The Lean Construction Journal in a 2009 white paper pegs the ratio of non-value-added or wasteful activities in a typical construction project at 55% to 65%. The white paper-Creating Value: A Sufficient Way to Eliminate Waste in Lean Design and Lean Production goes on to say, “Creating value and only value is the best way to reduce waste in design and construction.”
Needless to say, the construction industry is badly broken and needs fixing. How does the industry rise up and meet the challenges of customer demand for higher quality, improved profitability, and the shortage of skilled workers? The first step is to cast aside the not invented here syndrome and embrace a time tested manufacturing solution -the Toyota Production System-commonly called Lean.
Why should construction company managers even consider Lean as a way to improve their business? Here are some eye opening facts about the U.S. construction industry:
60% to 85% of construction time is spent waiting or fixing mistakes
The average construction worker operates at 40% efficiency
Critical shortages exist in qualified and skilled workers
The return on equity for construction pales in comparison to all other U.S. industries
Customers are frustrated with poor quality, confrontation, excessive change orders, and scheduling delays
These are some of the same or similar issues Japanese companies like Toyota faced in the 1950’s. Lean construction can help remediate the dire conditions described above. While Lean is no silver bullet, lean construction offers substantial improvements to the problems facing the construction industry. If construction companies want to prosper in the 21st Century then they should move toward lean thinking.
Why so Much Waste?
Why so much waste? Construction projects are so fragmented. Many times subcontractors do their work disregarding how what they do impact the work of other subcontractors. We call this the “throw it over the wall’ mentality. One functional department ( in this case subcontractor) completes its part of the project and throws it over the wall to the next department (subcontractor) who throws it back over the wall because it isn’t right. This mentality sub-optimizes the performance of the entire project creating quality and schedule problems.
Lean thinking is a new way to manage construction. Many people object because they believe lean is a manufacturing strategy and has no application in a “unique” industry like construction. The goal of Lean Process Improvement is to maximize value and eliminate waste using techniques like one-piece flow, Just-in-time delivery, and inventory reduction.
There is a small but growing movement to apply lean principles to construction. Applying lean principles to construction really means applying them to project management. This transformation involves mapping your construction processes, determining the most efficient work flow and establishing a pull system. How do you create a pull system? As a contractor you can begin by looking at what the completed project should be, and then work backwards, identifying each preceding step. Downstream processes determine what the upstream processes will be and when they should take place. Taking this view of the project will help you control the work flow. You should also look at creating value stream or process maps of your job support processes as well as project processes. Processes like job setup, estimating, payroll, accounts payable, purchasing, tool and material handling are good candidates for mapping.
The Need for Change
The construction industry is broken and the five facts below demonstrate why the industry needs to change:
Lean construction focuses on identifying and delivering products or services on which the client/owner places high value. Clients often place high value on:
While there are fewer options in the bid market than in the negotiated environment, there are still numerous ways contractors can add value to the construction process for owners that cost the contractor little or nothing. Simply by eliminating confrontation and reaching out through better communication and collaboration, the contractor can substantially increase value for the owner.
When contractors focus on delivering maximum value to clients, they usually find that profit margins increase. This is not surprising, since in virtually any industry the cheapest products usually produce the smallest profit margin. Therefore, if a contractor competes on price, the contractor is forced into a low margin sector of the industry. Industry data supports the belief that highly competitive bid markets are the least profitable. Secondly, since lean construction is about reducing waste, this means lower costs. Therefore, the contractor is under less pressure to lower its profit margins. Toyota was able to almost immediately double its productivity. When you consider the average construction worker is working at only 40 percent efficiency, the construction industry should expect dramatic improvements. Before blaming the worker, it should be noted that Roger Liska’s studies revealed that the majority of the lost efficiency was due to poor management-20 percent results from waiting for materials or supplies, 20 percent results from inefficient company processes and 15 percent results from work rules or congested work areas.
