Transcript: Be A Continuous Improvement Junkie - w/ John Pemberton

No professional sports team would ever go into their championship game, pick your particular type of sport and try to play against the other team when nobody knew each other. They had never practiced together. They hadn't developed any plays and yet that's what we do in construction in an average project. The conclusion many people are coming to is there's no bad folks in the construction business. It's just a bad system.

Hello. Hello. I'm Brittany Campbell Turner and this is the Constructor Podcast, episode number 36. Hello and welcome to the Constructor Podcast, the best way to build it. This podcast is dedicated to helping property owners have certainty in their decisions about their construction projects.

We talk about fostering trusting relationships within your project teams, help you understand how to lower risk, be under budget and on schedule in your construction projects. Most importantly, exceeding your end user's desires. There is a movement happening. We as an industry are getting smarter. John Pemberton and I talk about the continuous improvement movement and relevant data that supports what makes projects have the highest likelihood of being ahead of schedule and under budget.

You'll see what I mean when we get into the research. John comes to the idea of lean construction with an owner's mindset. Having been at Intel as the global construction group general manager, he understands that most people in general care about the metrics, which typically are schedule and budget. Also, he considers himself a continuous improvement junkie due to his manufacturing background at Intel. These are two awesome qualities that make his perspective relevant for the constructor audience.

I had a really fun time having this discussion with John. Listen in to my interview with John Pemberton. Hello, John. Welcome to the Constructor Podcast. We're happy to have you on the show today.

Thank you, Brittany. Happy to be here. Wonderful. You are the CEO of Transforming Construction Solutions currently. We'll talk a little bit about what TCS does in a little bit.

I wanted to talk to you about your experience with LCI. We've had a couple of interviewees here from LCI. You are in an owner advisory role there. Tell us a little bit about how you got involved with them. Sure.

I worked at Intel Corporation making computer chips for almost 34 years. I retired from there last summer. About three decades of my Intel career, I was a manufacturing factory manager, plant manager, actually running factories for the company. In the last four or five years, I moved into a global construction manager role, really traveling around the world, building what Intel needed to build, whether it was labs, offices, office complex, R&D facilities, et cetera. Through that journey, I got connected with a number of other owners, who led me to The Lean Construction Institute.

I haven't spent most of my career in manufacturing. I was a continuous improvement junkie, if you will, and it was a natural attraction to get involved with people who were trying to apply lean construction principles and collaborative contracting methodology to the construction industry. And I got to the board of that organization. I was on that for three years while I was working with Intel. And then this last year after I retired, both from the board there and the company, I've been on the traveling circuit really sharing what we'll talk about tonight, which is the business case for lean and some really what I think are pretty fascinating business research results that we've uncovered over the last year or two.

That's wonderful. I love that you said that you're a continuous improvement junkie. I think that I'm definitely becoming one of those. And I am happy to hear that that journey led you to The Lean Construction Institute and you've been able to contribute to it. So yeah, let's get into the topic of discussion, the business case for lean.

In past interviews, we've actually interviewed Renee Chang, who's done some research with The Lean Construction Institute as well. And we've been able to gather a lot of info from her interviews. So I'll make sure to link those to this. But you definitely have a different perspective having worked in the industry as an owner. So you have that perspective.

And now you get the opportunity to share that with various groups. Who are you speaking with? Who are the people that you're actually doing this presentation to? It's a pretty good range of people, but the primary audience that we set out as Lean Construction Institute to try to touch were our communities of practice across the country. There's 30 different communities of practice, really geographically based.

There's one in the Bay Area, one up in the Portland area, one in Seattle, one in DC, one in New York City, and Dallas, et cetera, around the country. Those communities of practice are made up of lean practitioners, continuous improvement, folks that are really trying to find a better way to do construction in their local markets and their companies with their projects. And they're made up of architects, engineers, general contractors, trade contractors, specialty consultants, owners, really the whole gamut of people involved in the capital delivery project.

