How to Reduce Construction Rework Costs
The long-standing criticism of the Construction industry for its poor productivity levels, high cost of rework and its command and control approach to job site coordination and planning has unfortunately remained consistent over the years. At the turn of the century, Sir John Egan published ‘Rethinking Construction’, highlighting the urgent need to address spiralling Construction costs, schedules, and defects. Several high profile reports have since reiterated this criticism, most notably the McKinsey Productivity Imperative Report, and yet, the data suggests that little has changed.
A recent international study indicates that the measured direct costs of avoidable errors are in the order of 5% of the project value. If you overlay these poor performance factors against an industry in the UK with average profit levels of just 3%, this highlights the immediate and pressing case for change.
This article offers insight into what practical measures construction companies can take to address the productivity imperative, reduce rework costs, and begin the journey to a high-performance culture.
The UK Construction sector spends £Billions every year on the cost of poor quality, rework, and error, with wide-ranging impacts and root causes. In our experience, these range from outdated and ineffective planning, communication & coordination throughout the Design and Construction phases to inadequate attention paid to quality originating from increasing cost and schedule pressures and poorly executed supervision.
Much of these require significant strategic invention at a political, client owner and organisational level to influence the change necessary. The industry is at the beginning of a long journey with many of these initiatives, including:
- Digital Transformation (Digital Twins, digital design integration, autonomous plant, and digitised construction processes).
- Modern Methods of Construction (PDfMA, offsite manufacture and onsite assembly).
- Project13 (Outcome focused project delivery models, risk/reward commercial incentivisation and value-based smart procurement).
Integrating these long-term solutions will bring about significant change across the infrastructure landscape. However, they will take time. There are tactical measures Construction companies can implement now that are proven to deliver notable benefits in reducing rework and improving job site productivity and delivery performance.
We have highlighted our top 3 tips on how to harvest the low hanging fruit from the poor productivity tree:
01 Make Problem Finding a Celebrated Behaviour:
How do we often react when someone arrives with a problem? What are our first thoughts? Likely an eye roll or an exhausted gasp at the idea of having to fight another fire – This cynical approach increases the likelihood of hiding poor quality or, worse, encountering latent defects later on. Construction Leaders must begin to change leadership attitudes to make improvement, adaptation, and evolution part of everyday work; firstly, leaders must make ‘problem finding’ a celebrated behaviour.
When someone comes to you with a problem, instead start with, “thank you for bringing this to my attention. Could you tell me the target condition of this operation and what are the obstacles that prevent you from achieving this?”. By following through with an improvement coaching cycle, leaders will spend much less
time fire fighting and more time coaching their army of problem solvers.
02 Short Interval Control Drives Short Interval Learning:
One of the most pointless exercises to occur on infrastructure projects is the creation of an end of project Lessons Learned log. In most cases, this excel document is considered a tick box exercise and will be archived in the graveyard of dead Lessons Learned logs, never to benefit another project again. The problem with leaving our learning until quarterly reviews or end of lifecycle closedowns is that in Construction, we are unlikely to benefit from even the best ideas as the process will have elapsed. Therefore, we will have missed our window of improvement opportunity.
Compounding this issue is the inflexible nature of Construction schedules. Construction programmes are conducted over vast geographies and timeframes and under complex circumstances that make creating detailed forecasting plans complicated and limit the team’s ability to react to inevitable changes. Mike Tyson once said, “everyone has a plan until they get punched in the face”. To counter this, Construction teams first must make their performance visual and measure production at the shortest interval of control by properly deploying the Last Planner System* (Collaborative Planning) and Tiered Visual Performance Management. This approach to Lean planning stimulates improvement opportunities through short learning cycles, which, when acted upon, promptly drive improvements in productivity, reliability, and quality.
* Last Planner System Definition: The Last Planner System is a Lean production planning and control approach designed to produce predictable workflow and rapid learning in the construction and commissioning of projects.
03 Process Confirmation Today Prevents Process Error Tomorrow:
Quality is never an accident; it results from high intention, sincere effort, intelligent discretion, and skilful execution.
Transforming the sector’s approach to Built-in Quality by capturing, containing, and controlling error at its point of cause and permanently addressing the root causes will go a long way to clawing back some of the lost revenue on Construction programmes. Although we have seen developments in safety-critical sectors such as Nuclear Construction, moving to 100% inspection is not the solution to the rework crisis in the Construction industry, as this approach adds excessive cost and schedule pressures to an already stretched environment.
Process Confirmation Today Prevents Process Error Tomorrow:
Additionally, when an error occurs following an investigation, it is often found that the process wasn’t ‘robust enough’, which leads to layers of bureaucracy being added to the process. This effort is usually fruitless as the process wasn’t being followed in the first place, so making it even more complicated won’t solve the problem. Achieving high-quality performance requires more than robust processes, and to address the high levels of rework and error in Construction, our Leaders must:
Set the Culture:
Make the principle of Right First Time a way of thinking and empower employees to take pride in their work. This mindset is the baseline from which Leaders can add more complex systems to reduce and eliminate errors from occurring, such as Andon support, Standardised Working Methods, and Error Proofing.
The principle of Right First Time is to:
- Never accept poor quality from your supplier (internal & external).
- Never create poor quality within your processes.
- Never pass on poor quality to your customer (internal & external).
Lead the Change:
Make Process Confirmation & Go, Look, See a mandatory placeholder in your weekly Leadership standard diary. Firstly, Process Confirmation is not an audit; it is a coaching opportunity to set transparent process & performance expectations, role model the value of standardisation & process discipline and understand how your employees are thinking. Secondly, a Go, Look, See is not a chance to ceremoniously prance around the site like the Queen. Go with purpose, intent, and desire to see the waste for yourself and seek understanding by
showing respect and asking why. Leaders should coach and not fix.
To summarise, construction firms can set the precedence for high performance and seriously address the sector’s challenges by embedding the cultural enablers and operating system at a tactical and enterprise-level aligned to a Lean thinking way to improve safety, quality, and delivery performance. In our experience, start your journey by implementing an effectual short interval control approach with visual and candid performance
dialogue. Empowering project teams with those five connected conversations will immediately benefit site productivity, planning reliability, and reduction in rework and defects.
Lessons the Construction Industry Can Learn from Lean Manufacturing
To put this into context, in 1984, each employee of Toyota Motor Company raised and delivered on average 45 improvement ideas … How does this statistic compare to your Company?