Fluor Canada: Reframing The Opportunity For Capital Efficiency
By Anand Nicodemus, P.Eng., Global Director Lean and CPI, Fluor Corporation
and Jayne Nichols, P.Eng., Lean Coach & Director, Design Engineering, Fluor Canada
Reframing in a Crisis
In a Canadian hospital over a decade ago, there was a mounting backlog of surgeries accompanied by a growing list of older patients whose end of life was arriving before they could be operated on. The hospital needed to operate on 30% more patients every day to clear the backlog. Many saw the problem as being a simple capacity issue, while some attributed the experience to a paucity of clinical staff. However, it was one thoughtful Head of Surgery who reframed the experience by applying the lean method of “stand in the circle”. The Head of Surgery observed motion — as in the movement of hands and feet that was excessive and added to the time of clinicians during surgeries. That fundamental reframing of the experience saw the hospital change their surgical methods to reduce motion and subsequently increase their capacity by 30% — which made them the center of excellence in geriatric surgeries.
Becoming the Best
The slightest change in perspective can provide dramatically different results.
Toyota, known for designing and producing high quality new models of vehicles in half the time of their competitors, are experts in reframing. Toyota can build a Lexus in 17 hours with 34 defects, and it takes Benz, Audi and BMW 57 hours with 78.7 defects (per 100 cars). According to Jeff Sutherland, creator of the framework called SCRUM which is based on Toyota’s way of working, “… the German plant was expending more effort to fix the problems it had just created than the Japanese plant required to make a nearly perfect car the first time”. (Reference 1 below) What is the fundamental reframe that makes Toyota the fastest in design, engineering and building of cars with very few defects? What is the fundamental reframe that can help the industrial construction industry to achieve the level of performance our clients want and need?
Toyota’s system of design and production (termed “lean”) have been very successfully applied in the high-tech industry, advanced manufacturing, government, health care and more around the world. For those who have managed to fully embrace Toyota’s way of working, the results have been astounding.
Learning to Reframe
Applying lean is all about reframing how we see problems and using smart methods — applied together in unison — to create a significant increase in benefits. Fluor has also successfully applied lean on several capital projects, resulting in a number of benefits such as reduced cost, reduced lead time, productivity improvements, reduced overtime and employee stress.
In one case, construction management identified a schedule risk to the upcoming underground scope on a project and put together a team consisting of an area construction manager, field and home office engineers, material management, and others. Lean coaches helped the team to diagnose key leverage points and put together a plan to ensure a predictable, safe and efficient execution of the piling work, using techniques such as value stream mapping and root cause analysis. One of the key concepts that helped this team to plan the work was the concept of flow and in gaining an understanding of the wastes of transportation, inventory, waiting and rework, the team was able to reframe their thinking. With support from the lean coaches, and engagement of the subcontractor, the team was able to put this plan into action, and the results speak for themselves. The at-risk piling work was executed on time and predictably, with a 50% productivity improvement — a result viewed by the client as a success story.
This Isn’t Just About Production, Is It?
One of the questions often asked is whether or not this reframing and application of lean methods can help business processes such as engineering, design, procurement, HR, etc. The answer is yes! There are areas of opportunity everywhere, whether they are material wastes, process wastes or wastes in information.
Fluor has applied lean to several key engineering and design processes for example, growth of small power consumer requirements rather late in a project life cycle. A multi-discipline team was put together by management, consisting of engineers and designers from various disciplines. Analysis of the waste elements included defects and waiting which helped them to see the opportunity to improve the process of identifying small power consumers, and when applied to a new project, this resulted in a significant reduction in changes to small power cables, electrical equipment and buildings in late stages of the project. As they went through this process, the synergy created by putting these disciplines together using the structure of lean provided creative, cost-efficient solutions.
How Big is the Opportunity in Industrial Construction?
Considering that a large amount of engineering and construction efforts is materially impacted by any potential backtracking — this rework impacts every design and construction endeavor no matter the industry. Also reflecting on the fact that typically many activities on a construction site are not value-adding and that a portion of planned activities in a day do not get completed on a construction site (References 2 & 3 below). If we can reframe our experience as one characterized by an abundance of a few specific forms of waste, then we can choose to apply some really smart methods — methods that make our work smooth, efficient, and release capacity directed to making owners and contractors more competitive through capital effectiveness. The opportunity is enormous.
Lean and Capital Efficiency
“Under the thoughtful guidance of our trained lean coaches at Fluor, project teams have delivered measurable value for clients by implementing lean techniques on their capital projects,” says Mark Brown, Vice President and General Manager, Fluor Canada Ltd. “Through the application of exercises that help to reframe opportunities and challenges, Fluor is able to provide a best course of action for our clients that leads to successful project delivery — on time, on schedule, and cost efficient.”
However, capital efficiency is not only an ask from clients, but also a necessity to ensure viability of projects. Clients seeking to be competitive and grow their business in the challenging market conditions of today, are also examining a range of capital effectiveness targets.
While reference to the broad range of lean methods that can be applied together in this endeavor is beyond the scope of this article, the key characteristics of a capital project thus executed are apparent:
- Close collaboration of Fluor, client and sub-contractors; being in the design and construction space together.
- Incremental and iterative design progression that minimizes backtracking with all design disciplines being involved.
- A focus on real objects in design and build with much less emphasis on documents.
- Responding to change, being adaptive and speedy resolution of issues versus following a plan mechanistically.
- A concerted approach to preventing defects.
- Planning and executing as one a seamless system involving trade foremen.
- Building to cadence and working visually which helps to bring anomalies and abnormalities to the surface.
Just like the thoughtful Head of Surgery did, Fluor sees the need to stand in the circle together with its clients, JV partners, suppliers and subcontractors to reframe the opportunities in successfully executing industrial capital projects. Through this lens, we can work together as a project community to achieve a step-change in capital effectiveness, ultimately to the benefit of clients.
Anand Nicodemus is a Lean Sensei (teacher) in Fluor. Teaching lean became his life’s mission after he successfully led a lean deployment as the General Manager of a Technology Company in 1994. With Lean, Anand was able to double the revenue in a market that was shrinking by half year-on-year. Since then, he has taught lean in over 80 organizations, across multiple industries in 12 countries and helped them improve strategy and operational performance.
Jayne Nichols first used lean as a Department Manager within Fluor and quickly became aware of the transformative power of lean. She decided to dedicate her time to propagating lean, and since then has coached dozens of teams in Fluor in implementing lean methods in their design and construction.
Reference 1: "Scrum: The Art of Doing Twice the Work in Half the Time" by Jeff Sutherland
Reference 2: “Lean Principles in Construction”, Research Summary 191-1, Construction Industry Institute
Reference 3: “Competing Construction Management Paradigms” by Glenn Ballard and Gregory A Howell
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