And many of those audiences are 50 to 100 people that we are able to have meaningful discussions with about what the research results are finding, what they're learning on their projects, and really how we can continue to try to move the industry forward. So that's been the primary audience of people. Now, in many of those communities of practice, though, we are trying to also do joint events with a general contractor like AGC, their national chapters, or an AIA for the architects, their national chapters, so that we're really trying to touch the whole community of people in a geography to share the business results.

We've been doing that for much of the last six months on the road, trying to get that information out to folks. And we're now starting to get requests to go into specific companies and share the business results and what we're learning around the country as we talk to different projects and different people. So it's really a pretty good mix of people across the country. That's wonderful. Would you say that there are particular markets that whatever the broad gamut is of parties, right, whether it be GC, designer, owners, is there a specific market?

I mean, I know health care has been a huge follower of LCI. I'm just curious as to whether you're able to see more technology companies, things of that nature. Sure, that's a good question. Certainly, there's many of the practices that we're trying to promote and study in the research really originated on the West Coast. Sutter Health, as you mentioned, James was on your program.

You can find my episode with James Pease from Sutter Health, how to develop a collaborative culture on every project with James Pease at Constructor. That's constructRR.com. Now let's get back into the interview. And shared some of the work they've done. Folks like Disney, UHS Health were also kind of innovators in the field.

When I started getting involved with this with Intel, we set up what we called the Large Owner Group, which was really about, it grew to about 20 companies, folks like Procter & Gamble, folks like Chevron, Microsoft, Google even participated a bit, General Motors, really a very, very wide range of companies in different industry segments that we're really trying to share and try to learn from Sutter, learn from Disney, learn from what other owners were doing, and how could we collectively try to move the industry forward.

That group of large owners also has been meeting pretty regularly over the last number of years with some of the industry consortia, folks like LCI, folks like the AEIA, folks like the AGC, to see what we can do as we band together. CII has been a big leader in that, really trying to figure out how we can band together to make systematic and really structural improvements in the industry. That really helps to know about the Large Owner Group, and you said that's primarily in California? Well, I'll call it the movement started in California.

It was really out of Berkeley, was some of the original foundation of where the Lean Construction Institute started. It's where some of the first, as James shared, some of the first IFOA contracts were done, but it's really proliferating now across the country. It's no longer just a West Coast phenomenon by any means. It's in Chicago, it's in New York City, it's in LA, it's in Florida, I was just down talking with folks in Orlando a week or two ago. It's spread across the country now.

That's just where it's headed. Do you feel like there's a true momentum really spreading across the country? I mean, you've been traveling all over the place. I sense that there is. I mean, there's clearly, and one of the things I was very passionate about and still am very passionate about is really how do we shift the productivity curve in the construction industry?

I noticed a number of your prior programs have talked about that, or at least in some sense, that really there's only a couple of industries that have had flat productivity over the last 40, 50 years. Healthcare has, construction has, education has, but if you look at many other industrial segments like manufacturing, information technology, transportation, agriculture, they're getting five or six percent productivity improvement year over year for 50 plus years, and our industry has stayed flat. And so I think there's a growing sense that that's just dragging our overall economy down and it's dragging our human capital down, that we're just got to figure out a better way to do the work of construction and bringing things together.

And I think the learning many people are coming to, or the conclusion many people are coming to, is it's not a, there's no bad folks in the construction business. It's just a bad system that we've allowed to develop over the past decades. And it's, you know, partly our litigious society, it's partly a lot of small, smaller companies that are trying to protect themselves and not get into a bad place. But we really have to come together and say, what's a better way to do this business?

And that's really what the Lean Construction Institute is trying to move forward, there's a better way, there has to be a better way. Other industries are finding ways to be more productive and so we just have to learn and figure out how to move our business forward. Yeah, that's wonderful. I'm curious as to whether you get specific questions after you've done your presentation, right? We're going to get a little bit more into detail about the business case for Lean, but is there any question that you get often after doing the presentation?

