“LEAN” AS AN ANTIDOTE TO LABOUR COST ESCALATION … · “LEAN” AS AN ANTIDOTE TO LABOUR COST...

“LEAN” AS AN ANTIDOTE TO LABOUR COSTESCALATION ON COMPLEX MECHANICAL AND

ELECTRICAL PROJECTS”

Peter F.Court1, Christine Pasquire2, Alistair Gibb3 and David Bower4

ABSTRACT

This paper represents “work-in-progress” as part of a collaborative research project being undertakenat the Centre for Innovative Construction Engineering for an Engineering Doctorate at LoughboroughUniversity, UK. The programme is funded by the EPSRC and is sponsored by a major UK mechanicaland electrical contractor (the company). The project will have specific objectives, which will be capa-ble of making a significant contribution to the performance of the company. That is, the tasks will ben-efit the company whether or not the Engineering Doctorate was being undertaken. It will not be a“student” project, which has only been selected to keep the research engineer busy, nor will the tasksbe at the margin of the company’s interest.

In the mechanical and electrical (M&E) sector in the UK, labour cost is one of the largest variableswhich can have a direct influence on the financial outcome of a project. Actual labour cost incurredhas a dependency upon the productivity achieved on site, which in turn is dependant upon theconditions that prevail on that site. For a major UK M&E contractor, labour cost has escalated to suchan extent that margin slippage has occurred. Margin slippage can be defined as the negative variationbetween the expected margin (gross profit) for a project when acquired, and the final margin when theproject is finished. Consequentially, the company, as part of a performance improvement initiative,have the objective of developing lean techniques to overcome the causes of the cost escalation—poorproductivity, and see this research project and implementing lean as a result of it, as a vehicle todeliver the improvement. This paper will propose that lean techniques, when imposed upon a project,can be an antidote to the causes of poor productivity, and therefore prevent labour cost escalation,along with its impact on the project’s final profitability. These lean techniques, known as“interventions”, are applied to a case study project with positive results in terms final labour cost andmargin.

KEY WORDS

Margin slippage, Productivity, Labour, Mechanical sector, Electrical sector.

INTRODUCTION

This paper represents “work-in-progress” as partof a collaborative research project being under-taken at the Centre for Innovative ConstructionEngineering for an Engineering Doctorate atLoughborough University, UK. The programmeis funded by the EPSRC and is sponsored by amajor UK mechanical and electrical contractor

(the company). The project will have specificobjectives, which will be capable of making a sig-nificant contribution to the performance of thecompany. That is, the tasks will benefit the com-pany whether or not the Engineering Doctoratewas being undertaken. It will not be a “student”project, which has only been selected to keep theresearch engineer busy, nor will the tasks be at themargin of the company’s interest.

Lean Construction Theory

3

1 Research Engineer, Dept of Civil and Building Engineering, Loughborough University, UK,[email protected]

2 Dept of Civil and Building Engineering, Loughborough University, UK. [email protected] Dept of Civil and Building Engineering, Loughborough University, UK, [email protected] Principal Fellow, Warwick Manufacturing Group, University of Warwick, UK, [email protected]

The themes of the research project are “Innova-tive Construction Technologies” driven by thedesire to use leading edge research and learning toimprove the business of the sponsoring organisa-tion. The sponsor company is a major provider ofadvanced mechanical, electrical and communica-tions solutions in the construction sector in theUK. It works for customers in banking, retail, lei-sure and commercial property development, aswell as education, health, defence and govern-ment offices, secure establishments and airports.

RESEARCH PROJECT OBJECTIVE

A primary objective of the company is to developa way of working that will contribute to reducingthe costs of implementing its projects by a targetof 10%. This is being delivered as a performanceimprovement initiative, and there are four primarybusiness drivers behind this objective, and theseare; 1) client driver; clients want more and morefor less and less; 2) competitiveness; the companyoperate in a competitive environment; 3) effi-ciency improvement; poor productivity is a fea-ture of UK M&E projects, and; 4) competing newalternatives; whole buildings can be manufac-tured off site, and assembled on site, making largesections of traditional site installation redundant.

