POWER August 2010 - 66

PLANT CONSTRUCTION
Lean Implementation at the
Firm Level
From the perspective of the mechanical contractor
in this example, that group has expertise
in a number of cash conversion processes,
referred to by the staff as " copper " or " steel, "
which serve the needs of all of its power plant
customers. These processes include all elements
of design/coordination, procurement,
fabrication, and installation (Figure 1).
The size of the plant project and sophistication
of the mechanical firm may dictate that
the design, procurement, and fabrication steps
of the production system occur away from the
plant site in the contractor's regional office or
fabrication shop. The intermediate product, in
this case copper spools, is transferred to the
plant site for efficient final installation. Often,
these steps are manually coordinated and use
disparate tracking systems.
This fragmented production system is manageable
for a low-volume mechanical firm, but
as the demand for services increases, system
inefficiencies will magnify operational constraints
and increase inventories. For example,
the mechanical contractor often manages several
projects within a region for multiple power
plant customers and may manage several
projects at a single power plant. The contractor
also operates a single regional fabrication
shop and maintains a design and coordination
staff. Each project has different customers,
scheduling demands, and business priorities.
This complexity highlights the inherent inefficiencies
in the design-engineering-fabrication
process and causes increased variability.
Consider the scenario where a contractor
is hanging pipe for three different projects for
three different customers in parallel (Figure
2). The contractor may decide to improve
consistency in operations through continual
improvement in one or more " cash-to-pipe "
conversion processes that are the same, regardless
of the customer or project.
The firm's goal of applying lean techniques
focuses on certain activities, which are shown
2. A belt-tightening approach. Lean thinking at the firm level focuses on continual improvement
in one or more cash conversion processes, such as " copper piping " for a mechanical
contractor, which involves all of the core competencies of design, procurement, fabrication, and
installation. This process is consistently applied over and over for multiple clients and multiple
projects. Source: FMI Corp.
in the blue-shaded zone in Figure 2, in order to
eliminate waste and improve operational consistency
from project to project on the same
production process. In this case, a mechanical
contractor may decide to improve the production
process for all copper design, procurement,
fabrication, and installation, as these steps are
consistent from customer to customer.
The following are some examples of lean
implementation at the firm level:
■ Evaluate and implement an appropriate
balance between pull and push in the production
model.
■ Reorganize the fabrication shop systems
to improve material flow.
■ Develop an integrated process that eliminates
or reduces the effects of the often
troublesome handoff from design to procurement
to fabrication.
These activities are wholly within the control
of the contractor. Therefore, when operating
from this perspective, the project manager
or superintendent for the mechanical contractor
makes daily decisions that generally result
in improved overall performance for the mechanical
contractor's business. That person
may decide to use the strategy of a constant
stream of installation rates, which provides a
consistent flow and demand for the design-procurement-fabrication
process. This, however,
may cause deficiencies (such as not keeping
up with the schedule) or excess supply (such
as working too far ahead) at the project level
from the GC or owner's perspective.
Notes: D = design activities, P = procurement activities, F = fabrication activities, I = installation activities, GC =
general contractor, O = owner or plant manager, AE= architect/engineer.
3. Plant construction project as a production system. From the perspective of
the plant manager, the project is depicted here as a production system with inputs and outputs.
The production system in the middle of this diagram is the set of processes that drive all activity
toward completing a given project. Source: FMI Corp.
Project as a production system
Inputs
■ Requirements
■ Specifications
■ Milestones
Design
Engineer
Procure
Construct
Outputs
■ Functional facility
■ Occupancy permit
■ Documentation
Lean Implementation at the
Project Level
At the project level, the mechanical contractor
is one of several trade contractors involved in
a project. The project is a temporarily formed
organizational structure or supply chain with a
defined start and finish. As expected, the plant
manager or GC would drive the requirement
to deliver the project using lean techniques.
Consider the schematic in Figure 3, which
represents the process of constructing a facility
(a project) as a production system.
The production system in the middle of this
diagram is the set of processes that drive all
activity toward completing a given project.
This production system involves multiple
firms and their unique processes, such as copper,
steel, underground work, or glazing. In
the hypothetical project structure, the design,
engineering, and procurement steps for the
mechanical, electrical, and structural contractors
may still occur in remote offices or project
trailers, while the construction and installation
effort is, by necessity, field-centric.
Today's waste reduction and productivity
efforts for the project purposefully focus on
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POWER August 2010

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