Hello, and welcome. My name is Sam Spata, and this is Construction Management Course for Lean Project Delivery. In this course you will be taking the first steps on your lean journey. A journey which I believe you will continue throughout your professional career as a way to deliver more value and more fun to the work that you do. Now, my perspective is that of an architect for over 35 years. I've managed major practices, complex major capital projects, both in New York City and in London. Former member of the Lean Construction Institute, and current Chair of the New York Chapter of LCI's Lean New York. My personal lean journey began over eight years ago in Sacramento, California, on projects with over $6 billion in construction value. Today, you're going to learn a little about what I've learned in those eight years. And I hope you find it to be fascinating enough to continue your education once we're done. The outline for our course is to begin first part to talk a little bit about project delivery in general terms, and then to zoom in on a theory of lean. Which then will inform part two of our conversation, where we will dig into lean project delivery, and end with some ideas for your independent study. Project delivery. Let's begin with why, then a brief history, the Theory of Lean, and some takeaways and Intent, which is a tool that you will be using in your lean journey in the years to come. So why talk about leaning project delivery? There are many methods out there. Why is different? Why is it necessary? Well first, all current projects are wasteful. Numbers anywhere from 30 to 50% of inefficiency estimated in the United States. And the United Kingdom has issued a 2025 challenge that public sector work will significantly reduce both cost and time for project delivery. It's also particularly litigious here in the United States. Too much effort goes into the fixing of blame rather than the fixing of problems, and that comes from the contractual structure of the project. But, worse, not enough effort goes into delighting our clients. And our clients include not only the person who at the end of the day will occupy a project and own it, but each one of us who, in a value chain, is a customer to then other. We are under-emphasizing how powerful the practice of delivering projects can be for learning and growing as individual practitioners. And that's the third reason. It's an unhappy process. Projects begin with a lot of hope, but the general process of design and construction gets very painful, and the results too often are less than expected. Too many projects in fact do not happen because there is sufficient belief in the reliability that projects can be delivered on time, on budget, and to meet the goals of all the stakeholders. What is a project? Professor Peter Barrett, I think, at the Salford University has the best definition. It's a means to a means to an end. You could read more about that in the book that he edited, Revaluing Construction. Now I'm an architect. And as architects, engineers, and constructors, we live for projects. Projects are how we earn our living. It's also what we enjoy doing. The idea of tackling a problem, solving out a new way of arranging space. The logistical issues of labor and materials coming to a site. We get excited in the design and construction industry about projects. That's what we love to do. But too often we forget the for our client, a project is a means to a means to an end. The project is an organizational means to achieve a new physical reality, a place, a space, which in turn is the means to that client's end. And that end generally has to do with their institutional or organizational strategy and mission. And the end could be measured in dollars and cents, if it's a business concern, say retail that's looking to increase sales per square foot. That's a pretty easily to measure end. But sometimes the ends are, let us say, even more noble than that, such as discovering new medicines. Or having more children get through educational system and graduate high school. So the projects that we love to do as designers, engineers, architects, and constructors, always we need to keep in mind that they are means to a means to a client's end. And that's important because lean is focused on outcomes. Very much about the outcomes we deliver. So when we think about a project, and we look at the different modalities for delivering them, I reduce them down to five key aspects. Projects are about time, they have a beginning, a middle, and an end. There is a transaction involved, because that is how we make our living as designers and constructors, and how the owner achieves their end. There are key roles that each of us must play, and there's certainly risk and purpose. The purpose can be the noble, strategic goals of the client, and the risk are the ones that we all take as being part of the team that delivers a project. These five elements are key to understanding any mode of project delivery. And also to understanding why so many owners, constructors, architects, and engineers, have begun their independent lean journeys. Let's take a look at forms of project delivery on this this matrix. If client integration goes from a low at the bottom to a high at the top, in integration with the process, and if a collaboration between designers and construction goes from a low here all the way over to a high at the other end. Then we'll find that different modes of project delivery start falling in like this. With the traditional design bid build that you see here being really at the bottom at the lower end corner in terms of the amount of client integration and design and construction collaboration. And I'll just illustrate that for a moment. So the designers and constructors really don’t collaborate until the documents have been accepted by the owner. The owner and the designer collaborates very intensively up to the time of bid. And then afterwards, it's mostly the owner and the constructor working. The three are not all working together as a unified team. Whereas on the upper end, integrated project delivery you see here is the highest form of client integration and design in construction collaboration. Now the purple, P3, it's important. P3 is a financial Structure. And P3, which is Public Private Partnership, can actually take on any one of the types of integration. We see it mostly using design build, design assist, and more intensively integrated project delivery. But that is a separate course in itself. When we look at