Lean in Leeds

The Shepherd Way. To some, it may sound biblical. To others, pretentious. To those who have read their lean literature, it will sound familiar. The Toyota Way is a book which explains the 14 management principles underpinning how the Japanese car giant works; principles which cut swathes of waste from its manufacturing processes and made it a world leader. The Shepherd Way is Shepherd Construction’s blueprint for doing the same thing.

Shepherd Construction chief executive Vaughan Burnand has long favoured Japanese business management techniques. When he took up his role in 2000, he says, he produced a ‘hoshin’, or strategic plan, setting out a long-term vision for the company.

But it is only recently that some of the lean techniques pioneered by Toyota have found their way onto Shepherd’s sites. The catalyst was apartment blocks: the contractor started building them about four years ago and now they comprise 20% of the workload. But its first attempts proved problematic.

‘It’s fair to say that with the first one we built we made a bit of a mess of it,’ says Andrew Wilson who is project manager on The Gateway in Leeds, which CM visited recently to try to gain an understanding of what lean techniques might mean at project level. ‘The first venture was very difficult, in terms of Shepherd getting into its repetitive nature,’ says Wilson. ‘Each apartment is somebody’s home. You’ve got high standards and small units. It’s quite intense in that sense.’

Problems arose because of the high number of specialist contractors involved and the way they were interacting with each other. Things had to improve – which is where lean methods and The Shepherd Way come in.

You may well be wondering – despite lots of column inches devoted to the subject over the past few years – exactly what lean means. It conjours up production lines and groups of overall-clad workers huddling together to discuss ways to tweak what they’re doing to make the process better. Nicola Morrey, Shepherd’s new process improvement manager, sums it up neatly: ‘The Shepherd Way is the way we approach, manage and eliminate waste from all our processes to achieve the company vision in line with our values,’ she says, adding that waste refers to squandered time and works management time as well as materials.

But where to start? Shepherd trialled three different approaches and found that BRE’s CLIP (construction lean improvement programme) system got the best results. In fact, that’s where former aeronautical engineer Morrey worked as a consultant for three and a half years before Shepherd recruited her.

The first step was to work out which subcontractors Shepherd worked best with – and vice-versa – and to keep working with them. The next, more difficult, challenge was to change the relationship between Shepherd and its subcontractors.

‘The traditional approach of contractor to subcontractor can tend to be just that: big brother, little brother. Here’s a big stick, do as I say. That attitude can lead to conflict,’ says Wilson. ‘To break these barriers down and work in a more collaborative way, fundamentally it’s about the working relationships and creating trust so that they feel they can come forward with mistakes, rather than cover them up. Then we can work it out.’

This all sounds nice and cuddly, but surely this can’t mean that Shepherd then tells the subcontractor: ‘Okay, you made a mistake but because you’ve owned up we won’t make you pay for it.’?

‘We take a considered view of the commercial aspect,’ replies Wilson. ‘That does not mean we will hit them with costs all the time.’

In practice, Wilson is finding that some problems don’t even come to Shepherd because where two subcontractors clash, they are sorting things out between themselves. They’ve realised that in some cases, its quicker and cheaper to get on with it than to spend time working out who’s to blame and who should pay what.

Shepherd is also building up relationships at senior level between the directors of Shepherd and the subcontractor with a view to planning workload jointly over the next two to three years.

For some, this relationship-building is a struggle, admits Wilson. ‘It’s a bit of a step change to move into a collaborative way of working for some of the guys in Shepherd,’ he says. ‘It’s a bit alien. It’s far easier to shout and ball.’

Wilson is one of the converted. An ex-planner, he says the whole idea of lean appeals to his nature. ‘As a planner you’re always looking for where there’s slack, where there’s float. If you apply that across the board, not only to time but to people too, you can see that there’s really something in this.’

Wrapped up with this change of mindset is a change of practice to involve the specialist contractors in planning and programming. Part of Morrey’s remit is to work out the best ways of doing this so that they can be standardised and repeated across all Shepherd projects. Morrey calls these the ‘tools and techniques’ which underpin the lean way of thinking.

