an investigation to determine the impact of lean...
TRANSCRIPT
An investigation to determine the impact of lean construction techniques on project performance by comparing Design and Build with
traditional construction procurement methods
Johan Bezuidenhout
Supervisor: Dr H Parker
A research report prepared in partial fulfilment of the requirements for the
Degree of Masters in Business Administration at the Graduate School of
Business, University of Cape Town
i
ABSTRACT
According to Naidoo (2006), the South African construction industry will need
to double its output to meet public and private sector growth targets projected
for 2014. The industry’s ability to meet this demand however is compromised
due to poor performance in this sector globally. Low levels of productivity
results in millions of Rands lost annually.
This report investigates the link between the implementation of lean
techniques in construction and increased levels of productivity. In order to
explore this link, productivity amongst construction projects making use of
lean techniques such as benchmarking, partnering, total quality management
(TQM), just in time (JIT) and value engineering (VE) were compared against
projects less inclined to the implementation of these techniques. According to
Lam (2006), Design and Build (D&B) projects lend itself to the implementation
of these lean techniques, as apposed to traditional procurement (DBB) -
highly fragmented in nature. For the purpose of this report, D&B performance
was compared with traditionally procured projects in order to asses the impact
of lean techniques on productivity. Furthermore, interviews were carried out in
order to determine industry perceptions amongst various members of the
supply chain. Once key themes from the interviews were identified, a survey
was conducted in order to gain deeper insight into the impact of specific
techniques such as partnering and D&B procurement.
Evidence in this report suggests that, ceteris paribus, D&B projects
outperform traditionally procured construction projects. The reason for this is
that these projects lend themselves to the implementation of lean techniques.
As a result, levels of productivity increase, primarily through improved
communication, -coordination, better teamwork and higher levels of
integration and better project planning upfront.
Key Words: Productivity, Lean, Design and Build (D&B), Design Bid and Build (DBB)
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DECLARATION
1. I know that plagiarism is wrong. Plagiarism is to use another’s work
and pretend that it is one’s work own.
2. I have used the Harvard convention for citation and referencing. Each
contribution to, and quotation in, this report from the work(s) of other
people has been attributed, and has been cited and referenced.
3. This report is my own work.
4. I have not allowed, and will not allow, anyone to copy my work with the
intention of passing it off as his or her own work.
Bezuidenhout, J. December 2008
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ACKNOWLEDGEMENTS My sincere thanks to the following people for their contribution:
• Lynn O’Neill
• Peu Bezuidenhout
• Stephen Chambers
• Chris McMinn
• Alan Commerford
• Erik Nieuwenhout
• Billy Northcott
• David Elliot
• Marius vd Berg
• Bernard Minnaar
• Marcel Hoebe
Special thanks to Dr Hamieda Parker for supervising this report. Your
conviction and commitment is highly valued.
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TABLE OF CONTENTS ABSTRACT ............................................................................................................ i
DECLARATION ...................................................................................................... ii
ACKNOWLEDGEMENTS ..................................................................................... iii
TABLE OF CONTENTS ........................................................................................ iv
LIST OF FIGURES ................................................................................................ vi
ACRONYMS ......................................................................................................... vii
1. INTRODUCTION ............................................................................................... 1
1.1 Introduction to research ............................................................................ 1
1.2 Background ................................................................................................ 2
1.3 Research outline ........................................................................................ 3
1.4 Research objectives .................................................................................. 4
1.5 Scope and Limitations ............................................................................... 4
2. HYPOTHESIS & PROBLEM STATEMENT ...................................................... 5
3. LITERATURE REVIEW ..................................................................................... 6
3.1 The construction industry in South Africa .............................................. 6
3.2 Performance in the construction industry .............................................. 6
3.3 Productivity: Historic survey .................................................................... 7
3.4 Lean and construction ............................................................................... 8
3.5 Lean techniques in construction ............................................................ 10
3.5.1 Standardisation and Specialisation ..................................................... 10
3.5.2 Benchmarking ..................................................................................... 10
3.5.3 Supply Chain Integration ..................................................................... 11
3.5.4 Just In Time (JIT) ................................................................................ 11
3.5.5 Total Quality Management (TQM) ....................................................... 12
3.5.6 Value Management (VM) .................................................................... 13
3.5.7 Partnering ............................................................................................ 14
3.6 Obstacles facing the implementation of lean ........................................ 14
3.7 D&B vs. traditional procurement (DBB) ................................................. 17
3.7.1 Definitions ............................................................................................ 17
3.7.2 Risk ...................................................................................................... 18
3.7.3 D&B Trends ......................................................................................... 19
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4. HISTORICAL CASE ANALYSIS ..................................................................... 21
4.1 Background .............................................................................................. 21
4.2 Case Structure .......................................................................................... 21
4.3 Metrics ....................................................................................................... 22
4.4 Case Findings ........................................................................................... 23
4.4.1 Industry Group ..................................................................................... 23
4.4.2 Nature .................................................................................................. 24
4.4.3 Cost ..................................................................................................... 24
4.4.4 Performance Comparison ................................................................... 25
4.4.5 Summary ............................................................................................. 28
5. METHODOLOGY ............................................................................................ 29
5.1 Literature Review ..................................................................................... 29
5.2 Interviews .................................................................................................. 31
5.3 Surveys ..................................................................................................... 32
6. FINDINGS ........................................................................................................ 33
6.1 Productivity............................................................................................... 33
6.2 Lean ........................................................................................................... 33
6.3 Design & Build and Design Bid & Build ................................................. 34
6.4 Case Comparison ..................................................................................... 34
6.5 Interviews .................................................................................................. 35
6.6 Survey ....................................................................................................... 43
6.7 Summary of findings ............................................................................... 48
6.7.1 Interview: ............................................................................................. 48
6.7.2 Survey: ................................................................................................ 49
7. CONCLUSIONS AND IMPLICATIONS ........................................................... 51
7.1 Conclusions .............................................................................................. 51
7.2 Implications for managers ...................................................................... 52
7.3 Implications for future research ............................................................. 53
BIBLIOGRAPHY AND REFERENCES ............................................................... 54
APPENDIX ........................................................................................................... 58
1. Literature ..................................................................................................... 58
2. Interviews .................................................................................................... 62
3. Survey .......................................................................................................... 67
4. Case Comparison ....................................................................................... 74
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LIST OF FIGURES
Figure 1: Productivity survey ................................................................................. 8
Figure 2: Lean construction wheel ........................................................................ 9
Figure 3: Costs and benefits of quality management ......................................... 13
Figure 4: Industry culture in construction and manufacturing ............................. 15
Figure 5: A: Single- and fragmented point responibility ...................................... 17
Figure 6: Allocation of risk for each type of procurement contract .................... 18
Figure 7: Risk Profile of different procurement systems ..................................... 18
Figure 8: A: Growth in Design and Build as preferred procurement method ...... 19
Figure 9: A: Perception of growth in Design and Build as procurement Method 20
Figure 10: Case comparison structure. ............................................................... 22
Figure 11: Case comparison structure 2. ............................................................ 23
Figure 12: Case comparison by industry. ........................................................... 23
Figure 13: Case comparison by nature. .............................................................. 24
Figure 14: Case comparison by cost................................................................... 25
Figure 15: Case comparison overall performance by owner submitted projects 26
Figure 16: Case comparison by performance by contractor submitted projects. 27
Figure 17: Overall performance of owner and contractor submitted projects. .... 28
Figure 18: Overall performance of owner and contractor submitted projects ..... 35
Figure 19: Interviewee Profile………………………………...……………………...35
Figure 20: Interviewee key point summary ......................................................... 42
Figure 21: Integration amongst value chain members ........................................ 43
Figure 22: Rated importance in terms of influencing productivity ....................... 44
Figure 23: Perception of D&B apposed to traditional procurement (DBB) ......... 44
Figure 24: Perception of the construction industry .............................................. 45
Figure 25: Perception of partnering’s ability to influence productivity ................. 45
Figure 26: Key point summary - areas that influence productivity ...................... 46
Figure 27: Ranked perception of areas to improve productivity. ........................ 47
Figure 28: Summary of findings based on literature, interviews and survey ...... 50
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ACRONYMS
• AOMS Adirondack Oral & Maxillofacial Surgery
• BRE Building Research Establishment
• CII Construction Industry Institute
• CPMS Construction Productivity Metrics System
• D&B Design and Build
• DBB Design, Bid and Build
• DPW Department of Public Works
• GDP Gross Domestic Product
• IBS Industrialized Building Systems
• ICD Integrated Collaborative Design
• JBCC Joint Building Contracts Committee
• JIT Just In Time
• KPI Key Performance Indicators
• QS Quantity Surveyor
• SA Republic of South Africa
• SAPOA South African Property Owners Association
• TQM Total Quality Management
• WIP Work in Process
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1. INTRODUCTION
1.1 Introduction to research The construction industry in South Africa is rapidly growing. According to
Naidoo (2006), the industry will need to double its output to meet public and
private sector growth targets projected for 2014. Low levels of productivity in
construction worldwide however are hampering the sector’s ability to meet this
target.
In 1998, Sir John Egan’s Construction Task Force launched an investigation
to address the low levels of productivity faced by the industry. The study
concluded that production in other industries (such as manufacturing and
retailing) benefited substantially from the implementation of lean production
techniques such as total quality management (TQM), value management
(VM) and just-in-time (JIT). Even though the construction sector differs in
many respects, it was suggested that the same benefits may be obtained if
these techniques were implemented properly.
This report identifies lean techniques applicable to the construction industry
and determines their impact on productivity. However, due to the explicit
nature of the industry, barriers to implementing lean techniques were
identified, as well as countermeasures to accommodate these obstacles in
order to realise the full potential of lean techniques in construction.
For the purpose of this report, productivity amongst D&B projects were
compared with that of traditional projects (DBB). The reason for this is
because D&B projects lend themselves to the implementation of lean as
opposed to traditional procurement. This report also made use of relevant
literature, interviews with professionals in the industry and a survey
administered to various members of the supply chain. Conclusions and
recommendations were drawn from these findings.
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1.2 Background The construction industry experienced faster growth in percentage
contribution to South Africa’s GDP than any other sector from 2004 to 2008
and is currently the 8th biggest overall contributor to the GDP. This sector also
contributes approximately 6% of South Africa’s employment (Exhibit 1 & 2 in
Appendix: Literature review). However, according to Naidoo (2006), the
construction industry will need to double its current output (approximately
R100 billion) to meet public and private sector growth targets projected for
2014. Achieving this target will not be easy. This is because the construction
industry is associated with fast track projects, a heterogonous environment
and its dependency on many other trades. These factors more often than not
contribute to bad construction project planning right from the briefing phase,
which results in deadline and cost overruns, as well as inferior workmanship
and ultimately client dissatisfaction.
