Contractors mitigate high prices, supply chain delays with lean construction tactics

As a project executive at Chicago's largest general contractor, Joe Pecoraro is accustomed to wielding Skender's clout and financial resources to get his jobs done. When all else fails, money always talks. But right now, he needs a door package to complete a project, and the vendor can't promise it for another four or five months — at any price — because the doors do not exist.

"That's a scary thing as a contractor," Pecoraro said. "When you don't have a tool to fix a problem, and the answer is, 'You just have to wait,' that's a problem. You’re working without a net right now."

Contractors across the country are well aware of the situation, the result of what a recent Skender report calls "a unique combination of unrelated factors collectively wreaking havoc on the construction industry" that has been brutal for everyone and potentially lethal for companies caught unprepared. These include the Suez Canal blockage, a Texas ice storm, a COVID-19 manufacturing slowdown, labor shortages, a housing market surge and businesses fully reopening

"It's going to be a lot more obvious to people procuring work right now who the good contractors are," Pecoraro said. "You're not going to see their projects sitting vacant with no guys on them."

Ben Harrison, a 20-year construction industry veteran who is now vice president of product management for data-management company Preferred Strategies, believes the current crisis will push companies that haven't learned how to be efficient out of business. "Competition is keen," he said. "You either improve your processes, or you shrink."

Improved productivity

Despite the challenges, Skender is weathering these issues. The company is one of more than 200 designers, general contractors and trade partners that use lean construction, a collaborative project-management operating system that can dramatically improve scheduling and reduce waste. Lean improves productivity by reintegrating a siloed industry following six tenets:

• Respect people.
• Optimize the whole.
• Generate value.
• Eliminate waste. 
• Focus on flow.
• Continuous improvement. 

"At its core, lean is a change in mindset and a different culture and behavior you create within the team,” said Kristin Hill, education programs director for the nonprofit Lean Construction Institute. “We have collaborative ways of teams working, interacting, talking about ideas together and exploring them that just doesn't happen on traditional projects.”

Hill, who owned an architecture firm in Colorado before she joined the Institute, said this transparency benefits not just the companies involved, but the entire industry. "When I first came into the lean realm, I was shocked and amazed at what people were sharing," she said. "The whole industry rises up together when competitors are helping each other, raising the bar up, up, up."

As an example, Hill cites lean's Integrated Project Delivery agreement, a relational contract signed by owners, contractors and designers before projects commence. "The IPD agreement is about how everyone is going to behave. It's not transactional," she said. "It's leading to teams being able to break barriers, innovate and improve productivity. Lean is about problem-solving collaboratively by bringing different perspectives and viewpoints together."

Harrison agreed and said companies are starting to make big strides in systems integration, which drives efficiency. "With that, we almost always have mobile access to information now with phones and tablets," he added. "Systems integration is tied to mobile access, and that's where companies are really getting a bang for their buck."

The power of technology

The iPhone pushed the Luddite-leaning construction industry into the 21st century, and construction technology has been facilitating leaps in efficiency ever since. Progress reporting on jobsites, for example, can now be done by drones using photogrammetry that provides precise 3D measurements, said Michael Mazur, CEO and co-founder of digital field construction tracking company AI Clearing. Mazur said the technology "allows for highly skilled staff to focus on more value-added tasks, especially in times where access to skilled labor is becoming more challenging."

"Most software is a tool that makes you into three, four people," said Troy Warr, senior software engineer for construction-management software company Computer Presentation Systems, which provides centralized portals for critical documentation, communication tools that eliminate time-consuming phone calls and messages and construction-scheduling templates that can be revised in real time.

Across the industry, companies are looking to technology — everything from 3D-printed building models to barcodes for managing materials — to help them stay afloat through this crunch. Washington, D.C.-based concrete contractor Miller & Long has stepped up its adherence to lean principles, including investing in alternative energy sources, prioritizing proper waste recycling and reducing water usage, said chairman and CEO Brett McMahon. But he believes that BIM — software used to plan, design, construct, operate and maintain buildings that has been around since the 1970s — has been just as crucial. 

"We feel very strongly that BIM will be the standard industry operating system, just like Windows, in the fairly near future," McMahon said. "Everything will flow in the virtual design environment, increasingly, in 3D, 4D and 5D scenarios. BIM models allow you to maximize use of materials in as efficient a way as possible."

While McMahon believes lean and BIM are "changing the industry fundamentally," he also pointed out that many of the core lean principles are simply a throwback to the days when contractors weren't constantly struggling just to keep up with demand. 

"No good contractor wastes, anyway," he said. "But now, tighter focus is critical."