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Productivity Improvement from Value Stream Mapping The NZ Small Builder - New House Segment

1/3/2013 Executive Summary The purpose of this report is to provide a rational and 'linear' insight into the complex residential new - build process to the Building and Construction (B&C) productivity improvement community, and in so doing to identify those areas and projects which have the greatest potential to deliver productivity gains. Value Stream and Process Mapping are used to enhance productivity through 'lean' manufacturing in process industries. The B&C Productivity Partnership Establishment Board (PPEB) Construction Systems workstream identified Value Stream Mapping (VSM) and Process Mapping (PM) as tools that could be deployed to better understand areas of 'waste' across the B&C sector. Use of these methodologies has identified four significant productivity improvement opportunities, initially in the $2.7 billion p.a. Small Builder - New House segment/community. On the assumption that this Small Builder segment will rise to average $4.2 billion p.a. through the cycle to 2020 (based on 22,000 houses p.a. with 55% of these by the Small Builder segment) these improvements have a potential value, measured in today's dollar terms, of $113 million p.a. by 2020. As an analogue of productivity this represents an improvement of up to 2.7% in productivity depending on success in having the outputs taken up and adopted within the Small Builder segment. Once implemented, many of the proposed initiatives will also benefit productivity in other segments working within the wider residential build and the Alterations and Additions (A&A) market. The investment required by the industry at large will be relatively low over a period of 2-3 years. This document outlines the work that led to identification of the proposed productivity initiatives in the Small Builder segment. It also suggests additional workshops for Value Stream and Process Mapping other segments that may benefit from a similar process. It is recommended that investment is made in four proposed initiatives. Proposed Projects

• Client Skill Level (Knowledge and Communication)

• Consenting and Tendering Process

• Project Management / Project Planning

• Weather Delays (Technical Solutions)

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Background The Building and Construction (B&C) sector employs some 8%¹ of the workforce and is a major contributor (5%)¹ to New Zealand's GDP. It is widely acknowledged that B&C productivity has been flat, and at times negative, over the past 15, years during which time other industry sectors have continued to improve. Increasing B&C productivity by 10% would result in a corresponding lift of 1% in GDP². B&C is highly fragmented, with 90% of the workforce employed by enterprises with ≤5 people³. It has been suggested that this fragmentation has been one of the barriers to improving productivity; however there has been little research into processes, and few initiatives implemented, that could raise productivity across the sector. To address low productivity in the industry, the Building and Construction Sector Productivity Partnership (a partnership of industry and Government) was established in 2010 through the Department of Building and Housing (now part of the Ministry of Business, Innovation and Employment (MBIE)). It aims for a productive, safe and profitable building sector, providing a foundation for strong communities and a prosperous economy, with a measured goal of 20% improvement in productivity by 2020 across the B&C sector. The Partnership comprises a Governance Group, which sets its direction, and four workstreams targeting a deep understanding of what makes for a productive sector. One of these, the Construction Systems workstream, has undertaken a number of projects that have the potential to contribute to improved B&C productivity. Its work is based on understanding how value-based decisions are made and how processes across the entire length of building projects can be manipulated to eliminate waste and increase overall project value – an analogue of productivity. The Construction Systems workstream identified Value Stream and Process Mapping, techniques used successfully to enhance productivity through 'lean' manufacturing in process industries, as tools that could be deployed to better understand areas of 'waste' across the B&C sector. A decision was taken to explore the application of these techniques as a project prescribed in the Project Flow Diagram (Appendix 1). The principle of achieving high-value outputs meant that a pragmatic, rather than academic approach, was used; hence the adoption of the 80:20 rule to eliminate the need to understand the impact of every minor element of influence across an entire build programme.

Project Steps The project plan involved a sequence of four steps – Market Segmentation followed by a series of workshops covering Value Stream Mapping, Process Mapping and Future State Mapping: Market Segmentation The Segmentation step was to identify the segments that would deliver the greatest

value available that might be derived from a VSM exercise. BRANZ was engaged to complete the B&C sector segmentation matrix. Matrix dimensions were Market Segments and Process Segments.

