How Lean Construction Practices Are Decreasing Schedules for Contractors

By Akio

McGraw Hill Construction, the Lean Construction Institute, and Dassault Systèmes teamed up to produce an in-depth report on Lean Construction. Below is an excerpt from that report on the the impact Lean practices are having on contractors in regards to scheduling.

Construction Manager


The Impact on Contractors of Schedule Decreases Due to the Adoption of Lean Practices

Reduced project schedule is one of the top benefits of adopting Lean practices, and saving time in the construction industry also cuts costs on projects and can increase profitability.

However, the savings only accrue to the contractor if the owner has not already factored the reduced amount of time into their expectations of the contractor, especially in the case of a negotiated project, or if the contractor has not deemed it necessary to build those cost savings into their bid in order to win a project in a highly competitive market.

The study results suggest, though, that these options are not mutually exclusive. About two thirds of contractors report that the schedule savings they experience due to their Lean practices do have a positive impact on the profit they experience in their projects, and just about the same percentage of contractors report that they are able to bid projects more competitively due to the schedule savings.

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Clearly, there must be significant overlap of firms who both have schedule reductions feeding their bottom line and schedule reductions absorbed in their efforts to be more competitive.

However, the findings also reveal that the industry is nearly unanimous about the growing expectations of owners that projects can be done in shorter time frames due to the adoption of Lean practices in the industry.

Tweet: The industry expects that projects can be done in shorter time frames due to the adoption of #LeanCon @Dassault3DS http://ctt.ec/R69b4+Tweet: “The industry expects that projects can be
done in shorter time frames due to the adoption of #LeanCon”

This aligns with the previous finding that increasing their firms’ competitiveness rather than direct profits is the larger benefit from Lean.

The in-depth interviews with Lean experts shed further light on this finding. Experts report that, even just five years ago, most owners were not familiar with Lean, but they see a broad change occurring.

Some believe that owner mandates will be the most critical driver of Lean construction in the industry in the future, a shift from what they currently see occurring, other than in one or two sectors like healthcare with engaged owners that have led the industry on Lean adoption.

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Related Resources

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A Chronicle of Futures Foretold

By Catherine

Wouldn’t it be nice to have a crystal ball to warn us when the next crisis will happen?

Buffalo on Wall Street

While it isn’t a crystal ball, Swiss university ETH Zurich has developed a scientific platform to predict when bubbles develop. Didier Sornette, professor of entrepreneurial risks at ETH Zurich, created the university’s Financial Crisis Observatory in 2008 as a reaction to the global financial crisis.

I became very angry about what I read that predicting such a crisis wasn’t possible,” he says. “We knew a crisis was coming. We knew this impression of great wealth and mastering of the economy was an illusion.”

Dr. Sornette notes that he doesn’t predict the crash. “We diagnose the bubble before the end, when a crash confirms it existed,” he says.

Normal up-and-down cycles aren’t the same as the booms and busts of bubbles. The existence—or nonexistence—of bubbles ends up in arguments about what is normal vs. abnormal, compared with history, price-equity ratios or an excessive growth rate of the stock market.

What should the normal growth rate be: 5%, 15%, 20%? What could justify that last year the return was 20%? Was it irrational or was it new technology?” Dr. Sornette says. “People find reasons that justify the observed price.”

Rather than pick a number, Dr. Sornette’s model looks for superexponential growth. Regular growth is exponential because of the effects of compounding. With superexponential growth, the growth rate itself is growing.

The bubble is when rate of return accelerates,” he says. “It’s a positive feedback loop. In normal circumstances, the higher the price, the lower the demand. In a bubble, the higher the price, the larger the demand and therefore there’s a larger subsequent growth rate. It’s due to a crowd effect, or herding, because it’s so tempting to imitate the others and to run after the bonanza of the time.”

By coming up with a scientific model with verifiable metrics, Dr. Sornette hopes the resulting evidence will help the “is-it-a-bubble-or-not” debate move from being philosophical or political to being scientific. Similarly, it wasn’t until the existence of the ozone hole was scientifically proven that an international agreement to ban chlorofluorocarbons was adopted.

William White, who was a member of the executive committee of the Bank for International Settlements, and some of his BIS colleagues warned that a crisis was about to hit in 2007.

