Lean Construction Secrets: Streamlining Your Projects for Success

This week, we explore how AI is transforming the construction industry. Discover how AI tools can aIn this episode of the Contractor Success Forum, we dive into the world of lean construction-a game-changing approach that helps contractors complete projects faster, safer, and with higher quality. Hosts Wade Carpenter and Stephen Brown discuss the key principles of lean construction, including the 5S methodology, waste reduction strategies, and how these practices can streamline operations and improve profits. 

Learn how lean techniques can boost your team’s efficiency, improve employee engagement, and reduce costly rework. Whether you’re a seasoned contractor or new to the field, this episode offers practical steps to implement lean in your business today.

Topics we cover on this week’s episode:

• Introduction to Lean Construction (00:00:00 – 00:00:19)
  Ever wonder how construction companies deliver faster, safer projects? Introducing lean construction.
• Overview of Lean Construction (00:00:19 – 00:01:00)
  Explanation of lean construction’s key principles and its origins.
• Benefits and Statistics of Lean Construction (00:01:00 – 00:02:00)
  Hard data on lean practices, including efficiency, teamwork, and satisfaction improvements.
• 5S Principles for Lean Construction (00:05:59 – 00:06:25)
  Explanation of the 5S principles: Sort, Set in order, Shine, Standardize, Sustain.
• Reducing Waste in Construction (00:06:25 – 00:08:12)
  Addressing waste reduction in construction using the DOWNTIME acronym.
• Implementing Lean and Employee Engagement (00:08:12 – 00:09:45)
  Engaging employees and improving productivity through lean methods.
• Conclusion and Resources (00:11:45 – 00:14:17)
  Encouragement to get lean certified and the importance of continuous improvement.

LINKS

Resources we mentioned in the episode:

• Lean Construction Reading List
• Jason Schroeder’s podcast, Elevate Construction
• Lean Construction Education Program

Visit the episode page at https://CarpenterCPAs.com/leanconstruction for more details and a transcript of the show.

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Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | SuretyAnswers.com

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TRANSCRIPT

[00:00:00] Wade Carpenter: Ever wonder how some construction companies consistently deliver projects faster, safer, and with higher quality?

What if there was a way to eliminate waste and boost efficiency across the board?

Welcome back to the Contractor Success Forum. I’m Wade Carpenter, and today we’re diving into lean construction, a game changing approach that’s helping contractors get more out of every project.. My co host, Stephen Brown, is here and will guide us through the key principles and practical steps you can take to streamline your operations, reduce costs and elevate your team’s performance. Whether you’re struggling with delays or aiming to improve your margins, this episode has got something for you.

Let’s get started. Stephen, kick us off.

[00:00:38] Stephen Brown: I hope it’s got something for everybody, Wade. Lean construction. There’s so much written about it. There’s so many consultants, advisors on how to turn your construction company and into a lean organization. Where I got interested in was the AGC initiative about adopting lean.

They consider it important enough for all their members to provide training and resources for the study of it. It’s the application of something that seems to me, Wade, it’s like a a philosophy of business that has clear techniques that you have to implement to get started.

So it’s a vague idea. It’s a concrete idea. So the best lean practices are very purposeful in their application. And what I mean by that, Wade, is, you study and implement lean. You make a decision. Like any change of anything, you make a decision to do something about it. And the AGC just offers some leadership on how to get started, how to wade through it.

There’s a lot. If you just go to, the internet, you’ll find all kinds of information about lean construction.

[00:01:36] Wade Carpenter: I had studied it many years ago too, and I know some of the principles. But can you give us a little background on what the origins of lean construction is, and just a quick general overview of what it is?

[00:01:45] Stephen Brown: It’s been around, it’s my understanding since the early nineties. A lot of it has to come from a philosophy. When you notice that there’s certain companies that are profitable and thriving, even under the worst economic conditions, you study them. And what are they doing different?

And then you take it, from a manufacturing approach to the construction industry. So that’s my understanding of the evolution of it, Wade.

[00:02:07] Wade Carpenter: Yeah, a lot of it started around some of the Toyota practices and principles and I think there’s several philosophies that have come through that. Basically looking at continuous change. But just give us a little bit about, I know the AGC had given some statistics and things like that. You want to share some of that with us?

[00:02:23] Stephen Brown: Sure. High lean projects are 31 percent more likely to be completed under budget. 30 percent more likely to be completed ahead of schedule. 33 percent more likely to experience excellent team chemistry. 30 percent higher employee engagement and satisfaction, and 27 percent positive architect, engineer, team collaboration. And Owner Collaboration.

So if you’re like most contractors, a lot of this kind of hits home with you. You say to yourself, ah, those are pretty low percentages. That doesn’t really matter. I don’t have time to mess with it. But those are just hard statistics based on AGC and others measuring the results of getting a program implemented and seeing how it helps. Just hard, hard statistical numbers, but I would argue there’s so much more to it.

It’s just like we’ve always preached in the Contractor Success Forum, you want to work smarter, not harder, and you want to keep your employees safe so you can send them home at the end of each work day. That’s your responsibility as the owner or manager of a construction company.