1 Report of the Building and Construction Sector Productivity Taskforce 2009 2 PWC "Valuing the role of Construction in the New Zealand Economy" 2011 ³ PP Productivity Roadmap March 2011

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Value Stream Mapping - First Workshop In simple terms VSM involves identification of processes that are value-adding, non-value-adding but necessary and non-value-adding. In this way areas of 'waste' can be targeted. Traditional process improvement tends to focus on improvements to Value Adding steps, a methodology that results in diminishing returns. The 'lean' approach is to identify and achieve improvements by focusing on non-value adding activity. A Value Stream Map records 'as it is' as perceived by workshop participants, and contains no element of 'what it should be', 'what is desirable' or 'what is recommended'. VSM is traditionally applied at an enterprise level; however it was thought that as significant 'waste' in the B&C sector occurs beyond the boundaries of a single enterprise, VSM should be applied at the industry sector level. A Current State Value Stream Mapping workshop was facilitated by a professional practitioner working with a range of participants in the Small Builder-New House segment including Architects / Designers, Builders, Sub-trades, Manufacturers, Merchants, Consenting Bodies and DBH. It included the following dimensions:

• Lapsed time over the key steps • Sequencing of steps • Active time • Dependencies and constraints • Skills required • Capital, and capital over time • Areas and periods of 'waste'

Outputs include a transparent value map highlighting lapsed and active time and obvious points containing high levels of 'waste', which are opportunities for detailed Process Mapping. Process Mapping - Second Workshop A classical Process Mapping exercise with the same/similar workshop participants was completed for the Design, Tender, Consent and Contractual steps that had previously been identified as opportunities at the VSM workshop. Outputs included a skills capability process map and identified opportunities. Future State Mapping - Third Workshop Future State Value Stream Mapping is where creative input is applied to the Value Stream Mapping process by participants from the previous workshops. The outputs (nominated focus points from the Process Mapping) are studied and remapped to eliminate potential areas of waste and to refine areas of potential improvement identified in earlier workshops. A comparison between lapsed times for Current State and Future State Value typically demonstrates quantum gain efficiency opportunities based on the same resources. Outputs include a future state map and selected and recommended areas of greatest improvement and potential improvement expressed as projects and initiatives that can deliver productivity improvements.

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Outputs Outputs from each sequential step in the project were cascaded into, and used as the focus for, subsequent steps. The entire process acts as a converging filter to identify a short list of initiatives that can potentially the deliver highest value and productivity improvement for effort.

Market Segmentation The analysis by BRANZ demonstrated that the largest client (or work type) segments by cost are new detached and low-rise dwellings, alterations and additions to dwellings, central government funded roads, private sector mining, industrial buildings and education buildings. These sectors account collectively for the top 20% by number of the segments, representing about 60% of all fixed capital formation. The full report has been published as BRANZ study report SR266 [2012] and can be found at: http://www.branz.co.nz/cms_show_download.php?id=3735c9d7ea88c53cdb4f142295c997ead44e5e8c The 'Small Builder - New House' segment (defined here as building 10 or fewer houses per year) was selected for the first VSM exercise, as other studies and workstreams were known to have examined the other segments in the group representing 60% of B&C work, including Group Home Builders. Significantly the Small Builder segment builds some 55% of new detached houses and, because of that segment's very nature, intuitively would provide a greater opportunity for productivity improvement. It was also recognised that many process improvement opportunities discovered in the Small Builder segment, which had a value of $2.7 billion in 2012, were most likely to be applicable and beneficial to other 'client' segments such as Group Housing which was worth $0.9 billion in 2011.

Residential Builder Segments By Build Rate - YE June 2012

Builder Size Houses p.a.

Number of Houses

Market Share Cumulative Market Share

>50 3806 27.33%

>40 3977 28.58%

>30 4517 32.44%

>20 5124 36.79%

>10 6161 44.24%

Rest 3994 28.68% 72.92%

Owner Builder 3771 27.08% 100.00% Source: Analysis of consents by individual builder

Value Stream Mapping - First Workshop The Current State Value Stream Mapping created an indicative snapshot and perspective for the Small Builder Segment from a client's initial approach through to final completion and handover to client. The Current state VSM is shown on page 7. Four broad stages involving 22 steps were identified:

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Client This stage involves background research by the client, the client's approach to builder or designer, an amorphous stage of consultation that that may involve multiple evaluations, land acquisition etc, with a range of sequences followed by the design (working drawings).

Tender/Consent/Contract This involves the tender process, the consent process (sometimes in parallel with the tender process) and the contractual process (Client sign-off). Planning/Site Preparation/Build This covers the planning/process, scheduling (simultaneous to engaging subcontractors and notifying council), site preparation, and the building phases (including a simultaneous compliance regime on each phase):

- Foundations - Floor structure - Frames/structure - Close in - Internal lining - Fit out - Finishing - Hardscaping - Landscaping

Completion / CCC / Handover / Warranty This involves practical completion (walk-though with client), Consent / Compliance / Certificate, client taking possession, handover, final payment, and warranty servicing / call-backs.

