"How to avoid rework phenomena in construction projects by maintaining a reliable organizational profile? The application of LEAN-6 SIGMA methodology minimizes time variability in construction phase."

1. UNIVERSITY OF TWENTE.
“How to avoid rework phenomena in construction projects by maintaining a reliable
organizational profile? The application of LEAN-6 SIGMA methodology minimizes time
variability in construction phase.”
Course: Markets, Organizations and Innovation (195810100)
Instructor: Professor dr. ir. André Dorée
Program: MSc. Construction Management & Engineering
Document type: End-assignment
Student: Dimitrios Kordas / s1231901
(Main text: 3887 words)
Enschede, 19-3-2013

2. Contents
1. Preface ............................................................................................................................... 3
2. Introduction ....................................................................................................................... 3
3. Organizing for reliability .................................................................................................... 5
4. Time variability: Non-excusable delays ............................................................................. 5
5. Towards Lean & 6 Sigma ................................................................................................... 7
6. Challenges and barriers ..................................................................................................... 8
6.1 Lean Construction .............................................................................................................. 8
6.2 Resilience engineering ....................................................................................................... 9
6.3 The role of 6-Sigma .......................................................................................................... 10
7. Conclusion ....................................................................................................................... 10
8. References ....................................................................................................................... 12
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3. 1. Preface
The following essay thrives to make transparent the connection between time variability in
construction projects approached as a rework symptom and to argue on why project
managers if applying Lean Six Sigma will eliminate time variations in construction
operations.
Countries in both the developed and developing world have seen a constant negative
characteristic in their national construction industries. Time overruns have been common
problems in every construction project. Numerous factors such as utility and weather
damage delays can cause the costs of construction to exceed the budget and extend project
schedule. Understanding the specific causes of cost and time overruns due to changed
internal or external working conditions can help to control cost and time extension on
projects. They may be related to external or internal factors that may cause the construction
of a project to delay.
The core of this effort is structured on building two main understanding dimensions. Firstly,
to give a picture of the construction industry’s performance measured on Quality Time Cost
(QTC) criteria which still remains insufficient and away from the initial targets of the Egan
Report (Egan, 1998). The industry still fails to complete the majority of projects on time and
budget and meet the needs of the consumers, not offering best value for clients and tax
payers alike. Why is this reality even now, regardless of the type and scope of civil projects?
Which are the factors and parties affecting the time performance of construction crews?
Why modern projects still suffer from time overruns and time variations in their internal or
external processes?
The second part builds on the need to mitigate with the emerging risk of rework. Time
delays are approached as a symptom of rework which calls for thinking and acting in a
reliable operating environment during the whole life cycle of construction projects.
Unforeseen or unexpected changes are seen as the key-driver behind this planning drama;
thus they have to be minimized. Lean production model is proposed to be applied as a
philosophy of eliminating all the time-related correction activities and the Six Sigma is used
as a statistical tool which will enable project managers to count systematically their past
performance in order to avoid the previous rework phenomena.
2. Introduction
Looking back to the storyline of Sydney Opera house; this landmark was planned to be
delivered in 1965 and finally opened in 1973 followed by an acceptable cost escalation. The
Elbphilharmonie Hamburg is still one the most time failure projects in Europe. The project
was scheduled to be opened in 2010, and now is under construction and planned to open in
2015. Giving a deeper glance outside Europe, it is also seen that housing industry is not
reliable enough in delivering projects on time.
(Chan & Kumaraswamy, 1997) had identified that the construction industry in Hong Kong
suffers from high ‘subjectivity’ influences of the three main stakeholders (clients,
consultants, and contractors). All three groups of practitioners in the industry opined that
“poor site management and supervision”, “unforeseen ground conditions”, and “low speed
of decision making involving all project teams” are the three most significant factors causing
delays in local building works (Chan & Kumaraswamy, 1997, p. 577). They also found that
“The clients and consultants appear to assert that the main source of delays is due to a lack
of contractor experience in planning and supervision on site, but the contractors controvert
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4. that many delays arise from insufficient design experience of the consultants.” The Nigerian
construction industry according to (Aibinu & Jagboro, 2002) suffers from client-related
changes. As they had noticed; “A major source of deficiency identified as significantly
responsible for this is clients’ continuous issue of design information/variation orders.”