Shortage of Skilled Workers
Another challenge the industry faces is a shortage of skilled workers. If the industry wants to attract workers, it must change the perception that construction work is undesirable. Again, lean construction is a valuable tool in that battle. When there is a lack of workers, there is a tendency to reduce the job requirements to find additional workers. To make this work, the requirements tend to be revised downward so lower skilled workers can qualify. While this works in the short term, it creates boring jobs that highly skilled workers don’t want. Further, this approach tends to reduce productivity and increase the downward pressure on wages because wages reflect productivity. Throwing money at a problem is never a solution, but wages are a factor in the equation. Therefore, emphasis must be placed on increased productivity so highly skilled workers can be attracted and wages increased. This isn’t a delusion because lean manufacturers have already proved this concept works.
While there are no panaceas, Lean offers substantial improvements to the challenges facing the construction industry. Those contractors that want to prosper in the 21st century should move toward thinking lean to improve their processes.
The Power of Lean in Construction
Lean construction is a systematic application of lean thinking to the design and construction of buildings that do what clients and end-users want-provide value. Evolved over the last 50 years, lean thinking has revolutionized some parts of manufacturing and is now facilitating significant improvements in the way service organizations like hospitals, banks, etc. are meeting customer requirements.
Adopting lean thinking requires sustained work over a number of years. There are no instant solutions. For most people, lean requires a change in the way they think and the behaviors that support their actions. There are many things that lean organizations do that can be copied — partnering, supply chain management, value stream analysis, flow, etc. — but they are only lean when they are done with lean intent. That requires lean thinking around how the organization works.
Not all construction firms accept waste as a necessary prerequisite for doing business. They minimize or eliminate it by using Lean tools and techniques. Some examples of companies using Lean principles and tools to overcome poor quality, poor delivery and less than stellar profits are: Boldt Construction, Linbeck Construction, Mortenson, Sutter health, Veridian Homes, and the Walsh Group
Lean process improvement isn’t a new concept, but it is relatively new to construction. There are many skeptics who believe Lean is a manufacturing strategy and is not suited for the construction industry. Many aspects of the Toyota Production System and other lean tools can and do apply to the construction process.
Courageous, out-of-the-box thinking construction organizations such as Boldt, Turner Construction, and Messer Construction along with others, are leading the way by demonstrating that lean process improvement can reduce waste in construction with results mirroring other industries.
Lean principles hold the promise of reducing or eliminating wasteful activities, costs, and inefficiencies in construction, creating a system that provides value to customers.
Today’s job hunter faces great challenges when seeking employment within the construction industry. The market in A/E/C (construction, architecture and engineering) for hiring has been very slow, and at some points have reached over 20% unemployment, making this industry one of the most difficult markets to work in. However, the good news is, even in the toughest markets, there are still 80% of the people within this industry are employed. There are many ways to obtain a construction job interview, but some are more effective than others. Job interviewing is obtained from a variety of sources, many of which are offline but many are now online. When job hunting in the A/E/C industry. Job candidates need to stay focused on their network of contacts within the industry, and on niche resources advertising construction jobs.
Below are the top 6 ways to obtain a construction job interview. Job seekers should focus on utilizing all methods simultaneously in today’s tough employment environment.
About three out of four construction management hires, including those handled by construction search firms, take place through private or unadvertised construction job openings (openings unknown to the public). These construction jobs are the most confidential and difficult to find, but have the greatest potential for job flexibility and obtaining an exceptional construction salary and compensation.
Private openings are often rarely managed with more than a few candidate interviews before a hire takes place. You need to be one of those.
Even when there are no current construction job opportunities available, an employer can often create a construction job opening when the right candidate comes along, even in the worst of times. Some employers will want to upgrade their weak links during a down turn, while others want to expand and capture market share while their competition is holding back.
You need “to come along” before the construction job opening becomes public. That’s where networking comes in. A recommendation from an influential referral fosters immediate trust and respect from a potential employer, and can provide you treatment as a choice candidate.
In your Rolodex or contact manager, research your list of key contacts. Also look through your industry’s association membership directory, and call every one you know who has a job in your field that might be willing to help you with job leads. In many cases, your close friends and business associates will be the best sources for job leads and referrals. They are also most likely to respect your confidentiality and offer their genuine help. In addition, they may even be able to refer you to a construction recruiter or other construction employment resources.
They might also be good references and sources for ideas as to what is going on in your market, who is hiring and what firms are doing well.
