Implementing Continuous Improvement Can Increase the Construction Industry’s Profitability

The Construction Industry Institute has estimated that only about 10 percent of what the construction industry does on a project is value added. Another 33 percent is attributed to support activity, but an unacceptable 57 percent is considered waste. A certain amount of support activity is definitely beneficial because without planning the waste would be even greater. Ouestion is how can we reduce the amount of necessary support activity required? However, the most important question is how do we reduce the waste in the construction process? It’s not realistic to believe that we can totally eliminate all waste; however, manufacturing has only about 26 percent waste or a little less than half what occurs in construction.

Henry Ford said almost a hundred years ago, “The best way to grow a business is lower costs.” The best way to do that is to eliminate work that does not contribute to the value of the product or service.

Before everyone starts pointing fingers at each other, keep in mind that all project stakeholders in the construction process contribute to creating the waste and the worst offenders are often the buyers of construction services because they actually create wasteful rules or unproductive requirements.

Most people connected with the construction industry are well aware of the waste, which shows up in longer schedules and increased costs. The mistake that is often made is trying to fix a complex problem in a single step. For example, the goal may be to reduce waste by 30 percent. Because it’s difficult to find a solution that will have that kind of impact, the initiative often dies out. Attempting to fix large, complex problems all at once makes the process very complicated. The greater the complexity, the greater the resistance to change and the more problems there are in attempting to implement the change. In addition, large complex changes usually require a significant investment in time and money, resources that are often difficult to obtain. These reasons contribute to large initiatives not achieving their objectives.

In contrast, the concept of Kaizen focuses on tiny, easy to implement improvements on a continuous basis.

Unfortunately, too often small changes are discounted because they are perceived to not be worth the time and effort. Yet, many small improvements can add up to significant savings. For example, a flight attendant for American Airlines suggested a way to save 7.5 cents on every flight. While each savings is small, it resulted in an annual savings of $62,000. The reality is a one-tenth percent daily improvement, the equivalent of about 28 seconds a day, will double productivity in three years.

One of the largest wastes is the underutilization of employees’ potential. This is a disaster. Multiple studies have discovered that a majority of award winning innovations were initiated by an individual; not as a result of management initiatives. Those initiatives started by individuals created greater impact than those started by management. The answer is to start a Kaizen program, or continuous improvement process, at all stages in the construction process.
One reason this process is so powerful is that it truly empowers the workforce. Workers have indicated in many surveys that the two most important motivators are feeling appreciated and being in on things. The greatest compliment one can give is to ask someone for their opinion and then let that person implement it. It’s difficult to involve people more than having them implement their own ideas. We often hear the comment that people don’t like change. That’s really not true; what they don’t like is your change. People like to implement their ideas, which also create buy-in and empowerment.

Creating a continuous improvement process
There are two obstacles to involving people in change. First, it’s difficult to implement major change. Second, employees are often hesitant to make suggestions since no one has asked for their opinion before or if they have offered a suggestion it was ignored. This has made many workers hesitant or even indifferent about making suggestion to improve performance. This is a problem because front-line workers are often in the right place at the right time to observe a situation where they can offer a recommendation for improvement.

Fortunately, the Kaizen approach helps to overcome both of these challenges.

How to start a continuous improvement program
The easiest way to get started is to simply ask everyone to make two suggestions a month on possible improvements that they can implement. The emphasis needs to be on thing they can implement, or at least help implement with their team. You should avoid focusing on the benefits to the company. Most improvement plans focus on making the company more money, but that is not a great incentive for the worker. Instead, focus on eliminating things that annoy the worker or changes that would make the worker’s job easier. By making these types of changes the worker will become more efficient, therefore increasing the profitability to the company. To get this kind of program started the emphasis has to be on the worker. The good news is that when companies do this and workers begin to see the benefits of continuous improvement then they begin to make more and more suggestions that improve productivity.

The trick to making this process work is to be supportive. Don’t judge people’s suggestions. Since by definition Kaizen changes are small, you can afford to let people try them. The rule is that they must create an improvement or they aren’t implemented, so if they try it and it doesn’t create an improvement it’s a no go. However, avoid judging before they try it. The exception is if something would cause a safety issue, then you can overrule.

Finally, after a suggestion has been tried and works, it should be posted so other team members can learn about it. This process is simple. Indicate what the problem was, what was done, and what improvement was realized. This should take less than 75 words and if possible include pictures.

Further information can be found at www.TedGarrison.com.