Herrero Builders’ Lean Product Development Journey
Herrero Builders is a construction company established in San Francisco in 1955. Its lean journey started with the commitment from its top management. One initial activity to change the mindset of its employees to enable this cultural change was to organize study-action groups. Teams were formed to read “The Toyota Way” and brainstorm how lean principles could be implemented in the construction sector and develop a shared vision.
Since then, Herrero has continued introducing lean tools such as Hoshin Planning, Visual Communication, A3s, Process Maps and the Value Integration Process, among others, to ensure collaboration and learning since the early stages of the construction projects. Continue reading to learn about the lean practices Herrero Builders has implemented as part of its Lean Transformation Journey.
Herrero Builders operates as a commercial general contractor that builds new buildings, renovates, seismically upgrades existing buildings, and provides solutions for tenant improvements for healthcare, education, commercial, R&D, industrial, parking, athletic, retail and multi-unit residential uses.
This construction company started its lean journey in 2005 when the top management committed to implement the Lean Methodology to create real value and eliminate waste in the End-to-End construction projects. Following the key milestones of Herrero Builders’ Lean Product Development Journey:
2005 – Top management wanted to implement novel approaches to the traditional construction practices used for decades, especially in the way of organizing the construction site, communicating with people and aligning with partners. Lean consultants were hired to support the lean transformation.
2006 – Study action groups were established to read, discuss and learn about Toyota’s lean principles and mindset. Herrero was one of the first companies in the construction sector to create the Director of Learning position and a Learning Department as part of its strategic plan to become a lean organization.
2007 – First Hoshin Planning was finalized to guide the company through the stabilization of its core processes
2010 – The team focused on collective value discovery, process alignment with customer values, cross-functional collaboration, visual communication and continuous improvement. The team was aligned to the Herrero Way to be customer driven.
2012 – Promote knowledge sharing and become a network organization
Through its journey, Herrero Builders successfully established different lean practices in several stages of the Product Development process. These practices were identified and structured according to the four building blocks of the Lean Innovation Model. Below are just some of the best practices identified and described in Herrero Builders’ chapter of the Lean Product Development Best Practices Book recently published by the Lean Analytics Association.
1) STRATEGY AND PERFORMANCE
Constructing a new building is a complex activity since several stakeholders with different values and objectives are involved: engineers, economists/accountants, government and regulatory entities, owners, agencies, etc. Therefore, it is important to understand and align the stakeholders’ values from the beginning. Herrero Builders established the Project Value Integration Process (VIP) which is a leadership process aiming at discovering collective value to define a project’s success and later delivering that value exceptionally well through the project’s entire lifecycle.
2) SKILLED PEOPLE AND COLLABORATION
Herrero Builders has given a great importance to cross-functional collaboration. It was identified that increased complexity and integration challenges arise when different parties join the project. Before applying lean principles, projects followed a sequence and allowed people access only when a previous job was concluded. For example, the architect hired the engineers and, later on, other contractors came into play.
Herrero Builders started to use an integrated project delivery approach where all parties start working together at the beginning of the project and have increased cross-functional collaboration between architects, engineers, contractors and specialist contractors. With this approach, the company implemented the frontloading lean principle, bringing in most of the stakeholders’ knowledge and expertise from the early stages of the construction project speeding decision-making, ensuring alignment and knowledge sharing, reducing rework and the overall cycle time.
3) EFFICIENT PRODUCT DEVELOPMENT PROCESS AND KNOWLEDGE BASED ENVIRONMENT
As part of the lean implementation in Herrero Builders, the team started to appreciate the value of processes and process maps. Detailed process maps were created to identify the activities done by each stakeholder/organization participating in the building design. All stakeholders were involved in this activity from the beginning of the selected project. Additionally, A3 Reports are used to solve problems, make decisions and capture knowledge during the complete life of the projects.
4) CONTINUOUS IMPROVEMENT AND CHANGE
Teams at Herrero Builders follow the Plan-Do-Check-Act (PDCA) cycle to achieve continuous improvement and change. Different concepts and tools are implemented in each phase of the cycle. The objective is to implement PDCA thinking in everyday life as a mental model: plan the work, do it, check afterward the progress and results, and then adjust activities as needed.
The main benefits of implementing lean practices in construction projects were: the alignment of values or goals of all stakeholders from the beginning of the project, increased cross-functional engagement, formalized processes, reduction of inefficiencies in the processes, time-saving, etc.
At the company level, the main benefits include an increase of 10% in recoverables from staff and a reduction of 50% in overhead time (time not paid by customers) due to the improvement process plan created at Herrero. Today, 50% of the idle time of the organization is driven towards continuous improvement. Recoverables are around 72% and overhead time is at 28% and reducing overhead time 50% by making Herrero a customer
Herrero Builders’ Best Practices are presented and described on more than 25 pages in the Lean Product Development Best Practices book.
Herrero Builders’ chapter is only one out of the 10 chapters presenting the real-world application of lean product development.
The hard copy of the book with the 10 cases is available for only 74.99 EUR.
Herrero Builders’ Lean Product Development case is available digitally free or charge to our members.
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About the Authors
Lean Analytics Association
Dr. Flores has over 20 years of experience collaborating as internal or external consultant in different manufacturing and services organizations, leading several initiatives related to Lean Thinking, Business Process improvement, Six Sigma, Supply Chain, Change Management, Open Innovation, Digital Transformation and Human Centered Service Design; providing also training and coaching.
She is co-founder and president of the Lean Analytics Association (LAA) and visiting scholar at the College of Management of the Ecole Polytechnique Fédérale de Lausanne (EPFL) in Switzerland.
She carried out her Post-doc at EPFL collaborating at the Lean Product and Process (LeanPPD) FP7 European project from 2009 to 2013. She completed her PhD in 2006 at the Politecnico di Milano studying Open Innovation Models to enable Industry-University collaboration for innovation. She obtained her Master’s Degree in Manufacturing Systems in 1999 and a Bachelor’s Degree in Mechanical Engineering from Monterrey Tec (ITESM) in 1996
Paulo Napolitano has over 30 years of construction experience as a General Contractor. He has been applying Lean Principles in projects and organizations since 1999. He combines research in innovative areas with practical experience to improve team performance, organization performance, and develop a culture of innovation. His main focus is on Product Development and Product Execution.
He also has been working with General Contractors, Architects, Consultants, and Subcontractors in South America, Europe, and North America. Project sizes that he has worked and he is still working today: from 5 million to 1.2 billion dollars.
Lean Analytics Association
Doroteja has 3 years of experience working on lean product development with background in mechanical engineering and ultra-precision technologies. She has worked with global organizations from various industrial sectors, either leading or supporting the development and introduction of bespoke lean innovation and new product development solutions.
Doroteja is interested in innovation capability development and over the past years she has developed several training courses to support organizations achieving quick and efficient knowledge transfer through customized simulated sessions. Being a certified Service Design Thinking Facilitator she believes in “Doing, not speaking” and supporting developments of truly customer-centric products and services.
Doroteja is a co-author of the Lean Product Development Best Practices book, and conference publications.