6.2 Industrial engineering applications
6.2.7 Continuous improvement
A 50% reduction in management-based losses would save $1,333,333/3 = $666,667 revised net profit = $300,000 + $666,667 = $966,667
A 50% improvement in labor deployment would improve profits by 967 × 100%/300 = 322%
In summary, IEs can have a major impact on construction productivity and profitability by helping management to improve its decision making and the logistics of the labor force.
Further gains can be derived by addressing other construction processes and SCM issues.
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Modular homebuilders thought quality was important, but depended on inspections to assure quality instead of “building in” quality. On the other hand quality leaders exhib- ited the following best practices:
• A mission to satisfy both external and internal customers
• Measuring the satisfaction levels of all customers
• Continuous process improvement
• Employee/team member empowerment—create ownership of improvements
• Training
• Recognition and rewards for outstanding performance
• Active, involved leadership
6.2.7.3 Quality improvement concepts
A mission statement should exemplify an organization’s focus on exceeding customers’ expec- tations with products of high value and quality, and motivating/empowering its employees.
Leadership involvement—Baldrige winners all shared the common attribute of having leaders which were committed to quality and which demonstrated it by example through their daily activities. Such leaders were active participants or members of quality councils that were set up to promote quality endeavors. They guided and led quality improvement efforts, established and reviewed performance measures, kept quality as a major topic of all meetings or ongoing reviews.
Measurement—Measurement is critical to ensuring that an organization is meeting its goals and expectations. These goals/expectations should be delineated in a strategic plan developed with the participation of all stakeholders to ensure that they are an integral part of the quality endeavor. For quality performance to be achieved there must be specific, mean- ingful measures of performance based on key drivers. The strategic plan should also delin- eate the responsibilities of specific individuals and assign time frames for accomplishment.
Key drivers—customer satisfaction, operational performance, financial performance, team member satisfaction, and community service—are indicated in Figure 6.2.
Mission Mission statement
Customer satisfaction Key drivers
Indicators
Response time on warranty calls Warranty costs
Warranty calls
Defects found at homeowner inspection Defects found by builder at delivery On-time delivery
Referral rates
Annual customer survey Customer satisfaction index
Operational performance
Financial performance
Team member satisfaction
Community service
Figure 6.2 Typical measurement hierarchy for a modular manufacturer with indicators for customer satisfaction. (With permission from the Housing Constructability Lab, University of Central Florida.)
By way of an example, the indicators of customer satisfaction are customer satisfaction index, referral rates, percentage on-time delivery, defects detected by the builder at deliv- ery, defects deter-mined by homeowner inspection, warranty call rates, warranty costs, and response time on warranty calls.
The measurement of operational performance may include labor efficiency, pro- duction costs, quality costs including warranty costs, and rework costs. Financial per- formance may include return on assets, tracking of fixed and variable costs, profit margins, etc.
Community service activities reflect the organization’s citizenship, which are inte- gral to its values, as reflected in the leadership component of the Malcolm Baldrige criteria.
Continuous improvement—The HCL study utilized the PDCA cycle to promote a culture of continuous improvement in the modular homebuilding industry. A modified PDCA cycle includes both incremental improvement and breakthrough improvement, as would be derived from a benchmarking endeavor. The model emphasizes feedback from sev- eral stakeholders and the use of performance measurements. Feedback is obtained from homebuyers about product quality as well as service and warranty call responsiveness.
Production workers, field installers and other workers provide feedback about potential improvements in materials, design, production, and erection of homes. Cross-functional teams identify and implement improvement opportunities such as:
• Reducing defects and associated costs
• Improving responsiveness in handling customer complaints, service/warranty calls
• Improved homes with higher perceived value
• Improved operational productivity/effectiveness
Employee empowerment—The HCL model focused on empowering employees for the success of the organization, using a number of Deming’s 14 points (as described in Section 6.2.5):
• Point 6: Institute training
• Point 8: Drive out fear
• Point 10: Eliminate exhortations for employees and the workforce
• Point 13: Encourage education and self-improvement for everyone (Figure 6.3).
6.2.7.4 Training and education
The review of best practices of Baldrige winners pointed to the importance of quality training and education—an understanding of quality principles such as statistical process control (SPC), teambuilding, and empowerment is a prerequisite for a capable and moti- vated workforce.
6.2.7.5 Recognition and rewards
Recognition and reward systems were seen to be a major factor in motivating employees to display a commitment to quality and to seek to create a superior organization. Examples include—at the company level—bonuses for meeting or exceeding targets for customer satisfaction or defect rates. At the team level, team recognition is effective for rewarding sustained high performance.
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6.2.7.6 Continuous construction improvement in institutional buildings
The process of post occupancy evaluation (POE) provides a structured and systematic method for learning lessons from past construction projects. Preiser et al. (1988) define POE as the process of evaluating buildings in a systematic and rigorous manner after they have been built and occupied for some time. Although one may intuitively suspect that a facility succeeds (or fails) in serving its users well, one cannot fully appreciate and measure to what extent this occurs without conducting a POE. The quality of constructed facilities is important to its users. Perkins et al. (1992) observed that people experience more satis- faction within their environment if it is kept in an aesthetically pleasing manner. Preiser et al. (1988) noted that “spatial attributes, the sequence, location, relationships, size, and detail of a facility’s spaces have been shown to affect occupant behavior.” A POE involves the measurement of the functioning of a facility as compared with its purpose as defined in a formal program, and by the objectives of the architect/designer. The POE requires that a systematic research methodology be used to compare specifically the expectations of the client/owner with the effects of the facility on its users. The results of the POE can identify the extent to which the design intent has been met—this feedback can also help to identify
“best practices” that can be used to improve future designs.
