Pasquire, C. and Ballard, G. (2011), "Commercial aspects of lean construction", Journal of Financial Management of Property and Construction, Vol. 16 No. 1. https://doi.org/10.1108/jfmpc.2011.37616aaa.002Download as .RIS
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Copyright © 2011, Emerald Group Publishing Limited
Commercial aspects of lean construction
Article Type: Guest editorial From: Journal of Financial Management of Property and Construction, Volume 16, Issue 1
The recession in the USA and Europe has focused many on the need to achieve efficiency savings and impose austerity measures. As a result, there has been a widespread upturn in interest in lean countermeasures as a solution. Whilst the upturn in interest is to be applauded, there is a real danger that the misinterpretation of lean approaches as cuts, job losses, delayed payments, etc. will result in a retrenchment of the construction industry to defect ridden, blame, claim and conflict ignoring the needs of its customers. In contrast, overheating of the industry in other parts of the world such as South America, China and Asia are placing impossible demands on basic construction resources and scarcity is driving prices ever higher. Here also is an opportunity to engage lean thinking in order to make resources go further.
This special issue aims to provide a platform for aspects of lean thinking that expand its application away from the management of direct on-site processes into the wider commercial aspects. The recurring theme throughout this issue is value – what it is and how it manifests itself. The papers published here were selected from the 18th Annual Conference of the International Group for Lean Construction by the conference Chair and Technical Editors. The selected authors represent Chile, the USA, Russia, the UK, Germany, Sweden, Finland and Australia and present a thoughtful approach to construction seeking first to understand value and then developing the commercial mechanisms that enable the delivery of that value.
Understanding value in its widest sense was the goal of Jose Salvatierra-Garrido and Christine Pasquire who present a critical review of the current understanding of value and its relationship to lean thinking. This paper demonstrates the gap between manufacturing customers who directly influence products by their purchasing actions and construction customers who comprise sectors who have no direct voice in the purchase of the product or its design. This paper argues that these sectors or domains should be better or more clearly represented as a result of the impact that construction has on wider society.
Ailke Heidemann and Fritz Gehbauer examine the collaborative approach advocated by lean project delivery systems and its impact on performance and client satisfaction. Using case studies from Australia and the USA, the authors investigate the success factors and ask whether and how similar collaborative arrangements could be applied in the German construction sector.
Salinda Perera, Steven Davis and Marton Marosszeky look at the role of the Head Contractor in delivering value with the construction sector in Australia. They seek to ascertain the degree to which the various contracting organizations associated with a project, understand their contribution to and influence over value. This paper looks at value at project delivery level.
The fourth paper by Joel W. Darrington and Gregory A. Howell asserts that incentives affect behavior. In this way, the authors argue that different incentive mechanisms are required to change the behavior of the parties to a construction contract. The authors review economic and non-economic motivation theory and seek to use their knowledge and experience of the industry gained as active participants to propose new strategies for incentivizing construction work.
Ari Pennanen, Glenn Ballard and Yrjänä Haahtela move the discussion toward using cost as a design tool. This paper firmly takes the hard side of the value Equation (cost) and investigates how construction design can be improved and better value delivered by using cost to steer design. This is in contrast to “traditional” practice in which design either proceeds in advance of cost estimating and then needs to be cut back to meet budget requirements or specification is added until the budget is spent. Steering design to target cost ensures the client gets what is required at the best cost.
The subject of commercial management from a lean perspective is described by Daria Zimina and Christine L. Pasquire. In this paper, we learn that the traditional separation of “commercial” from the core business of an organization has often led to conflicts with both customers and supply chain. Zimina argues that commercial activities need to integrate with and support core business and that clear commercial strategies are needed to establish the nature and position of the core business within the market.
In the final paper, Louise Bildsten, Anders Björnfot and Erik Sandberg provide a detailed micro-example of how lean thinking can bring commercial benefit within the supply chain by investigating purchasing strategies for kitchen cabinets within house building. Here, we see the various commercial aspects of market-driven strategies compared to value-driven strategies showing the clear benefits of the latter. This is an unusual and refreshing piece of research informed by unrestricted access to a manufacturing company over a significant timeline.
Christine Pasquire, Glenn BallardGuest Editors