LeanConstruction. Without Integrating Specialty Contractors? Dave Crumrine October 14, ConstructionInstitute

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1 Lean Construction Without Integrating Specialty Contractors? Dave Crumrine October 14, 2015 LeanConstruction ConstructionInstitute Institute Lean

2 Can we really deliver Lean Construction without integrating Specialty Contractors?

3 The BIG Idea There is more value to be created by truly integrating specialty trades into the project value stream than any other AEC opportunity before us.

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6 Definitions for Today Specialty Contractors Contractors performing a specific portion (or specialty) of a project Trade Contractors Sub Contractors

7 Definitions for Today in te grate verb \ˈin-tə-ˌgrāt\ transitive verb 1: to form, coordinate, or blend into a functioning or unified whole : unite 2: to find the integral of (as a function or equation) 3 a: to unite with something else b: to incorporate into a larger unit 4 a: to end the segregation of, and bring into equal membership in society or an organization

8 Definitions for Today in te grate verb \ˈin-tə-ˌgrāt\ transitive verb 1: to form, coordinate, or blend into a functioning or unified whole : unite 2: to find the integral of (as a function or equation) 3 a: to unite with something else b: to incorporate into a larger unit 4 a: to end the segregation of, and bring into equal membership in society or an organization

9 Concepts of Integration Use of everyone s contribution - (including ideas) Complexity prohibits going it alone - (it s more complicated than ever before) Integrators add tremendous value - (by just helping us integrate redefine work ) Opposite of subdividing for simplicity

10 Practical (Real) Integration Team effort Value Selection Early Involvement Brainstorming Problem Solving Communication Trust 100% Genuine Integration!!

11 The Bright Side More Design-Build and IPD teams (true teams) Growing qualification and value-based selection Reduction in open-bidding/price-only selections

12 Anti Integration in our World Dream Teams

13 Anti Integration in our World Shot Gun Wedding

14 Anti Integration in our World Sheep s Clothing

15 Miracle on Ice Integration in our World

16 Why? The Burning Platform

17 Why Integrate Research proves it works Our work lives should revolve around adding value. not doing battle Dividing tasks is simple, controllable & efficient, but Integration is how value is added Owners are becoming believers! Its time we play some offense in our industry!

18 Research Penn State research (2003) DBIA sponsored Based on database of 350 CII projects Projects classified as Excellent (exceeding expectations) Successful (meeting expectations) Not meeting expectations

19 Research It s still true! Recent Pankow Founda0on research of 204 projects Published Maximizing Success in Integrated Projects- an Owner s Guide Leicht, Molenarr, Messner, Franz & Esmaeili 1. Early Involvement Primary Contractors and Key Specialty Trades 2. Qualifica0on Based Selec0on 3. Cost Transparency Open book ozen with shared risk and reward

20 Let s Take a Look

21 Specialty Contractor Timing & Project Success Early Project Involvement Excellent projects Specialty Contractors on board at initial client proposal Successful projects Specialty Contractors involved before design 20% complete Penn State University Study DBIA Manual of Practice Document 309 Selecting Specialty Contractors October 2003

22 Level of Project Success vs. % Design Complete Blue Specialty Contractor Purple General Contractor % Design Excellent Project Average Project

23 Early

24 Design Control Excellent projects Specialty Contractors & Project Success 72% of the time Specialty Contractors performed their own design Average projects 30% of the time Specialty Contractors controlled design Penn State Chris Taylor Thesis 2001: Referenced in DBIA Manual of Document 309 Specialty Contractors October 2003

25 BIM/3D Specialties are on board (many ahead of design community) for one reason To Make Money / Be successful Set the framework for integrating Example: Set up the Big Room Concept Require Early Design Collaboration Use them!

26 Specialty Contractors & Project Success Contracts/Selection Successful Projects - Specialty Contractors were: Retained on sole source or negotiated contracts 27% of the time Selected from a small pool of prequalified candidates 18% of the time Excellent Projects - Specialty Contractors were never selected by open bidding NEVER Penn State University Study: DBIA Manual of Practice Document 309 Selecting Specialty Contractors October 2003

27 Specialty Contractors & Project Success Bidding vs. Early Partnering Owners often believe incorrectly that they receive the best value through open bidding. This process typically results in nominal up-front savings of only a few percentage points. On the other hand, by employing a different procurement method and involving qualified Specialty Contractors during the design phase, the Specialty Contractor can contribute towards developing a scope that better represents the Owner s actual requirements, which can lead to much larger savings and overall value. This is possible through right sizing systems and components, intelligent procurement, and the cues of innovative and modular construction techniques. DBIA Manual of Prac@ce Document 309 Selec@ng Specialty Contractors

28 Performance of Partnered vs. Non- Partnered Projects Copy slide data % Partnering 4.86 Non-Partnering % Cost Change % Duration Change % Change Orders Cost % Claims Cost % Value Engineering Savings Partnering: A Tool for Communications Management : Project Management Institute 26th Annual Seminar/Symposium (October 1995)

29 Benchmarks for Partnering Category Result Area Results Cost Total Project Cost (TPC) Construction Administration Claims (% of TPC) Profitability 10% reduction 24% reduction 87% reduction 25% increase Schedule Overall Project Schedule Changes Schedule Compliance 20% reduction 48% reduction Increased from 85% to 100% Safety Hours without lost time accidents 3 million vs. 48,000 industry standard Quality Claims Lost work days No. of Dr. cases Safety rating Rework Change orders Direct work rate Number of claims Projects with claims 4 vs. 6.8 industry standard 74% reduction 5% of national average 50% reduction 80% reduction 42% increase 83% reduction 68% reduction Other Job satisfaction 30% improvement Source: Construction Industry Institute Research Summary Model for Partnering Excellence - November 1996

30 How?

31 How key ideas Early project involvement Qualification/value based selection Specialties participate heavily in design Cost Transparency and Shared Risk/Reward A foundation of teamwork and partnering

32 How to Make it Real Give up to go up John Maxwell Prep for the Big Bid List request Don t squander your Golden Time Explore the idea with others Have your elevator speech ready Trust

33 Answer These Questions In my firm today where could exceptional client value be uncovered by partnering with a specialty firm? What is holding me back? What will I do the first day back in the office?

34 Dave Crumrine, PMP, DBIA President Interstates Q&A