We almost always have a good discussion while the presentation is going, because I try to make it relatively interactive because it's really about learning and what can we collectively do together. And one of the things we often talk about is that many people in the construction industry believe that the problem is out there. If just the owners would do something or if just the general contractors would do something or if just the trade contractors would do something. And the learning that we always come back to is folks, it's going to take all of us to decide to play together better and it's not anybody that is the problem, we are all the problem and we got to figure out how to work together better, apply the practices and the tools and techniques, we'll talk a bit about more.

But I think that's the common one, Brittany, that it's so easy to fall into the trap that it's somebody else's fault and that's the problem. And I think that's the biggest there's enough evidence or data to prove that that might be partially the case. But we've just got to pull ourselves up by our bootstraps, if you will, and say we're part of the problem, let's go be part of the solution. So we're only better together. We're only better when we collaborate.

I love it. I truly do. So let's get into the data. Okay, sure. So I won't spend a lot of time talking about what Renee's work does.

She's done just phenomenal work at out of the University of Minnesota. I've had a chance to listen to her and talk with her a number of times. You can find my two-part series with Renee Cheng, professor and researcher at University of Minnesota, how to create high performance projects and the benefits of IPD lean projects at Constructor. That's constructrr.com. slash EP 28 and constructor.com.

slash EP 29. The other study that we that we sanctioned out of the Lean Construction Institute was really done by the folks at Dodd Analytic. And what they what we set out to do with them is really to start from the premise of what's the state of play, if you will, for owner satisfaction and project performance. And so we got we got an in-depth survey we did together with them on 81 different owners, wide range of different types of businesses from higher education, industrial, government, developers, a wide range of different applications.

And in each one of those 81 owners, we ask to really be able to study and do a detailed analysis on what they viewed over the last couple of years as their best project and what they would view as their typical project. And we did ask a lot of detailed questions then and had them self-identify on their best and average. And the reason that we did that is we don't want to get tainted with the one outlier that was terrible and nobody ever wants to do again, but really try to understand what was the differentiators and what's the causality for folks having best projects versus what is typical.

And then we started to sift through the data and of course the number one and number two business metric that all owners said was the most relevant for them was how did I do relative to the budget my company set up when I embarked upon this capital asset project. And then second is did I get my capital asset delivered and put into production, whatever production means for that organization at the time that I committed it to at the time the project was approved. So we really studied a lot of the project schedule and the project budget because that was the too overwhelming not surprising to folks from what was important to them.

And then we kind of start diving down through the data with the punchline and the punchline is really that folks that have a high lean intensity and I'll describe what that means as we go forward but high lean intensity projects are 3x meaning 300% more likely to be ahead of schedule and 2x or 200% more likely to be under budget than those that were not. And so we think there's a very compelling set of data around that and then I can share kind of the four or five big takeaways if you will that we got out of that research.

Let's just make sure to let the audience know that the research is available to review. It's good to at least have this on hand to thumb through and we can definitely leave the link where you can find that in the show notes. So I'll leave that for you guys. Yeah thank you that's great. Yeah we have a we put together kind of a one page summary that folks can have that is posted on the LCI website as well as the I'm going to kind of give you the clip notes of walking through the presentation the full presentations there and then there's also a number of videos that folks can watch that we've taped over various different times so a lot of collateral that folks are interested in learning more.

Thank you for for doing that. So continue please tell us more. So I'll say that there's probably four or five things that came out of the research and again some of them are match what we would say our intuition would be but the magnitude of the difference was pretty compelling to us and then some things I think we were surprised by how of some of what the data told us. So I'll kind of just walk you through the top four or five learnings. The first learning and again this one matches intuition to an extent but the magnitude of it was really surprising.

So one of the big learnings that we had out of the research again differentiating best projects from average was how important team dynamics were in the best relative to average and we asked in four areas and we did this based on research that the Pankow Foundation and CII had done you know a number of years ago several three probably three now years ago around team chemistry integration of new team members commitment of members to project goals and then decision making and it was amazing the best projects had about a seven to one or a six to one ratio of improvement relative to team dynamics from the average projects.