The implementation of lean production techniques such as TQM, JIT, VM,
partnering and benchmarking to improve productivity has been successfully
applied in many other sectors, such as motor manufacturing (Toyota), retail
(Tesco), aircraft manufacturing (Cessna) and even surgery (AOMS). The
construction industry on the other hand is adept at delivering exceedingly
complex products and services. Construction products are normally
assembled on site, unlike in a controlled factory environment. Furthermore,
according to Root (2007), these projects are characterised by a myriad of
relationships between many organisations as well as thousands of different
processes.
Due to the unique construction environment, it is much more challenging to
successfully implement these lean techniques. Some of these obstacles
include: fragmentation of the industry, limitations to standardisation and
specialisation, limitations imposed by a traditional tender based procurement
system as well as being highly reliant on multiple industries and team
member’s different functions, making communication and coordination very
difficult, hence the loss of productivity throughout the process.
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1.3 Research outline This report is divided into the following 7 chapters:
• Chapter 1: Introduction
The introduction focuses mainly on the research hypotheses, as well
as introducing the rest of the report
• Chapter 2: Hypothesis and problem statement
This chapter states the field of interest and the significance of the
research.
• Chapter 3: Literature review
The literature examines relevant literature with regards to productivity
in the South African- and other construction industries globally.
Information was obtained from journals, books, the World Wide Web as
well as publications. Key words include: Lean construction techniques,
productivity, design and build (D&B), design bid and build (DBB)
• Chapter 4: Historical case comparison: D&B vs. DBB
This chapter introduces construction projects in the form of a case
study, to gain a deeper insight into the actual mechanics of a
construction project and the relevance of lean in construction. Its focus
is specifically on D&B projects and traditionally procured projects.
• Chapter 5: Methodology
This chapter describes the qualitative research methods used in this
study. These include data from the Literature Review, Interviews,
Historical Case Comparison as well as a Survey
• Chapter 6: Findings
This chapter analyses data gathered from the literature review,
interviews, case studies and the survey
• Chapter 7: Conclusions and Implications
The final chapter draws conclusions and makes recommendations
based on the findings from the previous chapter
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1.4 Research objectives The objective of this research report is to answer the following question: How
can productivity in the construction industry benefit from the implementation of
lean construction principles?
In order to answer the above, the following was taken into account for
analysis.
• Current performance of the construction industry and the future outlook
for South Africa
• Definition, measurement and relevance of productivity in the
construction industry
• Definition and implementation of lean production techniques in the
construction industry as well as other industries in contrast.
• Obstacles and barriers for implementing lean production in the
construction industry
• Possible benefits and detriments of successfully implementing lean
production in the construction industry
1.5 Scope and Limitations Although the literature is not restricted to the South African context,
questionnaires, interviews and case studies are mostly South African based.
Moreover, the bulk of the information comes from a small sample of
construction related professionals in the Western Cape only. The correlation
of the interpreted data and its application must therefore be seen in this
context.
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2. HYPOTHESIS & PROBLEM STATEMENT
So far it is clear that the construction industry has a vital role to play in
promoting developments in the economy. However, this industry experiences
major obstacles in delivering projects on time, within budget and to quality due
to low productivity. According to research conducted by SAPOA, “contractors
face many problems when delivering construction projects, as a result of poor
contractor performance, characterised by poor work quality and low
productivity which is common in the industry” (Thwala, 2007:2)
As highlighted in the Egan Report (1998), the South African construction
industry is not the only construction industry facing this challenge.
Construction industries around the world are characterised by high
fragmentation, client dissatisfaction, low levels of investment in research and
development, low levels of training and traditional tender based project
systems.
The purpose of this report is to determine whether productivity on construction
projects can be improved by the implementation of lean construction
techniques, such as partnering, value engineering and benchmarking. In order
to solve the hypothesis, projects making use of lean construction techniques
must be compared with projects not currently making use of lean construction
techniques (not exclusively) in terms of productivity. As a result, two particular
methods of procurement for construction projects have been identified in order
to test the hypotheses – D&B procurement and traditional procurement. The
reason for this is that, according to Lam (2004), innovative procurement
methods, specifically D&B projects, lends itself to the implementation of lean
in construction as apposed to traditional projects, hence the reason for
comparing their performance in order to draw reasonable conclusions and
make recommendations.
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3. LITERATURE REVIEW
3.1 The construction industry in South Africa As mentioned earlier, the SA construction industry is a major role player in the
economy. According to Statistics SA, the construction industry experienced
annual employment growth of approximately 390 000 people between 2001
and 2006, bigger than any other sector in this period. Furthermore, according
to the DPW, the industry contributed a total of R122 345 billion to the total
gross capital formation in 2006, which is equal to approximately 38%!
In 2006, the sector saw an increase in growth from 10% to 14% from 2005 to
2006. According to Thwala (2007) this trend will continue, underpinned by
strong public infrastructural expenditure. Furthermore, public sector
infrastructural expenditure has increased by 15.8% per year between 2003
and 2007. Evidence to support Thwala’s prediction is the fact that the SA
government is the largest contributor to domestic construction expenditure,
totalling between 40% and 50%.
3.2 Performance in the construction industry Worldwide, productivity levels in the construction industry have been classified
as relatively poor. Sir John Egan launched an investigation into this
phenomenon (known as the Egan Report: Rethinking Construction) as early
as 1998 to establish the main causes. According to Egan (1998), these
include (but are not limited to) the fragmentation of the industry, customer
dissatisfaction, untrained workforce, low profit margins and a tender based
procurement system. Another major stumbling block in the construction
environment is the difficulty of measuring productivity, due to its highly
customised and complex nature. This has fuelled research for standardising
methods for measuring productivity, such as CPMS, with the emphasis on
benchmarking.
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Egan saw the manufacturing and service industries making major productivity
gains from implementing lean production systems that focus on the following:
• Supply chain integration: Partnering with the supply chain by
establishing and working towards mutual goals and objectives benefits
the process by shared progress measurement,
• Standardisation: By pre-assembling units or components the
construction time is dramatically reduced and quality can be increased
by manufacturing in controlled factory conditions as apposed to
exposed construction sites.
• Performance measurement: Systems such as benchmarking, VM,
TQM and JIT are used in various other industries for eliminating waste
and improving quality and efficiency (explained elsewhere)
3.3 Productivity: Historic survey As mentioned previously, the construction sector in South Africa and in most
other counties is a significant contributor to the country’s GDP, as well as total
employment, hence the importance of the performance of this industry. On
these grounds, a survey was conducted by the Michigan Tri-Partite
Committee in 2002 to investigate low levels of productivity in the construction
sector in North America, and methods to improve it. Respondents totalled 182
construction professionals, of whom 90% had more than 10 years experience
in the industry. The main objective of this qualitative survey was to determine
what professionals consider to be the greatest barriers to productivity, as well
as areas for improving productivity. The top 5 results for ‘greatest barriers to
productivity’ and ‘greatest areas for improving productivity’ were respectively
as follows:
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Greatest Barriers to Productivity:1 Design: Specifications, drawings, documents have to be improved2 Field support for timely responses: Engineer/Architect on site3 Coordination of design4 Timely information (Based on RFI Schedules)5 Construction/ Project Mangement competancy
Greatest Areas for Improving Productivity:1 Constructibility of design documents (Realism)2 Coordination among major contractors and designers3 Pre-Project planning4 Communication and teamwork between various parties involved5 Improvement of the construction management process
Figure 1: Productivity survey. Source: Michigan Tri-Partite Committee (2002)
It is clear from the survey findings that factors such as communication,
coordination, integration and planning play a vital role in influencing levels of
productivity on projects. The next section investigates the link between lean
construction techniques and factors such as communication, coordination and
integration.
3.4 Lean and construction The principle of lean was originally developed by Toyota motor manufacturing
and later refined and expanded in other industries. In Sir John Egan’s report,
‘Rethinking Construction’ (1998), he highlights the benefits of implementing
lean procedures in various industries, such as offshore engineering, grocery
retailing, steel making and of course motor manufacturing.
The Egan report continues by suggesting that the implementation of lean
principles (discussed in more detail elsewhere) in the construction industry will
be just as beneficial as experienced by other industries. The benefits of ‘first
mover’ construction related firms that have implemented some of these lean
principles are evident. Examples of such organisations are Raynesway
Construction Southern (Hampshire), The Neenan Company (Colorado),
Pacific Contracting (San Francisco), and NMC (South Africa) who were all
able to reduce costs & time as well as increase productivity & output per
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employee by implementing techniques such as TQM, VM and JIT. Diekmann
(2003) identified the following as the five main enablers for lean construction:
• Standardisation
• People/Culture
• Continues Improvement/Built in Quality
• Elimination of Waste
• Customer Focus
Figure 2: Lean construction wheel. Source: Diekmann (2003)
Diekmann’s reflection of lean production in the construction sector is quite
encapsulating, for the purpose of this report, the emphasis will only be placed
on a selected group of principles, best explained in the next section.
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3.5 Lean techniques in construction 3.5.1 Standardisation and Specialisation
This technique contains visual management, workplace organisation as
well as defined work processes. Because every construction project is
unique, the implementation of standardisation is of course limited.
However, recently construction projects are making use of systems
such as IBS (Industrialised Building Systems), modularisation, pre-
assembly and pre-fabrication which dramatically reduces construction
time (since components can be mass produced in controlled
environments off-site), reduces cost (economies of scale due to
decreased set-up costs, rental costs as well as time spent) and
increase quality (controlled environment as well as mass produce).
3.5.2 Benchmarking
Egan (1998:10) describes benchmarking as “a management tool which
can help construction firms to understand how their performance
measures up to their competitors’ and drive improvement up to ‘world
class’ standards”. The successful implementation of benchmarking in
the manufacturing industry since the early 90’s has sparked the interest
for applying it elsewhere. According to Mohamed (1996), the
construction industry is slow to adopt this technique due to:
misunderstanding the concept, not knowing how to properly apply it in
context, the availability of data (the structure of the construction
process does not allow field-based data to be collected readily), as well
as the fact that benchmarking requires drastic changes in the way
information and communication is handled and documented.
Despite the apparent complexity and restructuring of traditional
methods associated with benchmarking, construction organisations
globally have seen the benefits of implementing this technique. For
example, Taywood Engineering Ltd uses benchmarking on projects to
identify strategies for achieving ‘zero defects’ in construction, based on
principles of a ‘zero defect culture’. Mohamed (1996) suggests that for
benchmarking to be successfully applied in the construction sector,
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three distinct types of benchmarking must be addressed – Internal
benchmarking, project benchmarking and external benchmarking
(discussed in more detail in the report).
3.5.3 Supply Chain Integration
According to Root (2007:8) “Construction projects involve relationships
between many organisations and thousands of processes. The industry
has evolved highly developed methods of accommodating this
complexity, with the evolution of many specialised roles and embedded
relationships. These are mediated through well-established contractual
arrangements, while the delivery and assembly of components to
dispersed locations is being continually refined with improving working
methods and assembly technologies.” As mentioned, the construction
sector relies on the collaboration of many different role players. The
need to improve the delivery process as a whole, especially in the
design phase has been recognised worldwide. Supply Chain
Management and Integration techniques (such as partnering) aims at
improving the relationship throughout the supply chain (from briefing to
handover), and as a result, remove unnecessary costs typically stored
up in the supply chain of the construction sector. Lastly, project
collaboration allows for the real-time sharing of information, drawings,
programmes as well as budgets. From the client’s perspective, benefits
of project collaboration and supply chain integration are improved
communication, increased speed as well as quality. The “D&B” concept
focuses primarily on the integration of the supply chain and the benefits
from doing so. The D&B concept will be discussed in more detail under
the case study section of the report.