forms of project delivery that are particularly conducive to the use of lean technologies, they're in that upper right quadrant. Where the integration of the client into the design and delivery process is high, and the collaboration between designers and constructors is also high. So in the cloud of lean, it really is leaning up towards that right hand corner. That's where lean practices But can really be applied to any project but that's where they can have their biggest impact. When we look at different types of project delivery, and this is my personal take after 35 years. If you look at those five key elements from time down to purpose. Just take a look at risk and what are the risks that are involved? And the key thing to keep in mind with lean is that the risk is about, in my opinion, reliability. Have we created a system for owner, designer, constructor to work together and reliably deliver on the promises that they are freely giving to make the project a success. Risk becomes the reason why lean has a huge beneficial impact for owners. In fact you will see later, that many are saying that lean is perhaps the best risk management device we have right now. So, project delivery, how did we get to the point we are at today here in the early 21st century? This is a chart that many people have used in talking about lean and introducing lean. I'll simplify the curves, and it basically shows that construction productivity index over a half century has gone down. Everything else other than farms is going up. It's a bit of an oversimplification, but something really did happen during that half century. If we look at the three key roles in a project, an owner who's got a stake to build something that they will use. A constructor, an organizer of all the trades and labor and materials. And a designer who develops the design solution that's code compliant, that can be built. Their roles have changed quite a bit in half a century. Whereas half a century ago, let's say each of those bubbles were equal. Something has happened in the intervening time, particularly, as you'll see later, as a result of economic disruption. Designers have, in many respects, retreated from the construction part of the process for liability reasons. There was a period in the 1980s where major firms would look at shop drawings and not even approve them because they were afraid about using the word approved. They retreated from the process, went through multiple iterations of contract forms to protect themselves against rising tides of litigation. At the same time owners found themselves increasingly in organizations that the building and the design and the construction of new facilities, the means to a means, was not as important as the end. And they were finding themselves more and more working for organizations, corporate, institutional, nongovernmental. Where the process of delivering projects was outsourced and their focus was less on design and construction, and more on their internal stakeholders, their internal clients. And having real estate be a function of organizational strategy and not a means of organizing design and construction. So, owners to a great extent in many industries, particularly in the last 30 years, have removed themselves from the process. And what that has done, is it allowed the constructor, because someone had to, to step into the void so that what you had is a hypertrophing of the role of the construction side. And the way that you know this is so, at least in the United States, is to after bids, when a project is under construction. If you want to know how long it really will take to build it, how much it'll really cost. The only persons that really have that answer or close to it, is on the constructor side. Now, that doesn't mean that constructors have done anything out of evil intent. What it simply means is that the process started to break down and someone had to step in to help projects actually happen. But it's not healthy to have this large of an imbalance, I suspect. So let's look at a different set of curves. And this is based on the premise that the greatest force that has shaped the design and construction industry. And project delivery in particular, has been the periodic downturns of a boom and bust economy. Design and construction has peaks and valleys and has been greatly shaped in the last four and five decades by recessions, economic downturns. Let's think about the five that have happened since I was in university back in the mid 70s. Five serious recessions have happened, each of which had a significant impact on the design and construction industry. Well what happened during those times? Well the curves are a little bit different. They're a little bit lumpy. Owner expectations throughout had been rising. Just as your expectations are when you buy a consumer product. Cars are better, houses are better, and buildings are more complex and more sophisticated. Spaces and places have grown in technology and owners expect more from each project. And the great news is, that as a design and construction industry, we are delivering by far, much better projects, much better means. We are delivering buildings, spaces, and places that are technically sophisticated, that we could have only have hoped to deliver four and five decades ago. So owners' expectations continue to rise, and that's as it should be. At the same time, the response of the design and the construction industry has also been rising. We have been, as I have noted, delivering better projects. More technologically sophisticated buildings, buildings that are more sustainable, better in their use of energy. Better in terms of how they incorporate human needs and the needs of organizations for innovation, and the capture, and the retention of key talent on a global stage. Let's take a closer look. At each recession point, two things happen. First, the owner expectations immediately jump up. And you know the way it is, you get a phone call early on in a recession. And your client says, we love the work you're doing, it could be a design, or you could be a constructor. We want to keep working with you, but we really need you to reduce your fees. Can you do this for 10% less, 15% less? I'm under a lot of pressure. It is absolutely as clearcut as that, that conversation happens at every downturn. So that's a raising of the expectation, in terms of more value for the money, because the money's going down. At the same time, in the design and construction industry, what we unfortunately have