Improved Productivity and Competitiveness in the Construction Industry
Table of Contents
The Construction Industry is fundamentally different from other industrial sectors mainly due to its unique characteristics and operating structures, giving rise to challenges in the delivery of sustainable cost-effective products. Several research studies from various countries (P. Love, I. Zahir, E. David, 2003) confirm that waste in industry represent up to 35% of total project costs. Furthermore, the consequences of poor communication in construction leads to unproductive outcomes, waste, budget over-runs, disputes, time over-runs, all of which has a detrimental effect on the quality, cost and the duration of the project. An investigation by the Project Management Institute (Project Management Institute, 2013) found that effective communication leads to more successful projects and allows organisations to complete an average of 80% of projects on time and on budget.
Waste limitation depends on identifying the types of waste that exist and where it occurs (James P. Womack, 2003). Moreover, inadequate communication within the organisation +during the life cycle of a project will result in poor waste management.
The main objective of this paper is to analyse the impact of organisational communication and Lean Thinking on improving productivity and competitiveness in the construction industry. The paper discusses the unique characteristics of the industry, the variations between construction and manufacturing. In addition, it reviews construction wastes, and investigates systems for removing waste and the Lean leadership culture.
2. Unique Characteristics and Operating Structures of the Construction Industry
There are fundamental differences between the construction and manufacturing industries. The construction sector does not perform as a conventional industry. It can be better defined as a conglomerate of industries that create physical structures that includes buildings, roadways and bridges. In comparison, manufacturing involves mass production of similar items that are sold to distributors, retailers or consumers (Project Management Institute, 2013).
The typical construction project is a complex operation involving a diverse range of professionals and unfamiliar groups including the main contractors, sub-contractors and general operatives coming together on site for short periods to form project teams. The fragmented nature of this structure together with its temporary duration increases confusion in an already complicated environment, particularly in terms of effective communications practices that are the norm in manufacturing and other sectors.
Although the main contractors have ultimate responsibility for a construction project, they depend on the sub-contractors who have the required expertise in a specific area to carry out the vast majority of work. The main logic behind this process is to improve efficiency by reducing overheads and operating costs, thereby achieving added value in the delivery of projects (Chotibhongs, D. Arditi and R., 2005). Hatmoko and Scott ‘deem that this structure has resulted in reducing project delays by 45%’ (Scott, J. U. D. Hatmoko and S., 2010). However, organisational communication receives little attention in this structure with the primary focus of the sub-contractor is to get the job completed on time, leave the site and move on to their next project.
The Project Manager, who is normally a member of the main contractor team, is responsible for the overall success of the construction project and is the point of contact for the client. In addition to the management and coordination of all the project teams, the Project Manager is responsible for ensuring compliance with timeframes, budget targets and on-site communication.
Waste management is not treated as a priority in the construction industry and is generally only considered in terms of material waste that is generated within the project. However, there are many types of waste (Kane, 2017): waste of product, time, energy and money. Waste should be considered in terms of Lean Thinking where it is described as any action or step in a process that does not add value to the customer (Earley, 2018).
3. Understanding Organisational Communication
Organisational communication can be defined as a process of exchanging information, ideas, and views from both within and outside the organisation. Realisation of organisational objectives depends on successful communication with the individual stakeholder groups. In construction, organisational communication is effective in conveying instructions that will influence the actions and or behaviours of others. In addition it may involve the exchange or request for information during a construction project. ‘Organisational communication is defined as the flow of messages within a network of interdependent relationship’ (Goldhaber, 1993). The Cambridge Business English Dictionary defines organisational communication as ‘the way in which an organization gives the public and its employees information about its aims and what it is doing’.
Effective communication is an essential part of any construction project and will facilitate the improvement of motivation levels in the workforce, together with improved processes. Equally, poor communication leads to demotivation, which will ultimately lead to problems in the construction project.
Communication is pivotal in the construction industry because the industry is dependent upon large amounts of information being transmitted, at a rate of intensity and efficiency to meet the demands that many construction businesses require in a highly competitive market (Nicholas, 2018).
