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Early Implementation of LeanEarly project phase planning for an integrated Lean
implementation and its impact on project value optimisation
Lean Construction Institute ConferenceAugust 2014
0408 815 623
SECORA Pty Ltd
Adding the Human Touch
Trademarks and Copyrights
The contents hereof contain proprietary trade secrets that are the private and confidential property of SECORA. Unauthorized use, disclosure, or reproduction of any kind of any material contained in this presentation is expressly prohibited. The contents hereof are to be returned immediately upon termination of any relationship or agreement giving user authorization to possess or use such information or materials. Any unauthorized or illegal use shall subject the user to all remedies, both legal and equitable, available to SECORA© 2014 by SECORA Consulting Inc. All Rights Reserved.
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Adding the Human Touch
SECORA Americas• 3 Partners• 4 Managers• 25 Consultants• Office: Tampa
SECORA Europe• 3 Partners• 4 Managers• 25 Consultants• Office: Frankfurt
SECORA Asia-Pacific*• 5 Partners• 50 Consultants• Offices: Sydney - NSW
Perth - WA
Company Regional Overview - Global Organisation
* Current regional focus area for SECORA growth14
SECORA Singapore*• 2 Partners• 10 Consultants• Office: Singapore
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Company Overview - Our Methodology
SECORA is a global consulting company specialising in delivering measurable productivity improvement and lasting change through knowledge transfer, process analysis, optimisation, training and process design.
We typically engage with our clients using a 3 phase process: First we seek to understand the client’s environment, organisation,
challenges and problems by collecting qualitative and quantitative data.
We then analyse the data and translate it into useful insights and diagnostic information that can be used to identify opportunities and develop improvement solutions.
Finally we support* implementation (& execution) so that our clients realise genuine business impact and benefits from the engagement and the new knowledge and experience is retained by the team.
Support *= As much or as little support as the client requires.
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www.secora.com.au
Adding the Human Touch
The deployment philosophy of ABI is shownin this simplified diagram on the right.The ABI Model shows how you can improvethe efficiency & competitiveness ofprocesses and how they can be modified toimprove performance & overall capability.Imagine the 9 ABI building blocks areforming a pyramid. Each layer builds on,and enhances, the one below forming aBusiness Improvement Culture.
SECORA Applied Business Improvement (ABI)
The SECORA Modular Approach to ABI
See www.secora.sg13
Note: the ABI methodology is used in projects but client personnel can/ w ill be trained in ABI if required
Adding the Human Touch
Tim Griffin
Mechatronic Engineering and Commerce Background
6 Sigma Black Belt with BHP Billiton at Olympic Dam
Business Improvement Manager with Origin Energy’s Major Development Projects group
Senior Engineer on the Olympic Dam Project responsible for Value Improvement Practices
Vineyard and Wine Label Manager
Page 6
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Purpose & Outcomes
This presentation will…. Highlight the benefits of early integration of Lean
Construction in the project delivery life-cycle Demonstrate how Value Optimisation can be
augmented using Lean Construction Principles Discuss the changes in approach, methods, behaviour
& thinking which are required to integrate Lean Construction into the early stages of the project life cycle
By the end of this presentation you’ll have an appreciation of where Lean Construction fits in the early stages of a project & the change required to integrate it.
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Lean Construction – Early ExampleVenice’s Arsenale
Venice developed methods of mass-producing ships in the Arsenal, including the frame-first system to replace the Roman hull-first practice.
The Arsenal Novissimo was begun in 1473. It enabled the creation of a system similar to an assembly line, in which hulls were constructed in the newer areas of the Arsenal before being fitted out in the old Arsenal.
At the peak of its efficiency in the early 16th century, the Arsenal employed some 16,000 people who were able to produce a whole ship each day
The Arsenale could fit out,arm, and provision a newly-built galley with standardized parts on a production-line basis not seen again until the Industrial Revolution.
