During the past several years a transformation has occurred in manufacturing. By implementing Lean Production Management developed by the Toyota Motor Company, and moving away from mass production, many firms in the U.S. and throughout the world have found the key to drastically reducing cost while increasing value to the customer.
Lean Production Management is now being implemented in the delivery of facilities and capital projects. Today’s projects are increasingly complex and schedule sensitive. It is more important than ever not only to deliver the project, but also to achieve the Lean goals of maximizing value for the customer and minimizing waste in the delivery process.
An ideal of Lean Manufacturing is to provide the customer a unique product, as fast as possible, and without waste. The customers of healthcare capital projects require the same: facilities that efficiently provide unique services with flexibility to respond to dynamic market changes, facilities delivered quickly to fulfill market demand and competitive advantage, facilities made more affordable by eliminating the waste and inefficiency of traditional project delivery processes.
Too often healthcare projects are characterized by surprises in cost overruns, schedule delays, and facilities that, upon occupancy, do not meet the program needs of the customer. Through a collaborative project team and rigorous implementation of Lean processes, great facilities can be achieved. We are able to ensure reliable results, improving the performance of both project delivery and the facility itself.
Lean Processes Applied to Facility Planning
The planning phase consists of documentation and understanding of the owner’s project criteria, establishing a target cost based on available funds, confirming space planning and utilization, defining design criteria, and creating the criteria for the conceptual design. Lean principles are applied in this phase to better understand workplace planning, to establish the project target cost, and to create an integrated team of designers, builders, and facility users.
Incorporating Value Stream Mapping in Work Place Planning
With value stream mapping we evaluate services, work processes, and patient flow from beginning to end and draw a visual representation of every step. This rigorous practice of benchmarking, measuring, and mapping teaches us to see waste that is often hidden in traditional process and practices. We evaluate current services, workflow, and patient flow based on the seven types of waste: waiting, overprocessing, overproduction, inventory, transportation, defects, and motion. We then look for opportunities to eliminate waste by creating a future state map that represents innovative and streamlined services, work processes, and patient flow. The entire process is decentralized to the department level and performed by those responsible for how services are provided.
Initiating the Target Costing Process
Target costing is a discipline that ensures the cost effectiveness of a project before it is launched. The concept of target costing can be understood as a reverse estimating process. Instead of using detailed quantity and cost information to build a comprehensive budget, target costing starts with an understanding of the customer’s expectations regarding cost, function and quality. The “target cost” is what the customer will pay for a facility based on the alignment of their specific functional needs and financial constraints.
Target costing relies on the cardinal rule: “The target cost of a facility can never be exceeded.” Under this approach, the budget becomes an influence on design and decision-making, rather than an outcome of design. There are three major steps that occur during the planning phase to set the stage for target costing.
- Understand the financial drivers of the facility and model expected costs. If expected cost is greater than available funds, reconcile space and design criteria with the target cost.
- Set the target cost below expected cost model if necessary to satisfy available funds. Setting the target cost just below the expected cost model is also a strategy for innovation.
- Gain agreement and commitment to the target cost from stakeholders, designers, and builders.
Establishing Integrated Multidisciplinary Design Teams
Teams of designers, facility users, builders, specialty contractors, and suppliers are formed early to develop the design and budget simultaneously. Major specialty contractors and suppliers are contracted through a value-based proposal process that gains commitment to high value, target cost solutions. These multidisciplinary teams meet often. When geographic or time constraints do not allow co-location or face-to-face meetings, teams meet through technology in web meetings or other electronic conferencing.
Lean Processes Applied to Design
By applying Lean principles in a collaborative design environment we move away from traditional batching of design and budgeting done in isolation and the inherent waste of rework associated with redesign and rebudgeting. We also move to detailed design performed by major suppliers and specialty contractors to eliminate the waste of redundant detailing and to allow designers to provide even more focus on creative, high-value design solutions. Multidisciplinary teams working in rigorous collaboration ensure that designing and budgeting are evolving in lock step.
Implementing Target Costing Deeper into the Design Phase
Target cost teams are formed according to systems (site, substructures, superstructure, enclosure, finishes, mechanical, and electrical) with the responsibility to design to budget. These multidisciplinary teams of designers, builders, and facility stakeholders work to ensure that when target costs increase somewhere in the facility, costs are reduced elsewhere by an equivalent amount without compromising function and quality. They are intent on managing project scope and eliminating aggregate increases to the project target cost. The process continues throughout all phases of facility delivery with budget as an influence on design and decision-making, rather than an outcome. Target cost teams meet at least weekly to design to budget. Target cost team leaders meet weekly to negotiate budgets between systems and components. The process is most effective when target costing is driven deep into the supply chain, engaging vendors in innovative and resourceful opportunities for cost reduction. Finally the teams are responsible for managing the transition from design to construction to ensure the target cost is never exceeded.
Value Engineering
Value engineering is a systematic and interdisciplinary examination of a project and its components in terms of function and worth. It is a structured methodology using tools like function analysis and life cycle costing to encourage analysis and creativity. Sets of solutions are developed and evaluated, and ultimately the highest value solution is advanced based on functions and cost. We use value engineering methodology to cause high value design rather than cut cost after design and create wasteful rework. Sometimes value engineering can identify opportunities for higher functionality or life cycle savings resulting in higher initial cost. In order not to violate the cardinal rule of target costing, extra cost must then be removed from some other part of the project without adversely affecting functionality or quality.
