eBook

WHAT IS LEAN
CONSTRUCTION?

JOB. DONE.
 Lean construction offers powerful ways
to reduce wasted time and money
Custom home builders in major markets across the globe face a
far different market than in 2021. As rising mortgage interest rates
price even more potential buyers out of the market for custom
homes, builders see less demand for new home construction. As
a result, the current state of the construction industry has builders
concerned for the future health of their business and looking to
newer methods such as lean construction.

The way forward is rethinking how home You can achieve sustainable profit-
builds are managed. With decreasing ability when excess costs and inefficient
volume and sentiment, home builders activity are wrung out of your business.
need to ensure each home project they
undertake earns a fair profit. Fortu- In other industries, project managers
nately, builders can learn from the have successfully done this using lean
experience of other industries that have philosophy. Construction companies and
battled the same concern for efficient custom home builders have adapted this
project management. into lean construction practices.

BUILDXACT | What is lean construction? Page 1

 Adopting lean construction practices
1 in custom home construction

Lean management, more traditionally The idea of lean management origi-

applied to centralized manufacturing nates with manufacturing concepts
like automobiles, helps home build- first tried by Taiichi Ohno and Shigeo
ers continuously improve by reducing Shingo beginning in the mid-1950s
wasteful spending and inefficient labor under the Toyota production system.
practices. But there are other benefits— Ohno identified seven areas of waste,
like giving your entire project team a and competitive builders recognize
greater say in best practices and job many of these as they manage their
site safety. own construction projects.

7 Places Lean Waste Happens

Graphic courtesy of Kanbanize.com

BUILDXACT | What is lean construction? Page 2

 How lean construction benefits
2
your construction company

Home builders like you may not think of management, you are solving the same
what you do as lean construction, but kind of problems that concerned the
your concern for minimizing waste is founders of lean project delivery. They
very similar. It’s easy to imagine how too wondered if fewer materials could
over ordering materials blows your create a product or whether their team
budget or how under ordering results in members were spending time doing
wasted time and money on last-minute the right things.
runs to the lumber yard.
When you work to eliminate waste in
your build and gain efficient project

BUILDXACT | What is lean construction? Page 3

 How software helps establish
3
stronger work habits

Accurate cost forecasting can help communication practices, like emailing

you identify and address the areas and back-and-forth phone calls, take
your lean waste occurs. Creating an an average of 19 hours per week, per
accurate cost forecast, however, first customer bid.
requires accurate, up-to-date material
pricing from your dealer. Today, modern software helps you
collaborate with your dealer online
You can’t afford to waste time when about pricing and availability, which
it comes to the estimating process. speeds your administrative work and
The time you spend in back-and-forth gives back valuable time you can spend
pricing with your dealer affects how fast discussing more important matters
you can build an accurate estimate and with your dealer, such as material
provide that to your home buyer. choices and substitutions that best
serve your customer.
An industry study from Buildxact and The
Fransworth Group finds that traditional

BUILDXACT | What is lean construction? Page 4

 Planning a more profitable
4 construction project

Profitability is all in the upfront planning, and today’s leading cloud-

based home construction management tools offer accurate project
estimating and quoting to prepare builders to run a successful
project from its early stages to final invoicing. With software, you
can generate an accurate detailed estimate faster than traditional
construction project tools. These modern estimates document all
the critical tasks and the associated labor and material costs.

The estimate and quote not only fully informs your home buyer of
what to expect but also allows you and your sub-contractors to
communicate quickly on the quantity and quality of materials and
set realistic installation timelines. Get everyone on the same page
before you hammer the first nail. You will find it is critical for cost-
control, scheduling and continuous improvement.

Software also helps you figure out your core team of reliable
subcontractors. Remember, subcontractors quoting the lowest
cost or quickest turnaround may not be worth the upfront savings
they promise you. You risk wasted materials and unplanned rework
to correct poor workmanship.

In the lean construction process, rework, or what some refer to as

defects, are a form of waste to avoid in the construction process
because they generate expensive, disruptive change orders.

BUILDXACT | What is lean construction? Page 5

 Coordinating schedules avoids
5 wasteful downtime

The right construction software makes tools that allow you to use features like
estimating and quoting a fast and effi- color-coded Gantt charts to see how
cient process so that you close the sale work is progressing and what jobs
quickly. Once the homebuyer commits depend on another task’s completion.
to the project and you’ve designated
your team to do the site prep, framing The right software allows you to adjust
and other tasks, then you can jumpstart schedules and material deliveries in
the actual project build. real time with simple, point-and-click
computer mouse commands that use
Again, the basic concepts of lean the same job categories that were used
management can help you gain project in the original estimate.
control. When planning your workflow
from one phase of the build to the Everything stays neat and organized to
next, you need to be able to coordinate minimize waste. By tracking schedules
schedules around material arrivals, and for each job, you learn the ideal time it
equipment and labor availability. should take for specific tasks.

Modern software helps you avoid

downtime through detailed scheduling

BUILDXACT | What is lean construction? Page 6

 Using budgets to benchmark
6 your construction activity

The best software also offers budget your team is the most efficient and
and invoicing line items for the many where the greatest costs lie. You want
tasks required to complete a home to continue doing what you do well so
build. Tracking expenses by tasks and that you can focus on improving the
categories gives you insights into what wasteful and expensive areas in future
parts of your project bring the greatest projects. It might mean hiring a new
value. In terms of lean principles, this set of subcontractors who work more
is what is known as identifying your efficiently or perhaps it means finding
top value stream. a more affordable dealer for the materials
involved with that costly work.
Whether it be framing, roofing, or
plumbing, you want to know where

John Smith Progress 0% Varianced 39% Invoiced 0% Gross Profit 0%

Actual Categories

Jobs
Demo and Site Construction $459.08 $240.00 $219.08 52%

Admin and General Requirements $13,849.11 $17,012.54 -$3,163.43 123%

Temporary Site Services $1,255.08 $1,212.00 $43.08 97%

Ground Floor Framing $27,029.67 $26,575.07 $454.60 98%

Kitchen and Bathroom Woodwork $13,849.11 $0.00 $0.00

BUILDXACT | What is lean construction? Page 7

How to adopt lean
construction in
your business
Many home builders like you are using
Buildxact as their lean management
platform. Buildxact offers time-
saving digital takeoffs, estimating
and scheduling for a low monthly
subscription. Want to learn more?

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