3.5.4 Just In Time (JIT)
Just In Time methods was first introduced in the manufacturing industry
(Toyota) in order to reduce WIP inventory (hence working capital), but
ultimately according to Ballard (1995) the main benefit of implementing
JIT is in the reduction of the variability of work flow, therefore
contributing to continuous improvement. However, Ballard continues by
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stating that the construction industry is much more complex and
uncertain than the manufacturing industry, due to the number of parts
and processes involved, limited standardisation and multiple
participants. When combined with the economic pressures of
minimising time and cost as well as optimising quality, the effective
implementation of JIT is much more challenging. Despite this, Das
(1997) states that firms following JIT practices derive benefits of more
frequent deliveries, smaller lot sizes as well as lower on-hand
inventory, levels (which arguably forms a critical part of all construction
projects) driven by increased quality, information sharing and ultimately
trust.
3.5.5 Total Quality Management (TQM)
Implementing TQM is a continuous process of incremental
improvements. It is a process orientated (as apposed to a result
orientated) approach, meaning that the results will follow as a
consequence of implementing the process correctly.
According to Peng (1996:40), “Total quality management (TQM)
consciously focuses all parties to the common goal of systematically
identifying and meeting the customer’s requirements as the super
ordinate goal. It should, however, be noted that the tools associated
with TQM can be as readily applied in a stable environment as in the
manufacturing sector. In construction, where customers’ requirements
are increasingly complex, and expectations uncertain, the application
of such tools can become difficult.” Despite the obstacles posed by the
construction sector, Peng continues to say that 15% savings on total
cost of a construction project can be achieved through the
implementation of TQM by eliminating re-work, reducing waste and
increasing attention or concern for prevention of rejects or wastes on
remedial works. See Figure 3 below:
13
Figure 3: Costs and benefits of quality management. Source: BRE (1982)
3.5.6 Value Management (VM)
Value management (VM) or value engineering (VE) is basically the
implementation of a service that maximises the functional value of a
construction project by managing its development from start to finish. In
other words, VM is an organised approach of identifying and
eliminating unnecessary cost throughout the lifecycle of a project.
According to De Leeuw (2001), value management covers the
following phases:
• Information Phase (Develop understanding of the project)
• Objective Phase (Focus on common objectives project must fulfil)
• Functional Analysis Phase (Develop functionality of the project)
• Creativity Phase (Brainstorming)
• Evaluation Phase (Identify possible alternatives)
• Development Phase (Technical development of ideas)
• Reporting Phase (Agree on outcome and consensus on actions
needed to keep project on track)
Lastly, De Leeuw states that although value management is currently
not readily adopted throughout the industry (for reasons mentioned in
previous sections), it is bound to be become more popular due to its
benefits, which amongst other include the fact that value management
aids in the identification of constraints which might not have been
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obvious, as well as providing “optimum value for money projects with
improved functionality” (De Leeuw, 2001:11)
3.5.7 Partnering
According to Ronco (1996:2), “Partnering is a formal program to
improve communications among the people and organisations working
on a design and construction project.” Key members of the project
team collaborate during the design phase, pre-construction and
regularly during construction phase of a project. According to Li
(2000), Partnering has been a primary management strategy for
improving organisational relations and project performance. Li
Continues to argue that, to increase productivity and efficiency in the
construction industry, a strong focus has been set on better integration
of the different parties (including the client, architects, engineers,
general contractors, subcontractors, suppliers, etc.) in one integrated
project organisation. These parties referred to by Li, are normally
independent organisations, with separate aims and operations. Typical
problems that occur, according to Laedre (2001), are lack of
communications and co-ordination leading to changes and alterations
during the process. This causes disputes, higher costs, lower
performance and lower overall quality, hence the significance of
collaboration and partnering.
3.6 Obstacles facing the implementation of lean As mentioned earlier, the difficulty for implementing lean techniques in
construction is mainly due to the distinct nature of this sector. Most ‘lean’
techniques (such as value engineering, partnering and benchmarking) have
been developed and refined in the manufacturing industry. Since these
industries differ in many respects, it will be worth wile doing a comparison:
Brokmann’s (2005) research concluded the following comparative table with
regards to the differences between these two industries (also see exhibit 4-5
in appendix: literature review):
15
Figure 4: Industry culture in construction and manufacturing. Source:
Brockmann (2005)
According to Barrie (1992), production in construction can be described as
project based unit production, contract production and on-site production.
Manufacturing on the other hand is inversely characterised by mass-
production, replication, stock- and factory production, which lends itself to
generating economies of scale (as apposed to construction). Peng (1996)
adds to this by stating that the reliance on migrant labour and the short-term
nature of construction projects add to the difficulty of implementing these lean
techniques. Peng continues to argue that new methods of procurement are
the key to overcoming inhibitive tendencies posed by the complex nature of
16
the construction industry. This is in line with Egan (1998:14) which states “the
industry rightfully complains about the difficulty of providing quality when
clients select designers and constructors on the basis of the lowest cost
(traditional procurement) and not the overall value for money.” Egan further
contributes by saying that, currently the fragmentation, low skill levels,
limitation of standardisation and pre-assembly (due to the highly customised
nature of construction) as well as limited or poor communication between the
large amount of key players on a project all act as barriers to the successful
implementation of lean principles in the construction industry.
In summary, the barriers can be categorised as follows:
• Traditional methods of procurement lead to poor contractor
performance and workmanship as a result of low tender prices. This is
mainly due to the fact that client’s wrongly associate ‘low cost’ with
‘value for money’
• The large amount of key role players on a project makes effective
communication and proper coordination difficult. This in turn has the
effect of wasting valuable time on a project, as well as constructing a
product that is not in line with the client’s expectations.
• Low levels of integration between the whole team (i.e. contractors and
the design team), which have a significant knock-on effect on time, cost
and quality of the project.
• The customised nature of a construction project makes it very difficult
to implement standardised, modular or pre-assembled products on a
project, which in turn makes it almost impossible to generate the cost,
time and quality benefits of economies of scale
• The highly fragmented nature of the industry leads to the extensive use
of sub-contracting, which in turn prevents the continuity of teams that is
essential to efficient working.
17
3.7 D&B vs. traditional procurement (DBB) 3.7.1 Definitions
Design and Build projects differ from traditional procurement in the sense
that the D&B contractor is responsible for both the design and construction
of the facility to deliver a building to the satisfaction of the client. According
to Masterman (1992), “Design and Build has almost been unanimously
interpreted and defined as being an arrangement where one contracting
organisation takes sole responsibility, normally on a lump sum fixed price
basis, for the bespoke design and construction of a client’s project.” This
can be divided in the following three categories: 1.the responsibility of the
design and construction of a project, 2.reimbursement occurs through a
fixed sum / upfront agreement, 3.the project is designed and built to
exactly match the client’s needs. Furthermore, according to Chappell
(1997), Design and Build contracts place responsibility for both design and
construction in the hands of the contractor one point of responsibility for
everything, as apposed to traditional procurement, where the design and
construct responsibility is kept separate. See figure 5 below:
Figure 5: A: Single point responsibility (D&B), and B: Fragmented responsibility (Traditional). Source: Seng (2006)
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3.7.2 Risk
As mentioned, D&B projects significantly increase the risk for the one party
assuming the point of responsibility (for both building and designing).
According to Solomon (2005:5), one of the biggest fears professionals
have about leading a design-build project is the increased risk associated
with construction. “While the tasks traditionally associated with architecture
and design is insurable, work occurring on a construction site is not.”
However, according to Solomon, this creates a huge opportunity for
professionals who take the risk – risk is not managed by insurance, but by
significantly higher profits. The graph below describes the difference in risk
structure between D&B projects as apposed to traditional procurement:
Figure 6: Allocation of risk for each type of procurement contract. Source:
Seng (2006)
Figure 7: Risk Profile of different procurement systems. Source: Perry, 1985
19
3.7.3 D&B Trends
According to Seng (2006), Design and Build tends to be quicker than
traditional procurement, both in terms of site construction and total project
time. Most importantly, Seng continues to argue that time savings with
D&B are maximised at the pre-contract stage, with upfront integration of
parties. According to studies carried out by Fitchie (1996), procurement
time for traditional projects can be up to two times that of D&B. Seng
continues by saying that the benefits of D&B are accrued simply because
of its ability to integrate the project team members, produce open
communication and encourage effective cooperation. As a result of these
and other proven benefits in terms of project performance of D&B, the
trend is definitely indicating rapid growth for this type of procurement.
Figure 6 below illustrates the growth in usage of D&B as a procurement
method as opposed to traditional procurement. Figure 7 is a summary of
the survey conducted by Zweig-White Information services in conjunction
with the Design-Build Institute of America in 2005, which shows the
perception of projected growth for D&B amongst construction
professionals:
Figure 8: A: Growth in Design and Build as preferred procurement method. Source: Design and Build Institute of America (2005)
20
Figure 9: A: Perception of growth in Design and Build as procurement Method.
Source: Design and Build Institute of America (2005)
21
4. HISTORICAL CASE ANALYSIS 4.1 Background The following case comparison was adapted from the 2002 Construction
Industry Institute (CII) study on the impact of different construction
procurement systems. The purpose of the CII report was to produce data that
records the economic impacts of the type of procurement system used for
construction projects, specifically on productivity. For the purpose of this
research report, Design and Build and traditional procurement (Design, Bid
and Build) will be compared exclusively.
The following distinction is vital for reference throughout the case: In D&B
contracts, a single entity (normally the main contractor) is responsible for both
the design and construction of the project. Contractually, this provides the
owner with a single point of reference. Traditional procurement (DBB) on the
other hand separates the design and construction aspects of a project. The
owner contracts with a design organisation for the complete design
specifications. Thereupon fixed price bids (tenders) are solicited from
construction contractors (main contractors) to carry out the erection of the
building. The successful selected contractor will then enter into an agreement
with the owner to build the facility according to submitted plans and
specifications.