The outcomes were that for the Small Builder segment:

a) The total cycle process typically took 49 weeks.

b) While a list of anecdotal concepts for improvement in the building process was identified, they were parked for consideration in the Future State Value Stream Mapping - Third Workshop.

c) The workshop agreed that the following selected areas would be taken to the next stage, Process Mapping - Second Workshop:

• Client Engagement and Tender Process – The view was that only one in five serious enquiries resulted in builds - i.e. a 20% conversion rate represents high wastage and unnecessary cost. Anecdotal evidence suggests that client inexperience of the complexities of building was a significant contributor to this, as was the custom of small builders not valuing or directly charging clients for their time in this phase. Client education/preparation is considered a key project.

• Consent Process.

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• Information exchange and communication between all stakeholders. (Client, designer, builder, sub-contractor, merchant, and consenting authority)

• Building and Inspection processes.

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Process Mapping - Second Workshop The process map constructed was limited strictly to design, tender, consent processes (i.e. processes related to obtaining consent, hence as depicted by the client and client’s representatives) and consequently contract finalisation. Any activities after the contract is finalised were not taken into account for this process map.

In the original Value Stream Map the design process (including all the pre-design discussions etc., the tender and consent processes and contract finalisation) altogether accounted for about 12 weeks. The process map approximately corroborates this, with the maximum summation of all times for these segments of activity being about 15 weeks. There are four key areas that have significant lead times and complexities (as also depicted in the process map):

• Site investigation – the decision on whether the site is simple or complex, and accordingly negotiating solutions with Council to prepare the design. Up to 3 ½ weeks.

• Making, reviewing and signing off the design. Up to 2 ½ weeks.

• Pricing – acquiring and compiling the requisite information from all sub-trades and suppliers and giving the final price to client. Up to 1 week.

• The consent process may – Up to 8 weeks .

It is possible that, with appropriate improvement steps, the total lead time of up to 15 weeks may be reduced to about 5 weeks. This is significant, and re-engineering these interactive processes alone could conceivably achieve a high proportion of the productivity improvement goal by 2020.

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Future Value Stream Mapping - Third Workshop The Future State was contemplated at the workshop and developed for the segment without restricting it to the process maps drawn per se, although emphasis was on areas of improvement that came from the Process Mapping. The key actions emanated from client education and the desirability of systematic project management being adopted by small builders. In this regard, significant discussion took place on communication with clients and on training small builders and their sub-trades on the basics of project management. It is estimated that, if actions are implemented to achieve:

• Client education,

• Client-designer-builder partnership, and

• Adoption of project management routines by small builders and sub-trades, plus

• Elimination or reduction of delays due to inclement weather in some regions. (Examples included rain delaying the pouring of foundations and/or ground floors, and wet or freezing conditions affecting brick laying.)

.... then optimistically, about 21 weeks would be reduced from the total cycle time of 49 weeks for a typical new low-rise house built by a small builder, with a major reduction achieved through effective client-designer-builder partnership in early phases.

Following two weeks examining his own business one workshop participant, a Certified Builder, considered that he could increase his build rate from 10 to 12 houses per year without increasing resources, based on areas for improvement identified in the workshop process. These improvements might apply only to the builder, as project manager / supervisor, and not necessarily to the subcontractors.

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Other Anecdotal Outputs From Workshops During the Mapping Workshops a wide range of valuable comments and information was captured and these are recorded in the Appendices as follows: Value Stream Mapping - Appendix 2. Process Mapping - Appendix 3. Auckland Council Consent Rejections/Delays - Appendix 4. Workshop participants - Appendix 5.

Proposed Projects and Potential Value/Productivity Gains Based on the outputs from the series of workshops, four areas have been identified as having potential to deliver significant productivity improvements in the large Small Builder - New House segment, some of which can also deliver improvements in other New House segments such as Group Housing. Because the target Small Builder segment is highly fragmented and 'independent', achieving the required transformation in processes may be more difficult than with some of the more concentrated segments; however the significant $2.7 billion p.a. size of the Small Builder segment presents the potential for greatest gains. Many of the improvement initiatives will have knock-on benefits for some of the other New House segments such as the $0.9 billion p.a. Group Housing segment. Achievement of the potential gains will be dependent on the level of resources invested in, and the effective and pragmatic implementation of, the proposed initiatives. The four areas proposed for development into projects and investment are:

1. Client Skill Level (Knowledge and Communication) Maximum potential saving through reduced iterations in finalising design - from 25 weeks down to 10 weeks.

