There is sometimes confusion between lean practices in the construction industry and the Integrated Project Delivery (IPD) method accomplished through an Integrated Form of Agreement (IFOA). Individuals and companies seeking to adopt lean techniques often ask if they need an IFOA to start implementing lean processes. An explanation of what constitutes “lean” and what an IFOA accomplishes is necessary in answering this question.

Lean construction techniques can be broadly defined as practices used to maximize value and reduce waste through collaborative communication and planning. It is largely about improving flow. Processes are constantly analyzed to continually identify opportunities to reduce waste and increase value added. Measurement of value added is typically achieved by asking if the particular action directly adds value to the project that will translate into profit or decreased costs. Waste, on the other hand, is typically classified into eight categories: overproduction, waiting, unnecessary transportation, excess processing, excess inventory, excess motion, defects and underutilized human talent. Lean construction techniques attempt to trim waste by implementing methodologies designed to force communication and planning, which result in better design, increased flow and more robust profits.

Lean practices are often accredited to Toyota manufacturing post World War II, explaining the Japanese influence on many core concept terms such as “muda,” the Japanese term for waste. It is hard to pinpoint the exact time that lean techniques made their way from manufacturing into the construction industry. The term “lean construction” is thought to have been captioned by the International Group for Lean Construction in 1993. Gleeson, F. and Townend J., Lean construction in the corporate world of the U.K. construction industry, 2007, University of Manchester, School of Mechanical, Aerospace, Civil and Construction Engineering. Since this time, the construction industry has integrated concepts from manufacturing, and even software production, into everything from design to constructing the end product. In construction, the most common lean techniques revolve around detailed planning of a project before mobilization. They also include daily and weekly meetings and adjustments to schedules as construction progresses. Two basic tools that can help one start implementing lean are “pull planning” and “Scrum.”

The pull planning process starts with identifying the project delivery date. It requires all participants, down to the crew-lead level, to provide feedback on the timing of their respective work. This is typically accomplished using a whiteboard and sticky notes. Working backward from delivery, each participant places a sticky note identifying daily tasks required to accomplish their work. Each trade is given a different color sticky note, which they place in separate tracks on a horizontal calendar. Collectively, the trades and the construction manager discuss the needs of the project. They then realign their respective daily tasks in light of the optimal workflow for the group. The result is a thoughtfully and collaboratively planned project that is much less likely to encounter schedule issues. Once the schedule is complete, a task is required to be completed before beginning the next task. Placing crew-leaders in the pull planning session ensures that those performing the work provide the necessary feedback on constraints that may appear in delivering the work. This input allows appropriate planning around obstacles that may otherwise come as a surprise during construction. The participation also builds a team mentality.

The process does not end with pull planning. Given the fluid nature of a construction project, the schedule must be broken down into weekly segments, usually six week periods, and adjusted according to progress. Project meetings must be had regularly to discuss the schedule, issues affecting the schedule and necessary adjustments. Collaboration is again key.

Another more microtechnique used in lean practice to help with keeping to schedules is “Scrum.” Scrum is a practice originating from software development. Like construction projects, software development is subject to fast-changing project requirements. The term “Scrum” is borrowed from the game of rugby. In rugby, a scrum is a feature of the game whereby each team tries to gain possession of the ball. It is most noted for the interlocking of the players’ arms wherein they work as a team to push against the opposition to gain control of the ball. Scrum in construction also centers on teamwork.

In lean construction, Scrum is a method of organization where a large segment of work is broken down into subcomponents called “sprints.” The work within the sprint is further broken down and assigned to specific individuals. Periodic meetings are held where task completion, task progress and uncompleted tasks are discussed. The meetings will also focus on barriers to completion of tasks. The information from the meeting is visualized on a whiteboard so that the status of each task is clear to all. Simply put, Scrum helps to take a daunting project, break it into subcomponents, and force communication between the team to remove obstacles. Many practitioners are using Scrum and pull planning to help focus daily tasks in order to keep to, or exceed, the schedule.

Parties new to lean often find the planning aspects, including the periodic meetings, to be a waste of time. This would be quite ironic, if true. In practice, entities implementing lean find that it increases both quality and productivity. Similarly, parties that have never operated under an IFOA are often reluctant to participate because of the intensive planning requirements.

An IFOA is a contractual agreement implementing the IPD method. An IFOA brings the owner, constructor, design professional and major trade partners under one agreement. It builds on lean methods by including the designer and trades in the planning process. The first step is a “validation study,” through which the team members analyze and report on whether the project can be built within the owner’s budget. The contract sets an “expected cost,” which is an estimate of the final actual cost of the project determined in the validation study. The team also sets a “target cost.” This is the cost the team intends to achieve through cost-saving techniques such as Target Value Design and implementation of lean principles.

The key differentiator under an IFOA is that the constructor, design professional and trade partners put their profits at risk. This ties profits to the overall efficiency of the project as a whole and not to each separate trade’s individual unit of work. The result is a realignment of incentives from a traditional project delivery method. The overall efficiency of a project becomes a common interest of all parties. Parties no longer view their unit of work in isolation. This framework incentivizes all parties to work together for better project, not unit of work, efficiency.

Many unseasoned contractors, and even owners, may see the validation phase as a waste of time and resources. However, stories of projects realizing substantial savings in the validation stage are not uncommon. I am reminded of a story told to me by a manager of construction for a large company with global operations. During the first day of a validation meeting, an HVAC contractor, who typically would have no part in any stage of design planning, proposed an idea that saved the project $400,000. Prior to the meeting, many of the newer members to the team felt the validation phase, and associated meetings, would be lost revenue. Clearly, the process worked and the entire team saw additional profit while the owner realized savings.

So what comes first for new practitioners, implementing lean or using the IPD method?  Naturally, lean. Lean concepts are so ingrained in the IPD method that a practitioner will not be successful using the IPD method without being a competent lean practitioner. However, the collaborative concepts associated with lean practices can and should be utilized even without using the IPD method. A project must be right for use of IPD. The scale needs to be of sufficient size that there are realizable savings through collaborative planning. Partner selection is also paramount and partners that do not implement lean are quickly weeded out. They are unnecessary drag and will reduce all risk pool members’ profits.