Why Lean Construction Works: The Real Value Proposition

Why Lean Construction Works (The Real Value Proposition)

If you have heard a lot about Lean, and I hope you have, and you’re like, “Well, how does this benefit me?” Let me explain it to you. I’m so excited because there’s a huge benefit to you and trade partners and general contractors and to you personally and everybody in between. So let me go through these one by one right now.

The Most Important Benefit: Living a Remarkable Life

Actually, let me cover the most important one right now. The key benefit is you and me living a remarkable life. One. Second, being able to live a remarkable life with our loved ones and our family. Three, us being able to bless the lives of people everywhere we go.

Lean implemented properly for respect for people. Doing what’s best for our folks and our clients and respecting people along the way is the most beautiful way to live. And there’s so much opportunity here that we could bless more people in construction, in our day jobs, than we could do in any nonprofit or church organization or any other place in the world.

Literally, there are tens of thousands of people that we will meet and have a direct effect on in the span of 5 years. It’s absolutely incredible the impact that we can have.

What Really Matters: We Would Still Do It for Our People

But let me tell you from a benefit standpoint outside of the people aspect. Actually, I can shout him out. Scott Butler with High Street. He said, “If you take away all of the productivity gains, the schedule gains, how well our job sites look, the efficiency, everything else, we would still do it because of what it has meant for our people.”

That’s really a massive statement. But let’s get into some of the other benefits.

Gross Profit Increases: 20-25% for Trades, 0.5-1.5% for GCs

Let me just tell you, in construction, we’re seeing clients that have taken their gross profit targets for trade partners from 8 to 10% all the way to 20% and climbing, and 20–25% and more.

We have seen general contractors increase their gross profit on a project by a half a percent, which for a general contractor is big, all the way up to 1.5%.

We have seen projects start to finish not only on time but anywhere between 1 to 5% earlier, which sometimes amounts to anywhere between 2 to 6 weeks easy. We’re even seeing clients finish 2 months early.

We’re seeing the amount of productivity double, and literally we track them very intensely for construction projects.

Cost Per Square Foot Decreases: $248 Down to Under $200

And here’s a really one that we just saw. The cost per square foot price for certain types of buildings go from 248 and climbing all the way down to an achievable target of under $200 Canadian.

So like the benefits are real, but I don’t ever want to start with that because it’s the right thing to do no matter what.

Less Rework and More Reliable Schedules

Next, less rework. If you are doing it the Lean way, you will have less rework.

Four, more reliable schedules. You’ll at least be able to finish at least close to on time, if not on time, or like I said, we’re tracking 1 to 5% earlier with Takt Last Planner and the Kanban method.

Better Leveling for Labor: 85 Persons vs. 15 Persons

Five, better leveling for labor. We don’t have a lot of labor running around. There’s a huge labor shortage when it comes to training. There’s people, but there’s not training. And we don’t have the same amount of product delivery team members and craft workers that we used to have.

And so, if you take a traditional push project with CPM and compare that to a Takt Last Planner and Kanban method project, you’re looking at like, let’s just say, one crew of the electricians, 85 persons on this crew, 15, and this one’s on schedule.

Fewer Disputes: Fix the Root Cause, Don’t Prepare for Court

Six, fewer disputes. And this is a huge one because a lot of times folks will say, “Oh, I have to do CPM. I have to do CPM.” Which is the worst thing that’s ever happened in construction. And they’re like, “We have to do CPM so that we can fight this out in court.”

No, no, no, no, no. Let’s eliminate the root cause. The root cause of you having to go to court and not finishing on time is a bad system and CPM. Let’s fix that and start using Lean construction scheduling methods and actually build the project right so you have fewer disputes with Lean.

Higher Retention: People Are Dying to Work for Lean Companies

Number seven, higher retention. People want, in fact, I get asked all the time, this doesn’t sound like a lot, but it’s a lot for me, two or three times a week of like really great professionals that don’t have any problem keeping a job, that are very loyal to their company. They’re like, “Jason, if I could find a company doing this in real life, like the real way, I would move there.”

So if you’re like, “I can’t hire anybody in the industry because like literally they all have jobs.” Then go the Lean route and you will get good folks. They are dying to come work for a company like that.

Better Client Experience: “Feels Like Coming to Disneyland”

And lastly, better client experience. This has been proven over and over and over. I’ll leave you with a comment that the vice president of construction left us with at the bioscience research laboratory. He said, “This is the best project I’ve ever seen, and coming here feels like coming to Disneyland.”

Literally, your clients are going to love it. That doesn’t mean that you won’t get outbid by low bid and some kind of nasty contractor, but it does mean that you’ll have a better client experience. And who wants to do work for owners that want the lowest bid anyway? And who wants to be mediocre in the first place?

Lean will change everything for you.