It is not the intention to explore these driversfurther here, but they are the reasons for theimprovement initiative, however, Gibb and Isack(2003) explains more on client expectations anddrivers. Of particular concern within the companyare poor labour productivity and the resultant costescalation it has experienced on its recent majorprojects. This has had serious consequences onthe financial performance of the projects to thepoint where severe margin slippage has occurred.Margin slippage can be defined as the negativevariation between the expected margin (grossprofit) for a project when acquired, and the finalmargin when the project is finished.

On these particular projects, these being theworst case and having the most serious affect onthe company, labour cost escalation has been vast.This is presented in table 1 below. The companyreports that not all of the losses are entirely attrib-uted to poor productivity, but it is the main con-tributing factor. Other cost variables are worthy ofattention, but are not the focus of this paper. Whatthe company intend to do is to develop new waysof working to overcome the causes of poor pro-ductivity, and see the research project, and imple-menting lean as a result of this, as a vehicle todeliver its improvement objectives. Productivityimprovement interventions will be designed using“lean thinking” principles, and applied to a casestudy project, as will be shown. The company fur-

ther intend to implement these, and further leantechniques into what will be called their “leanconstruction system”, to be applied to all projectsas they occur over time. So the interventionsimplemented as part of this research are onlyaspects of the “whole” system to be developed.

DOES LABOUR HOLD THE KEY?

According to Hawkins (1997), labour costs typi-cally constitute 30% of the overall project M&Ecosts, so maximising the output on site is essentialto increase a contractor’s performance and thevalue for money investment of the customer. Thisstatement was part of report of an investigativestudy, undertaken by the Building ServicesResearch and Information Association (BSRIA),and sets a foundation for understanding the prob-lems and issues that the UK M&E industry faceswithin the construction sector. BSRIA undertookthis investigative study comparing 4 UK, 1 Amer-ican, 1 German and 1 Swedish construction pro-ject to highlight productivity problems relating toM&E building services, to assist the UK M&Eindustry in promoting improvements in produc-tivity, and to suggest remedies to solve these prob-lems and improve performance. Remedies areindeed suggested in the form of best practice rec-ommendations, but actual design and implemen-tation of these remains at the discretion of thecontractor.

Within the company, as previously mentioned,the increased cost of labour on recently completedmajor projects has had a direct impact on thefinancial outcome of those projects, and becauseof the scale of the cost overruns, the companyitself. This is shown in table 1. These projectswere run in a traditional manner, with no specificlean interventions being made.

It can be seen that each project saw an increasein labour costs of 263%, 89% and 334% respec-tively. Whilst other cost variables on the projectsinfluenced the final margin, the losses on labourvirtually equalled the margin slippage suffered.

SITE FIRST PRINCIPLE

In his book, Toyota Production System, Ohno(1988) describes his plant-first principle. He saysthat the production plant is manufacturing’s majorsource of information, and that it provides themost direct, current, and stimulating informationabout management. This is the same for the con-struction site; the site is to construction what theplant is to manufacturing. It is the culmination ofall the construction processes and what is given tothe customer when it is finished. Also, are work-ers the only participants in the building process

Proceedings IGLC-13, July 2005, Sydney, Australia

4 “Lean” as an antidote to labour cost escalation on complex mechanical and electrical projects”

directly generating value to the customer? Larsen,Odgaard and Buch (2003) argue this point, andthese are the reasons for the principle themes ofthis project. It seeks to focus on the worker, theworker’s environment, and what makes theworker do what they do and why they do it, andwill only be concerned with M&E workers andthose of key interfacing trades insofar as theyapply. The overarching aim then is to implement“lean” in an action research project for the com-pany with a particular focus on the worker andtheir activities and behaviour. This will beaddressed through investigating three principalthemes:Practical: (sensible, useful, effective, involving,

the simple basics) What people “do” at theworkplace—Standardisation of work, processand products to create flow, pull and value de-livery. This aspect of the research will seek todevelop innovative methods and use of innova-tive components for installation by standardis-ing the work. Standard work is an agreed-uponset of work procedures that establishes the bestand most reliable methods and sequences foreach process and each worker (ProductivityPress, 2002).