4.2 Case Structure As mentioned, for the purpose of this report, D&B and traditionally procured
contracts were compared exclusively. For a project to be classified as a D&B
project in this study, one particular organisation had to perform 50% or more
of both the design and construction of a project. If this was not the case, the
project was classified as a DBB (traditional). The total number of project
participants equated 617 from various countries in the world. The project
participants fell into two categories: Owner submitted projects, and contractor
submitter projects. Of the 617 participants, 326 (split: 82 DB, 244 DBB) were
owner projects, and 291(split: 128DB, 163DBB) were contractor projects. The
participant structure is represented by the figure below:
22
Figure 10: Case comparison structure. Source: Construction Industry Institute (2002)
4.3 Metrics This case compared D&B with traditional procurement with regards to the
following metrics:
• Performance: Cost, Schedule, Safety, Changes, Rework and
Productivity
• Practice: Pre-Planning, Team Building, Zero Accident
Techniques, Project Change Management,
Information Technology, Materials Management,
Start-up Planning, Total Quality Management (TQM)
Based on the metrics described above, the study was divided up into sub-
sections for comparisons. Each project (D&B and traditional) was compared
by: 1. The type of industry it operates, (industrial or building), 2. The nature of
the project (modernisation, add-ons and Greenfield – meaning a brand new
project) and 3. Cost categories (total project value). This structure is
represented by the figure below:
23
Figure 11: Case comparison structure 2. Source: Construction Industry Institute (2002)
4.4 Case Findings 4.4.1 Industry Group
As indicated by figure 12 below, the study indicated that the majority of
submitted projects were traditionally procured as opposed to D&B, especially
owner submitted projects where DBB was used 9 times more often than D&B
in the building industry, and about 2 times more often in the industrial industry.
Although contractor submitted projects indicated a much closer split, DBB was
still more common than D&B. The word “traditional’ might explain the reason
for this, as this is still the preferred method for procuring construction projects
as a result of experience, but this trend is definitely changing (see figure 8 in
literature review).
Figure 12: Case comparison by industry. Source: Construction Industry Institute (2002)
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4.4.2 Nature
The literature indicates that D&B projects are more commonly used in higher
cost projects as apposed to traditional procurement, which tends to be used in
smaller projects. Greenfield projects have by far the higher cost component
compared to add-ons and modernisations. Owner submitted projects (see
figure below) still however indicated that traditional procurement is preferred
to D&B, even in higher cost projects such as green-field projects. Contractor
submitted projects on the other hand clearly illustrated that D&B is preferred
to traditional for higher cost projects. See figure 13 below:
Figure 13: Case comparison by nature. Source: Construction Industry Institute
(2002) 4.4.3 Cost
Although owner submitted projects clearly indicated that traditional
procurement was preferred to D&B, as project size (in terms of cost)
increased the ratio difference between DBB and D&B decreased. As indicated
below, for projects worth R500 Mil ($50 Mil) or more, the ratio is almost 1:1 as
opposed to projects worth less than R150 Mil ($15 Mil) where the ratio is
almost 1:5. Contractor submitted projects on the other hand clearly indicated
that D&B projects were preferred for higher cost projects (as per the
literature). On average, it was found that D&B projects had mean cost of R805
Mil as apposed to traditionally procured projects, with a mean cost of R227
Mil. Please see figure 14 below for a graphical representation.
25
Figure 14: Case comparison by cost. Source: Construction Industry Institute (2002)
4.4.4 Performance Comparison
In terms of overall performance, owner submitted projects indicated that D&B
outperformed DBB (traditionally procured) projects in the cost, schedule,
changes, rework and practice use components (5 out of the 6 metrics). Safety
was the only metric where DBB procurement outperformed D&B. The
‘schedule’ metric, which looks at project timelines, indicate that DBB
outperformed D&B under ‘construction phase duration’ – this could be
explained by the fact that D&B projects (as mentioned under cost) tend to be
higher cost, and as a result take longer to complete. The table below is a
direct comparison between owner submitted D&B projects and DBB projects.
Shaded blocks indicate better performance:
26
Figure 15: Case comparison overall performance by owner submitted
projects. Source: Construction Industry Institute (2002) Construction submitted projects painted a slightly different picture. Although
on average, D&B projects outperformed traditionally procured projects, the
split was slightly more balanced. Traditional projects outperformed D&B
projects in cost as well as schedule related metrics. However, differences
were not significant. The cost component could be explained by the fact that
D&B contractors have to quote (tender) on a project before any design work is
done. This could also be as a result of how changes were handled in D&B
projects (considering that they had an average duration far longer than DBB
projects.
27
The schedule component could be explained by the fact that D&B contractors
are responsible for the majority of the design and construct (above 50% as
defined previously). This could result in D&B contractors not being able to
estimate or predict durations accurately, as D&B projects tend to last much
longer than DBB, and have more uncertainty upfront as apposed to DBB
where the contractor only commences work after the design is complete, and
project requirements have been ‘ironed out’. The table below is a graphical
representation of contractor submitted projects with respect to D&B and DBB.
Again, shaded blocks indicate better performance.
Figure 16: Case comparison overall performance by contractor submitted projects. Source: Construction Industry Institute (2002)
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4.4.5 Summary
The study found that D&B projects were significantly larger on average in cost
than traditionally procured projects, for both owner and contractor submitted
projects. Also, project performance should not be seen in isolation, since
factors influencing productivity and performance, such as the size, industry,
nature and cost, should be accounted for. Ceteris paribus, the study revealed
a clear performance advantage for owners when D&B procurement was used.
However, for contractors, the performance of D&B over traditionally procured
projects was not that clear. This may be as a result of the increased risk,
uncertainty, increased scope of works and longer timeframe that contractors
operate in when procuring a D&B project. Despite this, overall for contractor
submitted projects, D&B still outperformed traditionally procured projects. The
results of the overall comparison between the D&B projects and traditionally
procured projects (DBB) for both owner-submitted and contractor submitted
projects are summarised below. The white block in the ‘Overall’ section
indicates which procurement methods outperformed the other.
Figure 17: Case comparison of overall performance of owner and contractor submitted projects. Source: Construction Industry Institute (2002)
OWNER CONTRACTOR OWNER CONTRACTOR OWNER CONTRACTOROVERALL DB *** DB Traditional *** ***
OWNER CONTRACTOR OWNER CONTRACTOR OWNER CONTRACTOROVERALL DB DB DB DB DB DB
*** No DifferenceBold Significant Difference
CHANGES REWORK PRACTICE USE
COST SCHEDULE SAFETY
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5. METHODOLOGY
Choosing the correct methodology is vital if this report is to add value. For the
purpose of this report, qualitative, quantitative, action research and historical
case studies were all considered. Brymann (1992) outlines that the most
important difference between the qualitative and quantitative approach is as
follows: a qualitative approach focuses mainly on the perspectives of those
being interviewed and in contrast, a quantitative approach focuses
predominantly on the concerns of the researcher. Furthermore, according to
Saunders (2003), action research is the management of a change initiative. In
other words: being able to implement a change agent in an existing process to
determine its impact. Alternatively, historical case studies, as the name
suggests, makes use of a past event or process, which allows the researcher
to analyse the outcome as well as its implications.
After careful consideration, it was decided that for the purpose of this report,
the researcher should focus predominantly on the following qualitative
methods:
• Literature review including historical case study comparing Design and
Build (D&B) projects with Design Bid and Build Projects (DBB)
• Semi-structured interviews
5.1 Literature Review The literature review in this proposal makes it clear that the hypothesis can
not be solved by exact science. According to Naoum (2001), each
construction organisation operates in a different environment and with a
different culture, hence the need to focus on the perspectives by those
interviewed. For this, a qualitative approach needs to be adopted. Reviewing
and analysing current as well as dated literature related to the research
question to gain a broad understanding of the present situation as well as a
possible future outlook. Literature was gathered in the form of accredited
journals, books and by interacting with researchers in this area.
30
The following were identified as key topics for addressing the research
hypothesis:
1. Productivity in the South African construction Industry
2. Lean methods applied in the industry
3. Design and Build Procurement and traditional procurement
Even though action research would have been a good method for measuring
the effectiveness of the implementation of the hypothesised procedures, time
constraints made this process simply impossible, especially due to the long
term nature of construction projects. However, historical case studies allowed
the researcher to compare different construction projects to determine the
impact of specific implemented procedures, methods or systems over time.
One limit to this type of research is of course the availability of project history
and the accuracy of recorded data.
For the purpose of this report, two types of projects and procurement methods
were examined specifically:
1. Design and Build procured construction projects
2. Traditionally procured construction projects
The reason for comparing these two types of projects is simply because D&B
projects and traditionally procured projects operate on different sides of the
scale, in terms of legal setup, risk, responsibility, party interface as well as
value chain integration as described in the literature review. Lam (2004)
argues that, because of the way design and build projects are structured, it
lends itself to the implementation of lean techniques such as partnering,
benchmarking, value engineering, etc. If this is the case, then it can be
determined what the impact of lean techniques are on productivity by
comparing design and built projects with traditionally procured projects (see
research hypothesis).
31
As discussed in the literature review, design and build projects make the
integration of information easier, streamlines communication as well as
resulting in time efficiency and cost savings. This claim is endorsed by results
from the interviews and survey. Furthermore, it also became evident by
comparing design and build projects with traditionally procured projects from
historical cases.
5.2 Interviews Interviews with 7 different members of the construction value chain were
conducted. Individuals interviewed all reside in the Western Cape. A semi
structured interview approach with guideline questions was adopted. All
questions related to relevant issues raised in the literature review, with
regards to improving productivity in construction by implementing lean
methods. The semi structured interviews were divided into the following
categories:
1. Design and Build procurement vs. traditional procurement
2. Productivity
3. Lean methods in construction
4. General
For a detailed list of questions and references, please see appendix. After
typing up the interviews, recurring themes were identified and compared with
the literature review. (See the ‘Findings’ section and appendix). Lastly,
representative quotes from the interviews were identified and grouped with the
recurring themes. The findings from the collected data were used as the
foundation for the conclusion and recommendations for this report.
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5.3 Surveys As explained by Saunders (2003), surveys are a methodology whereby a
sample of subjects is drawn from a population and studied to make inferences
about the population. Compiling a survey involves the use of questionnaires to
gather data from the sample.
An on-line survey for the purpose of this report was conducted in order to gain
deeper industry insight with regards to productivity in construction, and
especially the implementation of lean methods. 47 individuals responded to
the survey. Responses were limited to individuals operating in the Western
Cape. Respondents include members from the following professions in the
construction industry:
1. Developers (3 total)
2. Project managers (5 total)
3. Architects (4 total)
4. Engineers (5 total)
5. Consultants (8 total)
6. Main Contractors (14 total)
7. Co-Contractors (7 total)
8. Suppliers (1 total)
The questions for the survey were compiled after analysing the interviews. As
a result, the main focus of the survey was to determine the response with
regards to specific factors. Amongst these were partnering, procurement
preference and implications as well as ranking items related to productivity
such as communication, integration and transparency. Data from the survey
was analysed by comparing individual responses, filtering results (where
relevant) as well as identifying recurring themes (where relevant) in order to
make reasonable assumptions. Findings from the survey were also used as
the cornerstone for the conclusion and recommendations. Please see the
appendix for the complete survey analysis.