Achieving Improvement is about Common
Sense
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Resource Projects Success Criteria
Maximising Net Present Value (NPV) Minimising Total Life Cycle Cost (TLCC) Optimising project development cycle times
Undertaking project development activities in the shortest possible duration whilst maintaining an appropriate balance between quality, operability, cost and schedule
Achieving or exceeding planned production rates Meeting the market requirements for the product
specification
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NPVProject Value
Revenue
Capital Expenditure
OtherContingency
Indirect Costs
Direct Cost
e.g. LabourMaterials
Plant Equipment
e.g. SubcontractorsCommon Distributables
Owners Team
Operating Expenditure
OtherContingency
Sustaining Capital
Fixed Costs
e.g. OverheadSalaries
Variable Costs
e.g. MaterialsUtilities
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Project Delivery Processes
Project Definition
Concept Design
Func-tionalDesign
DetailDesign Sourcing
/ TenderExecution(Delivery) Operation
Engineering & Design
Identify Select Define Execute Operate
Identification Selection Definition Execution Operation
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Opportunities to Impact Value
Technology SelectionProcess Simplification
Fit for Purpose
Constructability ReviewsProcess Reliability
Minimum Standards and SpecificationsPredictive Maintenance
Design-to-CapacityEnergy Optimisation
Value EngineeringConstructability Reviews
Constructability Reviews
Project Definition
Concept Design
Func-tionalDesign
DetailDesign Sourcing
/ TenderExecution(Delivery) Operation
Engineering & Design
Rigorous Project & Risk Management
User Requirements Specifications
Impa
ct o
n Pr
ojec
t Val
ue
Waste Minimisation
Based on IPA Value Improvement Practices
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Lean Impact on Cost Performance
Exceptional cost performance with early Lean integration
Target Cost PerformancePossible utilisation of BIM
technology etc.
Cost Performance – Relative value for each dollar spent
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Project Performance
Completed EarlierCost Less
Lean introduced as a recovery fix
Poor front end loading and delivery
Execution
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TIM WOODS – Categories of Waste
1. Transportation 2. Inventory 3. Motion
Inefficient, non-necessary, non-value adding movement of material, information or peopleE.g.: Poor crane management , low speed lift ing systems or unsuitable transport & logistic methods/ systems
Inappropriate levels (high or low) of material, goods or work in process (including paperwork ) and informationE.g.: Entire draw ing sets at workplace. M ixed/ unidentified materials or storage areas.
Excessive people movements, actions & effort driven by poor ergonomics, process layouts, workplace design/organization or configuration Example: Materials & information not located at the work area. Stairs, obstacles no ‘Point of use’ storage.
5. Over Production4. Waiting 6. Over Processing 7. Defects / Rework
Delays & waiting resulting in idle people or assetsExample: Queuing, unbalanced activities, over allocation of people, sharing of tools and equipment
Difference between what is produced and the specification, resulting in scrap or reworkExample: Adjusting pre-assembled pipes, cutting & re-welding, return of components which have been ordered w rongly
Inappropriate levels of processing, complexity or non standardization that results in doing more than what the customer values (or requires..and wants!)Example: Special welding procedures & testing due to lack of standards. 10 hr fire-resistant doors in a 2 hour fire-resistant wall.
Difference between what & when the customer requires the product and what is actually producedExample: Pre-assembled material transported to the work area too early. Parts of the job getting too far ahead of the rest.
The miss application of skills and/or overloading resources. Lack of workforce engagement in CI.
8. Skills
Example: How & Why Lean Works During Construction.
