0 cfma | new orleans lean | july 2015 © 2015 fmi corporation lean six sigma in construction cfma...
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1CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
LEAN Six Sigma In Construction
CFMA July 29, 2015
Presented by:Jim SchugPrincipal
2CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Who is FMI?
3CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Typical elements of FMI Operational Excellence engagements include …..
• Leadership coaching• Organizational Design/structure• Interactive Training• Development of a shared vision• Incentive compensation (Short and Long Term)• Systems development and implementation• Integrated, simple and well-used best practices• Accountability improvement• Field Metrics/Dashboards development• Staff Dashboards development• Intense Leader field presence
4CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Testimonials
“I think everyone really knows what they need to do. But without FMI’s help, we probably wouldn’t have resolved all of our issues and overcome our challenges.” President/Chief Operating Officer, Large Mechanical Inc.
“The strategy and expertise FMI brought to Miller Pipeline was and continues to be a ‘game changer’.” Dennis Norman, Vice President of Corporate Performance, Miller Pipeline
“FMI’s productivity training forced us to shift our focus from solely building projects to reevaluating our processes on how we run our business…..” CEO, Large SubContractor, Inc.
“Thanks to the processes FMI introduced to our company, productivity increased by double digits.” President, Mechanical Contractor
“We’ve seen significant gains in productivity since we hired FMI. In just the first year, we improved productivity by 10-12 %. Today, we’re about 20-25% more productive on an average man hour compared to when we first started working with FMI.” VP/Owner, self-performing General Contractor.
5CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Trends impacting A/E/C Industry
Changing nature of business
Construction 2.0 : productivity +
Smart Buildings Globalization Modularization &
prefabrication Recovering the
lost generation & the war for talent
Industry consolidation
The fate of public works
6CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
What Should We Do?
• Contractors “pinched” in the middle
• Volatile and complex environment
• Competitive advantage disappears quickly
7CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Adoption Curve Compression
Source: Adapted from “Crossing the
Chasm,” Geoffrey Moore
Lean
SkepticsNo way!
ConservativesHold on!Pragmatists
Stick with the herd!
VisionariesGet ahead of the herd!
TechiesTry it!
InnovatorsEarlyAdopters
EarlyMajority
LateMajority
Laggards
8CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Adoption is compressed
Personal Computer(8 years)
Smart phone(4 years)
BIM(3 years)
9CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
“Strategy is stuck,
SustainableCompetitive Advantage is fleeting,
And Companies must learn to change and adapt more rapidly.”
Adapted from The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business -- Prof. Rita Gunther McGrath
10CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Biggest Leadership Mistake
10 - 10 -
11CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Lean Business
Is there such a thing as Lean Strategy?
'The purpose of business is to create and keep a customer.‘
--- Peter Drucker
12CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Lean Business
Who are our customers? What do they value?
Can we build a sustainable business to provide our customers this value?
How do we create a repeatable system that minimizes cost to deliver this service?
Market
Estimate
Design
Build
Manage
13CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
What do great operations look like?
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
14CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
How do we know we are excellent in operations?
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
15CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
What is our company (or division) strategy?
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
• ___________________________________________
16CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Lean Business
A Lean Company has a well-synchronized business model.Remove waste in delivery of value to customer.
Strategy
Systems
Structure
Is your business “Lean”?
17CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Lean Portfolio Management = Good strategy!
Developing business models
Complete business models – have customers,
fine tuning systems/delivery . Keep close watch
on customer needs (High Profit)
Repeatable - Lean Operations (High Revenue)
18CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Lean in Context
• Lean Firm
• Lean Operations– A temporary relationship amongst an owner, engineer
and contractor, subcontractor or any combination of these
– An integrated engineering and construction supply chain
FIRM
PROGRAM
PROJECT
19CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
A Lean Firm is …
• Lean is a philosophy….not a process– Measurement– Continuous improvement– Identification and reduction of waste– People oriented – and engaging
• Lean uses various tools and techniques– Waste walks– Spaghetti diagrams– Kaizen events– Five S– Poka-Yoke– Activity analysis or work sampling (value stream mapping)
Lean is…
20CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Structure
21CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Focus on Reducing Waste
EightWastes
Motion
Transp
orta
ti
on
Not Engaging Employees
Wait Tim
eOver
Pro
duct
ion
Inve
nto
ry
Excess ProcessingD
efe
cts and
Rew
orkContinuous
ProcessImprovement
Just-in-Time (JIT)
Six Sigma
Lean
22CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Key Processes Needed?
• What Processes do you have?• What processes do we have that need to be
adjusted?• What is/isn’t working?
23CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Lean Operations – reduce waste in operations!
24CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
How Field Employees Spend Their Time in the Construction Industry
Recoverable Lost Time (32%)Waiting for information, materials,
equipment, tools, manpower, or other trades. Rework on items already
installed.
26%
32% 42%
Primary Time (42%)Installing units of work
for the first time.
Secondary Time (26%)Planning, scheduling,
material handling, lay-out, set-up, mobilization, etc.
25CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Tools Used to Create Clarity
OrganizationalLevel
ProcessLevel
26CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Tools Used to Identify and Eliminate Redundant Efforts
Redundant
Redundant
27CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Tools Used to Identify Underlying Causes and Address Them
28CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Real-Life Example of a Construction Company’s Margin Gain/Fade Spread
What is the difference between the top spread (actual performance) vs. bottom spread (expected performance)?
What field or office management techniques could improve the consistency of margin gain/fade?
Would improvements to technical skills and/or control processes improve this?
What could project managers do to help improve this?