2. Consenting and Tendering Process Up to 20 working days could be saved from the up to 40 days elapsed time spent in consent submission. Although most consents are reported as being processed within the statutory 20 days, a high number are rejected at submission and/or placed on hold pending further information to be supplied by the applicant. There is scope to further reduce the 20 working days as online consenting is implemented.

3. Project Management/Project Planning Maximum potential saving in actual build time – from 15 weeks down to 9 weeks

4. Reduced Weather Delays (Technical Solutions) The potential savings, while likely to be significant, will be a function of regional climatic conditions and the nature of the technical solutions.

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Potential Value Possible From Proposed Projects Value Stream and Process Mapping workshops identified opportunities within the Small Builder segment to eliminate waste expressed in terms of time - an analogue/proxy of productivity. Demonstrating and quantifying potential value and productivity gains from investment in the four proposed projects is very complex and is not exact, but needs to be completed to assess the order/magnitude of potential gains from such initiatives. A conservative approach is taken when examining the individual component dollar value of discrete activities in the build process, and to calculate the sum of the value savings under each component for a 'typical' case. Once each project is initiated, it is highly likely that new waste reduction opportunities will be 'discovered'. The gains are applied across the entire value of the Small Builder segment under a range of success assumptions.

Potential Value Of Initiatives/Projects General Assumptions:

• New House build rate will average 22,000 p.a. through to 2020 • Small Builder segment continues at 55% (12,100 valued at $4.2 b p.a.) through to 2020 • Theoretical maximum waste reduction expressed as time to build: 49 weeks 29 weeks

Specific Assumptions: • Client Education

Approximately 98% of new houses are one-offs or modified standard plans with owner input (BRANZ SR270). Significant time is spent by designers and builders with clients on their options and on how the design/build process works. This is estimated at an average of 10 hours per house taking a lapsed time of 15 weeks. Owners still need to discuss with designers and builders their requirements, but we assume here that a public education programme would reduce this time by 75%. Savings are:

12,100 x 98% x 10 x 75% x $80/hr = $7.1 m

• Quoting Tendering Process 54% of new homes are one-off designs (BRANZ SP 270). Approximately 20% of these have > 5 quotes (based on discussions with builders). Assume these are reduced to two quotes maximum. The savings are:

$80/hr x 6hr x 4 builders x 20% of all one-off designs = $2.5 m

• Reduced Changes On Work Already Completed Approximately 20% of new homes have changes done to work already in place. (BRANZ estimates). Assume the cost of change averages $5,000 per house which is avoided by client education. The savings are:

12,100 x 20% x $5,000 = $12.1 m

• Project Planning/Management (Quicker Construction – from 15 weeks down to 9 weeks) BRANZ SP 259 'Value of time saving in new housing' has savings of $1,000/week for small builders. Assume this is achieved for all Small Builders. The savings are:

$1,000 x 6 weeks x 12,100 houses = $72.6 m

• Reduced Rentals, down 20 weeks from 49 weeks to a theoretical 29 weeks in total project duration Assume 20% of new owners are renting at $400/week. The savings are:

20 weeks x $400 x 12,100 x 20% = $19.4 m

• Reduced Weather Delays (Technical Solutions) Assume half year (wet season), 30% of builders saving average of 4 week @ $1,000/week

12,100 x 50% x 30% x 4 x $1,000 = $7.3 million

Potential (100%) By 2020 Value: - Max $113m p.a. on a total value of $4.2 b Productivity Improvement: - Max 2.7%

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There will be various levels of success in implementing the initiatives identified. The potential gains in productivity will be a function of level of resources applied and the effective implementation of the strategies emanating from each of the proposed projects. The chart below shows the value of the projects based on a range of success levels.

It is suggested that in combination the projects are capable of delivering productivity improvements to the Small Builder segment in the order of 2.7% worth up to $113m by 2020. Other Opportunities From Outside The Value Stream Mapping Workshops During the period of Value Stream mapping Workshops the Construction Systems workstream project team identified other areas of opportunity that could support productivity gains by providing a source of knowledge to small-to-medium enterprises operating in the residential building sector. This might include:

� Build sequences for different construction methodologies

� An on-line benchmarking tool

� A source for disseminating new technologies and products, new techniques and other best practice.