In Saudi Arabia, (Assaf & Al-Hejji, 2006) conduced a research about construction project
delay for different types of projects in the state. It was concluded that 70% of projects
experience time overrun.
Why spending time on reworking and fixing out damages and defects that could be foreseen
is still a repetitive phenomenon especially in the construction stage of building facilities?
Looking the insight part of the construction sector it is seen that several stakeholders are
involved in different ‘arenas’. Various key-players are intervening in the main three
functional areas the so called; the “knowledge and attitude” arena, the “frameworks” arena,
and the “project” one (Barrett, 2005) who often change the scope and the processes
(business/project) of working practices. A negative perception by stakeholders can severely
obstruct a construction project. Inadequate management of the concerns of stakeholders
often leads to conflicts and controversies about the implementation of a construction
project (Olander & Landin, 2005).
The construction industry is mainly project-based and various complexities are inherent in
the construction projects. Reworking is a phenomenon identified in all basic stages of a
project’s life cycle (initiation, planning, execution, closure, maintenance and operations)
which often affects the progress of the activities resulting to continuous changes. Changes,
regardless of their nature and causes, lead inevitably to variations in building performance.
Mainly rework and wastages take the form of a waste in time, cost and thus quality. Rework
and wastages as (Alwi, Hampson, & Mohamed, 2002) had stated; are considered as non-
value adding endemic symptoms that seriously affect the performance and productivity
aspects in construction projects. The rework occurrences in construction projects are mostly
deriving from the unnecessary redoing/rectifying efforts of incorrectly implemented
processes or activities (Love P. , 2002).
The highway paving sector is not an exception in the pain of rework. Several delays have
been observed by the Florida Department of Transportation. (Vidalis & Najafi, 2002) had
concluded that; delays arise when design drawings are changed because of inadequate or
unclear details caused by inadequate data collection or survey prior to design. Design errors
in highway construction projects result in extra work such as earthwork, drainage, bridge
pilings, road resurfacing, re-paving, and widening. Design problems mostly occur when
design plans are not carefully reviewed.
The Durand Centre case is a really clarifying case of how time overrun can emerge even
when initial planning looks effective and sufficient. The Durant centre; a shopping mall in
London (1990) which was initiated based on traditional contractual form where the general
contractor held contracts with each of the subcontractors and did not self-perform work.
The procurement nature of the project and the insufficient supply chain design influence the
project’s execution speed. On the Durand Centre project there was a delay to steel
fabrication that resulted in a six-week delay to steel erection on-site and additional trade
costs of £231 thousands. This delay was not anticipated and did not become apparent until
it occurred on-site (O'Brien, 1999). As steel was a critical path activity, this delay caused
serious problems to following subcontractors (O'Brien W. , 1995).
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5. The research question so to be answered is: “How could project managers minimize time
variability in construction operations?”
3. Organizing for reliability
Almost all the cases are deteriorated by time overruns which lead towards thinking why
better planning did not take place from the initiation of the projects. Why construction
crews were not proactive enough regarding unexpected changes? The public opinion about
schedule escalation in building projects beliefs that it is only the bad technical planning
which pushes back the delivery line. The lack of a resilience management philosophy or high
reliability measures aggravates the final outcome. As (Lekka, 2011, p. v) had identified in her
HRO-literature review, there are six dimensions that allow higher and more efficient
utilization of complex systems like construction projects. These principles imply that
containment of unexpected events, effective anticipation of potential failures, ‘just culture’,
learning orientation, and mindful leadership will empower planners and construction crews
to nurture a collaborative, quality (value)-driven continuous improvement. The next sections
will outline how these principles can be put into action combined with lean benefits to
minimize all time delays.
4. Time variability: Non-excusable delays
Construction projects continue to suffer delays. Things go wrong and the project’s
completion date gets pushed back, with someone to be blamed for it. In practice, attempts
are made to identify the causes of delays and schedules are modified to incorporate revised
duration and new project time (Alkass, Mazerolle, & Harris, 1996). Delays are the direct
result due to time variations in the performance of construction teams.
Delay is a situation when the contractor and the project owner jointly or severally contribute
to the non-completion of the project within the original or the stipulated or agreed contract
period. There are two types of delays; non-excusable delays and excusable delays (Al Hadi-
Tumi, Omran, & Kadir Pakir, 2009). A non-excusable delay is delay caused by the contractor
or its suppliers, through no fault by the owner. The contractor is generally not entitled to
relief and must either make up the lost time through acceleration or compensate the owner.
