Lean Construction in Finland Magnus Nygård Head of Road Procurement Unit Finnish Transport Agency, Road Department

Authors M.S (eng.) Lauri Merikallio tel Professor Harri Haapasalo University of Oulu Tel

The Lean Ideal Give customer products exactly fit for purpose, instantly, with no waste Maximize value for customer and minimize waste

Project Management Production Management Lean Project Delivery System A New Way to Design & Make - Lean Construction

Creating a Lean Culture for Project Environment Philosophy Long-Term Thinking Processes Eliminate Waste People and Partners Respect, Challenge and Grow them Problem Solving Continuous improvement Jeffrey K. Liker - The Toyota Way

Defects in products Overproduction of goods not needed Inventories of goods awaiting processing or consumption Unnecessary processing Unnecessary movement of people Unnecessary transport of goods Waiting by employees for process equipment to finish work or for an upstream activity to complete. Types of Waste

GC Customer End User Owners Public Authorities Supply Chain Management in Public Sector Copyright © 2009 – TUKEFIN Architects and Consulting Engineering CM

Traditional Project Delivery Level of Common Understanding CommonUnderstanding CM/GC Hired Major Trades Hired Pre-Construction Services Architect Hired Engineers Hired ≤100% SDDDCD Construction Time

Integrated Project Delivery Level of Common Understanding CommonUnderstanding CM/GC Hired SDDD CD Construction Major Trades Hired Architect Hired Engineers Hired 100% Pre-Construction Services

Service Providers Customer needs are common interest for supply chain Combining interests and challenging markets to innovate and to collaborate Owners Customers Economical Safety Lead time Smoothness Ecoefficiency Usability …. NEEDS VALUE Project Delivery maximizing value and minimizing waste

Challenges and Trends in Construction

© Lean Construction Institute

© Lean Construction Institute

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© Lean Construction Institute Traditional versus Lean Decisions are made sequentially by specialists and ‘thrown over the wall’ Product design is completed, then process design begins Not all product life cycle stages are considered in design Activities are performed as soon as possible Downstream players are involved in upstream decisions Product and process are designed together All product life cycle stages are considered in design Activities are performed at the last responsible moment

© Lean Construction Institute Separate organizations link together through the market, and take what the market offers Participants build up large inventories to protect their own interests Stakeholder interests are not aligned Learning occurs sporadically Systematic efforts are made to reduce supply chain lead times Buffers are sized and located to perform their function of absorbing system variability Stakeholder interests are aligned Learning is incorporated into project, firm, and supply chain management Traditional versus Lean

The recent development of Lean in the Public Sector in Finland

Background of Lean Construction in Finland Individuals as a members of Lean Construction International society Skanska Finland as a member of P2SL (UC Berkeley) Tekes as a member of P2SL (UC Berkeley) LCI Finland Founded August 2008 Founder members: LCI-USA, RAKLI – The Finnish Association of Building Owners and Construction Clients, RT – Confederation of Finnish Construction Industries, University of Oulu Affiliated to University of Oulu, Department of Industrial Engineering and Management

Project Delivery Commercial terms Project organization Operational system Putting the Pieces Together - Our approach Integrated teams Working as a team Project Alliance Integrated Form of Agreement (IFOA) Add more common Interests for Parties Partnering Lean Project Delivery System Last Planner System Lean methods and tools

University of Oulu, Tampere University of Technology, Helsinki University of Technology, Technical Research Center of Finland VTT, Consultants R&D resources on Lean in Finland How we are working? Research projects by Universities and VTT Enterprise projects Group projects Funding Tekes – The Finnish Funding Agency for Technology and Innovation RYM Ltd – Built Environment Innovations

Lean Construction in Public Sector in Finland ProjectYearProject typeObjective Project Alliance2008Research Group The operational model for the procedures and ground rules of a construction procurement method based on partnership and risk sharing. Reliability Hospital District EnterpriseImplement Last Planner System Tukefin GroupProductivity Value adding, waste eliminating, innovativeness in supply chain better collaboration LCI-Finland2009GroupLean Construction in Finnish, research agenda for LCI-Finland GroupLean Project Delivery System, Value Stream Mapping, Integrated teams and Commercial terms, employee empowerment Tukefin GroupProductivity Value adding, waste eliminating, innovativeness in supply chain better collaboration Regional Development 2010-GroupTampere University of Technology prepares the plan

Project Alliance in Finland The competitive single target-cost approach Common research project between Finnish Road Administration, Finnish Rail Administration Seven General Contractors and three consulting engineering companies Carried out by VTT in 2008 The result of the research project was the operational model where selection takes place through elimination of candidates and a subsequent two-phase tendering process: the qualitative tender precedes the workshops that are part of evaluation, followed by submission of tender price That model has not been tested yet Spring 2010 two workshops with the owners and the industry The objective is 1-2 pilot projects near future

TUKEFIN Project Improvement of productivity in the public sector supply chain Who Group project: 12 public owners, 7 contractors, 5 consulting engineering companies Objective of the Project Improve productivity by adding the innovativeness of acquisitions and cooperation eliminating waste from project deliveries accelerating lead times of tasks and projects

Operational Environment Visio and Business Strategies Supply Chain Management Strategies Procurement Objectives Selection criteriaContract Incentives Economical for Society Minimize disruption for traffic and residents Price Lead time given by contractors Bonus / fine Continuous improvement and rewarding Lessons learnt Production control Last Planner System Reliability Decreasing waste Increasing innovations Customer Needs Copyright ©TUKEFIN TUKEFIN Implementation model

TUKEFIN results Some examples OwnerGeneral Contractor Change in processResult Finnish Road Administration Seppo Rantala Selection criteria -> Price and Lead time Bonus/fine for Lead time Last Planner System Price 10 % under budget Lead time 30 % under owners request Finnish Road Administration Skanska Infra Early involvement Last Planner System 6 months faster than owners request Municipality KeravaDestiaBonus : lead time, safety, quality Last Planner System Lead time cut to half Variation increased

Last Planner System used in Public Sector Projects Skanska Destia NCC Lemminkäinen Several in piloting phase

LCI-Finland Project Fall 2009 The objective of the project was to clarify and to estimate the Lean Construction tools and their potential in the Finnish construction industry. The development work was based on the Lean Project Delivery System Group project, seven participants, fund by participants and Tekes Focus on renovation and public construction Results Report in Finnish: Lean and Lean Construction - Philosophy, tools and methods Evaluation and applications for Finnish Construction Industry Cases

LCI-Finland Group Project Focus on renovation and public sector construction 6-8 participants: Public Owners, Consultant Engineering companies, General Contractors, Construction Managers, University of Oulu Common Interest: Best Practices, Lean Project Delivery System Value Stream Mapping models Implementation models Integrated teams and commercial terms Learning Employee empowerment Company specific research and demonstration projects Funded by participants and Tekes

LCI-Finland Other projects Helsinki University of Technology Four Lean Construction research and enterprise projects on real estate field Tampere University of Technology Two research project on building sector

Summary  Timing is perfect for Lean Construction in the public sector  Development environment in Finland is better than ever  Few organizations have worked on Lean Construction in Finland for some years Now there has been time to expand and level out a common understanding  EU-legislation does not avoid to implement Lean Construction philosophies, methods and tools in the public sector  Next three years will show how big an issue Lean Construction will be in Finland in the public sector