Dr Steven Ward MCIOB of WSP Continuous Improvement Services provides us with a timely reminder of the need for more emphasis on quality in construction and makes the case for procuring on the basis of supplier capability achieved through the adoption of the new ISO 18404
As Steve explains, recently I presented to the Constructing Excellence South West’s Clients Forum and Procurement and Productivity Theme Group on how CESW member Gilbert & Goode, was the first company in the World to achieve certification to the new ISO 18404 standard in Lean and Six Sigma. I was more than happy to do this as I believe that Construction Clients and their procurement approaches hold the biggest levers for improvement in our sector.
To put this in context, a story is needed…………. In 2012, we took some UK construction principals to visit Mitsubishi Electric in Livingstone Scotland. We had been there before to look at their Lean transformation, but this time was different. Working on the assumption that businesses in any sector employ people and buy things, we had asked for presentations from their Head of HR and also their Head of Procurement, in addition to the usual lean tour covering lean tools and deployment. During the Q&A session the following conversation took place between the construction people and the procurement lead. It went roughly as follows.
Question from Construction – “When you go through a procurement process, what emphasis do you place on quality?”
Answer from Mitsubishi. “Sorry I don’t understand the question.” (The guy seemed genuinely confused at such a question).
Question from Construction again “Well, when we (in construction) go through this exercise it is common to weight the emphasis between cost & quality. For example, maybe 60% of marks would be awarded for quality and 40% for cost. What do you do?”
Answer from Mitsubishi again, “Well if you put it like that, it’s 100% quality”. (Now the construction audience was confused).
Question from Construction again, “How can this be? How could you possibly make any money on this basis?”
Answer from Mitsubishi again, “It’s not that we don’t care about cost, we care deeply, it’s rather that we recognise that it’s pointless looking at cost until we can be satisfied that a likely supplier can deliver perfect quality, on time every time. We can spend significant effort establishing this supplier’s capability and only after this is done will we start to look at cost. An eventual agreement would contain a commitment to reduce cost year on year.”
I have often thought about this conversation and the contrast in the respective approaches to procurement in Construction and Manufacturing. For this reason, when a new ISO Global Standard in Lean was published in 2015, I immediately saw a possibility to link real capability in Lean with Procurement to accelerate change in our sector, providing of course that this particular ISO could really work and not just be used as another tick-box exercise like some others I’ve seen.
It is well known that the biggest cost variable in construction is labour productivity. It has also been established that around 20% of project cost is wasted through rework and errors. Despite knowing this, broadcasting it, publishing myriads of government reports telling us what to do about it, our industry still fails to keep up with rates of productivity improvement in other sectors. The reasons for this have been discussed by others at length and we are trying, through CESW, to improve this including acknowledging that Clients are in a unique position to help instigate and speed up the process of improvement. Only if Clients and their advisers can accurately specify their desired project outcomes, will the supply side stand a chance of achieving them.
Due to the wider system that includes market conditions that we call the construction sector, it is normally the case that project teams and their supply chains need to be able to mobilise quickly, putting together dedicated teams to deliver largely bespoke projects. In other words, we are expected to deliver well whilst dealing with a host of unknowns.
W.E. Deming taught us about “three worlds of buying”:
In world one, the buyer knows what they want and can specify it accurately and all likely suppliers have equal performance. Appropriate strategy = Go lowest price competitive tender.
In world two – The buyer knows what they want and can specify it accurately but likely suppliers have differing performance/service levels. Appropriate strategy = Buy on cost plus the cost to use the service. For example, I remember helping a contractor with Lean on a site in Doncaster where the bricklaying contractor was bought on lowest cost. It was basically a labour agency supplying 2 +1 gangs with no supervision, all on piece work. The main contractor site staff had to invest considerable time managing the labour, but this cost was not taken into account by the buyer.
In world three, the buyer is not quite sure what they want and cannot accurately specify it. This is very common in construction. Deming commented that in this world if we buy on the basis of lowest cost then “you deserve to be rooked”. Appropriate strategy = Seek out highest capability supplier and work in partnership to develop the brief to the point that it can be designed and built to an agreed target cost.
So, you might ask what has all this got to do with a Lean ISO? Well if we know that construction labour productivity is the biggest cost variable and 20% of project costs are lost to rework, it would make a lot of sense to procure primarily on the basis of capability when we are not quite sure what we want from a project but would like to engage with contractors and suppliers early in the process in order to benefit from their design and other inputs. It follows that the lowest possible cost will be achieved by the contractor who has the most capability. Of course, the particular type of capability to referred to is guess what? The ability to maximise labour productivity and quality. Given the high variety in construction and the seemingly perpetual inability to “compare apples with apples” when setting up performance measures, it is probably the case that the only thing worth measuring is the extent to which best practices known to improve productivity and quality are effectively deployed within a prospective partnered supplier.