Therefore, non-excusable delays usually result in no additional money and no additional
time being granted to the contractor. Excusable delays are divided into two: compensable
and non-compensable delays. Compensable delays are caused by the owner or the owner's
agents. While non-compensable delays are caused by third parties or incidents beyond the
control of both the owner and the contractor. These delays are commonly called “acts of
God” because they are not the responsibility or fault of any particular party.
Figure 1. Types of delay (Hamzah et al, 2011)
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6. So what lies beneath non-excusable delays? While construction takes place raw materials,
equipment (machinery), workforce (manpower) and working practices (methods) are the
four columns supporting the activities of crews under construction. Do all crews follow the
same patterns of proactive building on-site? The answer is quite obvious negative.
(Mitropoulos & Cupido, 2009) have already proved that construction practices are playing a
pivotal role in reducing the rework symptoms; thus less time is spent in fixing faulty usually
high-risk activities when high-reliability process (Weick, Sutcliffe, & Obstfeld, 1999) are
followed in combination with high experience which facilitates the teamwork.
The materials constitute perhaps the hottest topic in the beginning of a project. Probably
the most important decisions in the effort of integrating and optimizing a supply chain is the
allocation of decoupling points and the design of the supply chain strategy
(buy/make/assemble-to-order, make-to-stock, ship-to-stock). Resource allocation must be
frequently revised to minimize any possible raw materials waste. Nothing has to be wasted,
especially in the construction phase. This calls for a lean production model to be applied. As
(Naim & Barlow, 2003) had notified; the perception amongst house builders was that the
logistics of house building make it hard to organize just-in-time delivery of materials and its
impact on profitability was unclear. Furthermore, the transfer of risk down the production
chain to subcontractors reduced the incentive to introduce leaner supply models for house
building. House builders tended to rely on subcontractors to act to reduce waste. The case of
Durand Centre is ideally depicting this necessity for a turn towards lean principles.
Exploring better the following Ishikawa diagram, what should be pointed out is the nature of
the unexpected changes which affects the timing and importance of the emerging non-
excusable delays. The core categories of changes as (Chan & Kumaraswamy, 1997) had
noticed are; (1) project-related; (2) client-related; (3) design team-related; (4) contractor-
related; (5) materials; (6) labor. The diagram used aims to visualize how contractor,
materials, and labor changes affect the time performance of construction crews.
Figure 2: Causal model - the routes of variability waste of construction crews’ working time
(adopted from (Arthur, 2007))
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7. 5. Towards Lean & 6 Sigma
Timely completion of a construction project is frequently seen as a major criterion of project
success by clients, contractors and consultants alike. (Newcombe, 1990) noted that there
has been universal criticism of the failure of the construction industry to deliver projects on
a timely fashion. If “being on-time” is so crucial in delivering civil engineering projects, why
project managers cannot avoid rework conditions and eliminate this time-related waste?
Here, it is suggested that the integration of leanness and six sigma (6σ) is the answer to this
battle towards eliminating correction efforts and creating an organizational proactive
memory on past lessons learned.
Leanness production theory brought a radical shift in the pursuit of minimizing all the seven
types of waste when organizations move through the internal chain of Transformation –
Flow – Value (TFV) of materials.
These two main action plans have been introduced in the construction industry for more
than 10 years. Lauri Kosleka has explored the effects of TFV production model since 2000.
Transformation stands for the transition from inputs to outputs by utilizing all the raw
materials, information, and financial assets. Flow step describes the flow of a material
composed of by transformation, inspection, moving and waiting. Value generation is the
process where value for the customer is created through fulfillment of his requirements
(Koskela, 2000). The action plan which is described by the above mentioned process is
developed throughout the next stages:
 Eliminate waste: count non-productive time cases and act proactively following step
by step the five High Reliability processes.
o Review drawings as the number of involved consultants increases.
 Specify precisely the value from the perspective of the ultimate customer:
Communicate to all working teams what are the end-customer’s requirements.
o Develop goals before planning.
 Identify clearly the process that delivers what the customer values (the value
stream) and eliminate all non value adding steps: Break down all the components of
each operation and allocate them with previous rework failures. Assess the present
project based on past database.
o Review design and supply chain-related design problems. In the case of
Durant shopping mall there was no supply chain analysis before the steel
orders were given.