Client Education on

Process, Options, Procurement

and Rework. Plus rental savings

Quicker Construction Saving by Builder

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Project Outlines

1. Client Skill Level The main objective in this area is to better prepare clients prior to their approach to builders and designers by improving the clients’ understanding of their own needs and their knowledge of the design and building process. This will achieve greater efficiencies, reduced 'waste' and, better outcomes for all parties involved in the building process. It will also be important to improve building professionals’ knowledge of the client’s level of understanding and expectations of the building process in order to make the process, and communication about the process, more effective.

Project Title Client Preparedness and Education - Small Builders of New Homes Segment

Objective To minimise iterations in finalising design: through client preparedness and education while meeting their expectations.

Background

There was significant potential for builders to improve productivity in the period between clients deciding to build and the building starting. In most cases the client has no understanding of their real needs, the cost of various options and what the builder or designer will want to know to progress efficiently. This may be an area that has effectively been targeted by some volume builders through the use of show homes, dedicated sales and marketing staff and in-house design teams.

Current State Estimated time from client engagement to commitment for this segment is 25 weeks

Tools

There are a number of websites and publications aimed at assisting and guiding consumers through the building process, including The Building Guide, Consumer Build and BRANZ House Building Guide. Building industry organisations such as CBANZ, RMBF, NZIA and the Building and Housing Group of MBIE also have information targeted at homeowners wanting to build or renovate. Some individual businesses also maintain various levels of web presence that in some cases offers information for prospective clients. It is not known how well used (if at all) these resources are used and whether they make any difference to the client's skill level and productivity of the planning, consenting and contracting stages of a building project and/or meet the needs of clients.

Future State Potentially a 40%-60% reduction in time from initial client approach to finalisation of design.

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Project Scope

Stock-take and analysis of building and construction information designed to assist residential clients through the build process including:

• What is available in the New Zealand market? • What has been developed internationally that we can learn from? • What level of detail does the information go to, scenarios/planning, materials options,

cost? • What level of detail is provided on the building process and roles and responsibilities? • How well do they integrate information from other products such as green building,

consumer build etc? • Is the level of detail able to be tailored for different needs? • Is information current and how often is it updated? • Is information presented in formats the users want? • Is the available material what users want and need? • Is the material from different sources consistent or contradictory? • What metrics do product owners use to measure the utilisation of their products? • What can be learned from other sectors? • What technology advancements are available that ght transform how information can

be presented? Work with clients through surveys (e.g. BRANZ homeowners survey) and/or focus groups or similar to determine what information clients want and need. Work with key industry stakeholders including RMBF, CBANZ, NZIA, ADNZ etc to understand what key information clients need in order to optimise the client/professional interactions. Possible case studies of builders who have instituted more formal collaborations with designers / architects and vice versa; and/or have changed protocols for follow up of client enquiries. Discussions with communication/education professionals on 'delivery options'. Analysis of effectiveness and the costs and benefits of providing client information.

Potential for Productivity Gains

For builders in particular a surprisingly high amount of time was spent on projects before a contract was awarded (if a contract was awarded). This phase possibly also takes considerably more time than anticipated for clients. The Value Stream Mapping workshops estimated that time spent in this phase of a building project could be reduced from an estimated 25 weeks to as little as 9 weeks.

Deliverables Report and recommendation on a strategy to minimise iterations in finalising design through client preparedness and education while meeting their expectations

Costs/Time

Detailed costings have not been done for this project at this stage, but are estimated to be in the range $60,000 to $75,000 for the initial study with an estimated timeframe to completion in the order of 6 months, depending on scope and approach.

Measuring Performance

Performance measurement is likely to be a mix of qualitative and quantitative measures including: The quality of value for money decision making is improved. (qual) Clients feel more informed and confident in their choices (qual) Clients have an improved ability to make and understand the consequences of trade-offs required during the build process (qual) There are fewer iterations required to develop a detailed design that meets clients needs and budget (quant) Builders spend less time on average on pre-build activities for which cost is not recoverable (quant and qual)

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2. Consenting and Tendering Process

Consenting The consenting area has also been identified by government as requiring significant improvement, which has led to the online consenting and geobuild projects. A number of issues and ideas generated at the workshops relate to online consenting, but rather than suggest specific projects it is recommended that the Productivity Partnership or MBIE convene a small steering group or workshop with the Value Stream Mapping workshop group and the online consenting/geobuild team. This would be designed to ensure that the online consenting and geobuild projects capture those elements that will make a difference to productivity. Issues identified in the workshops and proposed for consideration in the online consenting and geobuild projects include:

• Hold pre-consent meetings between Territorial Authorities (TAs) and designers.

