Inside Intel: leaning on cross-sector experience
It’s no secret that the construction industry suffers from an efficiency problem when it comes to managing procurement and delivery. In a world where everyone wants a little extra for less, the way asset owners interact with their construction supply chain has become more and more adversarial, with negotiations more often antagonistic instead of collaborative.
My colleague Danny Granger and I met with John Pemberton, the General Manager of Global Construction at technology giant Intel, at their campus in Arizona when he first moved in to his role. He talked passionately about the amount of waste he has witnessed in construction and we shared our own experiences of delivering lean construction.
More recently Intel have formed a lean construction institute in Ireland, and I watched with interest a video of John Pemberton speaking at the opening of the institute in Ireland on how he is now driving efficiencies and collaborative working.
The cost of inefficiency
John highlighted that when he first moved into the construction sector with Intel, he was surprised at the inefficiencies our industry seemed to accept as a cost of doing business, and found the expectation of inefficiency built into projects from the planning stages.
However, he recognised that here was an opportunity to transform the way Intel manages the construction of its property portfolio. His career had exposed him to strategies that have been hugely successful in a range of other industries, including in his own backyard of semiconductor manufacturing at Intel.
But what can the construction industry learn from Intel and others leading the way with lean approaches?
An ideology to stay competitive
In Intel’s core industry, consumers demand better processing power and performance every year. But with how much they’re willing to pay for that performance firmly fixed, improving efficiency was an essential part of staying competitive.
The primary focus of the Intel manufacturing group’s search for great efficiency was the adoption of ‘lean’ ideology. Going back to the work of Henry Ford and built upon by Taiichi Ohno at Toyota, lean manufacturing is a systematic method for identifying and eliminating waste throughout production.
We’ve seen interest grow in variations of this approach in the technology and manufacturing sectors.
Delivering better value through lean
Transferring these ideas into a construction sector context has been at the centre of John’s approach to transforming construction procurement and delivery at Intel.
Standing on the same foundations as lean manufacturing, lean construction is designed to increase owner and construction supply chain satisfaction with design and construction delivery. It views the procurement and delivery process holistically, making it easier to identify potential improvements that can enhance workflows, eliminate waste and fundamentally deliver better value and efficiency for the customer. The method is applicable to all projects regardless of size or nature, although typically not instigated unless on a large scale.
Building on the successful adoption of the lean approach, integrated project delivery (IPD) – a method proven by owners such as Disney and Sutter Health - is another concept John has introduced at Intel. Based on team work and collaboration, this approach goes hand in hand with lean construction, involving a fundamental reorganisation that brings key stakeholders and contributors together into a single enterprise at the earliest stages of a project.
Embedding the right culture
All members of the project team are encouraged to consider the entire project on a holistic basis, as the lean philosophy requires, rather than focusing only on their own niche responsibilities. For IPD to be successful it requires 100 percent commitment from each stakeholder, from ownership to delivery teams.
An important part of IPD is the adoption of ‘target value design’, which turns the traditional project planning process upside down.
Where previously a cost estimate was provided and constructability evaluated based on a detailed design, target value design factors like cost and constructability are integrated within the design process itself.
With true integrated project delivery all contributors work together from a project’s beginnings, having signed onto a single multi-party agreement that includes the asset owner, project designers and trade partners. It’s a technique that fosters a culture of collaboration and innovation with a focus on delivering value and sharing. For example, when cost savings are made they are split between the asset owner and the supply chain.
Journey of change
In response to continual growth of mobile platforms, use of the cloud and the internet of things (IoT), Intel are on a journey of change. There’s no doubt that John’s achieving great things at Intel using the concepts and tools of lean and IPD, becoming more agile through lean concepts, taking the learning from other industries.
To achieve real value improvement the suggestion is to work smarter, and that means collaboratively.