And what we talk about when we go through that data a bit more is it's you know I try to not use any particular sport but I use a sporting analogy that you know no professional sports team would ever go into their championship game pick your particular type of sport and try to play against the other team when nobody knew each other they had never practiced together they hadn't developed any plays and yet that's what we do in construction in an average project. We dump people into a project we say go and then we wonder why people don't necessarily get along so the best projects clearly we're doing a lot to onboard people literally doing a lot to try to coach about how to behave as a team team ground rules how to how to be productive and coordinate and collaborate with each other that's kind of the first one and again I think many of us who have

been in projects and have been in the industry for a while you can walk in and sense whether it's good or not good but now it's starting to be pretty clear from a data perspective how big a difference that the time and energy people putting into that that team formation and stuff it's not waste it's actually very very productive time and that's very consistent by the way with Rene's research as well. Yes it is I think it's really interesting that team building is is really not it's basically atypical for people to spend time on they think they have to you know start hitting the ground running you know reviewing the drawings asking those you know RFIs you know just get into get into the guts of the project but it's that emotional intelligence ultimately that you're describing yeah and it's it's um team dynamics I think that's really key and you said

it before uh that's what people are are understanding you have you can only get better together and the data is showing us that that's awesome. The second the second big arena that we the research showed in this one I think actually surprised us but we called it kind of how you build the team and what the research showed and we've got kind of a continuum on the on the x-axis that talks about when do you engage all of the key stakeholders all the key stakeholders meaning the designer, the GC, the mechanical contractor, electrical contractor, drywall contractor you get the when when in the the space of the design is what we've got on the x-axis when in the in that continuum from the time you're doing a pre-business case I don't know if I want to do the project until you've got all of the the documentation done done when did all those folks get on boarded

and what the data showed was the best projects about three quarters of the time or 75 percent of the time those key stakeholders are all hired and on board as design starts versus the typical projects where probably less than a third of the time those key stakeholders are on board at the time design starts so the the notion and again this probably ties a bit back to the team dynamics potentially but it was just it was really insightful to listen to that as we talked with folks about why we don't do that because the data is so clear that if we got people on board early that's what makes projects best and we often will stop and say okay if the data is that clear why is that and we talk a lot about in some of our more traditional delivery methods like design bid build that we think we can't competitively select our partners until we have a set of drawings

and then we talk through many people in the country are are doing that many projects are are competitively selecting who's going to be on the team with no drawings done that's how they are able to to have everybody on boarded before design starts we talk about that there's a myth or a perception that it costs too much to get people engaged early and the data is very clear to the contrary that that's actually the best projects get people on board early and that they have a significantly higher likelihood of being under budget so that was that was a really enlightening one that we didn't quite expect yeah that that is quite enlightening i like that metric yeah the the third third area was again probably related a little bit to the the onboarding but it was really around selection process and and it was just fascinating to see on the best

projects how folks were picked based on value based on self-selected teams negotiated but very little around bidding and then on the average projects it was almost all around some type of open bid or some type of pre-qualification with the bidding process it was very very clearly differentiated on how we were selecting companies to be part of the project team was very different on best projects than it was on average projects the the fourth area and this is one that that i'm personally very very interested in because it's it's partly what i'm trying to do in my new company and helping helping folks is we studied the project delivery methods and the contracting types to see if we could see any any differences between best and average and what we learned on the delivery methods is that you know our traditional cm at risk or design bid build

was a majority of the average projects but in very little of the integrated project delivery or design build were in the average but the best were disproportionate to a design build or an integrated project delivery and were not so prevalent over on our more traditional delivery methods so what we took out of that is that the more collaborative the delivery method the higher propensity of having a best project so that was kind of the a big takeaway on delivery method and then the the compensation or contracting type again are are much more traditional lump sum and maybe a gmp was the primary what average projects did and gmp's was a pretty good number of folks that were in the best projects but there was a sizable number in the best projects that were some type of shared savings cost reimbursable and so we see that as an emerging trend as well

the other thing we took out of both delivery method and contracting type is there are best projects prevalent in any delivery method and in any contractor compensation method and so people often argue with me that you can do it any way you want and get a good result it's one of kind of renee's miss that she broke in her research as well and to an extent that that is true but if you want to have a significantly higher probability from a delivery method the more collaborative the delivery method is i.e.