The first technique is to get all the specialists together pre-contract, and before they’ve even put prices in, to brainstorm all the areas where waste of time, material or works management time could be eliminated.

The results are organised under a series of headings such as ‘project management and planning’, ‘logistics and safety’, ‘health and safety’. This list, together with who’s actioning what by when, is known as a Lean Opportunities Plan.

This exercise means that the specialists should have a much better understanding of how the job will work – and this should be reflected in the price they then put together, says Wilson: ‘Their pricing reflects the efficiencies we have agreed. For example, they know how they will hoist and distribute materials.’

A few jobs down the line, Wilson believes the specialists will also be reflecting this more efficient way of working in their tender prices. But as yet it’s too early for this to happen. ‘They say our sites are well-organised compared to others they are on, so that should mean that they can make more money,’ says Wilson. ‘But they will have to go through the mill a couple of times before they see the benefits.’

The other big collaborative exercise is planning. On The Gateway, and other apartment projects, it is the interaction between the subcontractors involved in the apartment fit-outs which is crucial to getting the job done on time. On the wall of the site office meeting room are 35 pieces of paper, stuck one after the other in a long line. On each piece is written an activity, such as ‘install bath and test waste’, ‘laminate flooring’, ‘sparkle clean’ and its durations.

This programme is replicated 303 times on the current phase of The Gateway. And once a week a Shepherd planner or site manager visits each apartment and records the status of each activity using a PDA. This is recorded in a traffic-light system on a progress chart: green means finished; amber means it’s next week’s activity, red means late. This is similar to the last planner system which may be familiar to some readers.

The great thing about the system is that it’s so visual, says Wilson. At weekly meetings with the subcontractors, it’s plain to see where there’s a problem. Sometimes it’s a matter of re-examining the process and refining the programme if the problem is recurring, or a red bar may indicate dropping resources.

After all the hard work building new relationships, brainstorming and programming together, the detail of the improvements that emerge can seem mundane. Some of the best practices going on at The Gateway, which have been developed on this project or on previous ones at Clarence Dock, just across the canal in Leeds, include: combining TV/data points and four electrical points onto one big board; using joinery coffins containing pre-cut lengths of all the wood needed for one flat; and installing plastic boxes within the holes of the door keeps, rather than painting them.

All mundane, but with the potential to save time and cut out potential snags. Wilson highlights the door keeps. Often the painters will miss them, or get paint on the door keep while painting inside the little hole, both potential snags. If you’ve got 303 flats, each with 10 doors, you’ve eliminated more than 3,000 snags by using plastic inserts.

Wilson and his team are just at the stage where they are starting to analyse snags to look for recurring themes. They have found, for example, that 70% of snags come from four trades. The next step will be to go back and look at the processes to find ways – like the door keep example – to cut those snags.

For Morrey and her team – there will soon be three ‘lean champions’, one for each Shepherd Construction division, recruited internally – the big challenge will be sorting out the best way to share all this best practice information. Currently there are about five projects in each division using the lean tools and techniques. The idea is that eventually all projects will use them either for part or all of the job as appropriate. Other departments – such as HR, estimating and design – will also get the treatment in time.

It would be great at this point to quantify the savings on programme length and cost that the trusting relationships and the collaborative planning and programming have brought, but it is too early to say.

For Vaughan Burnand, his first goal is to deliver all projects on time and on budget. ‘In the history of the company, we have never settled the final year’s accounts without having a loss-making project,’ he says. ‘Last year we produced our biggest ever profit of £6.2m, but we still had loss makers. If we hadn’t had those, we could have made £10m.’

Looking to the medium-term, Burnand has bold goals for growing the company’s profit from its current position of around 1.5%. ‘I believe we will produce 4% profit before I retire,’ predicts Burnand, who is 56 and plans to retire at 63. cm

Further Study

• ‘Fighting the Flab’, Construction Manager, February 2003 – find it on our archive at www.construction-manager.co.uk

• The Toyota Way – 14 Management Principles from the World’s Greatest Manufacturer by Jeffrey K Liker, published by Tata McGraw Hill

• BRE’s construction lean improvement programme (CLIP) www.bre.co.uk/page.jsp?id

• Lean Construction Institute UK - www.lci-uk.org