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6. FINDINGS 6.1 Productivity According to the Egan Report (1998), the construction industry globally is
underperforming. Shakantu (2007) endorses this by stating that the South
African construction industry is underperforming in terms of return on
investment. Egan claims this is due to customer dissatisfaction, untrained
workforce, low profit margins, and a tender based procurement system. The
2002 study conducted by the Michigan Tri-Partite Committee concluded that
the greatest barriers to productivity are coordination of design, information
flow and constructability, and the greatest areas for improving productivity on
construction projects are communication between members, pre-project
planning and coordination amongst members again. Despite the fact that
construction has experienced faster growth than any other sector, low levels
of productivity continue to cost South Africa millions of Rands every year.
6.2 Lean Lean production methods have been applied with great success in the
manufacturing industry. According to Diekmann (2003), 1.customer focus,
2.eliminiation of waste, 3.continuous improvement, 4.people (culture) and
5.standardisation are the 5 enablers for implementing lean in construction.
However, the construction industry differs significantly from the manufacturing
industry. This is in line with Barrie’s (1992) claim that the construction industry
is unique-project based production as mass replication and factory production.
As a result, lean techniques are often difficult to successfully implement in
construction. Some of the barriers for lean implementation are (but not limited
to): the duration and complexity of construction projects, the fragmented
nature of the industry, the high amount of role players and low levels of
integration and communication amongst them. Peng (1996) argues that new
methods of procurement are the key to overcoming inhibitive tendencies
posed by the complex nature of the construction industry.
34
6.3 Design & Build and Design Bid & Build Egan (1998) states that the construction industry rightly complains about the
difficulty of providing quality output when clients select designers and
contractors on a lowest cost basis. This is exactly the problem that the
traditional procurement system enforces – based on a fragmented design and
build division, and a ‘lowest-cost’ appointed contractor.
Design and Build (D&B) on the other hand makes use of one organisation to
provide the client with both the design and construction element. According to
Seng (2006), Design and Build tends to be quicker than traditional
procurement, both in terms of site construction and total project time. Seng
continues by saying that the benefits of D&B are accrued simply because of
its ability to integrate the project team members, produce open
communication and encourage effective cooperation. Furthermore, Cornick
(1991) states that because the design and build method of procurement offers
a single point of responsibility for both the design and production, it supports
the successful application of quality management to a building.
Research by the Design and Build Institute of America (2005) indicates that
the use of D&B as procurement is increasing rapidly, and according to
predictions, should surpass the traditional form of procurement in
construction.
6.4 Case Comparison This case compared D&B projects with traditionally procured projects (Design
Bid & Build). A total of 617 projects were submitted comprising of contractor
submitted projects as well as owner submitted projects. In terms of
performance and practice - these two procurement methods were compared
against each other with regards to total cost-, schedule/programme related
items as well as safety, change (or rework items) and practice use (i.e.
constructability etc). Furthermore, projects (both D&B and DBB) were
categorised per industry, nature and cost structure.
35
METRIC Owner ContractorCost DB ***Schedule DB TraditionalSafety *** ***Changes DB DBRework DB DBPractice use DB DB(*** -- No Significant Difference)(BOLD -- Significant Difference)
The study found that the use of traditionally procured projects still far
outweighs D&B projects, although less significantly in the industrial sector.
Furthermore, it was found that D&B have a mean project value of R805 Million
as opposed to DBB with a mean of R229 Million in comparison. This may
explain why ‘green-field’ projects made more use of D&B as opposed to ‘add-
ons’ and ‘modernisations’, since both the latter are smaller in size and cost.
Lastly, the study concluded, ceteris paribus, that the use of D&B projects
showed a significant advantage over traditionally procured projects for
owners. For contractor submitted projects, the results were not as convincing,
however, overall D&B still outperformed traditionally procured projects.
Results are summarised below:
Figure 18: Case comparison of overall performance of owner and contractor
submitted projects. Source: Construction Industry Institute (2002) 6.5 Interviews Interviews were carried out, compiled and analyzed over a period of 3 weeks.
All the interviewees had more than 10 years experience in the construction
and property development, with the exception of 1. See figure 19 below:
Figure 19: Interviewee profile
Interviewee Position Division No. of years in No. of years inname* current organization the industry
Mark Construction director All construction** 5 25Brian D&B coordinator D&B 1 21Peter Contracts Manager All construction** 14 21Thomas General Manager Construction Business School 11 14Paul PQS Quantity Surveying 4 4Barry Project Manager Project Management 18 28John Developer New Developments 15 19
* Interviewee names have been changed for confidentiality purposes** Industrial, Residential, Commercial and Residential
36
As mentioned in the methodology section, the purpose of the interviews were
to determine what the perception of influencing factors were with regards to
lean, productivity and the difference between D&B procurement as apposed
to the traditional method of procurement. The following themes emerged
throughout these interviews under the mentioned categories (respectively):
• Lean: Partnering, construction environment, synergy, standardisation
total quality management (TQM) and value engineering (VE)
• Productivity: Communication, integration, performance measurement,
teamwork and management issues
• D&B: Efficiency, design and construction overlap, risk and
responsibility
• Traditional: Flexibility, design and construction overlap, risk and `
responsibility
Below is a summary of the four categories (D&B procurement, Traditional
procurement, Productivity and Lean) and overarching themes from the
interviews. Each theme is described by representative quotes derived from
the interview transcripts. A complete questionnaire set for the semi-structured
interviews can be viewed in the appendix: interviews.
37
Categories and Themes Design and Build
A. Efficiency
B. D & B Overlap
C. Risk
Representative Quotes “The main benefit of this method is that the contractor can influence the design process right from the start and make use of valuable information from the rest of the team” “In my experience the design and build is generally quicker” ”It allows the client to streamline and integrate this whole process of design and build, and as mentioned, ends up saving him significantly over the lifecycle of the building.” “The overlap between design and build is much higher, because the contractor is in control of all the information, with less ‘foreign’ communication hurdles to overcome.” “The design and construction phase overlap tends to be a lot bigger compared to those of traditional projects. Mainly because the contractor takes responsibly for the facilitation of the whole process” “The contractor becomes responsible for overseeing the contract and therefore coordinating the different functions of the design team” “The contractor takes control of the project, in other words, he becomes responsible for the successful outcome of the project. In doing that, he takes on the risk for the design as well as the construction process”
38
Traditional A. Flexibility
B. D&B Overlap
C. Risk
“You’ll see that design and build is described as giving the client minimum flexibility, but the clients risk is also the lowest compared to the other methods like traditional, which is more flexible for changes at a later stage in the contract” “This is why I think traditional construction projects may be a bit more flexible to suit the clients ALWAYS changing needs” “With traditional – a lot of times the project can be novel for the whole team. This places tremendous stress on both the design and build part of the project.” “In my opinion, traditional construction projects’ design phase and building phase can overlap more. Why should the design for the roof trusses (example) be finished when the foundations are not cast yet? This design function can be performed while the construction is underway” The contractor assumes less risk. The client however, takes final responsibility of making sure the project ties up in the end. “Design and build project will be worth undertaking, is when the client knows exactly what he wants, and makes use of a contractor who is familiar with what the client wants, otherwise it make more sense using the traditional procurement system that allows the client some flexibility in terms of changes”
39
Productivity A. Communication
B. Integration
C. Performance
measurement
D. Teamwork
E. Management
“Clear lines of communication, collaboration and detailed and clear specifications from the client increases productivity” “As mentioned earlier, improved productivity is definitely a consequence of better communication.” “EVERYTHING MUST BE INTEGRATED if you want to become world class.” “…but once we put the measurements in place, integrate everyone in the organisation and analyse the data that we have gathered afterwards, I believe that it will have a significant impact on productivity” “What we as a professional team did in (which is standard by the way) to measure performance, is the construction programme” “The main tool for measuring productivity is probably the information required schedule (IRS), the contractors report, and the contractors programme “ “At the end of the day, by understanding how the other works, we are able to gel together a lot better. This then translates in delivering a better service, as a team, on the project at the end of the day, which means that the client will want to work with us all again!” “The wrong tool for the job is constantly an issue that stops sites from achieving high productivity – a result of bad management.”
40
Lean Construction A. Partnering
B. Environment
C. Synergizing
D. Standardization
E. TQM and VE
“The main benefit of partnering with members of the supply chain, including members from the professional team, is of course that we all understand the way the other works, we all have mutual goals, and we are all open to each other – transparent. “ “Partnering is about delivering a better product” “All projects are unique, positions are different, and environment is different etc. whereas in the manufacturing environment, everything is standardised and mechanised” “Construction projects, no matter how close to a previous building, are ALWAYS different. Ground conditions, municipal regulations, weather conditions, you name it. Manufacturing happens in a factory, pumping out one after the other of a standard product.” “Synergy is what pushes production and a superior product at the end of the day” “The supply chain for both of these procurement systems is the same, the way in which the chain differs, is how they integrate and work together” “The implementation of standardised tools in the construction industry is very limited, mainly because it is different from other for example manufacturing” “D&B lends itself for making use of lean techniques such as partnering, TQM and value engineering” “TQM essentially looks at ways that companies such as us or our partners, can ‘unlock’ their potential”
41
The table below is a key point summary by interviewee with regards to the four categories covered. The key points under each
category by interviewee describe the essence of the interview findings. Please note: names have been changed for confidentiality
purposes.