Set Based Design and Continuous Sharing of Information
Multidisciplinary teams work through an iterative process of developing sets of solutions that satisfy cost, function and quality. Sets of solutions are advanced until the last responsible moment for decision making ensuring the highest customer value. The success of target costing and value engineering is dependent on the willingness of team members to continuously share incomplete information. Daily, or at least weekly, design and budget information is shared. Design and budget must evolve simultaneously or we run the risk of independently developing solutions that do not provide highest value.
Simultaneously Designing Product and Process and the Use of 3D Modeling/Prototyping
Cross-functional teams of engineers, suppliers, constructors, and operators work together to simultaneously develop what is going to be built and how it will be built. Product and process design decisions are made simultaneously, rather than first producing a product design and then trying to produce a satisfactory process for making that product. We take advantage of 3D technology to create an integrated product and process design, including real-time budget updates as design changes. We use digital prototyping to integrate design and cost characteristics and provide widespread access to the design/cost model as it evolves.
Eliminating the Waste of Redundant Detailed Design
Traditionally detailed design is done twice; once by designers and engineers, and again by fabricators and installers. In Lean project delivery, designers and engineers are required to produce only those deliverables needed for permitting and needed by specialty contractors or other suppliers for detailing. Whenever possible, major specialty contractors are integrated into the project based on the design-build delivery model.
Implementing Production Planning and Management in the Design Phase
Efficient and effective work is assured when production planning and management is applied during the design phase using constraints analysis, and weekly work plans. Design and budgeting are planned and managed to emulate a continuous flow process. During the design phase of a project, progress is most often impacted by the constraints and bottlenecks involved in decision making. Project-based production management is formally applied to assist with constraints and bottlenecks using standard Lean processes and principles.
Lean Processes Applied to Building
Building consists of the transformation of design and materials into a facility that satisfies customer and stakeholder value. Lean processes and principles are applied to detailed design, fabrication, materials/supply chain management, and jobsite production to deliver the highest quality, in the shortest time, in the safest manner, and without waste at the lowest cost.
Detailed Design as the First Step in Building
Specialty contractors and vendors are responsible for detailed design developed through installation and fabrication drawings. 3D modeling is used for detailed engineering to reveal issues and expedite the creation and review of shop drawings/detailed design. We work to eliminate the waste of waiting and traditional “batching and queuing” of submittals, shop drawings and submittals are expedited through cross-functional review meetings involving the design professional, builder, and suppliers.
Managing the Supply Chain
Supply consists of the detailed engineering of the product, then fabrication or purchasing of components and materials, and finally the logistics management of deliveries and inventories. All decisions regarding the engineering, production, or delivery of materials and components are made with an eye to maximizing customer value. We will facilitate and support Lean manufacturing techniques in fabrication shops whenever possible. Deliveries of materials will be coordinated to ensure soundness of work assignments while minimizing the impact of on-site material storage. The impact of on-site material storage and inventories is minimized through just-in-time deliveries and one-touch material handling ideals.
Quality and Operations Design
The technique of in-process inspection empowers the entire project team to have the authority and responsibility for quality. Zero defect initiatives are implemented in the facility construction and start up processes. First run studies and operations design on all major work activities help to ensure the quality and cost effectiveness of installations. First run studies also facilitate the empowered planning and control of work by the expert installers of the work. Standardized components and work processes are designed into the product and process to facilitate fabrication, installation and maintenance. Safety, quality, and productivity improve when what is to be installed is standardized in configuration and work process.
Implementing Production Planning and Management in the Design Phase
Project based production management is formally applied using standard Lean processes and principles. Jobsite production is planned and controlled to emulate a continuous flow process. The movement or relocation of departments within existing facilities and the delivery of medical equipment are incorporated in detail in production management. All work is explicit in terms of content, sequence, timing, and outcome. Every hand-off of work in the work stream is direct, with a clear way to request action and receive a response. The pathway for production is simple, direct, and without waste. Improvements are made according to a method, under guidance, and by those who are responsible for performing the work.
The Lean delivery process demands rigorous collaboration, constant communication among team members, and a commitment to eliminate the harmful and wasteful distinctions between phases, disciplines, and companies. We streamline project workflow and eliminate the wasteful activity and rework associated with traditional project delivery. The result is a facility that efficiently provides unique services with the flexibility to respond to dynamic market changes, a facility delivered quickly to fulfill market demand and competitive advantage, and a facility made more affordable by eliminating the waste and inefficiency of traditional project delivery processes. In short, a unique product, delivered fast, without waste.
Paul Reiser is the Corporate Vice President of Productivity and Quality for the Boldt Company. His work focuses on improving overall project productivity, production, and performance. The Boldt Company is a 116-year-old firm providing innovative construction and technical services throughout the United States. Their portfolio of projects includes extensive work in healthcare facilities and in design-build project delivery. Mr. Reiser may be reached at (920) 225-6120 or paul.reiser@ boldt.com.