Another good way to obtain a construction job interview is to directly solicit construction employers of choice. Research the industry and identify six to ten primary targets for your search.
Within these target firms, identify the direct construction hiring authority (immediate construction manager of the construction position you seek) and contact him/her directly. Try to obtain a personal meeting by stating your construction employment interest. You can email them, fax them, send them a letter in the postal mail or call them. Contacting subcontractors or suppliers to see who can give you an introduction is also a good idea.
Another approach is to find out where the supervisor frequents such as a industry trade association, or other facility that would foster a chance meeting. Of course, the least effective and most risky means to contact the supervisor is through the mail. However, if you intend to send something through the mail, use express mail in order to get the proper attention. A direct solicitation risks exposure and may not be the best approach if you are concerned with confidentiality. Even if you ask the employer to respect your privacy, you are still vulnerable, unless you are unemployed and are not concerned with who might intercept your letter.
For private or public openings, construction executive recruiters and construction headhunters are experts in penetrating their specialized industry and locating reputable construction companies with attractive opportunities. Construction recruiters can introduce you to well-tailored construction job opportunities with little or no effort on your part. They will keep it confidential. To locate a construction recruiter in your specialty, try to get a referral from a colleague, a local construction trades association, or your competitor’s Human Resources department. A couple of other good sources are Kennedy Publication’s Directory of Executive Recruiters.
Be sure to find a construction executive recruiter who highly recommended for his or her professionalism, performance, and ethics. From the start, emphasize to your construction recruiter that your name and credentials must remain anonymous to potential employers unless you authorize release. Ask construction recruiters to contact you only at home, or in your private office, and only with construction opportunities that fit your construction career plan. Good executive recruiters can work within these requirements and may even arrange construction interviews without submitting your construction resume.
Like any brokers, construction recruiters work hardest for candidates who can help them close a sale. Such candidates have a marketable background, are clear on what they want, and are likely to accept a fair offer (usually a 10 to 15% salary increase). Unwillingness to job move immediately, or an unwillingness to accept a fair offer, will discourage recruiters from working with you.
Remember that construction recruiters work for client construction companies, so you may need to wait for the right opportunity. Make sure you get to know two or three pros, and stick with them.
Advertised construction openings are generally the least effective way to obtain a construction job interview. For employers, using ads is inefficient, expensive and time-consuming usually a last resort. So when you come to an employer’s attention by this route, you are associated with an unpleasant process and with a horde of candidates that the construction company must wade through.
Sending a construction resume is simply not effective. A recent survey from The Department of Labor reported that only 5 out of 100 American jobholders obtained their positions through newspaper want ads. Other surveys indicate that the figure is closer to 2 out of 100. Most resume readers take less than 5 seconds per resume to decide if the construction resume gets looked over or pushed to the rejection pile.
Responding to ads also risks your reputation and confidentiality. Your construction resume may fall into the hands of junior-level administrators, or it gets entered into corporate data banks (perused by anyone who has access to the Human Resources files). This scenario is unlikely to lead to an appropriate offer.
If you do elect to market yourself through advertised openings, check out each construction job opportunity via your network before contacting the company. Try to find out why the construction job opening was not filled privately, how long the search has gone on, and what problems have affected the firm and the incumbent who held the construction position.
In pursuing an advertised opening, you can improve your chances by writing an effective cover letter and by responding to the construction job ad within the first four days. Try to send a construction resume only after speaking to the construction hiring authority and concluding that both parties believe you are the “right” candidate. Interview only with an authority able to offer you a construction job. Bypassing those who have been assigned the rudimentary task of advertising and screening for the construction position (usually the Human Resources Department, office managers, assistants, or secretaries) greatly improves your odds of getting a construction interview. Good sources for advertised construction positions are building trades journals and construction magazines, local construction newspapers, and the online job boards and blogs.
Internet construction ads are generally no more effective than printed ads when it comes to getting a construction interview. However, they usually are more abundant, easier to find, and easier to solicit. In order to increase the odds of success, focus your search by locating construction job databases that specialize in your specific industry such as online blogs, employer directories and job boards like ConstructionExecutive (dotcom) an TradeJobsOnline (dotcom).