?•       Does Lean apply to construction?•       The benefits of Lean in co...
What should we focus on to improve? “Brilliant process management is our strategy. We get brilliant results from average p...
Background and History of                        LeanAPM Jan 2013              page 8           © Bourton Group 2013
The Lean Timeline                                                        Techniques                              Adoption ...
Lean thinking is . . .               Out of shape?   Cost-cut thin?      Lean and                                         ...
Lean encompasses many levels of improvement                      Type of problem Improvement Vehicle                      ...
Fundamentals and BasicsAPM Jan 2013             page 12         © Bourton Group 2013
The Five Principles of Lean          CUSTOMER            VALUE                       •   Understanding and agreeing exactl...
Lean Improvement               Simple Objectives               Difficult DeliveryAPM Jan 2013                        page ...
The key Lean concepts – Waste & Value                        Value-Adding               Waste                             ...
The Three Stakeholders of Lean                                   Highest satisfaction                                     ...
Process improvement today uses the best of Lean and Six Sigma – Lean Sigma! 1.       All processes have inherent variation...
Lean Sigma process improvement in a nutshell       2. Processes are fed by a       3. Processes convert those           nu...
The solution is unlikely to be                   ‘more checking’ !!               Finished files are the result of        ...
Lean Sigma is . . .                                  Business focused                                         +           ...
Benefits achieved in Construction sectorReduction in total scheme costs (excluding land).      ~ 4% p.aConstruction timesc...
What is a process?               S            I             P                  O             C  suppliers                 ...
Process complexity and the likelihood of error                            Probability of success, each process step       ...
Speed: a fundamental Lean Sigma measure               Speed: the measure of speed through a process               Before  ...
Identifying value streams• A time series of all activities and steps  conducted to deliver to the customer  what they requ...
What do we mean by ‘flow’….     • The continuous movement of an item through the       Value Stream (or process)     • Que...
What do we mean by ‘pull’ • Activity in the Value Stream is triggered by a request (pull) from   the customer • The custom...
What adds Value & What is Waste?                                                                             Minimise     ...
TIMWOODS – construction examples                                                                                          ...
TIMWOODS – office examples                                                                                             Mot...
Can we eliminate waste? It depends: •      Some will be obvious •      Some will be designed in – and must be designed out...
The DMAICT Methodology for Lean Sigma projectsDefine:            Define the project – forming a team with agreed, clear go...
The climate for Lean•      Challenge & Involvement         –    How challenged, how emotionally involved, and how         ...
The Deployment Challenge                                                  Does the CEO know how the strategy will         ...
M6 Extension – major intervention   Scheme   The £120m upgrade of the A74 between Carlisle and Guards Mill – the ‘missing ...
Lean Sigma speeds up the rail network   Problem   When Network Rail took on the UK infrastructure it identified five areas...
Service levels up 14% profitability up 35%   Problem   In 2006, poor organisational processes at Siemens Energy Services l...
Serco Occupational Health Problem Serco Occupational Health’s National Service Centre administers 25,000 health referrals ...
Top tips for successful Lean Sigmaimplementation  Recipe for success – key learning points  •       Top team commitment, c...
Summary•        Lean is a proven approach that has been in use for decades•        It’s focus has always been on “Doing mo...
APM Jan 2013   page 41   © Bourton Group 2013
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Lean in infrastructure - delivering more for less

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This presentation provided an overview of the tools and techniques now being used to improve the efficiency of the construction sector and deliver more for less.