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Managing Resistance to Lean in the Early Phase
Resistance to change, such as a Lean implementation, is highly probable
On a large project the timeframes are long and cause and effect is elastic
Barriers to implementation include: Perception that Lean is seen as too complicated A lack of knowledge of how it works Lack of interest in participating Seen as too time consuming
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The Transition Curve
Early integration starts with a smaller project team
Late adoption will coincide with a team expansion/ mobilisation
Early introduction of Lean on a Project can help create a critical mass
The earlier Lean processes are implemented and proven the more they become part of the project’s culture
Shock
Denial
Frustration
Depression
Exploration
Integration
Problem Solving & Decision Making
Perfo
rman
ce
Time
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Overview of Value Optimisation ToolsPhase Value Optimisation
ToolWhat ? Why ? Relationship to
LeanExpected ROI / Benefits
Project Definition
User Requirements Specifications
Sets businessrequirements
Define project deliverables
Specifies value Reduces scope creep, over specification
Project Framing Define critical success factors
Create teamalignment
Identifies key value drivers
Prevents rework through common understanding of project approach and priorities
ConceptDesign
Technology Selection Review and select technology options
Select best technology Lowest capital cost and through life costs
Process Simplification Eliminate items that do not meet business needs
Ensure all items of project add value
Core Lean philosophy Ensure process performance
Fit for Purpose Review design approach Define design specification
Reduce overproduction
Allows identification of over engineering
Waste Minimisation Reduce waste products Reduce emissionsfrom by product waste streams
Reduce overproduction
Reduce environmental impact
Construction Strategy/ Constructability Reviews
Specify how project is to be built
Ensure project can be built
Provides opportunity to specify Lean construction methodology e.g. modularisation
Reduce construction “waste”, optimise offsite labour
Process Reliability Review possible system failures and required maintenance
Generate maintenance cost forecast. Can meet requirements?
Opportunity to utilise 6 Sigma tools
Maximise revenue and reduce OPEX through reduction in unscheduled downtime and OPEX
Functional Design
Predictive Maintenance
e.g. utilisation of CBM where possible
Reduce planned maintenance and
Reduceoverproduction of maintenance
Reduced OPEX
Detail Design
Design-to-Capacity Ensure design can meet requirement
Identify excesscapacity
Will result in anunbalanced process
Reduction in capital spend
Energy Optimisation Analysis of energy use Reduce energy consumption
Identify waste Reduce OPEX
Adding the Human Touch
Identifying key value drivers and critical success factors.Understanding of business priorities
Project Framing
Project FramingWhat Is It?
A structured approach towards aligning objectives, value drivers and critical success factors.
WhyThe Deliverables?
Develop a coherent, decision driven road map. Reduce ambiguity and avoid planning inefficiencies early in the project phase.
Relevance to Lean
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User Requirements Specification
User Requirements Specific
What Is It?
The User Requirement Specification, is a complete, clear and unambiguous statement of the project requirements in measurable terms. The User Requirements Specification should identify exactly what the business requirements are and lists all relevant issues and criteria with respect to delivering those requirements.
WhyThe Deliverables?
Avoids misunderstandings as to project deliverables and ensures that outcomes are consistent with the business objectives.
Relevance to LeanA key determinant of value when identifying value and non-value adding design elements.An opportunity to gain formal endorsement for Lean
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Process Simplification
Process Simplification
What Is It?
A disciplined method used during design aimed at eliminating or modifying items that do not contribute to meeting business needs.
WhyThe Deliverables?
Confirm the value of selected components of a project.Improve the economics of the project by elimination of, reduction, or substitution of these components with lower cost alternatives that perform needed functions.
Relevance to LeanProvides an opportunity to utilise value stream mapping, understand production flows, analyse production and level process
Adding the Human Touch
Technology Selection
Technology Selection
What Is It?
Searches for production technology outside of the company (or, in some instances, in other divisions within the company) that may be superior to current practice.
WhyThe Deliverables?
Select technology that best meets business objective such as: Economic criteria, operability, on-stream time, integration, utilities consumption, flexibility, raw materials, environmental impact.
Relevance to Lean What can be brought across from other industries, e.g. Flow of information from automotive or defence to mining.
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Fit for Purpose
Fit for PurposeWhat Is It?
Validation of project objectives and establishing the corresponding fit-for purpose design approach that best correlates with business needs.
WhyThe Deliverables?
Set what balance of cost vs. reliability, expandability, automation etc., best fits the project's needs.Sets design factors
Relevance to Lean Target over or under design (avoid overproduction)
Adding the Human Touch
Waste Minimisation
Waste MinimisationWhat Is It?
An approach used during design to minimize the production of waste products. Such an approach might add additional equipment or examine alternate process technologies that have lower waste sidestreams.
WhyThe Deliverables?