And also having a happy workplace where employees are engaged and they want to continue to do their best. And you hire good people, you want to leave them alone to do their best. Having these practices in place involves a lot of different steps, and we can talk about that if you want to.

[00:03:40] Wade Carpenter: I think that’d be great. I know they gave several examples. I think of lean and it’s like we’re trying to be as frugal as possible. But can you give us some examples of things that we’re looking at?

[00:03:49] Stephen Brown: Sure. Lean is

s the whole philosophy of trying to implement organization out of chaos. You may not consider your project a chaotic site, but to others, it may appear to be so. You may understand it perfectly, but when everybody’s communicating together, things are calm, things are organized, and that you hire the best people to work and you have to respect them. You have to respect them to do their job. Okay.

Now I know that we can talk about, I imagine that a lot of listeners listening to this understand that exactly. I know the certain era of the contractor saying it’s my way or the highway. We all have customers like that. We all know people like that. A lot of our dads were that way.

But moving into the future, we were just simply talking about a podcast that we had, Wade, on the excavation contractor of the year for Equipment World. And one neat thing that they did is they looked at their whole operation, they decided how to do it better. So lean is not just doing things more cost effectively. But it’s doing it smarter. That’s my take on it.

[00:04:51] Wade Carpenter: Yeah, I think more like how can we cut costs or get it more efficient or reduce waste, those kind of things.

[00:04:57] Stephen Brown: Yeah.

There’s that. And then there’s the philosophy of not making things too terribly complicated, trying to simplify things. Part of the program we could get into a little bit is just the meetings with all the team members. Regular meetings of communication, of expectations, and when you implement the lean program, it’s something that you have to understand as the owner or CEO of a construction company.

You have to understand the principles behind it. Then you have to engage your employees in those principles and what needs to be done in order to have a vision look differently.

Now, you remember, we were talking about, Wade, I was telling you about a demolition customer, contractor customer of mine. They have the reputation of having the neatest job site. Everything is in order. Everything is piled in order. Everything’s methodically done. And when you watch it, it’s a thing of beauty. It’s like a ballet. It’s like a choreographed dance where everybody’s moving together. And that’s a purposeful goal that they’re, they strive for all the time.

And as a result of it, they have a reputation of being the best.

[00:05:58] Wade Carpenter: Yeah.

[00:05:58] Stephen Brown: That means something.

[00:05:59] Wade Carpenter: You brought up the 5S principles. You want to maybe explain that to our listeners a little bit?

[00:06:04] Stephen Brown: Wade, the five S’s help you create a structured and efficient and safe environment for your company. You sort out unnecessary items. First S is sort. The next one is Set in order. You organize and arrange tools and equipment and everything.

The third one is Shine. Clean up your workplace regularly. The fourth one is Standardize. Establish Standards and procedures. Consistent practices. Eliminate wasted effort. And number five, you Sustain it. You encourage discipline and commitment for continuous improvement.

[00:06:30] Wade Carpenter: That’s great. I think that sort of embodies what you were talking about, and, I didn’t know if you want to maybe go into some of the examples. One of the things I keep thinking about is like reducing waste. And, obviously the contractor wants to make as much profit as possible.

But if they’re wasting, resources or they have to go continually go back because they forgot something on the job or if they I guess if they’ve got waste .

[00:06:52] Stephen Brown: No. You’re on the right track or, we’re talking about, different sources of waste on a job, and they use the acronym DOWNTIME. Defects, overproduction, waiting, like you said, waiting for equipment waiting for materials to arrive, non utilized talent, transportation, inventory, motion, and then extra processing. That’s what DOWNTIME stands for.

And we’ll have all this on our website where you can dig into it a little bit more. But, yeah, you just think about all the things that go on that stop production. That’s gotta be the most frustrating thing in the world to a contractor, is when production stops.

I know it’s the most frustrating thing in the world to an owner. They don’t understand that you’ve got other projects and that things in the pipeline are slowing down or are hurting your productivity on their project. They don’t get that. So the better you communicate and work as a team, the better that looks to the owner.

The better you have a chance of repeating a good process over and over again, for an owner and getting business from that owner.

[00:07:52] Wade Carpenter: Yeah, that’s where the process is where I wanted to maybe talk about a little bit. Because Toyota’s philosophy is let’s reduce defects. In construction, when you have rework, that’s always costing these contractors. More money, more time, and so that’s where I think, having these processes in place I think can eliminate some of the issues that we see with rework.

What are your thoughts on that?

[00:08:13] Stephen Brown: Yeah, absolutely. AGC statistic is on average 70% Of U. S. projects are either late, over budget, or both. It’s not a matter of saying whose fault is it. It’s a matter of using your team to accomplish your project coming in, according to your budget and not being late.

And also, when you’re improving the safety, you’re improving the productivity. When you’re improving employee engagement and interest in their work, you’re improving productivity. When you’re trying to get regular customers to work with you, that engagement is productive and profitable.

And when you expect and communicate certain quality, it happens. And your profit margins are above average because of that. We remember we were talking about the different companies that use lean construction that do well in any economic cycle. There’s something to that in there.