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Lean in infrastructure - delivering more for less

  1. 1. Lean in Infrastructure Delivering more for less Stuart Smith, Chairman January 2013APM Jan 2013 page 1 © Bourton Group 2013
  2. 2. Objectives for today • Provide an overview of Lean and Six Sigma • Discuss how organisations in the Construction and Infrastructure sector can achieve improved performance by implementing a sustainable lean approach • Consider how to get started and how to overcome implementation issuesAPM Jan 2013 page 2 © Bourton Group 2013
  3. 3. Bourton Group We have a successful track record of improving complex processes in major public and private sector organisations. Our consultancy takes a holistic approach to: • Focus on your strategic objectives • Deliver lean sigma process improvement built around your needs • Transfer full capability so your organisation can sustain the change • Maintain direction and progress through strong programme managementWe provide full support on the ground until continuous improvement is fullyembedded. We also like to move at pace so your organisation becomes self-sufficient as soon as possible.APM Jan 2013 page 3 © Bourton Group 2013
  4. 4. Some of our clients nationalgridAPM Jan 2013 page 4 © Bourton Group 2013
  5. 5. Challenges our clients face Time Agility Waste Internal Capability Defects ProcessesAPM Jan 2013 page 5 © Bourton Group 2013
  6. 6. Our recently published book• What is Lean?• Does Lean apply to construction?• The benefits of Lean in construction• Shortcomings and difficulties in the construction context• A suggested route map• What is a good climate / culture for Lean and how to get it• How to align effort• How to lead a Lean transformation• What and how to measure• How to sustain LeanAPM Jan 2013 page 6 © Bourton Group 2013
  7. 7. What should we focus on to improve? “Brilliant process management is our strategy. We get brilliant results from average people managing brilliant processes. We observe that our competitors often get average (or worse) results from brilliant people managing broken processes.” Fujio Cho, Vice Chairman of Toyota Motor CorporationAPM Jan 2013 page 7 © Bourton Group 2013
  8. 8. Background and History of LeanAPM Jan 2013 page 8 © Bourton Group 2013
  9. 9. The Lean Timeline Techniques Adoption Increasing used outside spreading: adoption of Lean Japan – outside Government Sigma in Service auto industry HealthcareFW Taylor’s “Scientific US War Dept – Job sector – Construction/ Management”– the instructions for Banks & Infrastructure “one best way” munitions workers Telecomms 1890 1908 - 1926 1941 1950-60s 1980s 1987 1990s 1996 2000-11 Toyota develop the The term “Lean” Jack Welch Henry & the Model T Toyota Production coined to describe the launches Six Ford –flow lines and System and begin method that made Sigma at GE mass production their rise Toyota so much better than its competitors. Motorola launch “the Six Sigma Quality Program” APM Jan 2013 page 9 © Bourton Group 2013
  10. 10. Lean thinking is . . . Out of shape? Cost-cut thin? Lean and fit? Strong at delivering the right outcomes at minimum costAPM Jan 2013 page 10 © Bourton Group 2013
  11. 11. Lean encompasses many levels of improvement Type of problem Improvement Vehicle Bene Top down interventions Complex business process Process Redesign Signif Complex, cross- Lean approach integrated intodedicated team over a problems with multiple ‘handovers’ and variables. Involves all longer timescale (6 months+). perfo servic functional business strategic and transformation driven and Problems identified by Centrally Increasing complexity of problem/issue processes senior managers. resourced. changes Problems involving broader Lean Sigma DMAICT Reduc Basic cross-team business processes that cut methodology and tools. waste business processes across several teams. Focused participation of Impro ‘Intervention’ driven Problems identified by application – process stakeholders, servic Managers. customers and suppliers. solving operational problems and Problems affecting work improving processes –Lean Rapid Improvement team performance, Rapid events (5-day blitz to 6 week Good ‘step’ Improvement Events (RIEs) & Lean identified by team and/or project). Impac Work team team leader. Sigma projects Focused effort to resolve servic level issues using Lean problem solving tools. Small, local problems of working –Management Daily ways Lean Daily Small affecting team and Lean embedded in how generated individuals – below the System® improvement including: impro and in Work team and ‘radar’ problems. operate – all staff teams • 20 Keys® perfo colleague level • Daily the involved in both doing Work Group Meetings May id • Primary Visual display comp Bottom up job and improvingKaizenway Sheets • the Action continuous it’s done • Short Interval Leadership improvementAPM Jan 2013 page 11 © Bourton Group 2013
  12. 12. Fundamentals and BasicsAPM Jan 2013 page 12 © Bourton Group 2013
  13. 13. The Five Principles of Lean CUSTOMER VALUE • Understanding and agreeing exactly what your customer needs VALUE STREAM • Understanding all of your processes FLOW • Smoothing the flow PULL • Pulling value through the chain STRIVE FOR PERFECTION • Continuing to attack waste Principles now adopted world-wide in a variety of sectors and professionsAPM Jan 2013 page 13 © Bourton Group 2013
