Lean Construction

Published:

imageBy Alicia Rader, CPA, Manager | Tim Ayler, CPA, Partner
Team Members of the Construction Services Group

What comes to mind when you hear the word ‘lean’? Is it a fit person or a certain cut of beef? What about when you hear the words ‘lean construction’? The lean production concept has flourished in the manufacturing industry for years, but has been severely under-utilized by contractors despite evidence that implementation will improve the entire construction process for both the contractor and the consumer. This article will highlight the potential benefits of implementing lean construction concepts and how to begin thinking and operating lean.

When put into practice, lean construction can provide the following benefits:

  • Increased profit margins
  • Increased customer satisfaction
  • Increased work flow so crews are at their utmost efficiency
  • Reduced materials and tools inventory
  • Reduced costs, resulting in more competitive bids
  • Improved delivery times
  • Improved communication between owners, contractors, clients and workers
  • Reduced number of day-to-day injuries on construction sites
  • Improved productivity that can help attract highly skilled workers to your company

How does contractor start thinking and operating lean? The process begins by maximizing value to consumers, since people are more willing to pay for what they perceive has value. To maximize value, a contractor must effectively communicate and collaborate with its consumers to understand exactly what they value most, beyond conforming to the plans and specs, such as on-time delivery, no change orders, etc. Customers should feel comfortable to freely communicate all issues concerning a current project or other situations affecting their business. When a contractor understands its clients’ problems, the contractor can readily and effectively provide a solution. Naturally, these concepts should extend to all project participants. When all parties of a project are on the same page, the result is successful coordination, clarity of responsibility and reliable work flow.

The second key factor in implementing lean construction is to eliminate unnecessary waste. This means focusing on the construction process more than simply the end product. Waste, as it relates to the construction industry, can be the result of inefficient workers and/or management, inefficient company processes or inefficient material and supply chains. A large portion of this waste can be eliminated by implementing the following concepts:

  • Completely understand initial conditions of a project; Preliminary planning should include past performance reviews, risk analysis and meetings with key personnel (e.g. engineers, contractors, designers)
  • Identify and analyze potential problems and implement a new course of action before, during and after the project is complete
  • Monitor results on all processes as the project matures to ensure efficiency
  • Reduce lead times on materials and supplies by eliminating non-value-adding steps
  • Restructure relationships with product suppliers to cut down lead times where possible

A great deal of waste found in the construction industry can be eliminated by proper planning before a project begins. Many of the above mentioned concepts are reliant upon the pre-planning stage. Pushing pre-planning aside because you are too busy working on other projects commonly results in mounting costs and depleting value as projects move forward.

Lean construction contests the notion that there is always a trade-off between time, cost and quality. It can provide significant improvements to individual projects, as well as operations as a whole. By taking the steps to maximize value and eliminate waste, the construction industry has the potential to increase customer satisfaction, productivity and profitability.

Contact:

Alicia Rader, CPA | Manger, Member of the Construction Services Group | 317.260.4424 | arader@greenwaltcpas.com

Tim Ayler, CPA | Partner, Team Leader of the Construction Services Group | 317.260.4401 | tayler@greenwaltcpas.com