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A recent article from our Lean Construction Newsletter:
"Costed" Value Stream Mapping -
Combining Focused Lean Improvements with Target Value Design (TVD)
Lean is NOT a cost reduction activity. Costs are reduced as an outcome of doing Lean activities. However, when combined with TVD, using this Value Stream Mapping hybrid has powerful potential in the short term - as the longer term outcome of Lean activities begin to flow into reduced costs and bids.
by Ted Angelo and Larry Rubrich
Taiichi Ohno, one of the developers of the Toyota Production System, once said, "Eliminating waste is not the problem, identifying it is." The role of Value Stream Mapping (VSM) in the Lean Toolbox is to make invisible waste ... visible. Particularly valuable in identifying waste (delays) that can extend project lead times, VSMs are:•A method of creating a "one page picture" of all processes from the time a customer releases a project until the project is completed.
•A visual representation of the flow of information and materials/services across all of the processes - both value adding and non-value adding.
While VSMs have many applications in the administrative areas of construction organizations, the application we are discussing is its value when combined with the construction process called Target Value Design (TVD).
Although Lean is not a cost reduction program as previously noted, for construction projects, the project will not move forward if the "bid" is above the owners "allowable cost." At this point a TVD team is developed and a target cost is defined. This is where a Costed VSM is a powerfully structured tool for identifying cost reduction targets.
The Costed VSM follows the normal VSM with several exceptions that will be pointed out. It starts with the regular four steps to VSM as shown below.
TVD requires that that the TVD team design to a specific target cost. Therefore, the goal of the Costed VSM in construction is to meet this cost.Using a Costed VSM with TVD begins with having a thorough understanding of the owner's requirements. For large construction projects, it will be necessary to create several levels of maps to limit the size of the maps and to provide details for brainstorming improvements at each level. A large project map breakdown might look like:
1.High level map of the flow of work by architectural, civil, structural, mechanical, electrical, and other specialty contractors, etc.
2.Systems level map
3.Detail by trade
The map is created in the standard VSM format except that we now add "costs" for each of the steps, processes or process boxes as shown below.
Note that during the creation of the Current State Value Stream Map (CSVSM), all participants are asked to write down cost improvement ideas as they think of them on the "starburst/clouds" sticky notes that were handed out when the session started. When the CSVSM is completed, all participants post their notes on the map while explaining their ideas to everyone else. This is the start of the "advanced 2-step" brainstorming process. This posting of the notes is shown below (manufacturing Costed VSM shown).
The next stage in the Costed VSM varies from the standard VSM process. Just as in Change-Over/Setup Reduction, where we concentrate on the longest time setup elements because they have the largest opportunity to improve, the Costed VSM concentrates on the highest cost steps, components, processes, or process boxes because they present the largest opportunity for savings.
So that we can focus the second stage of brainstorming on these items, we separate these high cost items on a separate sheet as shown below.
The next step in the advanced 2-step brainstorming process is to write down all the ideas on flip charts (the standard brainstorming process most organizations use) as shown below. It is important to encourage participants to make sure that all starburst/cloud ideas are included on the flip charts. There is normally some "idea fallout" of the starburst/cloud ideas as the participants elevate the value of their own ideas as a result of hearing ideas during the flip chart brainstorming step.
After the flip chart ideas are affinitized (grouped by like idea), the Costed VSM adds another extra stage. The remaining eligible ideas (for voting), and there might be 50-100, are then evaluated by the participants from a cost savings and implementation risk standpoint. This allows the participants to more easily identify the best ideas by adding the ratings together. The scale looks like this:Cost Savings
1 = Low
3 = Medium
5 = High
Risk to Achieving Idea Implementation
1 = High
3 = Medium
5 = Low
An additional tool that could be of value at this point is Choosing By Advantages (CBA) as discussed in the above article.
The next step in the brainstorming process is to complete a secret ballot vote for the best ideas by the participants (typically the participants/teams are given between 5-10 votes depending on the number of eligible ideas).
After the votes are posted, the top ten ideas (by votes) are listed. At this point in a normal VSM process, the team creates the Future State Value Stream Map (FSVSM). For a Costed VSM, the participants do a process/reality check: If all ten ideas are implemented, will the cost/price goal be achieved?
If the answer is yes, the team creates the FSVSM.
If the answer is no, the team goes further down on the "voted for" list or rebrainstorms for more ideas, and then does the reality check again. This activity continues until the goals are met.
For three-day VSM Events, the next step is to choose a team leader and then develop the Kaizen Newspaper with the "actions items" required to turn the FSVSM into the CSVSM, followed by a standard Kaizen Event management report out.
For five-day events, the team breaks into sub-teams on day three and begins the "voted for idea" implementations. The team leader selection and Kaizen Newspaper is then accomplished at the end of day five, followed by the management report out
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