This document discusses lean and agile approaches in construction supply chain management. It defines lean as eliminating waste to enable value, and agile as using market knowledge and flexibility. The lean approach focuses on identifying and removing waste using techniques like just-in-time production. Agile emphasizes responding quickly to changes through virtual partnerships and postponement. Both aim to reduce costs and lead times. While lean originated in manufacturing, the document explains how its principles apply to construction's unique, project-based nature. It also compares the advantages and challenges of lean and agile approaches in construction.

1. Lean & Agile Approaches
CONSTRUCTION SUPPLY CHAIN
MANAGEMENT (MGT60803/QSB 2433)

2. Construction Project Overruns
2
Sydney Opera House Boston Arterial Tunnel
Final cost 15 times
more than was
originally planned
Final cost 196%
more than was
originally planned

3. Project Overruns
Construction industry
•90% of projects exceed costs
•Overruns between 50% to 100%
Cause of Construction Overruns
•Poor or incomplete design and documentation
•Client scope change during construction
•Mistakes during construction
•Delays in decision making and instructions
•Poor communication and etc.
3

4. Construction Productivity
4
Fundamental differences:- Manufacturing
(Repeated and process based) vs
Construction (Unique and project based)

5. Definition
• Lean
Without much flesh, thin and fit
• Agile
Able to move quickly and easily
Able to think quickly and in an intelligent way
5

6. Definition
• Leanness means developing a value stream to
eliminate all waste, including time, and to
enable a level schedule.
• Agility means using market knowledge and a
virtual corporation to exploit profitable
opportunities in a volatile marketplace.
6

7. Lean Approach
• The lean approach core concept was initiated by the
Japanese in the term of “muda”.
• Muda means waste or any human activity that
absorbs resource but creates no value.
• Thaiichi Ohno, the former chief engineer of Toyota in
Japan, was influential in the development of what is
now widely known as “lean thinking”.
**Lean originated as an approach to improving
manufacturing systems by focusing on creating value
and eliminating waste.
7

8. Lean Approach
• He suggested seven common waste activities.
1.The waste of overproduction
2.The waste of waiting
3.The waste of unnecessary transportation
4.The waste of inappropriate processing
5.The waste of unnecessary inventory
6.The waste of unnecessary motions
7.The waste of defects
8

9. 9

10. Lean Approach
1. The waste of Overproduction
Symptoms of this waste are:
• Just in case manufacture or supply working
ahead of need
• Excessive lead times (take long time to
produce)
• Excessive storage
• Excessive work in progress (labor / machine)
10

11. Lean Approach
2. The waste of waiting
Symptoms of this waste are:
•Ineffective use of time
•Lack of motion
•Lumpy flow (e.g. material)
•Opportunity cost of waiting time
The idle of operation including manpower, equipment or
inventory.
11

12. Lean Approach
3. The waste of unnecessary transportation
Key observations:
•Better communication can lead to less
transportation
•People, plants and processes should, where
possible, be linked
•The number of steps in a process should be
minimized
12

13. Lean Approach
4. The waste of inappropriate processing
Key ideas:
•Processes need to be both efficient and effective
•Focus on process and not product
•Avoid expensive, often “high tech” investments over-
specified in relation to the real need
•Ensure quality capability at all stages
•Avoid double handling
13

14. Lean Approach
5. The waste of unnecessary Inventory
Negative aspects of inventory include:
•Inventory generates ownership cost
•Inventory generates opportunity cost
•Inventory impairs (do harm) flexibility
14

15. Lean Approach
6. The waste of Unnecessary Motion
Be concerned with ergonomics, and avoid such
activities as:-
•Stooping
•Bending
•Lifting
•Reaching
•Over-exertion (need more energy to perform)
15

16. Lean Approach
7. The waste of defects
Key ideas:-
•Poor quality = cost = waste
•Quality assurance is an investment (not a cost)
•A defect be seen as a challenge
Extra Waste: Under-utilized people
16

17. Lean Construction
Q: Does the Toyota system, lean production,
apply in construction?
A: The construction industry has rejected many
ideas from manufacturing because of the belief
that construction is different.
Q: How different it is?
17

18. Lean Construction
18

19. Goal
• Shortest Time, Best Quality, Lowest Cost
• Greatest Safety
• FLOW:- Continuous flow, Pull system,
Integrated logistics (standardize process)
• PEOPLE:- Leaders as coaches, Collaboration,
Seeing the real thing (visual Management)
• QUALITY:- Quality control, Errors defining,
root cause analysis (Continuous improvement)
19

