The Productivity “Train Wreck” in the Construction Industry
The COVID-19 pandemic has affected the global economy through both demand and supply mechanisms. On the supply side, the performance of several core industries has been affected, resulting in an overall decline in productivity and efficiency. However, studies revealed that the construction industry always had productivity and efficiency problems.
The construction industry has built the world we know today and yet it is criticized for being the only industry with inefficiencies. Construction companies face a lot of challenges and issues like cost overruns, lack of skilled labor, inadequate communication, slow adaptation to emerging technologies and poor planning and forecasting, which consequently affects the industry’s efficiency and productivity. American builders’ productivity, for example, has plunged by half since the late 1960s. While other industries like healthcare, media, retail and real estate are showing increasing productivity over time, the construction industry has remained flat.
The lack of optimized-management in the construction sector is a defining problem that blurs solutions for the industry. Findings from industry research showed that only a third of all construction projects manage to stay within projected budgets. Improving efficiency and optimization of resources is a necessity today. However, such things are often overlooked in the construction industry. In fact, research further shows that the field of construction efficiency and optimization has not been fully studied and analyzed.
Rob McKinney, a “construction guru”, claimed that one of the reasons for the construction industry’s lack of productivity is the fact that the industry has a poor and weak combative nature. The system that was set up in the construction industry, he noted, is not really designed to be efficient.
So, is there a solution?
Yes. The answer lies in Kanban!
What is Kanban?
The Kanban approach is a methodology designed to improve workflows, reduce waste and improve efficiency and productivity. The origins of the word Kaban (pronounced Kahn-bahn) can be traced back to an original Japanese term that means “visual signal” or “card.” In fact, this system breaks down and visualizes a project’s workflow. An individual or team’s workflow can be visualized following the pattern of “To do,” “Doing” and “Done.” Using a Kanban board to keep team members informed of respective task assignments, this method can be easily applied to any type of work that follows a repeatable process.
Unlike other workflow management techniques that force workload and change on the employees, the Kanban approach is based on a pull system. It means that tasks are “pulled” into the system when workers have the capacity for it.
The Kanban method is also governed and managed by something called Work in Progress Limits. Usually, WIP limits are constraints on how many work tasks can actively be worked on at any given time. These limits can be applied at individual, team or organizational levels.
The Origins of Kanban
This visual system was pioneered by Toyota through the leadership of Taiichi Ohno, who is also known as the father of the Toyota car production. It dates back more than 50 years from now when Toyota started optimizing its engineering processes based on the same approach that supermarkets were using to stock their shelves. At that time, supermarkets were operating on a system where they would stock just enough products to meet consumer demands. This practice reduced waste and helped to optimize the flow between supermarkets and consumer demands. In addition, when inventory levels would match consumption patterns, the supermarkets would benefit and gain significant efficiency and optimization in inventory management as they would decrease the amount of excess in stock.
As a result, Toyota started applying the same technique to its factory floors. The goal was simple: the actual consumption of materials should be aligned with the massive inventory levels. Consequently, the Kanban cards were used and passed on between teams to communicate capacity levels in real-time on the factor floor.
A continuation of this article and how the Kanban method can be applied to the construction industry will be published in article 2!