Physical: (to do with the body as opposed to themind or spirit) How people do things in theworkplace—Ergonomics and workplace or-ganisation to improve health, safety and pro-ductivity. This aspect of the research will seekto address how people do things in the work-place. Of particular interest is ergonomics,which in the industrial workplace is generallydefined as a variation of the following:“A science devoted to determining the

range of anatomical, physiological and psy-chological human factors and designing workenvironments conducive to these ranges withthe objective of maximising productivity andminimising injury” (McNamara, 1986).

Psychological: (of or affecting the mind) Whypeople do what they do—Understanding moti-vation of the worker and its influence on be-haviour at the workplace. This aspect of theresearch will separately look at the psychologi-cal and motivational factors that cause theworker to behave in the way they do.

SO WHAT’S THIS ABOUT ANANTIDOTE?

As Womack and Jones, 1996, states, Lean Think-ing is a powerful antidote to muda. Muda is a Jap-anese term for waste, and specifically any humanactivity, which absorbs resources but creates novalue. These are; “Mistakes which require rectifi-cation, production of items no one wants, process-ing steps which aren’t needed, movement ofemployees and transport of goods, waiting forupstream activities, goods and services that thecustomer does not want”.

Added to this is the eighth category of waste,making-do (Koskela 2004). Koskela contendsthat there is a very common, generic type of wastethat should be added to the list, because it can bejustified using the same conceptualisations asused by the seminal authors. Further, the principalproblems described by Hawkins (1997), can eachbe categorised as one form of muda or another. Heultimately charges the UK M&E industry withvery low productivity for a variety of reasons, asexplained in his report. So herein lies the hypothe-sis of lean as an antidote to labour cost escalation.This should be tested with a case study.

TURNING THEORY AND RESEARCHINTO ACTION—A CASE STUDY

An action research approach was chosen to under-stand where to start and what to do first. Coghlanand Brannick (2003), define action research as


Peter F.Court, Christine Pasquire, Alistair Gibb and David Bower 5

Cost Element Project 1 Project 2 Project 3

Project value £19,096 £42,665 £38,500

Estimated labour cost (A) £1,117 £6,408 £5,295

Final labour cost (B) £4,052 £12,088 £22,962

Labour cost escalation (B-A) £2,935 £5,680 £17,667

Estimated margin (C) £2,334 £4,169 £1,381

Final margin at completion (D) £319 -£4,773 -£16,255

Margin slippage (C-D) £2,015 £8,942 £17,636

Table 1: Labour cost escalation and margin slippage on recently completed major M&E projectswith high complexity and high value (values are £000’s).

Project 1 was not a project of the company but has been included here as a comparator of performance.

involving a cyclical process of diagnosing achange situation or problem, gathering data,taking action, and then fact finding about theresults of that action in order to plan and take fur-ther action. Also, the key idea of action research isthat it uses a scientific approach to study the reso-lution of important social and organisationalissues together with those who experience theseissues directly.