  14. 14. Lean Improvement Simple Objectives Difficult DeliveryAPM Jan 2013 page 14 © Bourton Group 2013
  15. 15. The key Lean concepts – Waste & Value Value-Adding Waste Non Value-Adding (but necessary)APM Jan 2013 page 15 © Bourton Group 2013
  16. 16. The Three Stakeholders of Lean Highest satisfaction of needs CUSTOMER Total elimination What’s in it for of waste (Speed, ORGANISATION EMPLOYEE me and respect Quality and Cost) for individuals Balancing the needs of these stakeholders is central to Lean thinkingAPM Jan 2013 page 16 © Bourton Group 2013
  17. 17. Process improvement today uses the best of Lean and Six Sigma – Lean Sigma! 1. All processes have inherent variation and waste 2. Customers judge our processes on some measure of time, quality and cost Time Quality Lean Sigma Lean Six Sigma Waste removal Variation reduction Cost These three process measures and the causes that impact them are all interdependentAPM Jan 2013 page 17 © Bourton Group 2013
  18. 18. Lean Sigma process improvement in a nutshell 2. Processes are fed by a 3. Processes convert those number of inputs. inputs through a series of 5. . . . that are received by 4. Into process Information, raw materials, activities . . . customers outputs . . . etc. Inputs Process Outputs Customers 1. Everything we do is a process, from creating a document to delivering materials to site 7. We can measure the outputs of our process to determine whether we are Not Not consistently meeting those What the OK requirements. OK OK customer wants What the process produces 8. Failing to meet the customer Lower Target Upper requirements causes problems. It Limit Limit creates customer dissatisfaction and 6. Customers have expectations or incurs cost to the business – delays, requirements that can be defined waste, cost of putting things right.APM Jan 2013 page 18 © Bourton Group 2013
  19. 19. The solution is unlikely to be ‘more checking’ !! Finished files are the result of years of scientific study combined with the experience of many yearsAPM Jan 2013 page 19 © Bourton Group 2013
  20. 20. Lean Sigma is . . . Business focused + Customer centric + Process focused + + Targeted on waste and variation + Data driven + Team-based Project-based and Intact work groupAPM Jan 2013 page 20 © Bourton Group 2013
  21. 21. Benefits achieved in Construction sectorReduction in total scheme costs (excluding land). ~ 4% p.aConstruction timescale on specific activities halvedRework (e.g. Technical Queries) halvedApproval process time shortened by 20%Design growth significantly reducedSupply chain lead times halved completion 3 months earlyProductivity on specific activity increased 80%Plant and labour cost on specific activity reduced 60%Defect rates on mechanical process down by 90%Data driven decisions increasedContinuous improvement culture started APM Jan 2013 page 21 © Bourton Group 2013
  22. 22. What is a process? S I P O C suppliers a b c customers inputs outputs activities PROCESS UNDER INVESTIGATION start finish“A process is a series of activities that takes an input, transforms itand produces an output for a customer”APM Jan 2013 page 22 © Bourton Group 2013
  23. 23. Process complexity and the likelihood of error Probability of success, each process step Number of steps 0.95 (95%) 0.99 (99%) 0.999 (99.9%) 1 95% 99% 99.9% 25 28% 78% 98% 50 8% 61% 95% Think about the number of steps in one of your typical processes – how good does each step need to be to achieve the overall target performance?APM Jan 2013 page 23 © Bourton Group 2013
  24. 24. Speed: a fundamental Lean Sigma measure Speed: the measure of speed through a process Before Waste Waste Waste Waste Value Adding x 100 Actual Lead time = 6 Days Lead time = 1.5% After W W Value Adding Lead time x 100 Actual Lead time = 0.5 Days = 17% Increasing pace throughout the processAPM Jan 2013 page 24 © Bourton Group 2013
  25. 25. Identifying value streams• A time series of all activities and steps conducted to deliver to the customer what they require• Value streams follow processes, are not confined to departments, teams or even to business activity of the product, but the management and information systems that support the Current State to Future State basic process• Value Stream mapping is a Lean tool which enables analysis of a process to: – Identify opportunities to eliminate waste – Engage people in the process of improvementAPM Jan 2013 page 25 © Bourton Group 2013
  26. 26. What do we mean by ‘flow’…. • The continuous movement of an item through the Value Stream (or process) • Queuing, stopping, reversing or repeating is waste • When processes flow, cycle time & defects reduce Process speed Throughput FLOW Cost QualityAPM Jan 2013 page 26 © Bourton Group 2013
  27. 27. What do we mean by ‘pull’ • Activity in the Value Stream is triggered by a request (pull) from the customer • The customer pull leads to each step in the process pulling from the preceding step • No more than the amount needed is taken and therefore no more than this is produced • The rhythm and pace of the process is determined by the customer demand pullAPM Jan 2013 page 27 © Bourton Group 2013
  28. 28. What adds Value & What is Waste? Minimise Non Value Added (but necessary) Non Value Added (Waste) Value Added activity Eliminate Optimise Any activity that does not add value from the perspective of the customer can be defined as WasteAPM Jan 2013 page 28 © Bourton Group 2013