Having the Right Data Allows for Great Insights
29CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
The Process Improvement Cycle “DMAIC”
Implementation
Change Management Strategies
Training
Roll-out
On-going Data Collection/ Comparison Against Benchmarks
“Stand and Deliver” Reporting
Celebrating Successes
Reporting Results
Planning & TeamSelection
Problem Identification & Analysis
Identify Solutions
Reason for Improvement
Identify Problems
Problem Statement
PI Plan
Assemble the Right Team
Root Cause Analysis
Process Mapping
Data Collection / Benchmarking
Quantify Benefits
Identify Barriers and Aids
Building theBusiness Case
Identify Countermeasures
Evaluate Practical Solutions
DefineMeasure & Analyze
Improve Improve Control Control
30CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Lean Project Management Process
Pre-Job Planning
Short-Interval Planning
Daily Huddle
Exit Strategy
Post-Job Review
Fabrication Process
Mate
rial
Man
ag
em
en
t
Measu
rem
en
t
Feedback Process
Lean Operations
Control Center
31CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Implementation challenges?
32CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Build a Learning Organization built on field management tools
Adopted from Dr Judy O’Neil www.partnersforlearning.com
33CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Project-Focus Business-Focus
Managerial Needs Plan Organize Control
Leadership Needs Set Goals Align Resources Motivate Staff
Project Manager
Accountant
Operations Director
CEOPresident
CFO
Controller
Craft Employee
Project Super
Foreman
General Super
VP Operations
Estimator
Career Focus Matrix (with Example Positions)
Business Developer
Admin Staff
Project Engineer
Project Executive
Business Unit
Leader
Leadership Development
34CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Business Dev.
Standard-
ization
Customer
Mgmt.
People Dev.
Financial
Mgmt.
Technical
Approach
BudgetSched
uleScope
Man-power Mgmt.
Material Mgmt.
Sub / Vendor Selectio
n
VP of Ops
Project Executive
Project Mgr.
General Super.
Super
Foreman
EstimatorKey: Minimal/no ownership Some Ownership Primary Owner
Yellow indicates targeted growth focus Green indicates current skill set
Implementation challenges?
35CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Leonard Bernstein should have been a contractor!To achieve great things, two things are needed: a plan, and not quite enough time.” - Leonard Bernstein
36CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
We need a structured implementation approach!
Case forchange Vision Skills Incentives Resources Action
PlanRealChange
Vision Skills Incentives Resources Action Plan
Case forchange Skills Incentives Resources Action
Plan
Case forchange Vision Incentives Resources Action
Plan
Case forchange Vision Skills Resources Action
Plan
Case forchange Vision Skills Incentives Action
Plan
Case forchange Vision Skills Incentives Resources
Status Quo
Confusion
Anxiety
Gradual Change
Frustration
False Starts
Source: Adapted from a Dupont presentation to CURT
37CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Maintaining the Proper Balance is
KEY
38CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Why Great Firms Fail
1. Incompetence2. Bureaucracy3. Arrogance4. Tired Executives5. Poor planning6. Short term investment horizon7. Inability to deal with new technology8. Good Management
Adapted from Clayton Christensen – The Innovator’s Dilemma
39CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Case study: A large natural gas distribution company
• Background– $40 million annual capital spend– Short window for construction– Strategic alliance formed 5 years
ago– Multiple users or “customers” of
construction services
• Solution– Implement integrated planning– Contractor schedules own crews– Pre-fab during winter months– Use mapping and root cause
analysis– Scorecard for performance
tracking
• Result– $1.5 million shared savings
annually– 4 KPIs monitored monthly– Profit targets exceeded 3/7
quarters
Many Customers
Many Crews
Centralized and Integrated Planning
Centralized and Integrated Planning
Resource Requirements
Rough Cut Planning
Capacity Requirements
Tracking/Monitoring
L O
N G
R A
N G
E V
I E W
40CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
Jim SchugFMI Corporation308 South BoulevardTampa, FL 33606
Tel: 813.636.1254Fax: 813.636.9601E-mail: [email protected] site: www.fminet.com
Jim SchugPrincipal
Jim is a principal and engagement manager with FMI, management consultants and investment bankers for the engineering and construction industry.
With more than a decade of experience as an Army Officer, Jim led operations in complex and challenging environments. Some of his roles included strategic planning, training across large organizations and command with honors. He refined these skills working for a national builder, repeatedly leading his teams to successfully integrate operations, sales and customer service.
Today, Jim is passionate about developing customized strategy and best-in class operations with his clients. He applies practical experience with an in depth understanding of leading lasting behavioral change in dynamic environments.
Jim earned a bachelor’s degree in quantitative economics from the United States Military Academy at West Point and a master of science in engineering management from the University of Missouri. Jim has completed post-graduate work with Cornell University in Achieving Competitive Advantage. He has served in leadership positions on various local and national non-profit industry associations and is frequently invited to speak at industry events.
Thank youJim SchugPrincipal
41CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
About FMI
FMI is a leading provider of management consulting, investment banking† and people development to
the engineering and construction industry. We work in all segments of the industry providing clients
with value-added business solutions, including:
• Strategic Advisory
• Market Research and Business Development
• Leadership and Talent Development
• Project and Process Improvement
• Mergers, Acquisitions and Financial Consulting†
• Risk Management Consulting
• Compensation Benchmarking and Consulting
Founded by Dr. Emol A. Fails in 1953, FMI has professionals in offices across the U.S. We deliver
innovative, customized solutions to contractors, construction materials producers, manufacturers and
suppliers of building materials and equipment, owners and developers, engineers and architects,
utilities, and construction industry trade associations. FMI is an advisor you can count on to build and
maintain a successful business, from your leadership to your site managers.
† Investment banking services provided by FMI Capital Advisors, Inc., a registered broker-dealer and wholly owned subsidiary of
FMI.
42CFMA | New Orleans
LEAN | July 2015© 2015 FMI Corporation
www.fminet.com
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