Here are the benefits of Lean construction:

• Live remarkable life, bless people everywhere, tens of thousands of direct impacts in 5 years – Key benefit is you and me living remarkable life. Being able to live remarkable life with our loved ones and our family. Us being able to bless lives of people everywhere we go. Lean implemented properly for respect for people. Doing what’s best for our folks and our clients and respecting people along the way is most beautiful way to live. So much opportunity that we could bless more people in construction, in our day jobs, than we could do in any nonprofit or church organization or any other place in world. Literally, there are tens of thousands of people that we will meet and have direct effect on in span of 5 years. Absolutely incredible impact that we can have.
• Gross profit increases: trades 20-25%, GCs 0.5-1.5%, finish 1-5% earlier (2-6 weeks) – Seeing clients taken their gross profit targets for trade partners from 8 to 10% all way to 20% and climbing, and 20–25% and more. Seen general contractors increase their gross profit on project by half percent, which for general contractor is big, all way up to 1.5%. Seen projects start to finish not only on time but anywhere between 1 to 5% earlier, which sometimes amounts to anywhere between 2 to 6 weeks easy. Even seeing clients finish 2 months early. Seeing amount of productivity double, literally track them very intensely for construction projects.
• Cost per square foot decreases: $248 down to under $200 Canadian – Cost per square foot price for certain types of buildings go from 248 and climbing all way down to achievable target of under $200 Canadian. Benefits are real, but don’t ever want to start with that because it’s right thing to do no matter what.
• Less rework, more reliable schedules, better labor leveling: 85 persons vs. 15 persons – If doing it Lean way, will have less rework. More reliable schedules. At least be able to finish at least close to on time, if not on time, tracking 1 to 5% earlier with Takt Last Planner and Kanban method. Better leveling for labor. Don’t have lot of labor running around. If take traditional push project with CPM and compare to Takt Last Planner and Kanban method project, looking at one crew of electricians, 85 persons on this crew, 15, and this one’s on schedule.
• Fewer disputes, higher retention, better client experience: “feels like Disneyland” – Lot of times folks say, “Have to do CPM so can fight this out in court.” No. Let’s eliminate root cause. Root cause of having to go to court and not finishing on time is bad system and CPM. Fix that and start using Lean construction scheduling methods and actually build project right so have fewer disputes. Higher retention: really great professionals dying to work for company doing this in real life. Better client experience: VP of construction at bioscience research laboratory said, “This is best project I’ve ever seen, and coming here feels like coming to Disneyland.” Clients going to love it.

If your project needs superintendent coaching, project support, or leadership development, Elevate Construction can help your field teams stabilize, schedule, and flow.

A Challenge for Construction Professionals

Here’s what I want you to do this week. Focus on the most important benefit first: living a remarkable life. Being able to live remarkable life with your loved ones and your family. Being able to bless lives of people everywhere you go.

Implement Lean properly for respect for people. Do what’s best for your folks and your clients and respect people along the way. This is most beautiful way to live. You could bless more people in construction, in your day job, than you could do in any nonprofit or church organization or any other place in world. Tens of thousands of people you will meet and have direct effect on in span of 5 years.

But also recognize the other benefits. Trade partners going from 8-10% gross profit to 20-25%. General contractors increasing gross profit by 0.5-1.5%. Projects finishing 1-5% earlier (2-6 weeks easy, some 2 months early). Productivity doubling. Cost per square foot going from $248 down to under $200 Canadian. Less rework if doing it Lean way. More reliable schedules, finishing close to on time or 1-5% earlier with Takt Last Planner and Kanban method. Better labor leveling: traditional push project with CPM might have 85 persons on crew, Takt Last Planner and Kanban method project has 15 and on schedule.

Fewer disputes. Root cause of going to court and not finishing on time is bad system and CPM. Fix that and start using Lean construction scheduling methods. Build project right. Higher retention. Really great professionals dying to work for company doing this in real life. If can’t hire anybody in industry because literally they all have jobs, go Lean route and will get good folks.

Better client experience. VP of construction: “This is best project I’ve ever seen, and coming here feels like coming to Disneyland.” Clients going to love it. As we say at Elevate, Lean construction benefits: live remarkable life, respect people, 20-25% gross profit for trades, 1-5% earlier finish, less rework, fewer disputes, higher retention.

On we go.

Frequently Asked Questions

What’s the most important benefit of Lean construction?

You and me living remarkable life. Being able to live remarkable life with our loved ones and our family. Us being able to bless lives of people everywhere we go. Lean implemented properly for respect for people. Most beautiful way to live. Could bless more people in construction than in any nonprofit or church organization. Tens of thousands of people direct effect on in 5 years.

How much can gross profit increase with Lean?

Seeing clients taken gross profit targets for trade partners from 8-10% all way to 20% and climbing, 20–25% and more. Seen general contractors increase gross profit on project by half percent all way up to 1.5%. Seen projects finish 1-5% earlier, 2-6 weeks easy, some 2 months early. Productivity double.

How does Lean construction reduce labor needs?

Better leveling for labor. Don’t have lot of labor running around. If take traditional push project with CPM and compare to Takt Last Planner and Kanban method project, looking at one crew of electricians, 85 persons on this crew, 15, and this one’s on schedule.

Why does Lean construction lead to fewer disputes?

Lot of times folks say, “Have to do CPM so can fight out in court.” No. Let’s eliminate root cause. Root cause of having to go to court and not finishing on time is bad system and CPM. Fix that and start using Lean construction scheduling methods and actually build project right so have fewer disputes.

How does Lean construction improve retention?

Really great professionals, two or three times week, saying, “Jason, if I could find company doing this in real life, like real way, I would move there.” If can’t hire anybody in industry because literally they all have jobs, go Lean route and will get good folks. They are dying to work for company like that.