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Lean implementation at a government supplier
of electricity and energy |
Context / Scope of project
A large government corporation asked PIP to create a program to improve the productivity of delivering its Program of Work (PoW) and, at the same time, reduce the cost to deliver its PoW across various projects. The Program of Work included all asset construction and maintenance, ranging from small tasks to multi-year construction projects. This was a large and complex organisation with more than $7 billion in total assets. As such, there were multiple priorities competing for resources across the company. PIP designed a Lean program which is focused on streamlining and improving business processes and aimed at raising PoW productivity by at least 10% for the next financial year. The size and complexity of the organisation had resulted in a number of management deficiencies:
- Work ‘churn’ (repeatedly delaying / changing the schedule) was not effectively managed across the PoW end to end process
- Duplication of effort
- Under utilisation of resource (including contractors) and inability to smooth resources
- No buffer to increase flexibility
- Different processes and accountability for different work types – all work was not managed the same
- Performance was measured by the dollars spent, not by the amount of work done versus plan (physical assets constructed / jobs completed) and the mix of work executed was not programmed to maximise throughput
- There was significant project execution not to plan (scope, schedule and costs) - which caused rework, overspends and delays
- Contractors were not managed effectively with conflicting accountabilities between internal labour force and external labour force and no clear measures for contractor performance
What we did:
- Performed a quick diagnostic and identified opportunities to increase PoW throughput by an additional 19% which amounts to an additional $147M p.a. in productivity improvements and reducing indirect expenditure in delivering the PoW by $36M to $50M p.a.
- To achieve the PoW productivity and indirect cost reduction improvements, we designed a Lean improvement program that focuses first on prioritising initiatives and then drove a cross-divisional system view of the PoW pipeline
- The initial review identified the Performance Alignment (what measurements define success and what review process are in place to manage performance?), Scheduling (how is the plan is optimised to ensure workforce productivity and deliver the correct assets on time and within budget?), Design, and Works Delivery (delivery of asset design and construction of assets) teams as key areas of focus for waste reduction. Overhead cost reduction initiatives were identified but initially parked to ensure that cost reduction would not impact the capability to deliver its PoW improvement targets
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- Designed a streamlined and improved PoW process
- Used a Value Driver Tree to identify key waste levers to be addressed in the PoW Improvement Program
- Aligned initiatives to the key delivery areas on the Value Driver Tree:
- ‘Mix’: Improve Future Plan robustness (area plans, planning reports, timely identification of work)
- Capacity Hours: Improve resource planning to align schedule with capability
- Downtime: Improve operating processes to maximise field resource performance
- Identified high value initiatives (including dependencies) for immediate focus
- Where:
- S = Scheduling improvement team initiatives
- D = Design improvement team initiatives
- W = Works Delivery improvement team initiatives
- Increased Utilisation through improved work flow initiatives
- Scheduling: Redesigned scheduling process (deliverables timelines), implement rolling PoW plans (PoW lock-down) and aligned specification and procurement process with PoW
- Design: Optimised design input into the Project Approval Request– required before funds would be unlocked for construction of the asset
- Works Delivery: Increased continuity of work flow across 3 month schedule, optimised and embedded centralised scheduling and work packaging, streamline flow of work through to delivery, optimised micro scheduling and fast tracked FFA implementation and optimisation
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- Improved Productivity
- Design: Streamline designed processes (inc workflow & structures), increased the availability & use of standard template designs, reduced design effort by simplification, improved Compatible Units’ content & management and optimise variation management
- Works Delivery: Optimised and embedded centralised scheduling and work packaging, streamlined flow of work through delivery, drove field crew (internal and subcontractor) and resourced productivity improvements, implemented standardised tool for micro scheduling and fast tracked FFA implementation and optimisation
- Reduced Rework
- Design: Streamlined design processes (inc workflow & structures), reengineer estimation methodology & process and optimise variation management
- Works Delivery: Established accountabilities and optimise processes for internal delivery functions.
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Client achieved:
- The engagement had a rapid start with a pipeline of over 40 improvement ideas expected to deliver a 19% PoW throughput (physical ‘jobs’ completed) increase, amounting to an additional $147M p.a. in productivity, and reducing non-value-adding costs by $36M to $50M p.a.
- Lean visual boards were installed in the four key work groups covered in the engagement and managers were trained in the use of lean methodology to review performance and drive improvements. Visual board meeting now take place daily and weekly.
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