Kristin Hill June 17, 2015

Lean Construction Institute Provider Number H561 A Lean Introductory / A Deeper Look at Target Value Design and Delivery 060414DSGNFRM Kristin Hill June 17, 2015

4 Credit(s) earned on completion of this course will be reported to AIA CES for AIA members. Certificates of Completion for both AIA members and non-aia members are available upon request. for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product. Questions related to specific materials, methods, and services will be addressed at the conclusion of this presentation. This course is registered with AIA CES

Copyright Materials This presentation is protected by US and International Copyright laws. Reproduction, distribution, display and use of the presentation without written permission of the speaker is prohibited. InsideOut Consulting, Inc. 2015 The Lean Construction Institute 2015

Course Description This presentation will identify Lean project delivery as an "operating system," based in principles and use of appropriate tools. Participants will recognize that Lean is about understanding value and eliminating waste. The overview is focused on the practical implementation of Lean approaches, including examples of how teams actually implement Lean. A deeper look at Target Value Design will explain that TVD is a disciplined management practice to be used throughout the project to assure that the facility meets the operational needs and values of the users, is delivered within the allowable budget, and promotes innovation throughout the process to increase value and eliminate waste.

Learning Objectives At the end of the this course, participants will be able to: 1. Participants will understand that Lean is an operating system comprised of principles and tools, and recognize how the principles are relevant to the efficiency of design and construction that results in improved worksite safety, and positive response among building users. 2. Participants will understand and be able to utilize the Last Planner System for collaborative planning in design and construction, and apply the Big Room concept for improved collaboration. Participants will recognize how improved collaboration during the design process results in less accidental injury, and promotes physical, mental and social well-being on building sites. 3. Participants will analyze the concepts and tools of Target Value Design and Delivery, highlighted with practical, real world application of TVD on project work. Participants will understand how Lean practices create more efficient and safer work sites with less waste. 4. Participants will identify Set-Based Design as a streamlined design approach, and explain the role of building trust in improving schedule and cost in project delivery. Participants will learn how a shift in thinking and behavior creates respect for people, resulting in a built environment that better considers and serves the user.

Lean in Design Conference June 17-18, 2014 1:00 Introductions 1:20 Intro Lean Operating System 2:00 Break (15 minutes) 2:15 Intro Lean Tools - TVD 3:30 Break (15 minutes) 3:45 Continue Lean Tools - Planning 4:30 Plus/Delta & Wrap-up 5:00 Adjourn

Missed Schedules & Budgets Risk is High Traditional Delivery Safety is an Issue Rework/Waste More Execution Problems Teamwork is Unreliable Customers are Not Satisfied Profit Margins are Shrinking

Deliver w/in Schedule & Budget Collaborative Risk Management Lean Delivery Safer Sites Less Rework/Waste Fewer Execution Problems Team-wide Reliability Customers Realize Greater Value Company Realizes Greater Profits

OAR Model for Collaboration (from Newfield Network) The Observer you are sees certain actions to take to produce results 13

Shift Perspective Shift Language Shift Thinking Shift Behavior

Texoma Medical Center First UHS Lean Project Conditions of Satisfaction Results Reduce cost by $4 mil overall goal $94 mil Deliver in 17 months November 2009 No Punch List Final construction cost $97.9 mil $1.7 mil Savings Pool $7 mil in Value Adds Delivered first week December Despite 87 rain days No Punch List at Owner Turn-over No Injuries No RFI s No Change Orders 4 Minor Recordable Injuries 190 RFI s 40 Related to early Steel Package Many Confirming $1.4 mil in change orders $1.1 mil Owner Driven No Rework Rework greatly minimized collaborative efforts

Tale of Two Projects Same time, city, architect Different contractor, delivery method Traditional Delivery Fairmount 54 Beds Lean Delivery Horsham 60 Beds $8,828,677 Bid Day $8,206,072 Predicted Cost 30 Change Requests 3 Change Requests $677,758 Change Order Costs $9,500,000 Final Cost $175,925/ Bed - $36,181 Change Order Deductions $8,169,891 Final Cost $136,165/ Bed

Temecula Valley Hospital 2013 40% below market cost 30% operational cost improvement 200%+ increase in labor productivity 7 IFOA partners Rapid improvement Exceptional team work Lots of FUN

