Why More Owners Are Demanding Lean Construction

And why that is good for the construction industry.

As building project owners search for ways to more effectively invest their capital, they are turning to an approach known as “lean construction.”

Requests for lean construction capabilities are increasingly being included in Requests for Proposals (RFPs) issued by owners to construction managers. One construction manager in the Boston area reported that out of four recent RFPs, three requested the applicants demonstrate lean capabilities. In turn, construction managers are advising subcontractors that lean practices will be used on such projects.

Reasons for lean

These requests are being made with good reason. A 2016 research study led by Dodge Data & Analytics analyzed 162 projects identified by owners as best performers and typical performers. The study compared projects that used lean construction practices to projects that were managed in a traditional way. It found that lean construction projects were three times as likely to complete ahead of schedule and two times as likely to complete under budget.

Many owners credit the superior schedule and budget performance on their best projects to lean principles’ emphasis on creating collaborative teams with empowered foremen and tradespeople. According to Gina Casalinova, an owners representative employed by Cleveland Clinic, “Lean construction principles and tools help us to build better teams. They reinforce a culture of respect and teamwork that marries with our core values at the Cleveland Clinic.” The Cleveland Clinic has been a leader in the northern Ohio region in requiring that projects be designed and built using lean practices.

Lean construction has been used by owners for a wide variety of building types, including healthcare, commercial offices, manufacturing facilities, educational campuses, government buildings and mines. In addition to Cleveland Clinic, other owners of note committed to lean construction include Procter & Gamble, Intel, Universal Health Services, Genentech, Amgen, Sutter Health, Eli Lilly and Company and the University of California San Francisco. Oftentimes, especially in healthcare and manufacturing, the lean construction focus complements a lean operations approach in the owner’s organization.

The road to the present

In the early 1980s, Glenn Ballard and Greg Howell began to develop the first lean construction practices when they worked with project teams to increase productivity. Much of this initial work was done during the construction of oil refineries in Texas and California. Ballard recognized that planning was rarely done at the crew level, and yet that was where planning was needed most to effectively complete work. Ballard and Howell continued their work into the early 1990s, developing a planning approach that ultimately became know as the Last Planner® System.

The pair took note of similarities between their approach to work and the ideas presented as “lean production” in the book “The Machine That Changed the World.” They, along with others, coined the term “lean construction” in 1993 during an international meeting of construction productivity experts.

The 1990s saw the formation of the Lean Construction Institute (LCI), an industry organization focused on researching and disseminating information about lean construction practices. LCI’s membership includes owners, construction managers, trade contractors, architects, engineers and consultants, with owners now comprising a significant percentage of the membership.

The number of corporate owner members in LCI has more than tripled in the last five years. Also, there are more than 30 local lean construction chapters that serve as a resource for the industry, and most chapters include owner representation in their leadership group. Dan Heinemeier, executive director of LCI, notes, “Demand from owners for learning more about lean has caused us to create an annual owners-only forum, in which dozens of owner organizations participate in learning from each other.”

The upside for construction companies

The good news for construction companies is that lean is a collaborative discipline that incentivizes owners to focus on optimizing work for all parties on a project. While lean projects save owners money, they also enhance the profitability of construction companies serious about leveraging the benefits of lean while creating a work environment for crews that is safer and more enjoyable.

Tom Richert headshot

Tom Richert is a Principal with Lean Project Consulting, Inc., a consulting practice dedicated to improving the experience of project work. He is a project and enterprise leadership transformation coach who began his career working on both design and construction teams in the building industry, managing the development of projects in the educational, commercial, entertainment, and infrastructure sectors. Tom began his work with lean practices in 1999, and has presented and taught workshops at national Lean Construction Institute conferences.