Design and Build Traditional Productivity Lean Construction Mark Contractor increased responsibility Less design and construct overlap Don’t use productivity measurements Projects are unique and not standardized
Contractor coordinating entire team because control lies with many parties Implementing in 2009 on the following: Standardization opportunity is limitedBigger design and construct overlap Clients are moving away from traditional Turnover, profitability, money received on Better communication reduce time wastagefor D&B projects towards D&B time, wastage, construction guarantee Partnering creates a mutual driveDependant on relationships and trust Barriers between parties causing loss Partnering increases communication efficiency
of productivity.Better communication = higher productivityCollaboration and early involvement of all the key players
Brian More risk for the contractor Less risk for the contractor Better and more effective commutation Partnering, value engineering etc are all Less risk for the client More risk for the client between all the members in the project based on a principle of capturing value from Less flexibility for the client Flexible in terms of changes later increase total productivity all the members involved, hence the import-Benefit - everyone's input from the start Valuable input from members lower in ance of good communicationMore efficient (cost and time) the supply chain are lostBetter commutation
Peter Market is moving towards this form Currently this form of procurement is Can not stand in isolation, must be seen Partnering - understanding how others workof procurement, especially overseas becoming less attractive, as clients see Depends on involvement, communication Transparency and mutual goals improve clients the gains made overseas from D&B teamwork etc communication dramaticallyRisk transferred to the contractor Must be measured in order to improve Synergizing in order to create supers productTo work - the contractor has to be To increase productivity, make everythingfamiliar with the type of project visible, and focus on people's happinessLends itself to lean techniques (TQM) Leverage by proper planning
Thomas Ultimately lower cost, higher quality Much more flexible for client if he is Make use of a construction programme Partnering - collaboration in order to More risk for contractor not 100% sure what he wants, but for the project to measure productivity for create a better product for the clientMinimum flexibility for client wants to start building the whole team (output over time) TQM - to unlock potential amongst variousContractor operates in set framework Less cost effective membersbased on the lump sum provided Value Engineering - make use of a wide ray Client can leverage lifecycle cost by of input to be more efficientproper design work
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Figure 20: Interviewee key point summary
Design and Build Traditional Productivity Lean Construction Barry Client pays premium for reduced risk Possibly cheaper quote upfront Contractors construction programme Difficult, because construction is unique,
Client has a fixed price, knows what More overlap between design and Above = prompts the whole team to per- more components, longer in duration andhe/she is going to pay for the project construct phase, because there is no form make use of a lot more parties involvedWorks when the client knows exactly fixed sum agreement before the project Integration of the supply chain is important (reliant on many members in the chain)what he/she wants starts - hence the design and construct Clear communication is beneficial to Mechanization will improve leanLess overlap between design and can overlap more productivityconstruct phase
Paul Requires a lot of up-fron cordination The main contractor is just another Productivity is determined by workers Taking away the 'fat', i.e. remove the un-from the main contractor link in the chain and how they are managed neccesary bitsOne party manages the complete Involvement is limited Low levels of productivity is often a result Learn from each others business, and project from finish to start Contribution and value is lost of bad management compliment each otherThe final responsibility is with the Differs from design and build Control and cordination between program By gelling better together, delivers a bettermain contracor contractually Set and enforce targets and goals end product
Work with instead of against
John Works on projects that the contractor More involvement required from Make use of information required UK is becoming more standardized, but SAis familiar with the client over the duration of schedule, contractors report and has cheap labout - wont happen soonRelies on trust design and construction contractors programmesAfter negotiation, the clients input is Generally takes longer The team members are not at all as minimum integrated as they should beD&B takes quicker Teamwork and competence of the team
is vital to achieving optimum productivityClear lines of communication, collaborationDetailed and clear specifications
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6.6 Survey The survey comprised of a set of 10 in depth questions with regards to lean
techniques in construction, productivity and D&B procurement vs. traditional
procurement (see appendix). A total of 47 professionals responded, ranging
from the client to the suppliers. Main contractors were by far the majority
(30%), followed by consultants and co-contractors (17% and 15%
respectively). Results indicated that value chain members were fairly
integrated, but the level of integration tapered out further down the chain.
Most of the team communicated with consultants on a daily basis (96%), as
opposed to 36% of the team communicating with suppliers daily. See figure
21 below:
Figure 21: Integration amongst value chain members
Communication was rated as one of the most influencing factors with regards
to productivity, with a mean rating of 4.6 out of a possible 5. This is in line with
Koutsikouri’s (2008:216) claim: “...communication is seen as intrinsically
worthwhile within the team in order to create mutual trust between the
different team members”. Accurate documentation and transparency of
information was regarded as less important with respect to influencing
productivity. See figure 22 below:
Integration amongst value chain members
0%
50%
100%Client
Project Manager
Principal Agent
Architect
EngineerConsultant
Main Contractor
Co-Contractor
Supplier
44
Figure 22: Rated importance in terms of influencing productivity
81% of respondents agreed that the contractor assumes more risk in D&B
projects, but only 66% agreed that the client carries less risk as a result
thereof. 85% thought D&B projects saves time and 64% thought it saves cost.
Also, 77% claimed that D&B projects makes communication and integration
easier and 74% said that this procurement method ‘lends’ itself for the
implementation of partnering. See figure 23 below:
Figure 23: Perception of D&B as opposed to traditional procurement (DBB)
Rated importance in terms of influence on productivity
00.5
11.5
22.5
33.5
44.5
5
Communication Integration Transparancy Motivation Documentation
Ratin
g
Perception of D&B opposed to traditional procurement
05
1015202530354045
Contractor hasmore risk
D&B is lessflexible
D&B saves time D&B saves cost D&B makes foreasier integration
andcommunication
D&B makes lendsitself to partnering
Res
pond
ents
AgreeNeutralDisagree
45
91% of respondents agreed that the SA construction industry is currently
underperforming in terms of productivity. Interestingly enough, when the
question was asked whether the unique construction environment makes it
more difficult to implement lean techniques, specifically standardization and
pre-assembly, the result was a 50/50 split. Tam (2007:68) specifically argues
that: “The use of prefabrication has been considered as one of the most
effective waste minimisation methods in the construction context - however,
the construction industry has found extreme difficulties to implement it.” See
figure 24 below for findings:
Figure 24: Perception of the construction industry
30 out of the 47 respondents claimed to be a formal ‘partner’ in the industry.
Interestingly, 80% of the formal partners felt that partnering improved project
performance dramatically, as opposed to non-partners with only 17% claiming
dramatic performance improvement. See figure 25 below:
Figure 25: Perception of partnering ability to influence productivity
Perception of the construction industry
0
1020
3040
50
The SAconstructionindustry is
underperforming
The constructionenvironment
makes it difficultto implement lean
There is limitedscope for
standardization inconstuction
Resp
onda
nts
AgreeDisagree
46
The table below is a key point summary of responses to the open ended question: ‘Name at least one area where productivity can
be improved on construction projects.’ Responses were sorted into 4 overarching categories – 1.communication and integration
2.management and waste 3.training and 4.other.
Figure 26: Key point summary based on perception of areas to influence productivity
Communication and Integration Management and Waste Training OtherCommunication between stakeholders Resource management: Men Time and Materials Re-introducing apprenticeships Wet trades Communication between client, contractor and professional team The workforce understanding what they are building Overcome destructive nature of labour Brickwork Coordination of scaffolding use Critical path contractors Labour Empower through hardware & technology Better planning Do it right the first time Skills Development Formwork Information management Material waste Training Better methods for measuring productivity Team work Material handling/scheduling Improved Knowlede and Skill Quality Information between stakeholders Eliminate waste Improve skills of labour Painting Communication Tools Better training of teams More mechanisation Information management Better Tools Correct training Delivery (Time) Information flow Less waste on site Employ qualified staff Co-Contractor trades Information flow Reduced Wastage Skills Development Improved standards for measuring productivity Communication Reduce Absenteeism Reliable sub-contractors Labour taking ownership Communication of information Reduce time delays Better skills Formwork Making information flow well Materials waste by bad management Skilled labour Better measures of productivity Upfront Integration Labour control Procurement MethodsPre-contract planning Supervision Programming of contracts Less changes after project initiation Communication Specialized Tools Get sub/co-contractors involved sooner Target incentives Accurate and in time information Correct management Time management Better supervisors Communication Clear Instructions Information Absenteeism PARTNERING Sick DaysTrade coordination nvolving team members in innovative problem solving Information flow and distribution Get it right the first time Value Engineering Improved planning of project with client to reduce changes
47
Based on the above results, the graph below was compiled to illustrate the 5
most observed areas for improving productivity, based frequency in the
survey: “Communication and integration’ was mentioned more than any other
area, closely followed by ‘management and waste’. Lastly, ‘better training’,
‘trade related issues’ (such as improving formwork, painting and brickwork)
and finally ‘method related issues’ (such as improving overall quality,
technology and methods for measuring productivity). See figure 27 below:
Figure 27: Ranked perception of areas to improve productivity.
Perception of areas to improve productivity
0
5
10
15
20
25
30
35
Communicationand integration
Managementand waste
Training Trade relatedissues
Method relatedrelated issues
Res
pons
es
48
6.7 Summary of findings 6.7.1 Interview:
Results from the interviewees were in line with the literature review, despite
some minor deviations. One of these was the fact that some interviewees
regarded Design and Build projects to increase total contractual risk - not only
for the contractor (responsible party), but for the client as well, due to a
perception of the client putting all his ‘eggs in one basket’. If the contractor
defaults on delivery, then the client starts from scratch – hence the
importance of trust and using a good D&B contractor based on past
experience and performance. Furthermore, all interviewees agreed that
measuring productivity or performance is to first step and key to improving it.
However, there was little evidence to support that this was what was currently
happening in practice.
Interviewees also claimed that partnering dramatically improves coordination,
integration and communication on construction projects, which creates a
culture and spirit of mutual goal setting, understanding and teamwork -
ultimately improving overall productivity and project performance. Some
interviewees mentioned the importance of “taking everything into
consideration”. In other words – issues such as communication, integration,
coordination and culture cannot stand in isolation, but should be considered
as a whole in an attempt to improve productivity.
Lastly, all interviewees mentioned the fact that D&B projects are superior
compared with DBB, in terms of overall cost - no exceptions mentioned.
Although the literature suggested that indeed this is the case overall,
contractor submitted projects indicated inferior ‘cost’ performance by D&B
projects apposed to DBB. The reason for this, according to the case (Thomas,
2002) was as a result of the contractor taking full responsibility of the design
and construction element before any design work has been done – hence
increased uncertainty. Considering that most of the interviewees were
contractors, this result was unexpected.
49
6.7.2 Survey:
It was evident that integration amongst value chain members takes place on a
much bigger scale than expected, however, integration seemed to taper off
further down the supply chain – the lowest levels of integration existing
between suppliers / co-contractors, and the rest of the value chain.
The majority of respondents viewed D&B projects superior in terms of time
saving, cost savings, integration of members and implementation of
partnering, as opposed to traditional procurement (DBB). The majority of
respondents further claimed that partnering improves productivity on
construction projects dramatically. Interestingly, actual partners in the industry
as opposed to non-partners in the industry had a significantly different opinion
with regards to partnering’s ability to influence productivity. 80% of partners
claimed that partnering improves productivity dramatically, as opposed to only
17% of non-partners claiming dramatic improvement.
Lastly, survey results suggested that productivity in the South African
construction industry is below par, compared with other industries. However,
there was a 50/50 split between respondents agreeing and disagreeing with
the statement that it is significantly more challenging implementing lean
techniques in the construction industry as apposed to other (such as the
manufacturing-) industries, despite the explicit different nature between these
sectors. This was unexpected since Peng (1996) clearly states that the unique
construction environment makes it difficult for implementing lean techniques.
This is endorsed by Barrie (1992) who argues that manufacturing industries
are characterised by mass production and replication, as apposed to
construction where every product is unique and the only one of its kind.
