Lean transformation targets operating cost shortfall

San Diego Community College District follows the Toyota Way
Published 5-22-2012
  • Lean Capital Project Methods

    Co-located with an 815-space parking structure, Miramar College’s 5,108-sf Police Station received LEED Platinum certification in April 2012. The $16.7 million project came in ahead of schedule and approximately $1 million under budget.

    Photo courtesy of San Diego Community College District

  • Lean Construction Project

    On the campus of San Diego Community College District’s City College, four tower cranes are operating concurrently as part of three construction projects: a $57 million, 98,000-sf Science Building, slated for completion in June 2013; a $80 million including land acquisition, 66,000-sf Math & Social Sciences Building, targeted for completion in August 2012; and the $88 million, 110,000-sf Arts & Humanities and Business Technology complex to be completed in December 2013.

    Photo courtesy of San Diego Community College District

Doing more with less has become the new normal for facilities organizations everywhere, but the challenge imposed on the San Diego Community College District (SDCCD) pushed that principle to the extreme.

A few years ago, SDCCD found itself facing a classic good news/bad news scenario. Just as local bond money started flowing to finance a 10-year building boom, California’s dramatic revenue shortfalls forced a $50 million cut in the district’s annual operating budget.  

The disparity between an 80 percent increase in the built portfolio and a 16 percent drop in maintenance and operations spending generated numbers that did not add up.

According to David Umstot, the district’s vice chancellor of facilities management, “We couldn’t just stop providing certain services. I think everyone understood how significant the challenge was and recognized that we had to adopt a smarter approach.”

That smarter approach turned out to be a Lean transformation. Pioneered by Toyota, Lean is a process improvement technique in which a group of principles, practices, and tools are used to identify inefficiencies in a process, create value, reduce waste, and streamline process flow—resulting in a new process that uses less human effort, less space, less capital, and less time. (See A Lean Primer.)

Applying this emphasis on waste-elimination to capital program delivery and maintenance and operations functions has produced multiple changes in practices district-wide, millions of dollars in savings, and the realization that the Toyota Way paradigm shift must be implemented across the entire organization.

“You cannot change a culture if you have not empowered those who are actually doing the work,” says Umstot. “Everyone within our organization, including the people who pay the bills and answer the phones, has been involved in our Toyota Way study groups.It needs to be a holistic effort, up and down the entire organization.”

STARTING THE JOURNEY

Serving 130,000 students, the San Diego Community College District is the second largest in California and the sixth largest in the nation. A centralized facilities management group is responsible for three two-year institutions and six satellite campuses slated to grow from 2 million gsf to 3.6 million sf under roof, plus parking structures and more than 130 acres of maintained landscape.

The journey of applying Lean to capital program delivery and maintenance and operations functions started almost four years ago. To make informed decisions on where to focus energy and attention, the facilities group retained a sensei to help evaluate and benchmark the existing organization and practices. The goal was to pare back to the core mission, identify the greatest opportunities for improvement and efficiencies, and do more with existing resources. 

“Many people were concerned about the process, afraid of change or wondering if they would lose their job. Our sensei helped us sort the facts from anecdote, so we could carry out data-driven decision-making,” Umstot says.

After almost two years of sensei consultation, the district progressed to the point where it was capable of continuing on the journey on its own. Today, 18 months later, the notion that the Toyota Way is an ongoing process—“a journey, not a destination,” as Umstot puts it — is very clear.

MAINTENANCE PROCESS FINDINGS

Data-gathering on the maintenance side revealed several ways SDCCD could improve its program, both by adding new systems and streamlining certain tasks.  A prioritization matrix addressed what commitments the facilities group would make to its customers. New workflow processes organized project planning and made the maintenance load more predictable.

The initiative imposed order on what had been an informal service request system. Incoming work orders are now directed to a centralized call center whose staff is trained to triage problem reports according to commitments defined in a new five-tiered service level agreement. The SLA identifies the criteria for the five categories and commits to a specified response time for each.This system now provides true metrics on time utilization and enables personnel to be more effective in their jobs.

Newly added planner schedulers assign tasks to the maintenance staff according to SLA priority and proximity. This control over the workflow greatly increases the facilities group’s ability to plan for future projects and coordinate the skills required.

Several other measures make more efficient use of trade time. Painters are assigned directly to a campus for a few months instead of reporting daily to a centralized location. The benefits of this new scheme became evident in a report showing the district used as much paint in the first six months of the new scheme than in the entire previous year.

The district also outsourced the task of stocking parts in plumbers’ and electricians’ trucks, handing off the responsibility to the Grainger rolling stock program. 

“The premise is to get more time on tools versus driving and stocking for the job,” says Umstot.

An electronic work order delivery system now pushes new assignment details to technicians in the field through smart phones. The system allows only one work order to be open at a time, so it can clock how much time is spent on each task. Field personnel no longer need to return to headquarters for further assignments.

CUSTODIAL EFFICIENCIES

A similar exercise on the custodial side created a unified approach. The district adopted cleaning standards to eliminate variability and leveled the custodians' workload so each had a similar beat. A “management by walking around” policy has crew leads on site evaluating spaces with a scorecard to identify areas that need more attention, either through improved training or by uncovering possible maintenance-driven root causes. With custodians now fully aware of the criteria on which they are judged, the facilities group was able to introduce a pride program, which has already inspired some performance turn-arounds, Umstot says.