 Optimize the flow step: calculate the lead times and predict how client’s demands
can change the initial planning.
o Use customer’s feedback and Value Engineering/Management methods to
optimally integrate all the intermediate construction stages. In Nigeria, the
construction sector has to be reorganized on this step and the next two.
 Let the customer pull – don’t make anything until it is needed, then make it quickly:
Organize the supply base and the chain of actors as much as responsive as it is
needed.
o Develop innovative procurement methods (e.g. competitive dialogue).
 Pursue perfection by continuous improvement: Re-assess all the steps taken and re-
confirm the decisions to the final outcome by comparing Time – Cost – Quality (TCQ)
initial target and achieved ones.
o Perform constructability reviews.
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8. The missing bond now in this application is how one could increase the accountability and
data reliability of the mistakes tabulated. For this reason the Six Sigma is believed that if
combined with the aforementioned six lean principles will improve the business
performance of construction crews and thus, of firms correspondently. The objective of a Six
Sigma process is to reduce process variation, so that it will result in no more than 3.4 defects
per million opportunities (DPMO) in the long term. This defect rate is calculated based on
the assumption that many processes are prone to shift of 1.50 standard deviations due to
unavoidable assignable causes or degradation mechanisms (Feng & Kapur, 2007).
The tool is based on five simple steps which are the following:
 Define: The goal of the project: In (Mitropoulos & Cupido, 2009) we saw that the
crew’s B foreman had clearly defined the goal of his team; “eliminate the rework”.
 Measure: Map down the present situation: the Elbphilharmonie Hamburg started
when even the contactors had several legal conflicts with the owner. If previous
experience was measured and quantified in terms of time costs, the past lesson
would have helped engineers to avoid this planning disaster.
 Analyze: Find measures to reach the goal: the Florida Department of Transportation
had experienced several time delays due to design changes. In this case, an
performance-based contract with clear PIs statement could have minimized the time
variability in the paving operations.
 Improve: Implementation of measures: Poor site supervision and coordination
through this stage can be ameliorated by counting the on-site mistakes on specific
activities (e.g. joints connections, floor slab assembly, truss erection, asphalt mixing,
etc.) and thereafter structuring databases with Risk Priorities Numbers for each past
delay.
 Control: Assure permanent improvement: Applying systematically lean tools to
minimize materials; over-ordering/over stocking and machinery; time expenditure
when equipment ‘waits’ to be used, related waste. Establish an organizational
memory so flexible and modular that will enable project managers and thus building
crews to foresee, act and respond based on past scenarios. These scenarios should
imply that the boundaries for acceptable performance would become manifest
during training. The last implication opens however the challenges of growing in a
resilience engineering environment. In the Nigerian construction industry case, the
use of these scenarios could be significant as client-driven design changes can be
collected and assessed in terms of elements or interfaces that are most frequently
modified.
6. Challenges and barriers
6.1 Lean Construction
Several tools and techniques have been developed in order to apply lean principles, as
(Salem, Solomon, Genaidy, & Luegring, 2005) have listed these are;
 Last Planner System (LPS): pull-system scheduling technique and team planning
 Increased Visualization: photos and documents of the implementation process
 Daily Huddle Meetings: meeting minutes and the results of interviews
 First Run Studies: videos, photos, recommendations for productivity improvement
from workers and staff, field observation data for crew productivity study, working
procedures, and estimated and actual unit costs for the studied items
 The 5s Process: photos, meeting minutes and the results of interviews
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9.  Fail safe for quality: SPA, photos, recommendations for quality improvement, the
counter measurement of specific items that apply to this project, and the results of
interviews.
All the lean tools above require some core changes in the organizational level; from self-
assessment until continuous stakeholders’ collaboration.
Training and education is perceived as the main booster in implementing a lean philosophy
which goes far from just an emotional decision because competitors or potential market
enterers will apply it. Judging and reevaluating the business and the project processes
compatibility (Gann & Salter, 2000) is necessary to investigate to which extent value-adding
services are in line with core technical activities.
Are costs and productivity measurements understood in depth? Are the performance
metrics from past mistakes allocate to benchmark profitable versus loser projects?
Pioneering is a prerequisite also from the executive leadership in order to enhance and
sustain commitment to sustainability (6σ) and profitability (Leanness).
