Exploration of parallels in Lean and VM methodology in construction Steve Parker, Institute of Value Management

Our credentials Me Value Management Risk Management Benefits Management Lean Six Sigma You Lean? VM? Both?

Definitions Lean Construction… is a production management-based project delivery system, emphasizing the reliable and speedy delivery of value. The goal is to build the project while maximizing value, minimizing waste, and pursuing perfection – for the benefit of all project stakeholders. Value Management (including VE)… is the process of making explicit the functional benefits of a project and appraising those benefits against a value system determined by the stakeholders. VM is strategically and organisationally focused and ensures strategic fit. VE is technically focused on space, elements and components and provides the necessary functions at the lowest cost and at a specified quality.

Core proposition Lean focuses mainly on process (how something is done) Organisational or operating process; management process; design process; production process or a project delivery process (main drivers - increased efficiency, reduced waste and cost) Value management focuses mainly on product (what something is) Project scope, project design, system design, component design or widget design (main drivers – required function, reduced waste and cost)

Approach to improving value Review and define the current project conditions. Define, chart, analyse and prioritise the project functions. Identify other ways to perform the project’s functions. Select the ideas that offer the potential to improve value. Develop the best ideas with supporting business cases. Report or present the ideas and how they should be implemented. Define the problem and the objectives. What do we need to improve? Can we measure this? Analyse the process. Define factors of influence. Identify and implement improvements. Assure that improvements will sustain. Lean (Six Sigma) DMAIC phases – How to run a process improvement project Value Management (VE) Job Plan phases – How to run a product improvement project

Objectives of value improvement Lean Construction Improve predictability Reduce design and construction cost Reduce design and construction time Rationalise resources Identify blockers to activity Better performance visibility Value Management Identify vision and objectives Define aligned scope Improve function Distinguish between needs vs wants Eliminate over design Reduce whole-life cost Option evaluation

Benefits of value improvement Lean Construction Shorter programme Design process cost savings Construction process cost savings Increased programme reliability Better working practices - efficiency Value Management Demonstrable ‘line of sight‘ Platform for benefits modelling Appropriate design Efficient design with regard to function Valued intangibles Decision audit trail Lowest whole-life cost

Tools for value improvement Lean Construction DMAIC (PDCA, Kaizen) Voice of Customer Critical to Quality Process Mapping Value stream mapping 8 Wastes 5Y’s Statistical analysis Value Management VM Job Plan (Charrette) Value Tree Client Value System Function Analysis FAST Diagrams Function/Cost Analysis Relative importance Brainstorming

More tools …. Lean Construction Pugh Matrix Quality Function Deployment Visualisation Management 5S’s Collaborative planning and buffer scheduling NEC (or other) collaborative contract Value Management Multi-Criteria Analysis Value metrics / Value Index Value for Money Ratio Discounted Cash Flow Cost Benefit Analysis Functional Performance Specification Contract value engineering clause

In common, they focus on…. What the client precisely needs or wants Value improvement and value for money Facilitating stakeholder engagement and consensus War on waste Eliminating unnecessary cost

Causally, they both…. Drive learning and knowledge transfer Drive continuous improvement Deliver innovation Improve communication Improve team working and morale

But individually…. Lean focuses on improving process or production effectiveness and efficiency Value Management focuses on improving product function and form

Discuss…. Should the Lean Practitioner in construction have Value Management techniques in his/her toolbox and vice versa?