In order to commence the process of decidingwhere and how to start making changes to currentpractice, observational studies were undertakenon various sites of the company. A primary find-ing from this is that making-do, or improvisation5,occurs naturally to a greater or lesser degree withregard to how physical work on site is carried out,and this seemed to have a direct influence on pro-ductivity itself. In order to formulate an under-standing of this in the context of this case study,an ethnographic study was then undertaken. Eth-nography is a style of research rather than a singlemethod and uses a variety of techniques to collectdata, Cassell et al (2004). They defined this styleof research as:

“…the study of people in naturally occur-ring settings or ‘fields’ by means of methodswhich capture their social meanings and ordi-nary activities, involving the researcher par-ticipating directly in the setting, if not also inthe activities, in order to collect data in a sys-tematic manner but without meaning beingimposed on them externally…”

The purpose of this study was for the researcher tobecome a participant in the site process in order tobe immersed in the day-to-day site activities andnot just be an observer. This study did not set outto measure specific productivity performance ofthe activities undertaken; enough of this has beendone already (Hawkins, 1997). Rather, the pri-mary objective was to experience the conditionsthat exist on site and occur naturally, and howworkers do their work, without intervention. Thismethod will allow the researcher to understandpeople’s actions and their experiences of theworld in natural settings as they occur independ-ently of experimental manipulation, Cassell et al(2004). One week was spent as a ductwork fitter’sassistant (not a project for the company), andanother week was spent as an electrician’s assis-tant (this was a project of the company). Thisinvolved the researcher doing actual installationwork with teams under the direction of the teamleader. A diary was kept at the end of each day torecord events and discussions and digital images

were taken. A “rich picture” of the key words andphrases from the diary entries was created in orderto reveal a rich moving pageant of relationships,which is a better means of recording relationshipsand connections than is linear prose (Checklandand Scholes, 1992). The main findings are sum-marised as follows:

• limited, unplanned or improvised workplaceorganisation, workbenches, and equipment;

• assembly work carried out on the floor or onwhatever came to hand;

• materials stored randomly around the site inno particular order, and in unknown quanti-ties;

• scaffold systems provided that had to be ac-cessed, with no facilities to store materials ortools. If something was missing, the opera-tive had to climb back down to replenishwhatever was needed;

• tools only provided by the tradesmen—theyhad what they had irrespective of their suit-ability;

• various trades worked in the same area at thesame time. Materials for one trade were leftin the way of the other trade/trades.

Figures 1–6 (following page) represent a sampleof the research findings.

The ethnographic studies revealed the amountof waste and improvisation that naturally occurswithout attention being given to eliminating thecauses of it. If lean interventions are designed toovercome the causes of this waste, and this pre-vents labour costs from escalating, then lean as anantidote can work. Given this data, the next phasewas to design lean interventions to be able to over-come the causes of waste, and then to further testthem in a live situation. A project was chosen asthe “experiment”, and a hypothesis, which is astatement about cause and effect that can betested, was set as follows:

“LEAN AS AN ANTIDOTE TO LABOURCOST ESCALATION ON COMPLEXMECHANICAL AND ELECTRICALPROJECTS”

Labour is the independent variable to be manipu-lated in the experiment, and the outturn cost oflabour is the dependant variable, which isobserved as the outcome of the experiment. Inorder to manipulate the independent variable,labour, lean interventions were designed andapplied to the project. These were standardisation



5 Improvisation is proposed here as a form of making-do. Making-do, according to Koskela (2004), is the eighthcategory of waste adding to the 7 wastes defined by Womack and Jones (1996). To improvise: to make, invent,or arrange offhand; to fabricate out of what is conveniently on hand (Merriam-Webster online dictionary).



Figure 1: Improvised cable dispensing. Figure 2: Working on the floor.

Figure 3: Conventional scaffolding and manual handling. Figure 4: Improvised workbench and random storageof components.

