Saving Construction Time & Money for a Solar Energy Company
Client: Solar Energy Company
Industry: Construction/Utility/Other
Service: Rapid Process Improvement Event (Kaizen) and Implementation Services
Challenge:
- Tackle changes in a complex construction process plagued with delays
- The cost of money is a key factor driving up costs
- No discipline to schedule; frequent late design changes
- Average timeline of nearly 130 days
Solutions:
- Rapid process improvement event (Kaizen) approach brought together people in the company who had the right kinds of expertise
- Work sequencing changed to allow more parallel processing
- Establish work standards that create discipline to schedule
- Establish single authority for the entire process
Results:
- Projects already at the mid-point or beyond when the project started saved 20+ days on their schedule
- Timeline for new projects is closer to 80 days
- Cost avoidance (interest savings, contractor costs, etc.) should add up to at least $250,000 per project
In businesses like construction, the cost of money is one of the biggest factors driving profitability. One company that builds energy plants estimated that every day they spent in construction cost them anywhere from $5000 to $9500 in interest costs. Long lead times from start to finish of their plans was creating large cash constraints and eroding margins.
The company turned to Guidon for help in finding ways to compress the construction timeline, which stood at nearly 130 days. An analysis of their processes from a Lean perspective revealed several key issues:
- There was no schedule discipline and there was never a design freeze. Any group could, at any point in the schedule, request a design change—no matter what the schedule impact.
- No single individual was responsible or accountable for the deliverables of a project.
These two factors alone accounted for a majority of problems the company encountered. Because there was no central authority, no one had the responsibility for evaluating the impact of requested changes on the project as a whole. So usually the group with the simplest cost argument won. If purchasing found a component that was cheaper, their position would win out even if it meant going back to the drawing board on some component of the design.
The analysis also showed that the knowledge on how to run the projects much more efficiently was present in the company. But there wasn’t any mechanism for the voices of these people to get heard.
Given these circumstances, the best approach was a rapid process improvement event (Kaizen): bringing together people with the right expertise to evaluate the process, make decisions about work standards, and assign authority and responsibility. In a one-week Kaizen, the team:
- Changed the work sequencing so that more tasks could be done simultaneously
- Eliminated unneeded or duplicate steps
- Established a Project Execution Standard, which drives schedule discipline for all functions (including use of design freezes and evaluating requested changes against the impact on schedule as well as immediate cost savings)
As a result of these changes, the company reports:
- They saved more than 20 days in the schedule for projects that were already well underway
- The average timeline for new projects is closer to 80 days (a 35% improvement)
Counting all forms of cost avoidance, the company estimates they will save at least $250,000 per project.
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