50
The table below compares key findings across the literature, interviews and the survey:
Figure 28: Summary of findings based on literature, interviews and survey
No Topic Literature Interviews Survey1 Productivity in construction According to Egan (1998), the construction All 7 interviewees agreed that the SA 91% of respondents agreed that the SA
industry is underperforming globally, and Thwala construction industry is currently construction industry in underperforming(2007), low productivity is common in this industry underperforming
2 Productivity: Areas for According to the Michigan Tri-Partite Committee The majority of interviewees claimed that Survey respondents by far agreed that improving (2002), constructability, coordination, communication, factors such as better communication, improved communication has the biggest
planning and improved management ranked as the teamwork, integration and measuring of potential for improving productivity, followedtop 5 areas for improving productivity in construction performance and goal setting leads to by integration, motivation and teamwork
improved productivity
3 Lean: Benchmarking, value According to Peng (1996), TQM is continuous improve- Interviewees agreed that measuring Partnering and teamwork emerged as engineering, TQM, JIT and ment, and identifying common goals to reach client productivity is important for improving an important lean tool applied in partnering satisfaction. According to Mohamed (1996), benchmark- performance, however, it seemed that this practice. It was obvious from the results that
in is measuring performance in order to improve in the future rarely takes place in practice formal partners in the industry find the pro-cess much more beneficial than non-partners
4 Standardization: Application Barrie (1992) states that, because if the differences in environ- Opinion with regards to the implementation The split between those agreeing that standard-in construction ments (construction and manufacturing), it is often difficult of standardization varied. No significant ization could just as easily be applied to the
to transfer the benefits from standardization and pre-assembly conclusion could be drawn construction sector as any other, was exactlyto construction. 50/50. No significant conclusion could be drawn
5 Design and Build (D&B) and Thomas (2002) concluded in his comparative study between D&B 6 out of the 7 interviewees agreed that 85% and 65% felt that D&B outperforms DBBDesign-Bid-Build (DBB) and DBB projects, that D&B projects outperform the latter D&B projects outperform DBB based in terms of time and cost, respectively. Also,
significantly in general (overall performance metrics) on ultimate time, quality and cost of the 77% agreed that D&B makes communication project and integration easier as apposed to DBB
51
7. CONCLUSIONS AND IMPLICATIONS 7.1 Conclusions The construction industry in South Africa is currently underperforming. This
fact was confirmed by the literature in this study. Furthermore, all interviewees
concurred with this, as well as 91% of survey respondents – hence the need
for improvement in productivity in this sector. Lean production techniques
(such as benchmarking, total quality management, value engineering and
partnering) have been applied extremely successfully in the manufacturing
industry, but because of the distinct nature of construction, the same
techniques are often more difficult to implement with the same effect. Despite
this fact, the literature as well as interview and survey findings shows
evidence of lean techniques applied with great success on construction
projects, especially on projects making use of innovative procurement
techniques such as Design and Build (D&B).
The purpose of this report was to investigate the link between the
implementation of lean techniques on construction projects and higher levels
of productivity. In order to better understand this correlation, it was necessary
to compare productivity levels of projects making use of lean techniques, with
those not making use of lean techniques. In order to achieve this, D&B
projects (making use of lean) was compared with traditional procurement (not
making use of lean).
According to Lam (2004), D&B lends itself to the implementation of lean
techniques, such as partnering and total quality management, with the
specific focus on improving communication, coordination, collaboration,
integration, teamwork and ultimately client satisfaction on projects. Seng
(2006) states that the benefits of D&B procurement are accrued simply
because of its ability to integrate the project team members produce open
communication and encourage effective cooperation, as apposed to
traditional procurement (DBB), mainly due to its fragmented nature.
52
The historical case study in this report compared 617 different projects, split
between D&B and traditionally procured projects. Ceteris paribus, the study
concluded that D&B projects overall outperformed traditionally procured (DBB)
projects with regards to total cost, changes, rework and practice use. This study
provides sufficient evidence that D&B projects outperform traditionally procured
(DBB) projects by comparison, taking circumstances into account.
Evidence in this report suggests that the implementation of lean techniques in
construction results in higher levels of productivity. This happens primarily
indirectly through improved communication, -coordination, -teamwork, higher
levels of integration, and better project planning (especially upfront).
7.2 Implications for managers As mentioned, to test the true effect of lean on productivity for construction
projects in the future, action research would be ideal as a result of introducing a
change agent. However, due to the long term and complex nature of construction
projects, useful research options are limited since dedicated research over long
periods are required. Despite this, the study has indicated that improved
communication, -integration, -coordination and pre-project planning, significantly
increase productivity on construction projects, hence the importance of managers
to focus on these areas. However, the study also revealed that these issues
should not be seen in isolation, but rather as an ‘interactive whole’ – improving
one area should not lead to a decline in the quality of another
Furthermore, the study also suggested that by establishing formal and consistent
metrics for measuring productivity, managers will be able to record and
benchmark productivity in order to improve performance over time. However, this
rarely realises in practice, mainly as a result of increased onerous administration
and uncertainty with regards to the implementation thereof.
53
7.3 Implications for future research Based on the research in this study, it would add value to carry out an in-depth
case study on a specific organisation, with regards to the impact of lean
techniques on construction projects. The reason for this is to cancel out
irregularities, inconsistencies and distortion of data that occur as a result of
comparing projects across different organisations, making use of different
standards, metrics and data collection - in other words, comparing apples with
apples instead of comparing apples with oranges. Also, future research in this
field may benefit by focusing on only a couple of metrics for measuring
productivity and performance (e.g. waste, absenteeism and information flow),
and determine what the impact of lean is in these specific areas, respectively by
making use of recorded data on company specific projects.
54
BIBLIOGRAPHY AND REFERENCES
• Ballard, G et al 1995. “Toward Construction JIT”, Construction
Engineering and Management Programme, Department of Civil
Engineering, University of California
• Barrie, D et al 1992. “Professional Construction Management”, New York:
McGraw-Hill
• Brymann, A 1992. “Research Methods and Organisational Studies”,
London: Routledge
• Cornick, T et al 1991. “Quality Management and Design and Build: The
Opportunities for this Method of Procurement”, International Journal of
Quality and Reliability Management, vol. 8, issue 3, pp. unknown
• Chen, Q et al 2007. “Interface Management – A Facilitator of Lean
Construction and Agile Project Management”, Department of Building
Construction, State University of Backsburg, pp. 57-66
• Das, A et al 1997. “Just in Time and Logistics in Global Sourcing: An
Empirical Case Study”, International Journal of Physical Distribution and
Logistics, vol. 27, no. 3 / 4, pp. 244-258
• De Leeuw, C 2001. “Value Management: An Optimum Solution”,
International Conference on Spatial Information for Sustainable
Development, Nairobi, Kenya, pp. 1-12
• Diekmann, J et al 2003. “Measuring Lean Conformance”, Department of
Civil, Environmental and Architectural Engineering, University of Colorado
• Egan, J 1998. Rethinking Construction, The Report of the Construction
Task Force, Department of Trade and Industry, London
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• Frodell, M et al 2008. “Swedish Construction Client’s Views on Project
Success and Measuring Performance”, Journal of Engineering, Design
and Technology, vol. 6, pp. 21-32
• Gregory, A et al 2001. “Reforming Project Management: The Role of Lean
Construction”, Lean Construction Institute, Ketchum, pp. 1-9
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using Genres in Avirtual Start-up Organization”, Information Technology &
People, vol. 18, pp. 89-119
• Koutsikouri, D 2008. “Critical Success Factors in Collaborative Multi-
Disciplinary Design Projects”, Journal of Engineering, Design and
Technology, vol. 6, pp. 198-226
• Laedre, O 2000. “Use of Project Partnering in Construction”, Examining
the Effect of Project Integration and Target Pricing in Three Pilot Projects,
Trondheim, Norway, pp. 1-8
• Lam, E 2004. “Benchmarking D&B Procurement Systems in Construction”,
Benchmarking: An International Journal, vol.11, no.3, pp. 287-302
• Li, H 2000, “Partnering research in construction”, Engineering,
Construction and Architectural Management, vol. 7, pp.76-92.
• Mastermann, J 1992. “An Introduction to Building Procurement Systems”
E&FN Spin, London
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Productivity”, Benchmarking for Quality Management and Technology,
MCB University Press, vol. 3, no. 3, pp. 50-58
• Naidoo, S 2006. “South Africa: Construction Industry to Lead Growth”
Africa News Update, Retrieved in May 2008 at:
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http://www.afrika.no/noop/search.php?c=1378&l=en&query=South+Africa
+Construction+Growth&subscope
• Naoum, S 2001. People and Organizational Management in Construction,
Thomas Telford Publishing, London
• Peng, L et al 1996. “A Framework for Implementing TQM in Construction.
The TQM Magazine, vol.8, no.25, pp.39-46
• Ronco, W 1996. Partnering Manual fro Design and Construct, McGraw
Hill, New York
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Engineering, Design and Technology, vol. 5, no. 1, pp. 7-22
• Saunders, M et al 2003. Research Methods for Business Students,
Pearson Education Limited, Harlow, England
• Seng, N 2006. “The Success Factors of Design and Build Procurement
Method: A Literature Visit”, Proceedings of the 6th Asia-Pacific Structural
Engineering and Construction Conference, Kuala Lumpur, Malaysia, pp.
1-10
• Shakantu, W et al 2007. “Beyond Egan's supply chain management:
advancing the role of logistics in the South African construction industry”,
Sabinet alectronic Journal, vol. 14, pp. 93-115
• Solomon, N 2005. “The Hopes and Fears of Design-Build”, Architectural
Technology, McGraw Hill Construction. Retrieved in October 2008 at:
http://ce.construction.com/article.php?L=5&C=347
• Sommerville, J et al 2000. “A Scorecard Approach to Benchmarking for
Total Quality Construction”, International Journal of Quality and Reliability
Management, vol. 17, pp. 453-466
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• Tam, V 2007. “On Pre-fabrication Implementation for Different Project
Types and Procurement Methods in Hong Kong”, Journal of Engineering
and Design Technology, vol.5, pp. 68-80
• Thwala, W et al 2007.“Motivation as a tool to improve productivity on the
construction site”, Department of Construction Management and Quantity
Surveying, University of Johannesburg, pp. 1-6
• Thomas, S et al 2002. “Measuring the Impact of the Delivery System on
Project Performance – Design-Build and Design-Bid-Build”, Construction
Industry Institute (CII), November 2002
58
APPENDIX 1. Literature
Exhibit 1: Contribution of the percentage change in real value added by industry
to the total real annual economic growth rate (Source: Stats SA)
Exhibit 2: Estimates of number of employees per industry with 95% confidence
limits (Source: Stats SA)
59
Exhibit 3: The Relationship of the ICD principles (Source: Integrated Collaborative Design, Root (2007))
Exhibit 4: Dimensions of Industry Cultures (Source: Hofstede, 2003)
60
Exhibit 5: Technology and Organization (Source: Riley, 2001)
61
Exhibit 6: Report Programme as at 27th August 20
62
2. Interviews Interviewees: Background (Please note: Names have been changed for confidentiality purposes)
Name: Mark
Position: Construction Director
Number of years in company: 5
Number of Years in Construction: 25
Company: NMC
Date Established: 1978 (Known as Neil Muller Construction)
2004 (Re-branded as NMC (Pty) Ltd.)
Number of full time employees:
Nature of Business: Construction (Main Contractor)
Recent Projects: Parow Centre Cape Town
De La Rey, Northgate, Cape Town
Wispeco, Tygerberg, Business Park
Pick and Pay Distribution Centre, Airport
Name: Paul
Position: Professional Quantity Surveyor
Number of years in company: 4
Number of Years in Construction: 4
Company: Omkhai Consulting
Date Established: 2002
Number of full time employees: 8
Nature of Business: Quantity Surveying Consultation
Recent Projects: SFP Offices, Montague Gardens
Northharbour, Royal Ascot
Ruby Estates Residential, Milnerton
House Cambouris, Mooley Point
63
Name: Brian
Position: Design and Build Coordinator / Head of Marketing
Number of years in company: 1
Number of Years in Construction: 21 (design and build in the UK)
Company: NMC (Pty) Ltd
Date Established: 1978 (Known as Neil Muller Construction)
2004 (Re-branded as NMC (Pty) Ltd.)