Figure 5: Unplanned workplace, conventional scaffold. Figure 6: Various trades in same workplace,materials in each trades way.

of components, standardised work sequencing,mobile work cell and ergonomic access equip-ment. Each of these was designed to overcome thecommon route causes of the waste experiencedduring the ethnographic study. So let’s look ateach one in turn:

STANDARDISATION OF COMPONENTS

The report, Innovative M&E Installation (Wilson,2000), follows on from BSRIA’s ImprovingM&E Site Productivity (Hawkins, 1997). Theresearch underlying this report led to the recom-mendations that alternative systems, components,materials and innovative methods should be thor-oughly evaluated to identify opportunities for pro-ductivity gains on M&E projects. It concludes thatthe UK construction industry must replace out-dated components and processes if it is to remaincompetitive in a global marketplace. Thisresearch project has found that the UK construc-tion industry can realise a significant gain ininstallation performance through the adoption ofinnovative components and systems. Also,according to Ballard and Matthews (2004), a leanideal for the championship, prefabrication andassembly, is to “simplify site installation to finalassembly and commissioning”. These principleswere considered in the context of this case studyand the solutions were selected accordingly, andsummarised in table 2.

The specific purpose of this intervention was toeliminate unnecessary site processing of materialsand fittings.

STANDARDISED WORK SEQUENCING

A “week-beat” system of structuring the workwas employed, where the building was dividedinto smaller work zones (approx 1,000m2) andsequenced a “parade of trades” through each zone.Each trade was provided a period of one week in

each zone to complete their work. This is asdescribed by Horman et al (2002) as short intervalproduction scheduling (SIPS).

The specific purpose of this intervention was toeliminate the situation whereby materials andaccess equipment for one trade interferes withanother, and tradesmen are fighting for the sameworkplace.

MOBILE WORK CELL

Santos et al (2002) described applying the conceptof mobile cell manufacturing in construction. Thispaper presents the results of an exploratory studyinvestigating the application of the “mobile cellmanufacturing” concept within the constructionenvironment using a case study research method.The paper defines the characteristics of a cell ascreating a work flow where tasks and those whoperform them are closely connected in terms oftime, space and information.

These were the basic ingredients in the designof a simple mobile work cell appropriate to M&Eworkers. These were designed in conjunction withthe operatives with the objective of having all thatwas needed at hand when it was needed, with theability to be mobile and be able to move aroundthe product (the installation). The followingequipment was developed and provided:

• Mobile component trolley—see Figure 7.• Mobile cable dispensing and component trol-

ley—see Figure 8.• Mobile workbench with vice, shelf and

drawers.• Mobile material trolley for pipes and electri-

cal containment.The specific purpose of this intervention was toeliminate unnecessary sorting, fetching, looking,bending, carrying etc of materials and fittings nec-essary to carry out the work uninterrupted.



Activity Solution Selected Benefit of solution

Connection to the structure Shot fixing system Increased productivity

Method of support / suspension Pre-assembled, integrated supports Integrated system; increasedproductivity

Means of connecting service to supportLightweight, fast assembly channelsystem; quick fit support components,pipe-clips etc.

Increased productivity; materialsavings; ease of installation

System installation Press-fit pipework and conduit systems Increased productivity; ease ofinstallation

Tools and equipment Cordless power tools; mobile work celland ergonomic scaffold system

Increased productivity; improvedworking practices

Table 2: Solutions selected in accordance with installation activity and benefits derived from the solution(terminology for benefits is as used in Wilson (2000), Innovative M&E Installation).

ERGONOMIC ACCESS EQUIPMENT

The majority of M&E equipment is installed athigh level within buildings, and this requires theworker to gain access in order to install materialsand components using access equipment. Normalscaffolding typically consists of standard sectionsassembled to provide the necessary working plat-form height with kickboards and handrails.Access to the platform is via an integral laddernormally accessed from the inside of the towerthrough a lift up hatch in the platform floor. Tools,materials, consumables etc. are placed on the plat-form floor and used from there. This is a time con-suming process and involves the worker climbing,stooping, bending, twisting and reaching just toget to the place of work. In consideration of this, amore ergonomic scaffold was designed with theobjective of minimising significant body motionswhen gaining access to and carrying out work atthe point of installation (high level). This includedgetting from the floor, to the services installationpoint, and to the underside of the concrete slab for

fixing supports, and the like. The tower is stillassembled from standard sections but put togetherin a different way. It is readily accessible via aseries of steps at one end to give access to the ser-vices working height, and a step-up “poop-deck”at the furthest end to provide higher access to theunderside of the slab. On-board storage bins areprovided which are refilled using a simple manualreplenishment system.