• Fast-track processing of simple designs.

• Create and issue a consent checklist requiring completion before any consent application enters the consenting process. Make this checklist available online.

• Increase online processing significantly. TAs may make tools available online to check the adequacy of applications. Also TAs may make all the requisite information available online so that any ambiguities leading to rework of consent applications are obviated proactively. For very simple applications, online consenting with a “Go / No Go” template it may be possible too, if correctly supported by random sampling and inspection process.

• Possible outsourcing of information processing if information processing is creating bottlenecks.

• Electronic distribution of working drawings.

• Reduced inspection for simple designs.

• Consistent next-day inspection service is necessary to reduce inspection idle times.

• Reduced the number of inspections – increasing the responsibility and extent of self-certification.

• Consistency among building inspectors is essential.

• Council may notify latest issues on public websites.

• Avoidance of transferring costs from one party to another wherever possible.

• Alignment of building consent and resource consent processes.

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This project is already under way, in that the online consenting team is in the process of establishing a focus group session with the builders and designers from the VSM project. Tendering A number of areas for improvement were also identified for tendering, which is becoming more of an issue as some clients request tenders from up to 10 builders (and associated sub-trades) and merchants provide materials costing for more and more builders for the same project.

• Web/Cloud-based system for developing tender documents, allowing each trade to contribute to a tender in a more timely manner.

• Builders encouraged to use software to create a bill of materials.

• Standardise tender processes through creation of best-practice lists and guidelines.

• Use of standardised contracts for sub-contractors.

At this stage no projects are recommended for tendering, for two main reasons. Firstly, it is possible that improving clients' skill level and understanding of the building process combined with improving project management by building professionals, may solve many of the issues identified in the tender phase. Secondly, there are a number of aspects of tendering where further investigation is required before recommending projects, including:

• What is the currently the typical tender process?

• What proportion of projects go to tender?

• Who drives the tender process?

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3. Project Management/Project Planning Project management, including co-ordination of the wide range and number of sub-trades, merchant suppliers and consent inspections all involved in the building process, was identified early on as an area where time could be saved and waste eliminated.

Project Title Improving Project Pl anning, Information Workflow and Management - Small Builders of New Homes Segment

Objective

To improve productivity across the Small Builder segment through better co-ordination of resources during the building process by deploying project planning and management systems and training as appropriate.

Background

The Value Stream Mapping process identified that any building project requires coordination of a large number of sub-trades, merchant suppliers, consent inspections and other contractors. This view was backed up by data presented by Brent Mettrick at the RAW 2 workshop where he showed that better project management, coordination and scheduling of resources had reduced build time to 7.8 weeks, from 15.2 weeks, for a single-level dwelling up to 220 sqm.

Current State Estimated build time for the segment is 15 weeks.

Software & Tools

There are a number of building project management software products available that claim to be suitable for smaller builders and tailored to New Zealand conditions including Ravebuild, Cat Group, CostCon and Workbench. There appears to be little information available on how widely these tools and packages are utilised by builders building fewer than 10 houses per year. Anecdotally use appears to be very low amongst smaller builders and effectively non-existent within sub-trades linked to specific build projects.

Training

While some courses aimed at the building and construction industry, such as NZQA L4 National Certificate in Construction trades (supervisor), include some skills training in project or construction management / scheduling, it is often mixed with business skills and site safety awareness. More advanced business and construction management skills are an optional component of the qualification. Anecdotal evidence suggests that a number of training organisations are looking at increasing their building and construction-related project management training options in the near future.

Potential for Productivity Gains

The Value Stream Mapping process indicated that up to two weeks during the build process (i.e. from when building on-site starts) can save two weeks per house by employing basic project management and schedule management. Stonewood has shown that for a large group builder, more sophisticated workflow planning on site can increase savings, but it is not clear what the minimum scale is for such workflow planning to be realistically achievable.

Future State Up to 45% potential reduction in actual construction time

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Project Scope

Stock-take and analysis of construction project management software and tools aimed at the small building company (less than 10 houses per year) including:

• Determine the current level of project planning / management and deployment of software in this application in the segment.

• What is available in the New Zealand market? • How appropriate are they for use by smaller building companies operating

in the residential space? • How accessible are products for all parties involved in a project? • Is the level of access able to be tailored for different parties? • How cost-effective are they for companies building 10 or less houses per

annum?