Should we be looking for Lean Intervention or Transformation? Having facilitated the practical application of lean construction now for some 18 years, I hopefully have earned the right to an opinion on the subject of its overall deployment in our sector. Sadly, I have to report that the majority of lean construction efforts I’ve seen are based around the ad hoc deployment of Lean tools, and not on a strategic intent to improve operations. Also, when considering the adoption of lean construction, it is often too late. It’s common for senior construction management to select projects that are already in trouble as a test bed, hoping for the “silver bullet” that will magically and immediately make things better. Occasionally this works, but there are also failures where the project was “doomed” really before anyone got near the site. These are the projects where management will say, “well that lean stuff ain’t much good is it.”
So, what’s different about ISO 18404? Why use (specify) it? This can be explained by the way in which the ISO18404 Standard can be broadly divided into two parts, dealing with two issues.
Issue one is Quality of Training. It is unfortunately the case that it is possible to go online and buy a six sigma blackbelt for less than £50. It will, of course, be worthless, but it will be a blackbelt certificate. I can testify that any individual properly certified to the ISO 18404 standard will have something worthwhile. The standard provides guidance on the knowledge and competencies that a person delivering lean improvements in an organization should possess to three different levels of expertise. In the appendices to the ISO there are three detailed tables for differing levels of expertise named Lean Practitioner, Lean Leader and Lean Expert. The competencies include a wide range of Lean skills covering application, management and training ability dependant of the level sought. If an organisation has its own certified Lean Leaders or Lean Expert in place it is allowed to certify its own Lean Practitioners internally. Lean Competencies are vetted by the sector scheme owners the Royal Statistical Society or an independent assessment centre licensed by them.
Issue two is the Organisational Deployment of Lean. To explain this fully another story is required – sorry. A few years ago, after giving a training day on collaborative planning I was asked to help a company prepare a bid for a social housing regeneration project. The person who called said that they could see how the methods taught could help them both win and deliver the project. A collaborative planning session with the main contractor team and some of the suppliers was held and we came up with a lean project delivery strategy based on low levels of work in progress. This was key not only for Lean but from a H&S perspective it would be important not to open up too much of the site at once as it was in a particularly depressed area and full of kids. They ended up winning the bid with the client feedback stating that they were the only contractor that seemed to understand how to approach the programme. Having won the bid, largely based on Lean input, I am sorry to report that they then completely ignored the strategy and decided to tackle the project in a traditional way with high levels of WIP. This would mean a huge area of site open including demolition & scaffolding which would present significant H&S risks. I asked for my name to be removed from any contract documents. The point here is, they learnt the words but couldn’t hold the tune. Unfortunately, we have all seen this movie before, wonderful promises in an ITT, only to face a different reality in the actual project.
Let us contrast the above with how the ISO 18404 pilot company, Gilbert & Goode, approached their lean deployment in a way that would allow successful certification by BSI. Firstly, they developed a business strategy with defined objectives, based on enhancing customer value, with both short and long-term targets for reducing costs, reducing design lead times, reducing construction lead times, improving quality and Health & Safety. This would cover the whole value stream from acquisition, development, design, construction and aftercare.
Then they carried out significant training activity in order to gain an appropriate level of competent personnel, able to be certified to Lean Leader and Lean Practitioner levels. They also trained all their staff and their key suppliers in the basics of Lean. They deployed a series of Lean improvement projects led by their own Lean Practitioners, linked to the achievement of the targets in the strategy. They formed an appropriate supporting company architecture, with a reporting structure, steering group, accountabilities and support. They established a structured approach to continuous improvement with defined metrics, targets and review mechanisms.
The leadership team including the MD, Head of Development, Head of Construction and a Senior Project Manager personally undertook Lean Leader training and developed portfolios of actual applied evidence sufficient to satisfy the Royal Statistical Society of their competence. In other words, they walked the talk. They are now able to demonstrate tangible and intangible benefits but moreover the achievement of a culture based on the capability to continuously improve. Let me ask you as construction clients, would you like all your supply chain to act like this? If you would, then consider specifying ISO 18404 for your suppliers.
Dr Steve Ward works with WSP’s Continuous Improvement Services team and is engaged in helping with the practical deployment of lean thinking to the built environment. Contact email@example.com