In general, construction projects are intricate and precarious, requiring the active involvement of all the stakeholders. It is therefore important to have collaboration and co-ordination of activities using interpersonal and group communication to ensure the successful completion of the project. Inadequate communication, lack of consultation and poor feedback are found to be key factors that result in many defects in construction works. In addition, inadequate co-ordination and communication of design information can cause design problems resulting in design errors. A publication in 2003 by BSI Group highlighted such issues, stating that many of the defects in the UK construction industry were due to information not being efficiently communicated or utilised, and that these errors cost the industry an estimated £20 billion annually (BSI, 2003).
There are numerous communication methods and processes that will facilitate professionals in the construction industry to communicate effectively. Communication can be either formal or informal. Formal channels are downward, horizontal and upward whereas informal communication is generally termed as ‘grapevine’ (Karen Cacciattolo, 2015).
During the duration of a project, the project manager takes responsibility for the organisation and the provision of information to all other professionals associated with the project. As part of these responsibilities, there is a requirement to develop a communication plan so that it is clear to all what channels must be used (Nicholas, 2018).
4. Construction Waste
Waste in construction and manufacturing includes delay times, quality costs, lack of safety, rework, unnecessary transportation trips, long distances, improper choice or management of methods, or ineffective equipment and poor construction (Seung-Hyun Lee, James E. Diekmann, Anthony D. Songer, and Hyman Brown, 1999).
Over the past 30 years, the manufacturing industry has achieved substantial success in improving productivity mainly due to the removal of waste. By comparison, the removal of waste in construction has generally remained stagnant. There are reasons why the industry lags behind manufacturing in terms of waste. The fragmented nature of the way the industry operates together with the short-term nature of contracts make it difficult to have a long-term vision and strategy to tackle the problem of waste. In addition, construction management frequently fails to recognise the cost-benefit analysis of eliminating waste.
Waste in construction is created throughout a construction project from start to finish. It has been estimated that 33% of on-site waste is due to architects’ failure to implement waste reduction measures during design stages (Innes, 2004.) However, the process of construction waste production through design is complex because buildings embody a diverse range of materials and products and various project stakeholders, namely clients, contributed directly or indirectly to waste arising.
5. Lean Thinking in Construction
Construction firms are inclined to keep doing thing the same way adopting a policy of ‘if it’s not broken, don’t change it’. However, the business world has gone through dramatic changes over the past few decades, resulting in a global market for parts and supplies. In a competitive market where high levels of productivity are essential, companies now must look for solutions to reduce waste and improve product quality to remain competitive.
Lean Thinking presents a very different model for the industry. In practice, this model means subjecting the industry, its processes, management and all its diverse groups, to a close inspection aimed at identifying that value and studying existing work processes to remove waste.
The concept of ‘Lean Thinking’ was first introduced by Womack, Jones and Roos (1990) in order to describe the working philosophy and practices of the Japanese vehicle manufacturers and in particular the Toyota Production System. The philosophy of ‘Lean Thinking’ involves eliminating waste and unnecessary actions and linking all the steps that create value. In 1996, the initial concept of Lean was more extensively defined and described by five key principles: (James P. Womack, Daniel T. Jones, and Daniel Roos, 1990)
(i) Specify value – Define value precisely from the perspective of the end customer in terms of the specific product with specific capabilities offered at a specific time.
(ii) Identify value streams – Identify the entire value stream for each product or product family and eliminate waste.
(iii) Make value flow – Make the remaining value creating steps flow.
(iv) Let the customer pull value – Design and provide what the customer wants only when the customer wants it.
(v) Pursue perfection – Strive for perfection by continually removing successive layers of waste as they are uncovered (James P. Womack and Daniel T. Jones, 1996).
The Lean Thinking process forces an awareness on how value is created rather than how any single activity is managed. In a typical operation, project management tend to view a project as a combination of activities, whereas Lean Thinking views the entire project as a production system where the project is one large operation.
To introduce Lean Thinking in the construction industry there is a need to establish a philosophy that relies on the identification and elimination of waste using the various ‘Lean tools’.