Work with skills workstream to establish what information is available on current training options (e.g. BETA database TEC etc) and what is planned by training organisations. Work with key industry stakeholders including RMBF and CBANZ to understand the project management tools and training requirements of smaller residential building companies. Analyse the costs and benefits of implementing project management at the smaller building company scale (may include case studies and/or analysis of company data). Analyse of how well current offerings meet the needs of industry, identify gaps and make recommendations for improvements.

Deliverables

Report and recommendation on a strategy to improve productivity across the Small Builder segment though better coordination of resources during the building process, deploying project planning and management systems and training as appropriate. This might also include an on-line project management tool and best practice template.

Cost/Time

The cost will vary depending on the approach taken. At one end of the scale the project could be undertaken by students. This is the cheapest option but students are less likely to have good established contacts in the building industry and may struggle to provide deep insghts. A more experienced provider will cost more than a student, but may be able to leverage other work and should have more established industry knowledge and contacts and require less supervision.

Measuring Performance

Performance measures for this project are likely to consist mainly of quantitative measures including:

• The proportion of projects completed on time and within budget.

(Metrics on number of days lost due to sub-optimal scheduling).

• The change in average build time per house

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4. Weather Delays (Technical Solutions) New Zealand climatic conditions mean that there can often be delays in the build process caused by adverse weather conditions, primarily rain and/or freeze conditions.

Project Title Elimination of Delays Due to Weather Conditions (Technical Solutions) - Small Builders of New Homes Segment

Objective

To improve productivity across the Small Builder segment through the adoption of new technologies that eliminate delays due to poor weather conditions.

Background

The Value Stream Mapping process identified that seasonal weather in many regions is such that many house build projects can be delayed due to weeks of rain, high wind or freeze conditions. Typically building projects can be affected in the following ways (not exhaustive):

• Rain delaying the excavation and laying of drainage

• Rain delaying the pouring of foundation footings

• Rain delaying the laying of concrete floors

• Rain delaying the laying/mortaring of bricks/blocks

• Rain affecting framing moisture content resulting in partial inspections and delaying lining

• Wind delaying the laying of block walls

• Wind delaying the installation of roofing/guttering

• Freeze delaying the pouring of concrete

• Freeze delaying the laying/mortaring of bricks/blocks

Many of these productivity constraints are encountered, and are often prevailing, in other countries where solutions have been developed and are common practice. There has been no concerted application in New Zealand of technical innovation to resolve some of these industry issues with cost/productivity effective solutions.

Current State Estimated build time for the segment is 15 weeks plus regional/seasonal poor weather delays of between 2 and 6 weeks.

Tools

NZ has a number of organisations with research, practical technical building and training capability to:

• Assess the suitability of solutions currently practiced in other countries

• Contribute through creativity and innovation processes to the development, assessment and trialling of pragmatic and economic solutions

• Develop and offer technical training modules and CPD courses to introduce solutions across the Small Builder (and other) segment.

Organisations that could work severally or jointly on these productivity solution technical initiatives might include BRANZ, Callaghan Institute, Technical Institutes, ITOs, SCION, industry associations etc.

Potential for Productivity Gains

As an example the Value Stream Mapping process indicated that more than two weeks during the build process (i.e. from when building on-site starts) could be saved if bricklaying was not delayed due to rain.

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Future State Potentially more than 14% reduction in actual construction time depending on the climatic conditions on any one project.

Deliverables A series of Requests For Proposal to the range of organisations above (Tools) to address the range of issues set out above (Background).

Cost/Time

The cost will vary depending on the approach and response to the RFPs.

Measuring Performance

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Appendix 1.

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Appendix 2. Anecdotal Outputs From Value Stream Mapping The following ideas were parked through the discussion for further consideration, evaluation and possible implementation:

• Customer education is desirable – particularly early contractor involvement may speed up the entire process;

• Faster drafting saves about 2 weeks; • Availability of qualified tradespeople is an issue – if resolved it significantly

enhances the productivity of building trades; • More efficient project management enhances productivity; • Web-based subcontractor scheduling and booking service may lead to higher

speed of work; • If a driveway is laid in concrete before building starts it provides better access

and speeds up all the subsequent processes; • Consistent next-day inspection service is necessary to reduce inspection idle

times; • Improved site management in general may lead to improved productivity; • Good toilets are a crucial factor – otherwise people spend their time in using

facilities nearby, losing time; • Capability to work over weekends speeds up projects; • Consistency among building inspectors is essential. • Manage customer expectations to ensure they maintain realistic expectations; • Council notification of latest issues on public websites means that those

submitting plans for consents can check applications for compliance prior to submission;

• Use of pre-finished fitouts; • Explore the possibility of self-certification with stringent safety measures such as

good electrical switches etc. Self-certification may speed up the building process significantly.