POE accomplishes the following:
• It measures the functioning of a facility in use compared with the goals of the formal program and the goals of the architect/designer and other specialists.
• It determines how well a facility meets its intended purpose.
• It compares the expectations of the client/owner with the effects of the facility on its users.
• It identifies changes, if any, that can improve future facilities.
• It allows all involved parties to learn from the past.
6.2.7.7 Categories of POE: Historical, comparative, longitudinal, quasi-experimental
Ex-ante evaluation involves an analysis of facility performance “before the fact.” It may be informal, as conducted by some architects, in visioning how a facility may be used.
Production Set crew
Opportunities
portfolio Supplier
Product and process improvements
Opportunities Major opportunities
Cross-functional teams
· Conventional team
· Kaizen blitz Dept. quality team
Dept. quality team Dept. quality team
Builder
Homeowner Measurements and opportunities
Figure 6.3 Continuous improvement in modular homebuilding. (With permission from the Housing Constructability Lab, University of Central Florida.)
On the other hand, simulation methods evaluate the utility of a facility in terms of travel distances, etc., as well as perceptual criteria.
There are several categories of POE. They include:
• Historical—studying the facility in retrospect to determine if actions taken during the design/construction process have been effective.
• Comparative—contrasting two situations such as two similar facilities after one has been specifically changed.
• Longitudinal—taking baseline measurements before changes are made. Changes are then initiated and differences attributed to them.
• Quasi-experimental—using statistical approaches to compare experimental and con- trol situations.
• “Post mortems”—a revisitation of the design and construction processes themselves provides critical process-related lessons.
6.2.7.8 Conduct of the POE
A POE survey instrument is developed to address the factors of economy, function, and performance in the project/facility being reviewed. It uses a five-point Likert scale ranging from “very dissatisfied” to “very satisfied,” with a midpoint indicating “neither satisfied nor dissatisfied.” One version of the survey is developed for facility users (who are familiar with a facility) and another for design, construction, operations, and maintenance personnel. This latter group may represent a design/technical team that can address a very broad range of issues related not only to the owner’s intent, but also to long-term performance of a facility.
6.2.7.9 Procedures
• Invitations are sent to the team members for two distinctly different evaluation meet- ings: (1) a facility user meeting, and (2) a design/technical team meeting. The second group is especially critical as it is the best source of remedial action information.
• The facilitator conducts the evaluation meetings. The design/technical team is instructed on the completion of the survey documents.
• A general discussion is held on the background and conduct of the project. The owner, decision-makers, designers, and project staff provide background on the inception of the project and its subsequent conduct.
• The POE participants walk through the entire facility in small groups and complete the surveys individually.
• Following the site visit, the data from the design/technical team’s surveys are col- lated and analyzed.
• The scored and narrative responses for both users’ and design/technical surveys are combined with historical building performance information. Maintenance records are checked for operating costs, breakdowns, and malfunctions.
• A comprehensive POE report is prepared. The survey findings are reconciled with current standards and specifications to develop meaningful recommendations.
• The report is distributed to all involved parties.
6.2.7.10 Implementing continuous improvement with the POE
Once a POE is completed and documented, it is critical that additional steps be taken to apply the lessons learned to the design and construction of future facilities. These steps
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represent the stages in the continuous improvement cycle shown in Figure 6.1, and are required for systematic improvements to occur. A meeting is conducted with selected decision-makers, in which the survey findings and recommendations are presented.
Approved changes are subsequently made in the appropriate reference documents, so that the specifications and construction procedures for future projects can have enforceable requirements to utilize identified best practices. These documents may include master specifications, design criteria, and construction procedures manuals (Figure 6.4).
As indicated in the foregoing figure, the post occupancy process serves as the “Study/
Check” phase of the PDSA cycle. The recommended changes are implemented in the “Act”
phase.
6.2.7.11 Quality score calculations
The following equation provides for the determination of a “quality score” for each sur- veyed facility or project. The questionnaire responses are combined to obtain mean rat- ings (R) for each question. A weight (W) is assigned to reflect the importance of a particular objective. For example, under the heading of the objective “function,” respondents could be asked to rate the adequacy of a specific office space. The same question, when asked of different spaces may, have different weights applied.
The composite quality score would be based on the following factors: rating R and relationship Wjk of question j to objective k,
quality scores (QS )=k
j jk j n
j jk n
R W W
=
=
∑ ∑
1
1
Industrial engineers can further enhance the POE process through life-cycle analysis to assess building/facility performance on a wider scale that includes not only user satisfac- tion with everyday utilization, but also issues of operating cost, durability, and reliability.
1. Plan Identify the problem and develop the plan for improvement 2. Do
Implement the plan on a test basis 3. Study/
check Assess the plan; is it working?
4. Act Institutionalize improvement;
continue the cycle Post
occupancy evaluation
Figure 6.4 The Deming cycle (PDSA cycle) and postoccupancy evaluation. (Reprinted with permis- sion from Forbes, Proceedings of the IIE Annual Conference, Orlando, FL, 2002.)
User satisfaction questionnaires provide valuable information on the perceptions of the client (construction owner) with respect to the finished product and, very importantly, the nature of the associated processes. A typical questionnaire would address contractor per- formance measures relating to such issues as timeliness, responsiveness, communication, empathy, cost, and quality.
Overall, the delivery of design and construction services can be significantly enhanced through the use of “lessons learned” and “best practices.” The information collected through POE application should also address how to design processes to improve design quality, cycle time, transfer of learning from past projects, and provide effective perfor- mance measurement systems for understanding, aligning and improving performance at all levels. The quasi-experimental type of POE should be investigated for application where two or more facilities may be compared with each other.