Three Elements Operating System Lean Construction Institute Used with permission

Lean Fundamentals Intense focus on understanding value from the Customer s perspective Delivering value & eliminating waste in the process Continuous improvement of processes Shift in thinking and behaving supported by tools Respect for people

14 Principles 8Wastes

Current Reality Manufacturing Construction Productive Time Waste 57% Productive Time Waste 12% Source: Construction Industry Institute 2004

8 Wastes 1. Overproduction/Underproduction 2. Waiting 3. Unnecessary transport or conveyance 4. Over or incorrect processing 5. Excess inventory 6. Unnecessary movement 7. Defects 8. Unused employee creativity

Identify Waste in Design Processes 27

Continuous Improvement

Economics of Trust From The Speed of Trust Trust = Speed Cost Trust = Speed Cost YouTube - Stephen Covey - Leading at the Speed of Trust http://www.youtube.com/watch?v=igyxxyshxyo

Trust Quotient Trust Advisor Field book Trust Quotient TQ = Credibility + Reliability + Intimacy Self - Orientation For Example: Mother Teresa TQ: 10,000 Vladimir Putin TQ: 10 Source: Curt F. Dale Seminar

Project Promise A project is a very big promise delivered by people in an ever changing network of promises

Conditions of Satisfaction (CoS) Language Act of Making a Promise CoS are measurable statements that tell the project delivery team what tests a project must pass to be accepted as a success. No compromise goals This YET That Basis of decision-making for team Post in Team Space

Big Room

Effective Big Room An Effective Big Room supports the collaborative behavior of a team intensely focused on advancing work. Agenda - Collaborative What, Who, When, Expected Outcome Facilitation/Leadership Rotate/Share Rules of Engagement Accountable Conditions of Satisfaction Action Logs

Target Value Design (TVD) A management approach that drives design to deliver to defined customer values within project constraints. Drive out Waste Innovate Sound Decision Making Drive Value Drive Value YET Drive Cost

Set Target Cost Design to Target Project Phases Project Definition Business Case (deliver X for Y) Go No/Go Validation Go No/Go Design Development/Documentation Owner s Project Budget Design Budget Construction Budget On-going Cost Model On-going Cost Model Build to Target Go No/Go Construction/Production Commission/Turnover

Design Phase Pricing Models SD DD CD Pricing Construction Traditional Pricing/ Value Engineering Model TVD Design Model

Lack of Communication Why? What? How? Owner Architect Contractor

High Communication Why? What? How?

Organization Cluster Formation Community Public Relations User Operations Site Equipment Project Operations INTEGRATED TEAM Structural Core / Shell Interiors Build-out MEP/FP IS-IT

Cluster Teams Example Cross -Discipline Cluster (Structural) Cluster (MEP) Structural Engineer - Leader Architect Owner PM Construction Manager Mechanical MEP Engineers - Leaders Architect Owner PM Construction Manager Structural Skin Note: Clusters include Owner Stakeholders Cluster (IT) Electrical Engineer- Leader Architect Owner PM Owner IT Representative Construction Manager

Collaborative Design Conversation

A3 Dashboard Management 62

Collaboratively develop Path to Target Target Value Design Trade Est Target Most Probable Savings Concrete 3,504,798 3,200,000 3,200,000-304,798 Steel 4,355,000 4,350,000 4,355,000 0 Millwork 1,933,550 1,668,000 1,596,362-337,188 Window 856,589 913,500 1,077,545 220,956 Stucco 1,194,187 930,000 1,027,725-166,462 Doors 1,982,988 1,785,000 1,900,000-82,988 Kitchen Equipment 1,200,000 1,200,000 1,100,000-100,000 Lab Phara Casework 405,000 250,000 250,000-155,000 P Tube 314,700 283,000 283,000-31,700 15,746,812 14,579,500 14,789,632-957,180

Scratch Your Head Problem Solving

Low Tech Logs Hot Topics Risks/Costs Path Back

Hot Topics

Risks/Costs

Path Back

Target Value Tracking Target Current Delta

Product Development for the Lean Enterprise, Michael Kennedy

Set-Based Solutions From CPR Program

Last Responsible Moment Pull-Planning Design Phase Construction Phase Last Responsible Moment for Decision Last Responsible Moment for Change