either a ipd or a design build where you have a higher propensity of partnerships and when you have a cost or not even necessarily a cost reimbursable but a shared savings where people have skin in the game to use renee's terms that had a very very big differentiator from a probability of success so that was pretty fascinating results on our part i just love the consistency that you're finding with with the dodge data analytics and also renee within her research that again it focuses back on team and it even goes down to the contracting types it's very much it very much shifts one's mindset and it and that is ultimately necessary to shift the culture it sounds like yes yes and then the last the last area that we that we studied and this is really we didn't to go back all the way to how we set the research up or the dot analytics folks set the research up

we did not ask and did not even mention anything about lean in picking your best project or average project they just said from whatever your business metrics are that you judge success or lack thereof you know give us your best and your average and then we ask a lot of questions around management methods that you use on your projects and so the last area and the fifth area that we had quite a bit of learning on is what lean tools made the biggest difference between average projects and best projects and so we've got probably what i call the top eight on a page in the presentation but i'll just touch on a couple of them and really the way we try to to coach and and teach this as we travel around talking to different companies and different project teams is it's difficult to absorb all the things one might do to try to go apply lean construction

techniques to a project but what we are learning is there are three or four that probably have the most material difference so if you're going to start somewhere here are places you might start in consistent britney with what you mentioned the top ones are things like a co-location or a big room you may have heard of that before and it's really a structured way of making everybody sit together you you meet together you have a very visual management of all of the data is up on the wall all the problems are up on the wall and so you don't get this what i call up the food chain over and down the food chain stuff going on you really have a very structured way of trying to communicate as a team collaborate as a team so that was kind of the number one differentiator between best projects and average projects so the second second biggest one was

really around target value design and that's a then a integrated way again of getting teams to collaborate between designers and the trade partners that physically do the work in an organized manner so you see kind of a consistency between the co-location big room getting people to collaborate work together in an integrated manner target value design is a methodology of getting the trade partners who are actually going to physically build the stuff in the field involved in the design they have tremendous insight into what works what doesn't work and can really add to the value of design again going back to the the better we have the trade partners on board as we start design that those was a key enabler for best projects then things like prefabrication modularization full team onboarding there's a number of other key lean tools and methodologies that that drifted to the top that the best projects use but it was just

again it's really all in the spirit of how does the team learn together as a group so that's great definitely thank you for sharing all of that john you bet you bet i we're just we're excited that the data is now starting to support the intuition many of us have had over the past you know five to ten years that there's a better way and the data is clearly showing there is a better way and we're just excited to get that out there many of the times i talk with folks i get to show me the data and now we can actually start to show them the data and that's a that's an opening for the conversation there's a lot to do there's a lot to learn there's a lot more to to help move this movement forward because that's really again what i call it is a

movement to find a better way certainly so tell us what impacts you're making or you're hoping to make with tcs well it's very similar to what we just we spent time talking about again i'm a passionate as i said a continuous improver and i just i've seen i've seen great projects that everybody loves and they're they're working together and they're making magic happen and they walk away feel it good i mean they all want to work together again and then i've seen projects that everybody's button heads and not talking to each other or yelling at each other and it just is emotionally draining we are way behind schedule way over budget everybody's irritated and they go home and are irritated with their families and friends etc and it's just a tough go and there's frankly a better way to go do this business and i really want to try to help companies that are