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Appendix 3. Anecdotal Outputs From Process Mapping A number of suggestions for improving the process were made and recorded:

• Simple designs may be subjected to less inspection. • Building wish-list (requirement planning) and budget may be provided in a

standardized online format to clients upfront. • It was further recommended that builders are encouraged to use software to create a

bill of materials. • Increase on-line processing significantly. TAs (territorial authorities) may make tools

available online to check the adequacy of applications. Also TAs may make all the requisite information available online so that any ambiguities leading to rework of consent applications are obviated proactively. For very simple applications, online consenting with a “Go–No Go” template may be possible too, if correctly supported by random sampling and inspection process.

• Reduce the number of inspections – increase the responsibility and extent of self-certification.

• Improve contractual processes by making security of payment mandatory. The time and effort wasted later on issues arising out of illiquidity will be thus significantly reduced.

• Create and issue a consent checklist requiring completion before any consent application enters the consenting process. Make this checklist available on-line.

• Standardise tender processes by creating best practice lists and guidelines. • Electronic distribution of working drawings. • Fast-track processing of simple designs. • Use standardised contracts for sub-contractors. • Hold pre-consent meetings between TAs and designers. • Issue a standardised checklist to clients to prepare for designers. • Possible outsourcing of information processing if this is creating bottlenecks. • Encourage the practice of “paying for quotation” with the amount refundable if the job

is awarded and construction takes place.

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Appendix 4. Auckland Council Consent Rejections/Delays In addition to the process map discussion, a more general discussion involving Auckland Council provided the results of its analysis of the most common reasons consent applications were rejected or put on hold. These are reproduced below: Auckland Council top reasons for rejecting consent applications at lodgement/vetting (2012 Building Control Audit Results)

• Distance of existing and proposed buildings from boundaries not clearly indicated on site plans

• Existing and finished floor levels for proposed building alteration projects not shown on elevations and sections of building consent applications

• Producer Statements not fully completed and signed by author • Location of smoke detectors and hot water cylinder not indicated on plans

accompanying building consent application • Owner details on certificate of title (CT) differing from owner details on building

consent applications • Manufacturer specifications and installation details missing as part of product

specifications to accompany the application. • Smudged and unclear drawings not meeting the required standards • Incorrect referencing of Building Code and NZ Standards on drawings • Failure to indicate on the application how building work will comply with the NZ

Building Code • Failure to provide Fire Report when required along with the commercial consent

application • On-site waste water and Technical Publication 58 report not provided with on-site

waste disposal projects • Producer statement signed by author not on council approved list of authors

Auckland Council top reasons for consent applications going on hold (2012 Building Control Audit Results)

• Failure to demonstrate compliance with NZS 3604:2011/ Building Code on design and layout

• Failure to provide all information and documentations as per the processing checklist • Failure to comply with outstanding drainage engineering issues associated with the

project • Plans and consent drawings not meeting the required quality standards • Conditions imposed by approved Resource Consents requiring changes to building

consent plans and specifications • Complex Fire Reports requiring rework on design, drawings and specifications • Missing disabled access information details for commercial development projects • Missing information on plumbing and drainage drawings – e.g. location of private

drainage in relation to boundaries and public drainage lines • Missing manufacturer’s technical literature for product usage and installation

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• Missing critical design calculations for building projects – e.g. bracing, sub-floor, truss design calculations

• Missing Risk Matrix information halting compliance checking of risk associated with external moisture

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Appendix 5. Workshop Participants (In one or more workshops) Victoria Troake - Chair, Specialist Trade Contractors Federation Paul Taylor - Group Marketing & Operations Manager, ITM Eugene Lowrie - Category Manager - Building Products, ITM Dave Brown - Builder, Taylor and Brown & Chair Certified Builders Dave Whitehead - Builder, Lifebuilt Construction Ian McCormick - Manager, Building Control - Auckland Council Mike Kale - Winstone Wallboards Adrian Bennett - Ministry of Business, Innovation & Employment Max Christiansen - Designer / Architect Stavros Evangelidakis - Builder Ngaire Dunn - Winstone Wallboards Doug Naylor - Manager, Building Control (West,) Auckland Council Deane Smart - Construction Systems Working Group Nilesh Pandit - Facilitator Ruth Berry - Project Manager