Collaborative Decision-Making Sets and Decision-making: Building location & shape 14 Alternatives Showers 4 Alternatives Sheet vinyl flooring 5 Alternatives Roof structure 7 Alternatives Skin 9 Alternatives Tools: A3 s Choosing by Advantages (CBA)

A3 Thinking for Decision-Making Title Background Problem Statement Target Condition Collaborators Analysis Proposal Follow-up PDCA

Simple A3

Choosing by Advantages Factors Alternatives Criteria

Collaborative Risk Management Identify Mitigate Track Share

Risks Risk Estimate $ Risk Level City Development Plan & Architectural Review process delays $30,000 Med Community response to project during planning commission $10,000 Low Shared parking requirements with TMC $250,000 Low Program & scope changes $100,000 High Material cost escalation (5%) $100,000 High Procurement of remaining traders & partners $80,000 Low Plenum return in an I-2 Occupancy Refurbish existing patient units Total $570,000 86

Coordinating Action Last Planner System

Collaborative Planning Foundation by which the team collectively organizes the actions required to meet their goals Plans are nothing; Planning is everything. -Dwight D. Eisenhower Planning is the act of conversation that leads to well-coordinated action.

RESEARCH FINDING FROM EARLY 90 s 54 % of commitments made on construction projects were completed on time 2010 Lean Construction Institute

WHY USE LAST PLANNER SYSTEM? 91 2013 Lean Construction Institute

Last Planner System 5-Connected Conversations Construction Phase Master Scheduling Set milestones SHOULD Phase Pull Planning Specify handoffs CAN Look Ahead Planning Make work ready WILL Weekly Work Planning Make promises DID Learning/Improving PPC/Variance

Last Planner System 5-Connected Conversations Design Phase Master Scheduling Set milestones SHOULD Phase Pull Planning Specify handoffs CAN Design Cycle Planning Plan 2-3 weeks WILL Weekly Work Planning Make promises DID Learning/Improving PPC/Variance

Milestone Schedule Phase Pull Plan (Should) Continuously Advance 2-3 Week Cycles (Can) Work Register & Constraint Log Check in Sessions (Will) Percent Plan Complete PPC (Did)

Focus on expected outcomes/value Planning is done in a pull manner Work is made to flow Planning & execution are connected through conversation Last Planner System Creating the Value Stream People doing work- plan the work Based on making reliable commitments Manage constraints and variance Perfection Plan-Do-Check-Act (PDCA) cycle built-in

What is Pull-Planning? Working from a target completion date (milestone) backwards, tasks are defined and sequenced so that their completion releases work of others It is preformed by requests for work to be done

Milestone Plan Should

Pull-Planning Design Should

Pull-Planning Design Milestone Milestone Milestone

Pull-Planning Design Schematic phase Newbie team Constrained schedule 90-95% PPC average Detailed Pull to Milestone

Elements of Sticky Design Phase Color code sticky by discipline Swim lane from milestone & request Make sure your request has a promise Name Duration MY PROMISE What I will Deliver Be specific Small batch Delivery Date MY REQUEST (S) What I need from others Be specific Person /date

3 2 107 1

Last Planner System 5-Connected Conversations Design Phase Master Scheduling Set milestones SHOULD Phase Pull Planning Specify handoffs CAN Design Cycle Planning Plan 2-3 weeks WILL Weekly Work Planning Make promises DID Learning/Improving PPC/Variance

promises constraint log ref # due date promiser Will

Work Plan with Constraint Log

Deliver the plan 1. What promises did you fulfill? 2. What promises will you fulfill? 3. What are your constraints or concerns? 4. Are you on track overall? Will Did

Track PPC 100% Team: PPC PPC 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 4/11/2014 4/18/2014 4/25/2014 5/2/2014 5/9/2014 5/16/2014 5/23/2014 5/30/2014 6/6/2014 6/13/2014 Session Date Did

Track PPC Did

Contact Information Kristin Hill InsideOut Consulting, Inc. 617-633-7273 Khill@InsideOutConsult.com

This concludes The American Institute of Architects Continuing Education Systems Course Lean Construction Institute info@leanconstruction.org