The specific purpose of this intervention was toeliminate unnecessary motions for the tradesmangetting to the place of work, and to have the neces-sary materials and fittings at hand to carry out thework uninterrupted.

RESULTS

This case study set out to measure the cost oflabour used compared to the estimated labourcost, and consider its impact on the final margin ofthe project. To do this, actual labour used (notearned) was monitored on a weekly basis from thestart of the project and compared to plannedlabour usage, and this is represented in Figure 11.



Figure 7: Mobile component trolley,with simple manual replenishment.

Figure 8: Mobile cable dispensing and component trolleywith simple manual replenishment.

Figure 9: Tower as designed. Figure 10: Actual tower.

This study did not intend to measure specificenhancements to productivity such as metres ofcable / pipe installed; rather, it sought in a fairlysimple but scientific manner to test the effect thatthe lean intervention inputs had on the cost oflabour, on a weekly basis, then cumulatively. Theauthors do recognise, however, that the formerwould be valuable for future research to test theactual effectiveness of each of the interventions.

As can be seen, actual man weeks were consis-tently below planned on a week-by-week basis,with actual cumulative man weeks being 8.5%below planned that planned. Table 3 below repre-sents the estimated costs for the project, showingeach element, and comparing this to the final costper element.

A point to note is that the researcher did notinfluence the tradesmen by being present in theexperiment, this did not occur. Once the interven-tions were made, progress was monitored byphone-calls and random site visits.

DISCUSSION

Table 3 shows that the project ended with a 7%saving in materials and plant, an 8% saving inlabour, a 5% increase in sub-contract costs and a24% saving in preliminaries. Overall the projecthad a cost saving of £91k, which resulted in amargin increase of £144k, contributed too also byan increase in value from the customer of £53K.

Under normal experimental conditions, itwould have been desirable to compare theseresults with those of a control experiment, wherethe hypothesised cause was absent. In otherwords, to observe an exact same project that runsat exactly the same time but without the lean inter-ventions being made. However, in the context ofoperating in a live business and with a live projectit was not possible to do so. The historic projects

shown in Table 1 represent the control groupwhich did not have lean interventions imposedupon them, the cause, but had the result of sub-stantially increased labour costs, the effect, con-tributing to severe margin slippage. What thisexperiment has shown is that the four interven-tions proved effective in enhancing productivity,and the outcome in terms of reduced labour costsseems to be a function of these inputs. Did, there-fore, these interventions eliminate the routecauses of waste that would have otherwiseoccurred naturally? It would appear so. Labourcosts did not escalate and margin slippage did notoccur, in fact the margin increased significantlyon the case study project.

It could be argued that the project improved itsfinancial outcome because of skilled project man-agement, a good estimate, a better client, or bettercontractors in the other trades etc. This cannot besubstantiated in the context of this study. Butgiven that the company has experienced increasedlabour costs where interventions were not made,the results of this experiment are an encouragingstep in its performance improvement initiative, byshowing positive results in its first endeavours.So, is “lean” an antidote to labour cost escalationon complex M&E projects as hypothesised, anddid this lead to preventing margin slippage? Theauthors would argue yes, it is, and yes, probably itdid. They also recognise that other cost variablesneed to be controlled which deserve equal atten-tion in the future. But the final reminder is that thisresearch set out to focus on the labour elementonly, this being the company’s biggest currentconcern. This research has investigated the practi-cal and physical themes of the overall researchproject. The psychological theme, although partlyexperienced during the ethnographic study, wasnot investigated.