  29. 29. TIMWOODS – construction examples Motion Inventory • Excessive excavator Transportation movement • Stock piling of • Transporting material • Fetching of tools and aggregates or imported from excavation to equipment from the stores fill deposition site • Or in the office, when • Materials in storage • Moving materials from looking for files, reports, stores to work site contracts, etc. Over-Production Waiting (Idle Time) • Laying more black top than • A gang waiting for necessary Over-Processing instructions or materials • Debogging to an excessive • The need for signatures for • Payroll waiting for depth work permits, etc. timesheets • Producing too much • Multiple handling of • Waiting for site permits documentation timesheets • Plant waiting to be serviced • Pouring concrete to a better specification than needed • Designing something that is better than required Skills Misuse • Over compacting of fill • Waste of untapped material Defects/Rejects/Re-work human potential • Concrete pour does not • Not fully using the skills meet specifications that people possess e.g. • Any non-conformance Supervisor acting as a ‘banks-man’APM Jan 2013 page 29 © Bourton Group 2013
  30. 30. TIMWOODS – office examples Motion Over-Processing ─ Searching for files / Transportation handling paperwork ─ Repeated manual entry of ─ Retrieving or storing ─ Extra key strokes data files ─ Walking to get ─ Rolls-Royce report when a call ─ Taking material to copy information would do machine, fax, shredder ─ Handoffs ─ Un-needed steps, duplication ─ Carrying or posting ─ Going to get signatures ─ More information than paperwork customer needs ─ Checking and layers of approval Defects / Rejects/ ─ Creating reports no one reads Re-work Waiting (Idle Time) ─ Sending out un-needed copiesWaiting for… ─ Data entry errors Faxes ─ Pricing error System to come up ─ Missing information Customer response Over-Production Queuing for photocopier A handed-off file to come back ─ Doing more or ahead of Inventory customer need ─ Doing things for a customer ─ Queues paperwork Skills Misuse not there! ─ Open projects ─ Continually using a higher skilled ─ Creating reports no one reads ─ E-mails unread person on low skilled work ─ Making extra copies (in case) ─ Office supplies ─ Using a big computer when paper ─ Unused records in database OK APM Jan 2013 page 30 © Bourton Group 2013
  31. 31. Can we eliminate waste? It depends: • Some will be obvious • Some will be designed in – and must be designed out (Error Proofed) • Much will require a change of mindset • Some would require a change of law • Identify root causes – only when these are changed can the waste be removedAPM Jan 2013 page 31 © Bourton Group 2013
  32. 32. The DMAICT Methodology for Lean Sigma projectsDefine: Define the project – forming a team with agreed, clear goals and effective sponsorshipMeasure: Measuring the Process – gathering data on current performanceAnalyse: Analysis of the Process – identifying and quantifying root causes of current performanceImprove: Improving the Process – implementing performance improvementsControl: Controlling the Process – achieving predicted benefits and project closureTransfer: Sustain performance, maximise the benefits of the learning gained during the project and sign off Business Recognise Define Measure Analyse Improve Control Transfer opportunities TRANSFER APM Jan 2013 page 32 © Bourton Group 2013
  33. 33. The climate for Lean• Challenge & Involvement – How challenged, how emotionally involved, and how committed am I to the work?• Freedom – How free am I to decide how to do my job?• Trust & Openness – Do people feel safe in speaking their minds and openly offering different points of view?• Idea Time – Do we have time to think things through before having to act?• Playfulness & Humour – How relaxed is our workplace – is it OK to have fun?• Personal Conflict – To what degree do people engage in interpersonal conflict or "warfare?"• Idea Support – Do we have a few resources to give new ideas a try?• Debate – To what degree do people engage in lively debates about the issues• Risk Taking © CPSB, Inc – Is it OK to fail when trying new things? APM Jan 2013 page 33 © Bourton Group 2013
  34. 34. The Deployment Challenge Does the CEO know how the strategy will How? be delivered at all levels of the STRATEGY organisation to have confidence that the required results will be achieved? Where? Do Management know where the company is going so that they can provide the correct leadership to the workforce? What and why? Do Operations know what they should be doing on a daily basis and how they fit into EXECUTION the “big picture” i.e., why they have these objectives (context)?APM Jan 2013 page 34 © Bourton Group 2013
  35. 35. M6 Extension – major intervention Scheme The £120m upgrade of the A74 between Carlisle and Guards Mill – the ‘missing link’ in the M6. This included two major structures crossing the River Esk and West Coast Main Line, demolition of the Mossband Viaduct and provision of an all-purpose road. Largest application of Lean Sigma in Solution Construction & The programme focused on Lean Sigma efficiency improvements in Approval, Design Infrastructure to date and Construction processes. Our approach was pragmatic: work with the team to identify projects with the highest potential value; provide on-the-ground consultancy to support delivery of improvements through the DMAICT methodology; transfer of “Despite initial knowledge and skills, giving Carillion Roads internal capability for the future. scepticism, I am convinced Lean Sigma Results can deliver massive •£5m of savings directly attributed to Lean Sigma with notable individual projects: benefits within Earthworks (£1.56m); Piling Operations (£970k); Post Public Enquiry Process (£950k); construction and infrastructure. “ Structures Design Process (£500k). Steve Kennedy •An established CI culture, strengthening Carillion’s position for future HA tendering Operations DirectorAPM Jan 2013 page 35 © Bourton Group 2013