20. Lean Construction
• Lean construction is an adaption of Lean
principles and practices to the design and
execution of construction projects.
• Lean construction supplements traditional
construction management approaches by
focusing on:-
1.Creating material and information flows
2.Maximizing value generation
3.Using plan, execute and control paradigms
20

21. Lean Construction
Shared Principles
•Optimization of entire system through collaboration and
systematic learning
•Continual improvement and pursuit of perfection involving
everyone in the system
•Focus on delivering the value desired by the owner/client/end-
user
•Creating flow though systematically eliminating obstacles to
value creation and elimination of processes that create no value
(waste)
•Creating pull production (customer needs)
21

22. Lean Construction
Key Differences
•Construction projects are unique (one-of- a-
kind) prototype (decided by owner/customer)
•Multiple suppliers act under different
commercial arrangements
•Construction environments are typically
outdoors / difficult to control (weather)
22

23. Lean Construction
• Managing construction under Lean is different
from typical contemporary practice because:-
- it has a clear set of objectives for the delivery
process,
- it is aimed at maximizing performance for the
customer at the project level,
- it designs concurrently product and process,
- it applies production control throughout the
life of the project.
23

24. Lean Construction
As a result:
•The facility and its delivery process are
designed together to better reveal and support
customer purposes.
•Positive iteration within the process is
supported and negative iteration reduced.
•Work is structured throughout the process to
maximize value and reduce waste at the project
delivery level.
24

25. Lean Construction
• Efforts to manage and improve performance
are aimed at improving total project
performance because it is more important
than reducing the cost or increasing the
speed of any activities.
• Control is redefined from monitoring results
to making things happen.
• The performance of the planning and control
systems are measured and improved.
25

26. Advantages of Lean Approach
• Reduced waste
• Quicker response to customers’ demands
• Shorter throughout time
• Lower supervision costs
• Lower stock levels
• Improved quality
26

27. Disadvantages of Lean Approach
• Increases in workers’ responsibilities can lead
to pressure and anxiety nor present.
• Expansion of job requirements without
comparable increases in pay
• The company is the main beneficiary of
employee-generated improvements
• Possibility of staffs redundancy
27

28. Challenges for Lean in Construction
Prototypes
•Construction projects are unique (one-of-a-kind)
Environment
•Unpredictable:- weather, access (information)
Communication
•Teams are geographical separated adding complexity to share
information
Supply Chain
•Projects are typically deliver by multiple suppliers
Systems/Tools/Education
•Limited systems to support Lean and limited understanding
within the construction industry
28

29. Agile Construction
29

30. Agile Approach
• The main drivers of agility include rapidly
changing and unpredictable markets.
• Agile approach focuses on four underlying
components:
- Delivering value to the customer
- Being ready for change
- Valuing human knowledge
- Forming virtual partnership
30

31. 31

32. 32

33. Figure 1
33

34. Agile Approach
• Refer to figure 1.
• The suitability of agile approach depends on
the supply and demand characteristics.
• Agility promotes flexibility and postponement
is one of the method.
• Postponement is by making customized
product changes as close as possible to the
time of purchase by the end-customer.
34

35. Agile Approach
35

36. Advantages of Agile Approach
• Flexible
• Quicker response to customer’s demands
• Customize need
• Shorter throughout time
• Lower stock levels because inventory is
generic
36

37. Disadvantages of Agile Approach
• Staffs require to response quickly.
• Offers non-standardization and inconsistency.
• Requires in-depth knowledge of consumers’
demand.
37

38. Comparison of Lean and Agile
Approaches
38

39. Comparison of Lean and Agile
Approaches
Lean or Agile?
•Lean construction claimed to improve
construction processes with minimum cost and
maximum value by considering customer needs.
•However, some argued that agility, not
leanness, is what construction jobsite
management needs.
39

40. Comparison of Lean and Agile
Approaches
• In spite of schedule changes, the plan needs
to proceed.
• Planning allows the contractor to use
knowledge to minimize risks on both the
company and project level in order to
profitably complete the work on time and on
budget.
40

41. Comparison of Lean and Agile
Approaches
• Instead of selecting a lean or agile approach,
leagile has captured the advantages of both
approaches.
• Leagile is the combination of the lean and
agile paradigm with a total supply chain
strategy by positioning the decoupling point
so as best to suit the need for responding to a
volatile demand.
41