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Figure 11: Planned cumulative man weeks versus actual cumulative man weeks

FURTHER RESEARCH

These interventions were the first stage of design-ing and implementing a Lean ConstructionSystem for the company. The findings from thisreport will be used to inform and develop stand-ardised operating procedures and routines for howwork will be conducted in the future on new pro-jects. This will be together with new lean featuresyet to be researched, developed, implemented andtested on these new projects, which will bereported on in the future. One aspect of this will bepsychological factors that influence the worker.This was not considered as part of this case study,but is one of the main themes for the researchproject.

REFERENCES

Ballard, G. and Matthews, O., (2004). “Champi-onship—Prefabrication and Assembly”. Pro-ceedings of the 12th annual conference of theInternational Group for Lean Construction,Elsinore, Denmark, August 3–5, 2004.

Cassell, C. and Symon, G., (2004). “EssentialGuide to Qualitative Methods in Organisa-tional Research”. SAGE publications.

Checkland, P. and Scholes, J., 1992). “Soft Sys-tems Methodology in Action”. Wiley Publica-tions.

Coghlan, D. and Brannick, T., (2003). “DoingAction Research in Your Own Organisation”.SAGE publications.

Gibb, A.G.F. and Isack, F. (2003). “Re-engineer-ing Through Pre-assembly: Client Expecta-tions and Drivers”. Building Research andInformation, 31(2), 146–160.

Hawkins, G (1997). “Improving M&E Site Pro-ductivity”. BSRIA.

Horman, M.J., Messner, J.I., Riley, D.R., Pulaski,M.H., (2003). “Using Buffers to Manage Pro-duction: A Case Study of the Pentagon Reno-vation Project”. Proceedings of the 11thannual conference of the International Groupfor Lean Construction, Blacksburg, Virginia,July 22–24, 2003.

Koskela, L., (2004). “Making-Do—the EighthCategory of Waste”. Proceedings of the 12thannual conference of the International Groupfor Lean Construction, Elsinore, Denmark,August 3–5, 2004.

Larsen, J., Odgaard, G., and Buch, S., (2003). “ATrade Union’s View of the Building Process”.Proceedings of the 11th annual conference ofthe International Group for Lean Construc-tion, Blacksburg, Virginia, July 22-24, 2003.

McNamara, Brian E (1986). “Ergonomics: Maxi-mising the Human Resource”. 1986 LogistexForum, May 6–8, 1986.

Ohno, T., (1988). “Toyota Production System,Beyond Large Scale Production”. Productiv-ity Press.

Santos, A., Moser, L., Tookey, J., (2002). “Apply-ing the concept of Mobile Cell Manufacturingon the Drywall Process”. Proceedings of the10th annual conference of the InternationalGroup for Lean Construction, Gramado,Brazil.

The Productivity Press Development team(2002). “Standard Work for the Shopfloor”.Productivity Press.

Wilson, D., (2000). “Innovative M&E Installa-tion”. BSRIA.

Womack, J.P. and Jones, D.T., (1996). “LeanThinking, Banish Waste and Create Wealth inyour Organisation”. Simon and Schuster.



Element Estimated costs Final costs Variance Variance %

Value £1,672 £1,726 £54 3%

Costs:

Materials and plant £590 £550 -£40 -7%

Labour £335 £309 -£26 -8%

Sub-Contract £357 £375 £18 5%

Preliminaries £181 £138 -£43 -24%

Contingency £17 £17 Nil Nil

Sub-Total Costs £1,480 £1,389 -£91 -6%

Gross Margin Totals £192 £337 £145 75%

Gross Margin / Revenue Ratio 11.5% 19.5% 8%

Table 3: Estimated costs per element compared to final costs per element (values are £000’s).

“LEAN” AS AN ANTIDOTE TO LABOUR COST ESCALATION … · “LEAN” AS AN ANTIDOTE TO LABOUR COST...

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