[00:09:02] Wade Carpenter: Absolutely, and, I think especially when times get tight, that’s the time that you want to make sure these things are in place, more so than others. As a bean counter, I suppose I’m a little predisposed to like measuring a lot of this stuff. But as far as measuring it, can we talk just a little bit about some of the things we could be looking at? Some metrics maybe that a contractor should be looking to, see if they’re winning the game? We’ve said it many times, I think the old adage, what you can measure, you can manage, and what you can manage, you can control. So, any thoughts on how to track this stuff?

[00:09:32] Stephen Brown: Sure, you have to educate yourself on the practices and then you have to get started. And one of the ways that, and I put a link, the AGC also offered this incredible list of books and resources. With a really good narrative on those books.

I went through all the books and all the narratives, and we’re studying the ones that I specifically wanted to order, and start studying, a guy named Jason Schroeder. You can check out his podcast. He made a comment that really hit home. It’s a thing that contractors and a lot of males just don’t talk about, but it’s about joy and happiness. He says, keep driving until everything on your project brings you joy. And that’s the measure of success. Wow. Yeah.

[00:10:12] Wade Carpenter: Yeah, absolutely. These are great. Maybe we could put a list of some of these books in the comments on the show notes.

[00:10:19] Stephen Brown: Absolutely. We’ll have that for our listeners and, also a link to the AGC website about getting started. There’s a efficiency type program where you can become lean certified. There’s going to be a little bit of information about that in the link.

AGC is partnering up with consultant on taking this five-part course to getting Lean Certified. So that might be where you want to start. It’s certainly, you read the books and maybe you get certified, you might have a pretty good grip on it.

Some of the books, are written by contractors that talk about how they implement it, and they’re still in business, in the construction business. So they’re not consultants, they’re contractors that have implemented, and they tell you what they’ve learned about it. So there’s just a lot of study to do.

[00:11:01] Wade Carpenter: Yeah, I think that’s a good point too, because the original lean principles were really applied to manufacturing. And you can make the point that manufacturing in some ways is easier to control than construction because a lot of times in construction projects, you’re not doing the exact same thing every time.

So again, I think that’s key. And also some of the stuff I pay attention to the theory, constraints, and the throughput and all that stuff I’d like to talk about, that was all applied to manufacturing. Again, manufacturing is not easy either, but construction has so many more moving parts than manufacturing.

And I think this is a great point that you got here because as far as lean manufacturing or lean construction, there are some metrics that you can follow. And it’s not just about cutting costs. It’s being more efficient and reducing waste. So this has been great.

[00:11:45] Stephen Brown: Thanks. I’m certainly going to continue to study it, and we can certainly talk about it more, just like throughput that we did a podcast on where you were introducing the principles of it and how it could apply to contracting. There’s so many other things. There’s the Toyota Kata principle.

There’s scrum management, and it’s my understanding is basically a rugby term for constantly moving the ball forward in different ways. All these kind of tie into this lean philosophy and it’s hard to keep them all straight.

[00:12:15] Wade Carpenter: It’s all about improving your organization and finding that success in construction, right?

[00:12:19] Stephen Brown: One thing, Wade, that we’ve talked about in the past is the disconnect between the owner and the architect and the contractor and all the dysfunction involved there. And we talked about tactics for making the job starts properly and smoothly. It’s a key of setting the tone.

Having regular meetings, a weekly meeting with every single person in your organization, not just a few key people. You can do that now on Zoom. It used to be impossible to do. But you could do that and you can say, hey, I want a camera. I want to see your face. I want to engage with you on the Zoom. So everybody’s going to be on this Zoom on Monday morning and X amount of time.

But they talk about in those project meetings, you were discussing the challenges ahead for you that week. And you’re also reinforcing the lean principles. And one key to that was something that we were talking about earlier.

And that was always to think outward and not inward. Inward thinking is somebody, Wade, who, is managing everything themselves. Outward thinking is saying, how do I engage all these people that I’ve hired that are part of my team to get the work done? I

[00:13:23] Wade Carpenter: That’s a great point and actually leads into another podcast episode coming up.

[00:13:26] Stephen Brown: Okay. Let’s we can end on that unless you had any other questions. I do not pretend to be an expert on it, but it’s fascinating. And I thought our listeners might want to learn a little more about it and see about getting this going for themselves.

[00:13:38] Wade Carpenter: We’ll make sure that some of these resources get in the show notes and I’d love to talk about it. If you got some thoughts on today’s dive into lean construction, maybe you’ve got a story about cutting waste or a question on how to get started. Whatever it is, we’d love to hear from you.

Drop your comments and ideas below, and your feedback will drive our next great discussion. So thanks for joining us on the Contractor Success Forum. To dig deeper into the lean principles or any other topics we cover, visit Contractorsuccessforum. com or the Carpenter CPA’s YouTube channel. Or head over to the ProfitFirstConstruction. com website. If you found this episode valuable, don’t forget to share, and subscribe and stay tuned. We’ve got more insights coming your way every week. We’ll see you soon.