For the downturn

Decluttering doesn’t sound very construction, we know. The industry talks about ‘lean thinking’, ‘best practice’ or ‘continuous improvement’. But, after 10 years of the Egan gospel, all the jargon sounds a little jaded.

‘Lean means mean – cutting costs and getting rid of people. Or it sounds threatening, so people put up barriers. But we tell companies they can call it whatever they like,’ says Claire Corfe of BRE’s Construction Lean Improvement Programme (CLIP). So that’s sorted then – we’re calling it decluttering.

But whatever name you use, there’s little doubt that the relevance of squeezing excess costs and wasted time out of construction projects has never been greater. When every tender is ruthlessly competitive, clients can dictate pricing and needless costs could compromise contractors’ very future, it’s the companies that have decluttered their way to peak efficiency that will win out in the long term.

A group of early adopters have been flying the flag for lean construction for the best part of a decade – these include Shepherd Construction (The Shepherd Way), Laing O’Rourke, Mace, Midlands-based Thomas Vale and London fit-out business 8build. For these companies, lean construction is an embedded philosophy that starts from the client interface, permeates the organisation itself and then flows down through every consultant, manufacturer and supplier relationship.

But now there’s another wave of companies that have decided the recession is the right time to declutter their sites and businesses – consultants such as Corfe are reporting that their services are in demand like never before. ‘Because the market’s getting more desperate, contractors are taking it more seriously. At the moment it’s good times for us,’ says Neil Jarrett, who runs the Collaborative Working Centre. ‘We’ve seen a growth in enquiries across the board – apart from housing,’ says Alan Mossman, of the Lean Construction Institute.

For companies that balk at a management consultant’s fees in these tough trading times, the decluttering consultants and contractors agree that there are still opportunities for efficiency savings by adopting ‘quick wins’ (see panels opposite and overleaf). ‘Quick wins build people’s confidence. Start with quick wins, get things moving, and most people will start going along with it,’ says the BRE’s Corfe.

The degree to which lean thinking and continuous improvement has taken root in the industry is something of a moot point. Certainly, the high priest of lean, Sir John Egan, said last year that he would only award the industry four out of 10 for its efforts. A recent survey by the West Midlands Centre for Constructing Excellence found that although 89% of respondents said they implemented best practice techniques, 36% said they only ‘partly’ understood what the term meant in the context of the industry.

Control has been taken away from us, so the aim of doing this is to bring control back

Claire Corfe, BRE CLIP

Nigel Bellamy, one of eight founding directors of London-based 8build, believes that his company is ‘one of the few’. ‘Yes, we read about it on the major infrastructure projects such as Terminal 5, or the Olympics. But in the general business environment, it’s quite rare. You might find companies talking about “perfect delivery” or some other marketing tool, but then you’ll find the subcontractors are unhappy and the architect’s feeling bruised and battered.’

Any construction company under pressure to deliver a keen price and a tight programme can do so if it has to: call in a few favours from suppliers, put some pressure on subcontractors, and squeeze margins to the bone.

Paradoxically, it can also be easier to deliver projects in a recession, when lead times are shortening and labour is in plentiful supply.

So why bother with lean construction now?

The experts’ answer is that only the businesses that streamline their processes will be able to deliver on the lower costs they promised in the tender without exposing themselves to over-runs, claims and penalties. ‘By applying these techniques, it gives contractors more confidence in the costings and programmes they’re submitting,’ says Richard O’Connor, a non-executive director at contractor Thomas Vale, who also runs 6ix Consulting.

Other arguments for adopting a decluttering mindset are beginning to add up. Above all, today’s clients are certainly showing a keener interest in the war on waste. Now that it’s more difficult to raise PFI and/or other bank finance, public and private sector organisations need more support from contractors and suppliers to make the cost and programme savings that will help their projects stack up.

‘We’re going for more public sector projects, and we’re definitely seeing more questions on lean in the pre-qualification documents and right through to tender interviews,’ says Nicola Morrey, process improvement manager at Shepherd Construction. ‘I’m now hearing clients say they want more for the same, the same for less, or even more for less,’ adds O’Connor.

Even if you only think of costs saved on site cabins and security that’s pure profit

Richard O’Connor, Thomas Vale

8build’s Bellamy points out that the firm holds additional cards in the bidding game.

‘We can manage risk better between the parties. It means we’re not relying on crutches such as performance bonds and parent company guarantees. If the client’s QS is demanding contractors take out a bond for 10% of the contract value, that will cost them a five-figure sum.’

And there’s little doubt the techniques deliver results. Contractor Morgan Ashurst first consulted the BRE’s CLIP consultancy in 2005, using its advice to help bring a severely delayed student residence project back on programme. ‘These projects run at very high penalties – plus there was the potential embarrassment of 280 students with nowhere to live!’ recalls Paul Phillips, director of national frameworks at Morgan Ashurst.

The firm is running six other projects using CLIP to see whether the results justify adopting it across its workload of 200 contracts a year. But it already knows that the effects are felt after construction as well as before and during. ‘Some of the benefits come in the predictability, and defects liability – our 12-month defect rates are getting much less,’ says Phillips.

And by squeezing wasted weeks out of the programme and getting each project done slightly faster, contractors can start the next project sooner – Thomas Vale’s O’Connor has seen cases of 30% reductions in programme lengths. ‘Even if you only think of the costs saved on the site cabins and security, that’s pure profit,’ he says.

Finally, the advantages of thinking lean could also be psychological: in a recession, where the ground rules of winning work and delivering projects have changed so suddenly, a decluttering campaign could be an effective way for managers and directors to put themselves back in the driving seat. As the BRE’s Corfe says: ‘In busier times, you can pick and choose the work. Now, control has been taken away from us, so the aim of doing this is to bring control back.’

Lean techniques and continuous improvement are certainly nothing new: a minority of construction firms have been applying them consistently and a large number haphazardly. But in a recession, when survival is about offering maximum value for money, another look at the whole concept could be timely.

By throwing out dusty old procedures and established practices, contractors might just find ways of cutting costs and staying one step ahead of the competition. cm