Number of full time employees in association: 30
Nature of Business: D&B Construction Exclusively (Main Contractor)
Recent Projects: Masterheads Building, Maitland, Cape Town
Bowler Metcalfe PET Extension, Philippi, Cape Town
Bell Equipment Offices, Airport City, Cape Town
Name: Peter
Position: Contracts Manager
Number of years in company: 14
Number of Years in Construction: 21
Company: NMC (Pty) Ltd
Date Established: 1978 (Known as Neil Muller Construction)
2004 (Re-branded as NMC (Pty) Ltd.)
Number of full time employees in association: 65 - Salary
250 - Wages
Nature of Business: Construction (Main Contractor) Partnering coordinator
Recent Projects: Orley Foods, Montague Gardens, Cape Town
Robertson and Cain Yacht Building Extension,
Woodstock, Cape Town
64
Name: Thomas
Position: General Manager NMC Business School
Number of years in company: 1 (Business School)
10 (NMC)
Number of Years in Construction: 14
Company: NMC Business School
Date Established: 1978
2007 (NMC Business School)
Number of full time employees: 16
Recent Projects: Thomas has completed more than 12 modules for the
business school – lecturing other value chain members (from suppliers, to
architects), including but not limited to TQM, Value engineering, Corporate
Culture and Partnering
Name: John
Position: Development Manager
Number of years in company: 15
Number of Years in Construction: 19
Company: Old Mutual Investment Group Property Investment)
Date Established: 1845
2007 (Old Mutual Investment Group formed)
Number of full time employees: 4 development managers in Cape Town, 3
in Johannesburg, 2 in Durban (support staff not included)
Nature of Business: Development of properties for sale, lease or own use
in commercial, industrial, office and retail.
Recent Projects: Old Mutual Day Care Centre, Pinelands
Mutual Park Refurbishment, Pinelands
Cavendish Shopping Centre, Claremont
65
Interviews Theme Summary: Part 1
Design and Build Traditional Productivity Lean Construction Mark Contractor increased responsibility Less design and construct overlap Don’t use productivity measurements Projects are unique and not standardized
Contractor coordinating entire team because control lies with many parties Implementing in 2009 on the following: Standardization opportunity is limitedBigger design and construct overlap Clients are moving away from traditional Turnover, profitability, money received on Better communication reduce time wastagefor D&B projects towards D&B time, wastage, construction guarantee Partnering creates a mutual driveDependant on relationships and trust Barriers between parties causing loss Partnering increases communication efficiency
of productivity.Better communication = higher productivityCollaboration and early involvement of all the key players
Brian More risk for the contractor Less risk for the contractor Better and more effective commutation Partnering, value engineering etc are all Less risk for the client More risk for the client between all the members in the project based on a principle of capturing value from Less flexibility for the client Flexible in terms of changes later increase total productivity all the members involved, hence the import-Benefit - everyone's input from the start Valuable input from members lower in ance of good communicationMore efficient (cost and time) the supply chain are lostBetter commutation
Peter Market is moving towards this form Currently this form of procurement is Can not stand in isolation, must be seen Partnering - understanding how others workof procurement, especially overseas becoming less attractive, as clients see Depends on involvement, communication Transparency and mutual goals improve clients the gains made overseas from D&B teamwork etc communication dramaticallyRisk transferred to the contractor Must be measured in order to improve Synergizing in order to create supers productTo work - the contractor has to be To increase productivity, make everythingfamiliar with the type of project visible, and focus on people's happinessLends itself to lean techniques (TQM) Leverage by proper planning
Thomas Ultimately lower cost, higher quality Much more flexible for client if he is Make use of a construction programme Partnering - collaboration in order to More risk for contractor not 100% sure what he wants, but for the project to measure productivity for create a better product for the clientMinimum flexibility for client wants to start building the whole team (output over time) TQM - to unlock potential amongst variousContractor operates in set framework Less cost effective membersbased on the lump sum provided Value Engineering - make use of a wide ray Client can leverage lifecycle cost by of input to be more efficientproper design work
66
Part 2
Design and Build Traditional Productivity Lean Construction Barry Client pays premium for reduced risk Possibly cheaper quote upfront Contractors construction programme Difficult, because construction is unique,
Client has a fixed price, knows what More overlap between design and Above = prompts the whole team to per- more components, longer in duration andhe/she is going to pay for the project construct phase, because there is no form make use of a lot more parties involvedWorks when the client knows exactly fixed sum agreement before the project Integration of the supply chain is important (reliant on many members in the chain)what he/she wants starts - hence the design and construct Clear communication is beneficial to Mechanization will improve leanLess overlap between design and can overlap more productivityconstruct phase
Paul Requires a lot of up-fron cordination The main contractor is just another Productivity is determined by workers Taking away the 'fat', i.e. remove the un-from the main contractor link in the chain and how they are managed neccesary bitsOne party manages the complete Involvement is limited Low levels of productivity is often a result Learn from each others business, and project from finish to start Contribution and value is lost of bad management compliment each otherThe final responsibility is with the Differs from design and build Control and cordination between program By gelling better together, delivers a bettermain contracor contractually Set and enforce targets and goals end product
Work with instead of against
John Works on projects that the contractor More involvement required from Make use of information required UK is becoming more standardized, but SAis familiar with the client over the duration of schedule, contractors report and has cheap labout - wont happen soonRelies on trust design and construction contractors programmesAfter negotiation, the clients input is Generally takes longer The team members are not at all as minimum integrated as they should beD&B takes quicker Teamwork and competence of the team
is vital to achieving optimum productivityClear lines of communication, collaborationDetailed and clear specifications
67
3. Survey Survey Questionnaire:
1. Where do you fit in the value chain? Please select the appropriate box:
• Developer
• Project Manager
• Architect
• Engineer
• Consultant
• Main Contractor
• Co-Contractor
• Supplier
2. What is your position in the organisation?
3. Which other value chain members do you deal with on a daily basis?
Please select:
• Client
• Project Manager
• Architect
• Engineer
• Consultant
• Main Contractor
• Co-Contractor
• Supplier
4. Please rate the following in terms of importance to influencing
productivity (1 lease important, 5 most important)
• Communication between members involved in the project
• Integration of all members of the project
• Transparency of information related to the project
• Motivation of people involved in the process
• Accurate documentation for reference purposes
5. Design and Build projects differ from traditional procurement in the
following ways: (Please choose ‘agree’, ‘neutral’, or ‘disagree’)
68
• The contractor assumes more risk
• The employer assumes more risk
• Less flexible in terms of changes at a later stage
• D&B projects saves time
• D&B projects saves cost
• D&B projects makes integration and communication easier
• D&B projects lends itself to the implementation of partnering
6. Partnering: Are you currently a partner with any other member in the
value chain?
7. How would you describe partnering’s ability to improve or hinder
project performance. Please choose:
• Dramatic Improvement
• Slight Improvement
• No Effect
• Hindrance
8. What in your opinion is the main goal/benefit of partnering/collaboration
• Deliver a superior product to the client
• For the value chain to become more flexible
• Integration of information (value engineering)
• Increased transparency (performing better as one, as apposed
to working in silos)
9. Please choose ‘agree’ or ‘disagree’ to the following statements:
• The construction industry in SA is currently underperforming in
terms of productivity
• The unique construction environment (as apposed to
manufacturing) makes it difficult to measure and implement
methods for measuring and improving productivity?
• There is very limited scope for implementing standardisation in
the construction industry (e.g. industrialised building systems,
modular buildings, pre-cast elements etc)
10. Please name at least one area where you think productivity on
construction projects can be improved:
69
Survey Results: Summary
70
71
72
What is your position in the company? 1. Quantity Surveyor
2. General Manager / Partner
3. Project Manager/Commissioner
4. Sole Owner
5. Shareholder
6. Project Director
7. Director
8. Contracts Manager
9. QS
10. Alternate Director
11. Managing Director
12. Project manager / D&B
manager
13. Installation manager
14. Contract surveying manager
15. Operations manager
16. Quantity surveyor
17. Project Manager
18. Contracts manager
19. MD
20. Engineer
21. Development manager
22. Development Manager
23. Architect
24. PQS
25. Partner/Director
26. CEO
27. Engineer
28. Supervisory engineer
29. Divisional Manager
30. Projects Director
31. Architect
32. Business unit manager
33. Project Manager
34. QS
35. Structural Engineer
36. Project Coordinator
37. Projects Facilitator
38. Electrical Engineer
39. Project Developer
40. Architect
41. CEO
42. Managing director
43. Advisor
44. Project Manager
45. CEO
46. Project Manager
47. Alliance Procurement Manager
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Recurring themes in survey with regards to improving productivity
Communication and Integration Management and Waste Training OtherCommunication between stakeholders Resource management: Men Time and Materials Re-introducing apprenticeships Wet trades Communication between client, contractor and professional team The workforce understanding what they are building Overcome destructive nature of labour Brickwork Coordination of scaffolding use Critical path contractors Labour Empower through hardware & technology Better planning Do it right the first time Skills Development Formwork Information management Material waste Training Better methods for measuring productivity Team work Material handling/scheduling Improved Knowlede and Skill Quality Information between stakeholders Eliminate waste Improve skills of labour Painting Communication Tools Better training of teams More mechanisation Information management Better Tools Correct training Delivery (Time) Information flow Less waste on site Employ qualified staff Co-Contractor trades Information flow Reduced Wastage Skills Development Improved standards for measuring productivity Communication Reduce Absenteeism Reliable sub-contractors Labour taking ownership Communication of information Reduce time delays Better skills Formwork Making information flow well Materials waste by bad management Skilled labour Better measures of productivity Upfront Integration Labour control Procurement MethodsPre-contract planning Supervision Programming of contracts Less changes after project initiation Communication Specialized Tools Get sub/co-contractors involved sooner Target incentives Accurate and in time information Correct management Time management Better supervisors Communication Clear Instructions Information Absenteeism PARTNERING Sick DaysTrade coordination nvolving team members in innovative problem solving Information flow and distribution Get it right the first time Value Engineering Improved planning of project with client to reduce changes
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4. Case Comparison
Exhibit 1: Benchmarking and Metrics Questionnaire, Source: Construction Industry Institute, 2002
75
Exhibit 2: Data Analysis and Tabulation Tasks, Source: Construction Industry
Institute, 2002
Exhibit 3: Performance Summary for Cost, Schedule and Safety, Source:
Construction Industry Institute, 2002
76
Exhibit 4: Performance Summary for Changes, Rework and Practice Use, Source: Construction Industry Institute, 2002