To add value to the project by reducing or eliminating non-useful streams that minimize environmental impact.Prevent, Recycle/ Reuse, Reduction, Treatment
Relevance to Lean
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Design-to-Capacity
Design-to-CapacityWhat Is It?
An evaluation of the maximum capacity of each major piece of equipment. Tests if a “safety factor” is included to allow for additional catch up capacity of some production increases.
WhyThe Deliverables?
Clarify the impact of capacity decisions of major equipment on the capacity of the overall facility and future expandability.
Relevance to LeanCan be assessed via a value stream mapKey principle of process balancing
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Value Engineering (VE)
Value EngineeringWhat Is It?
A method for optimising the cost and performance of a facility. A function oriented, systematic approach to eliminate and prevent unnecessary costs.
WhyThe Deliverables?
The purpose of a VE study is to improve decision making and obtain lowest life-cycle cost without reducing quality.
Relevance to Lean
Value Engineering draws heavily on user requirementsWorkforce levelling, supported by task levelling to ensure resources are optimisedCAUTION: Value Engineering can turn into Capital Cost Reduction, deleting elements that will result in higher productivity during construction and operation.
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Value Engineering ProcessK
ey A
ctiv
ities
Option Generation and Discussion
Workshops
• Review of progress• Review boundary areas• Hold option generation workshops by area of focus
• List of options for further exploration
Modelling and Analysis
• Assess timing for individual options• Benefits validation and secondary impacts• Leverage engineering data, past experience to assess operability, risk
• Cost-benefit analysis allowing for:
• Timing• Capital required• Operability• Level of Risk
Option Refinement
• Review the outcomes• Narrow down options and identify areas for further investigation• Finalise recommended options based on criteria
•Assessments reviewed and vetted by:
• EPCMs• Owner’s Team• Business Eval.• RecommendationsD
eliv
erab
les
Initial Workshop
•Targets and Objectives• Process Briefing• Review of previous work• Brainstorming of potential opportunities
• Shortlist of the Top Opportunities
Adding the Human Touch
Value Engineering - Examples
Large mining operations planned airfield
Airfield built for long term peak capacity including taxiways and multiple parking areas
Initial use of the airfield was far below peak forecasts
Value Engineering identified an opportunity to build the airport in phases.• taxiways removed• Parking bays deleted• Terminal despeced
Adding the Human Touch
Workforce Levelling
High level analysis of work and identification of opportunities for sequencing, decoupling or offsite fabrication
Utilisation of pull planning to utilise available resources efficiently
Flow on requirement for work package level job levelling.
Reduce accommodation requirements (for remote projects)
Prevent loss of Lean culture
Date
Peak onsite workforce
Peak onsite workforce reduction
Adding the Human Touch
Job Levelling
Total Resource RequirementsBefore Levelling
Work Package 1
Work Package 2
Work Package 3
Total Resource RequirementsAfter Levelling
Cumulative impact of Job Levelling of multiple work packages, resulting in reduced peak labour demand
Levelling carried out through analysis, e.g. based on BIM or time in motion studies
Adding the Human Touch
Value Engineering - Examples
Permanent crainageto reduce mobile crainage use during construction shutdowns.
A relatively large capital cost that can be targeted during cost reduction activities.
Adding the Human Touch
Construction Strategy/ Constructability Reviews
Construction Strategy
What Is It?
Analysis of the design, usually performed by experienced construction managers, to reduce costs or save time in the construction phase.
WhyThe Deliverables?
Reduce Total Installed CostsReduce Schedule DurationsDevelop Construction Driven SchedulesEnsure the Project is Fundamentally ConstructibleDevelop an ongoing “log” for tracking ideas
Relevance to LeanPresents an opportunity to define strategy for modularisation, Pull Planning, JIT delivery, Standard work, 5S implementation, BIM
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Building Information Management (BIM)
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Summary
Early integration of Lean will increase the probability of meeting and exceeding your project targets.
The biggest challenge is generating the need and acceptance for Lean.
There are Project Management/ Engineering practices where Lean thinking and tools can be introduced
The best approach is to develop knowledge and demonstrate proven success
Adding the Human Touch
Understand, Analyse, Implement & Train
Tim Griffin [email protected] 0408 815 623