It seems what we have to focus on is the systemic fragilities that are building up in the economy, as opposed to looking for any trigger point,” he says. “My way of looking at it is increasingly to see the economy as a complex adaptive system. It shares the characteristics of other complex adaptive systems: we know they are inherently vulnerable to crises and that crises occur on regular basis, though the literature says big crises come infrequently but little crises come frequently. In something as complex as the international financial system, things are going to go wrong.”

Cyclical downturns are “events that clear out the system,” he says. “We probably have had 25 years of too little tolerance for downturns. Every time one threatened or happened, we just threw huge amounts of monetary intervention and expansion at it.”

Economic Bubble

The longer bubbles persist and the larger they are, the more likely they are to spread into other sectors. “It’s because of the wealth effect,” Dr. Sornette says. “During a bubble everybody feels rich.”

This makes it hard to stop bubbles. People love them while they’re inflating, and policy makers don’t want to declare an end to the party. One goal of scientifically declaring the existence of a bubble is to force the hand of policy makers to take actions that will deflate or plateau the bubble before it expands to the point of triggering a big, messy crisis.

Financial crises are particularly difficult because the fears of sudden failures can turn into a sort of reverse bubble, with losses feeding new losses. In addition, “a bank that is in bad shape finds it difficult to raise new equity and so is reluctant to make loans, which hurts the real economy,” says Paul Klemperer, economics professor at Oxford University in the U.K.

To remedy this, contingent convertible bonds were designed so that, when things go bad for a bank, they turn into shares or equity. The question is, “‘when does the conversion happen?’ In practice, when regulators say so,” Dr. Klemperer says. “Can we trust regulators to say so in time? We need these bonds to convert automatically, so regulators have to take action to stop conversion, not start it.”

He and co-authors Jeremy Bulow, professor of economics at Stanford University, and Jacob Goldfield, a former senior partner at Goldman Sachs, have proposed a new form of hybrid capital for banks, equity recourse notes, which automatically convert debt into equity when a bank loses market capitalization.

For Dr. Sornette, diagnosing bubbles with scientific metrics is another way to automatically help regulators and policy makers act: “They will do the right thing, if they’re forced to by the scientific evidence.”

Introducing SOLIDWORKS 2015: Designed by You

By Bertrand

The world of design has changed in many ways since I joined SOLIDWORKS in 1997. Computer hardware becomes faster and more powerful every year, which is changing the way that our customers do their jobs. These days, engineers are required to wear many hats. When I visit customers, I often see situations where one person is doing work that would have been spread across an entire team twenty years ago, from designing and drafting to FEA and data management. It’s probably not a surprise to hear that these changes influence the development of SOLIDWORKS, and, in particular, this week’s release of SOLIDWORKS 2015.

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From the start, SOLIDWORKS has been a user-driven product, and relies on feedback from a global community of more than two million users to shape the future of the tools they use. It’s true that some users are more vocal and honest than others, but understanding and responding to this feedback—both good and bad—is important. Listening to end users lets us understand how our products are being used; our product team has to be 100% certain that any new feature or enhancement provides real benefit to the SOLIDWORKS community before it goes into development. Our user-centric focus has not changed in SOLIDWORKS 2015, nor will it change in the future. In fact, SOLIDWORKS 2015 includes more than 200 new features and enhancements, and 90% of them are the direct result of requests and other feedback from end users.

Our first promise was to “put the power of 3D on every engineer’s desktop.” But that’s not a big enough challenge anymore. Our new promise is to continue developing 3D solutions that let you to meet modern engineering challenges head-on. It’s not enough to focus on making the software faster. We need to give you the tools that inspire you to design products that change the world. SOLIDWORKS 2015 is one step to fulfilling our commitment. As we continue to develop SOLIDWORKS to meet new and emerging needs, we’ll also look to expand the power of 3D and push its capabilities to the limit. Your success is our success.

I invite you to visit our launch website to explore the powerful new enhancements found in SOLIDWORKS 2015. I am certain that they will help improve your everyday productivity, optimize your work process, reduce operations costs, and let you solve more design challenges. Let’s go design!

SolidWorks 2015



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