learned is that we sell time, and we sell people. That is where our expertise is. And we tend to reduce staff, we tend to stop investments in technology. So at the same time that the owner expectation is going up the ability of the construction, design industry is going down to respond to those expectations. When we come out of recession you can see that we take off again. We're clawing back and we get better than before, but we never quite capture the space that was there. And what we find is that over time, the gap has been widening between expectations and our ability as a design and construction industry, engineers, architects, constructors, to keep up with the expectations of our owners. What do we do? Well at the end of each recession, there has been the change. Construction management came on in the 1970s, since the early 1980s the Rust Belt Recession. Everything pretty much has been fast-track for major capital projects. The session we have in the early 90s lead to a lot of use guarantee maximum pricing. You see it everywhere. And program management has taken off quite a bit since the early 2000 recession. The dot com conversation if you will. What's going to happen next? Well, let's keep in mind that none of those changes radically changed how owners, constructors and designers worked together in a project delivery. To a certain extent they were very large band-aids and I would submit that there was really no patients coming out of this most recent, great recession for another band aide. And we're at a great moment in time. We are, in our industry at a water shed moment. Our technology for design and construction has reached a point that we've could only dream of a few years ago. We have the changing of the guard if you will in terms of generational turnover and we're reached a point where the dissatisfaction with the process is such that this is a crisis that we would not want to waste. Let's not put another band-aid on it and let's look at a better way to deliver a project. We've all ready began because the increasing use of building information modeling has created a New Standard of Care and I submit has gone a long way towards closing that gap. Now when we look at a project well into construction with a BIM model, if an auditor has a question about quantities and technology, the design team can very easily go into that model and see where we're at. Just how many pre-KS planks did we have scheduled for this project? It's not knowledge that's very down one, two, or three subcontracts, below the owner. The information is upfront, it's accessible, and it's making our projects better. It's closing the gap, but to really, really get beyond the gap is to use these curves as a stair step and to begin that lean journey. And to be innovative in how you deliver projects. It's through innovation such as lean project delivery systems, I submit, that we will cross that line. And once again be at a point, where our owner satisfaction is greater than they had expected at the beginning of the project. What's the theory of lean? Because that is the key innovative tool. Greg Howell, along with Glenn Ballard cofounded the Lean Construction Institute seven years ago, and Greg, with Will Lichtig who is a great practitioner, reduced it to three key parts. The impeccable coordination, a predictive workflow. Thinking of the project as a collective enterprise, the alignment of financial motivations and incentives. And thinking of each project as a production system that changes fundamentally the structure of work. Are three equally important components to achieving products that meet Greg's definition of a project which is a project is a network of commitments. That's true whether it's lean or not. The point of lean is your more likely to reliably fulfill those commitments. Let's dig into this. Lean has some very practical tools and in the second part i'm going to be going into in some detail. But to beginning of Lean is an understanding. When people come together at the beginning of a project to talk about work, every time they put on that hat, whether it's a soft hat or a hard hat, when a person sits down at the table there's three questions in their mind. And Lean accepts this as the cultural foundation for doing projects well. People want to know what's in it for me. Will this project advance my career. What's in it for my firm. Will he meet our financial goals. And finally, what's in it for my client. And whether you are an architect or an engineer, a trade contractor or construction manager. Or the owner we are a member of corporate real estate and an owner organization. You are asking these questions. Does everyone who's involved with the doing of projects have a personal stake? They have a firm wide stake for their organization and they have a client. It might be an internal customer, but they have got a client. And what Lean says is that structure your project in such a way that these private interests become mutualized. So that it becomes win, win, win. Absolutely not win, lose, or let's do the project. We'll litigate the blame at the end. How do we structure projects so that we can reliably predict that everyone can win at each of these questions is a mutualilization of private interest. That is the, I would say, the fundamental insight that makes all the Lean tools effective. Now for those of you who have a background in manufacturing perhaps, or study Total Quality Management, TQM. You will see that underlying many of the Lean tools is a very simple rotation. Plan, do, check, and adjust. Once upon a time, we used to say PDCA meant plan, do, check, act. But now beginning a Lean journey, we know it's plan, do, check, adjust, and then begin over again. Plan, do, check, adjust, because important part of lean is the continuous pursuit of perfection. So here's a lean tool before we begin part two, if this were a live audience, I would be asking you what did you take away today? And I would take those notes on a board and you would tell me what you heard, what you learned, what the take aways were. And then, I get an opportunity to say, well gee, that's not quite what I had in mind, or yes, that's exactly what I was hoping you would say. And what we learn as a lean tool, any time you take that feedback immediately from the audience, and find that what did they take away? You're starting to see, is there a gap between what I'm saying and what people are hearing, so how do I change what I say so that they hear the things that we really are trying to communicate.