The review also uncovered several specific activities that could be eliminated to reclaim personnel time, for example, the 17 person-days per month spent opening and securing doors for faculty and staff. A shift in policy to providing those services for only the first two weeks of the semester freed a “huge” number of hours to redirect to higher priority tasks.

An emphasis on more efficient cleaning included the migration from a nighttime third shift to daytime first and second shifts. Not only is it easier for custodians to keep up with the workload, such as refreshing restrooms during the day, but the revamped policy also eliminated the 30-minute paid lunch breaks allotted to third-shift workers.

“Those employees now get an extra half-hour of productivity daily,” Umstot notes. “Multiply that by 100 custodians, and it’s an extra 50 hours a day, 250 hours a week, which is pretty significant.” 

CAPITAL PROGRAM DELIVERY

The district’s capital program delivery structure also changed significantly. Emulating the Toyota Way, a monthly A3 program report that tracks key performance metrics was created. Included in the nine categories are: safety; overall program implementation expenditures versus planned; bid schedule; budget distribution and reserves status by institution and district-wide; budget expenditures to date and commitments; schedule for all active projects; small/disadvantaged business program participation; the speed of vendor payments and change order processing; and change orders aging over 60 days. Viewing these results on a single page provides a convenient snapshot of the program’s progress.

One area in need of attention was the district’s former approach to traditional hard bid project delivery, which had been generating an average change order rate of 10.8 percent and average project delays of 43.5 days. Migrating to multiple prime project delivery lowered the change order rate and improved schedule performance, but still left room for improvement. The district now requires the use of pull planning on all projects, regardless of delivery method. 

Further progress was made with the district’s introduction of Building Information Modeling (BIM) standards about two years ago. (Version 2.0 was released in March 2012.) The standards are enabling as opposed to proscriptive, making best use of each delivery team member’s specific expertise. Clash detection has proven quite cost-effective, saving approximately $3,400 per clash resolved during design instead of in the field. Even more “compelling,” Umstot notes, is that on projects where BIM is the common denominator, the change order rate has gone down to just 2.3 percent.

Other Lean techniques adopted include target costing, with the goal of at least a 70 percent space efficiency ratio, and set-based design and life cycle cost analysis, particularly for mechanical systems. Value stream mapping reduced change order processing time from 67 working days to 21 calendar days, among other accomplishments.

SDCCD also incorporated the Japanese practice of Hourensou, an offshoot of the Genchi Genbutsu concept of going to see for oneself. Hourensou entails delegating a skilled representative to visit and assess job sites because the manager is not available. The results are translated into weekly project status summaries presented in an A6 format.

The A6 reports capture salient details like job look-ahead, change orders, and schedule updates, along with photographs of the construction site.

“We review them first thing Monday, so we are all on the same page as the person on the ground. Often, problems are not as readily understood in words as when you have the chance to look at them for yourself,” Umstot comments.

BUY-IN AND PUSHBACK

To enlist support for the Lean agenda at the highest level of the district, Umstot first presented the information to colleagues in the Cabinet, including the college presidents and the chancellor.

“We reviewed the financial repercussions and the benefits to the district. We also defined the quality of our standards and explained the commitments we could make with our resources. It was important for everyone to understand these details,” says Umstot. 

The fiscally responsible governing board members, familiar with these types of Lean measures from their outside roles, embraced the program.

The unionized labor force, represented by the American Federation of Teachers, was keenly aware of the budget challenges and realized the need for change. Some pushback did arise among a handful of craft workers, but for the most part, the objections were countered by emphasizing the need for accountability and the obligation to meet the best interests of the district.

The facilities group also listened to observations from the field. For instance, the first smart phones deploying electronic work orders operated on a network lacking in bandwidth, so data moved very slowly. Plus the device’s small screen and keyboard were difficult to use. Adopting smart phones with a faster 4G connection and larger screens and keyboards was a win/win decision.

The district has also introduced the requirement that all maintenance and operations supervisors earn a Lean Enterprise certificate at San Diego State University, on organization time.

“Our last cohort is currently going through the program,” says Umstot. “By the end of May the entire supervisory staff will have this certification, and the tools and knowledge that come with it. It is fantastic for me to watch the light bulbs come on as they understand what we’re doing and inculcate these techniques into the organization.”

METRICS

So far the district has identified potential cumulative savings of almost $26 million over an eight-year period. Current savings this fiscal year are estimated to be more than $4.5 million.  Of all the data to come out of the Lean initiatives, Umstot looks at the trajectory of two key metrics — cleanable space per custodian and maintenance cost per sf — as a reflection of the organization’s progress.

At the program outset, custodians cleaned an average of 13,900 sf each, and maintenance costs were $3.93 per sf. SDCCD set three-year targets of 25,000 sf and $2.25 per sf, respectively.  The 2011 progress snapshot shows custodial cleaning now at 21,225 sf, and maintenance costs at $2.31 per sf.   

In the future, Umstot will be looking for savings in two very different areas, the purchasing process and email management.

“There are always opportunities for improvement. That is a key concept behind the Toyota Way. It is relentless, a journey, not a destination,” he concludes.  

By Nicole Zaro Stahl