6. The 8 Deadly Wastes
The elimination of waste improves profitability by reducing cost and improving processes, resulting in a competitive advantage. The concept of removing waste, which is an integral part of Lean Thinking, was originally developed by Toyota’s Chief Engineer Taiichi Ohno, the founding father of ‘Lean’ manufacturing. Ohno described three major barriers that can influence a manufacturing process negatively: referred to in Japanese as ‘Muda’ (wasteful activities), ‘Muri’ (overburden) and ‘Mura’ (unevenness).
The process of eliminating waste initially involves the challenge of understanding precisely what waste is and where it exists. Certain forms of waste are easy to identify; however other forms of waste can be much more difficult to recognise. Although products can significantly differ between industries, the typical wastes created in construction are relatively similar.
Within construction and manufacturing there exist 8 types of waste. The first seven wastes were first identified by Taiichi Ohno (1988) and subsequently Womack and Jones (1996) identified an eight category of waste.
The categorisation of these wastes are: Overproduction, Waiting, Transport, Over processing, Inventory, Motion, Defects and Skills and Underutilised Talent (Denerolle, 2018).
7. Creating a Lean Leadership Culture
Creating a Lean Thinking leadership culture is a fundamental step in overcoming the obstacles to accomplishing a positive Lean philosophy in construction. In any organisation, the employees are its greatest asset. One should never assume that employees’ ideas or opinions are of any less significance than that of leadership at management level. Managers are human and can make mistakes (Lean-Manufacturing-Junction.com, 2018).
In developing a Lean leadership philosophy, management should cultivate a trustworthy working relationship with employees, while also retaining respect for their position of authority within the organisation. The managerial approach should be agile and accommodating, however it should confirm approved schemes of work and ensure that the employees adhere to correct methods.
Resistance to change is an issue in many organisations, including the construction industry, and can become problematic if not correctly managed. Employees can prefer a situation where they feel safe or at ease and therefore are reluctant to change unless there is a crisis. This issue can be prominent with long-term employees.
All employees should understand the Lean Thinking journey and the benefits and opportunities it will bring to the organisation by working smarter, not harder. Effective leadership and communication that provides assurance regarding training, coaching and mentoring will assist the employees in adjusting to new processes.
8. Organisational Communication and Lean Thinking
Change Process Life Cycle Schematic Diagram
“Excellence in construction is achieved when value for money, appropriate risk allocation and the expected benefits have been delivered safely through the procurement of a project or programme of work using an integrated supply chain that fully utilises their capabilities”. Source: UK Government Performance Management Task Group Report
This paper discusses a new approach for supporting the elimination of waste in construction through the use of organisational communication in conjunction with the use of Lean Thinking tools.
Due to unique characteristics and operating structures that give rise to many challenges, the Construction Industry is fundamentally different to other industrial sectors. Most projects within the Construction Industry are one off projects while in comparison, the manufacturing industry involves mass production of similar items.
Research has proven that effective communication leads to the delivery of successful construction projects. However, even the most successful construction projects create significant amounts of waste. Effective organisational communication and Lean Thinking is essential in overcoming the significant challenge in the elimination waste in construction.
Many construction firms adopt a policy of “if it’s not broken, don’t change it”. To ensure these firms remain competitive and improve product quality, this policy needs to be revoked. Construction companies must focus on the awareness of how value is created rather than how any single activity is managed, hence the Lean Thinking process.
The process of creating a continuous improving culture in the construction industry is the first step in achieving excellence in the sector. There will be significant challenges along this journey, however, I believe that organistaions must seek solutions and change if they want to remain competitve in fast developing markets.
The ‘Change Process Life Cycle Schematic Diagram’ was developed to communciate the Organistaional Communication and Lean Thinking change process from conception to completion. The diagram highlights a number of key milestones that must be accomplished by construction firms who aspire towards excellance in construction.
The next step of this process should involve a detail research study of waste throughout the life cycle of construction projects, with the aim to identify practical opportunities and means of minimisation the effect of waste in terms of delivering quality and excellence in the built environment.
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