Exploration of parallels in Lean and VM methodology in

construction

Steve Parker, Institute of Value Management

Our credentialsMe

• Value Management• Risk Management• Benefits Management• Lean Six Sigma

You• Lean?• VM?• Both?

DefinitionsLean Construction…

is a production management-based project delivery system, emphasizing the reliable and speedy delivery of value. The goal is to build the project while maximizing value, minimizing waste, and pursuing perfection – for the benefit of all project stakeholders.

Value Management (including VE)…is the process of making explicit the functional benefits of a project and appraising those benefits against a value system determined by the stakeholders. VM is strategically and organisationally focused and ensures strategic fit. VE is technically focused on space, elements and components and provides the necessary functions at the lowest cost and at a specified quality.

Core proposition• Lean focuses mainly on process (how

something is done)• Organisational or operating process; management process; design

process; production process or a project delivery process (main drivers - increased efficiency, reduced waste and cost)

• Value management focuses mainly on product (what something is)• Project scope, project design, system design, component design or

widget design (main drivers – required function, reduced waste and cost)

Approach to improving value

Review and define the current project conditions.

Define, chart, analyse and prioritise the project functions.

Identify other ways to perform the project’s functions.

Select the ideas that offer the potential to improve value.

Develop the best ideas with supporting business cases.

Report or present the ideas and how they should be implemented.

Define the problem and the objectives.

What do we need to improve? Can we measure this?

Analyse the process. Define factors of influence.

Identify and implement improvements.

Assure that improvements will sustain.

Lean (Six Sigma) DMAIC phases – How to run a process improvement project

Value Management (VE) Job Plan phases – How to run a product improvement project

Objectives of value improvementLean Construction

• Improve predictability• Reduce design and

construction cost• Reduce design and

construction time• Rationalise resources• Identify blockers to activity• Better performance visibility

Value Management• Identify vision and

objectives• Define aligned scope• Improve function• Distinguish between needs

vs wants• Eliminate over design• Reduce whole-life cost• Option evaluation

Benefits of value improvementLean Construction

• Shorter programme• Design process cost

savings• Construction process cost

savings• Increased programme

reliability• Better working practices -

efficiency

Value Management• Demonstrable ‘line of sight‘• Platform for benefits

modelling• Appropriate design• Efficient design with regard

to function• Valued intangibles• Decision audit trail• Lowest whole-life cost

Tools for value improvementLean Construction

• DMAIC (PDCA, Kaizen)• Voice of Customer• Critical to Quality• Process Mapping• Value stream mapping• 8 Wastes• 5Y’s• Statistical analysis

Value Management• VM Job Plan (Charrette)• Value Tree• Client Value System• Function Analysis• FAST Diagrams• Function/Cost Analysis• Relative importance• Brainstorming

More tools ….Lean Construction

• Pugh Matrix• Quality Function Deployment

• Visualisation Management• 5S’s• Collaborative planning and buffer

scheduling• NEC (or other) collaborative

contract

Value Management• Multi-Criteria Analysis• Value metrics / Value Index• Value for Money Ratio• Discounted Cash Flow• Cost Benefit Analysis• Functional Performance

Specification• Contract value engineering

clause

In common, they focus on….• What the client precisely needs or wants• Value improvement and value for money• Facilitating stakeholder engagement and consensus• War on waste• Eliminating unnecessary cost

Causally, they both….• Drive learning and knowledge transfer• Drive continuous improvement• Deliver innovation• Improve communication• Improve team working and morale

But individually….• Lean focuses on improving process or production

effectiveness and efficiency• Value Management focuses on improving product function

and form

Discuss….• Should the Lean Practitioner in construction

have Value Management techniques in his/her toolbox and vice versa?