The biggest challenge however is located at the capability building in identifying non-adding
value activities to customers and to organization. Planning the personnel’s management can
be time consuming, and on the other hand making scenarios for its optimal utilization in
specific-task positions can be much more valuable in long terms.
In the end, leanness calls for re-planning the teams organization is the highest collaboration
required aiming to deliver a predefined amount of value and not just doing the job. If third
parties, like suppliers, are not willing to participate in this new window of value creation and
waste elimination then fragmentation and poor coordination will remain as a route of
pitfalls leading to time variations in the actual execution of a project.
This last challenge relies on the supply chain side, where things are calling for constant
optimization. Often the relationships between buyer and supplier are not mature enough
and this increases lead times. A modern challenge for project managers emerges here, as
they are now obliged to reassess the maturity and the flexibility of their supply base and
eliminate all the potential relational or contractual obstacles. Innovative procurement
methods such as competitive dialogue or performance-based contracts will be required to
be developed.
6.2 Resilience engineering
As (Ballard, 1999, p. 282) had stated we can assume that there is a ‘natural’ variability of
production capacity even when methods, technology, and conditions are fixed. Further,
there is the difficulty of accurately estimating even average capacity when there are changes
in these variables or when the type of work changes or there is some change in crew or
squad composition. Even manufacturing is plagued with variability. Since we don’t make
identical products in controlled conditions, capacity variation is a fact of engineering and
construction life. Current production management techniques ignore this fact, as is evident
in loading practices.
The solution against time variations is the creation of a resilient firm-system. Anticipation,
attention and response are seen as key qualities of a resilient system (Hollnagel & Woods,
2006) improvisation embraces these by “thinking in action” (Cunha, Cunha, V., & Kamoche,
2002).
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10. Is it always a soft-skill task the development of improvisation and its enhancement into the
crews’ psychology? According to (Adamski & Westrum, 2003) “requisite imagination” is a
mandatory principle for resilience. Consequently a hidden barrier for project managers
initially and after for the foremen is the tough effort they have to make on building a
teamwork spirit with high task-related construction quality provided by real time
information.
However before being committed to resilience, builders have to adapt with all the previous
reliability principles of (Weick, Sutcliffe, & Obstfeld, 1999). This implies that machinery,
materials, methods and manpower have to be re-planned under a scope of change
management or ongoing adaptation. Adaptation is a central part of resilience. Adaptation
comprises knowledge in terms of anticipation (what to expect), attention (what to look for),
and response (what to do) (Hollnagel & Woods, 2006, p. 350). These three elements;
anticipation, attention, and response are challenging nowadays more than ever project
managers as they will have to found a new “thinking in action” and thereafter transfer it to
execution crews.
6.3 The role of 6-Sigma
The 6σ has to be used one step further than just a statistical package or ERP software. So
what has to be reengineered when using 6 Sigma?
The underlying concept is the holistic approach of improvisation. (Grøtan, Størseth, Rø, &
Skjerve, 2008) had distinguished a triple-way of improvisation working through the
adaptation process. Adaptation by sensemaking is the core of this approach which leads to
the required preparedness for building a highly responsive ability to map, understand, and
react to unforeseen changes.
According to (Weick, Sutcliffe, & Obstfeld, 2005) sensemaking is not a conscious human
process, but a process that will come into play as an intuitive reaction (e.g. to unfamiliar or
chaotic situations). (Weick, Sutcliffe, & Obstfeld, 2005, p. 405) define sensemaking as being
about “the interplay of action and interpretation rather than the influence of evaluation and
choice.”
Here exactly lies the new role of 6σ as the tool is not used as an accounting machine only. It
is assumed that the more frequent the use of 6σ the higher the possibility of planners to
increase the sensemaking of crews and eliminate their subjective interpretation of past
faulty performance due to time delays.
7. Conclusion
Unfortunately, the entire idea behind the final organization’s picture has snags. Including the
aforementioned risks, learning mitigation time and time to forget will be two parameters
that project managers and foremen will have to define and communicate to the
construction teams (Fig. 3). To sum up, the suggested methodology is not an accounting-
driven remedy, but a production philosophy applicable to construction operations.
Hopefully, this writing increases the awareness of engineers and builders on how to
reorganize day-to-day construction operations in order to minimize time variability in their
performance.
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11. Figure 3: Stock and flow structure of incident learning (Cooke & Rohleder, 2006, p. 226)
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