interested in doing it differently approach it differently using some of the lean construction techniques we talked about using more collaborative team approach to things whether it's design build or an integrated project delivery but really really applying lean to individual companies to make the companies better but also taking it to a project level and figuring out how they can work together better so that's our that's our mission that's our vision that's what we want to try to help those who want to be helped those that are what i'll call early adopters in this movement i mentioned that movement a couple of times you know i think the folks at sudder i think the folks at disney i think the folks at uhs i think the folks that that were pioneers in the lean construction institute that were the innovators i when i was at intel was a was either a late

innovator or an early early adopter one or the other but we're now trying to find other early adopters and say who are the companies whether it's a piping company electrical company an owner a general contractor designer that wants to change the industry that really wants to try to move things forward and that's the company we want to try to work with to help them help move the industry forward yeah it's an exciting time and uh i'm glad that you've you found the opportunity to to share the knowledge that you've been you've you've learned while at intel and in your involvement with lci and um i'm sure i'm sure just going out and speaking on behalf of lci about the business case is it's just piquing people's interest so that's that's that's awesome i'm glad you're getting the opportunity to consult on that well thank you for uh thank you for allowing me the

time today i really appreciate what you're doing to try to get the word out on many different levels of how we might do business better and differently and um again be happy to help anybody who's in your audience if they have further questions on the lci research report or on how they might do better business themselves we'd love to come help them awesome so a couple questions for you just to to wrap up here what would you say is the number one thing and maybe we've touched on it already but what would you say the number one thing is that the listener should do right now if they want to learn more about lean construction or adopt a better method right be part of this movement yeah i think the the number one thing i encourage everybody i talk with around the country is as i

mentioned we have 30 communities of practice now they're not in every uh convenient to every location but to try to find a community of practice that is in a location close to you because that's really where you can start to connect with people who are as passionate as you are about making a difference and then try to connect with people who are in your industrial segment that are trying to move things forward so if you're an owner that's a way in which you can get connected with other owners if you're a designer that's a way you can get connected with other designers as well as other people on a project team level so that's my my first advice always to folks is to if you're able if you're in a geography where there's one that's in a rational geographic reach is to reach out to those folks and see how you can get engaged

how you can learn how you can be part of that community awesome thanks for that so my last question is how can someone get in contact with you or learn more about what you are doing we we have a website and i can probably get that to you or if you type in a google transforming construction solutions you can you can find our website and we've got a way of getting in contact with us and be again happy to happy to help folks certainly and i'll put that link in the show notes as well all right wonderful john thanks again for joining us today and all right keep the momentum going happy too thanks again john okay bye bye so i've been talking with you guys about lean construction in multiple podcasts interviewing lots of interviewees which i've mentioned during this podcast and i'll put in the show notes as well but there's a reason that

i've been talking about lean construction and it's i just want you to get it what do i want you guys to get exactly i want you to get that there is a clear and certain path to increasing your likelihood of projects to get better in the way of schedule and budget this path includes more collaborative delivery models it includes co-locating john's illustration about sports teams playing in a championship game without knowing one another one another was an excellent example of how not being prepared to compete for your teammate takes place in traditional construction models it includes conceptual continuous estimating with the utilization of BIM or building information modeling james peas from sutter health and i talk about this in episode 22 it includes prefabrication modularization and off-site construction techniques the next episode is with an off-site construction expert ryan smith and you'll find this in episode 37

so i hope all of you are getting this because this is so valuable not only for you to implement right away but for the industry to be ultimately elevated right john and i talk about the continuous improvement movement don't miss the opportunity to be part of that so please email me at britney at constructor.com i want to know how this podcast has helped you even if you haven't implemented anything yet if you just want to learn more and have questions for me just still email me again that's britney b-r-i-t-t-a-n-i-e at constructor construct r-r.com don't forget to subscribe at constructor.com to get email updates from me if you haven't already subscribed to the podcast you can do so at itunes and stitcher please leave a review to show your support and let me know you're enjoying the podcast i look forward to talking with you guys next week