  36. 36. Lean Sigma speeds up the rail network Problem When Network Rail took on the UK infrastructure it identified five areas causing 50% of train delays: Points; Track Circuits; Signalling; Seasonal preparedness; and Operational procedures. Performance in these areas needed to improve to reduce government penalties - averaging £400m a year at the time. A major improvement programme following Solution Network Rail’s successful Our role was to implement a wide range of process improvements through projects bid to manage the UK’s that also achieved large-scale transfer of knowledge and skills to Network Rail’s rail infrastructure. teams. In total, 150 projects were fully implemented and our consultants trained 1200 staff to create an infrastructure of Lean Sigma capability in the organisation. “There is an innate integrity to the Results Bourton Group and a •£100m of efficiency savings refreshing flexibility of response from •Lean Sigma improvements integral to 50% reduction in train delay minutes everyone.” •Over 1200 Network Rail staff trained Rob Freeman •Client now has full capability to sustain and build upon performance improvements Operations Director •National Training Awards – Winner 2006APM Jan 2013 page 36 © Bourton Group 2013
  37. 37. Service levels up 14% profitability up 35% Problem In 2006, poor organisational processes at Siemens Energy Services led to 20% of appointments being routinely cancelled. Unsurprisingly, customer complaints were sky-high – not a good recipe for success as the major utility companies started to prepare the next round of contracts to supply metering services. Business transformation in the Metering Services Solution operation at Siemens Process improvements through: streamlining capacity planning, work scheduling, job Energy Services completion and billing; redesigning districts to optimise coverage; augmenting IT systems, logistics processes, performance measurement and reward mechanisms; and developing new ways of communicating with customers and consumers. “An amazing turnaround. Results My team was incredibly •Customer complaints dropped by 50% as service levels increased 14% unified with fantastic •Profitability increased by 35% as lost time dropped by 90% and quality issues by 50% skills transfer from •Employee satisfaction greatly increased Bourton. “ Finbarr Dowling •The programme won the Siemens UK TOP+ Award 2007 Operations DirectorAPM Jan 2013 page 37 © Bourton Group 2013
  38. 38. Serco Occupational Health Problem Serco Occupational Health’s National Service Centre administers 25,000 health referrals per year. These referrals may be dealt with by a Doctor, Nurse or Technician and may be face-to-face, on-site or over the phone. The task for the National Service Centre was to reduce lead times experienced by clients at the same time as reducing operational costs. Lean project identifies annual Solution savings in excess of A systematic review was carried out of all of the key processes and a variety of wastes £120k with a were identified which were common across different types of work. New processes reduction in the were designed based on Lean principles which removed rework and delays and enabled lead time shorter end-to-end lead times. experienced by the customer of up to Results 50% •Over £120k of annual savings – with reduction in lead times of up to 50% • Process changes allowed for the removal of report re-writes from employed and sessional doctors. • Appointment booking procedures changed to improve convenience to the employee and increase the attendance rate. • Admin organisation re-designed to give better end-to-end accountability and visibility of case progress. • Design and introduction of templates to ensure information to and from clients isAPM Jan 2013 right first time. recorded page 38 © Bourton Group 2013
  39. 39. Top tips for successful Lean Sigmaimplementation Recipe for success – key learning points • Top team commitment, clear vision of where you are going and what you expect to happen • Strong programme deployment leadership and governance • Full-time Practitioners/Belts selected against a specification where attitude is more important than technical ability • Clear performance measures and auditable benefits • Continuous support and challenge to embed the changes into daily work habitsAPM Jan 2013 page 39 © Bourton Group 2013
  40. 40. Summary• Lean is a proven approach that has been in use for decades• It’s focus has always been on “Doing more for less”• The ‘Customer’ is at the heart of the Lean approach• It focuses on reducing cost not making cuts• It enables, and depends upon, true empowerment of staff• It engages people and is effective (and fun!)APM Jan 2013 page 40 © Bourton Group 2013
  41. 41. APM Jan 2013 page 41 © Bourton Group 2013

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