PERGAMON Computers and Structures 67 (1998) 389±400

Construction as a manufacturing process: Lessons from the

automotive industry
Andrew Crowley
Computer Aided Engineering Group, Department of Civil Engineering, The University of Leeds, Leeds LS2 9JT, England, U.K.

Abstract

The paper discusses the application of business process re-engineering (BPR) to the construction industry. In this
context, the paper will examine the concepts of computer integrated manufacturing (CIM) and lean production, and
question the relevance of these techniques to construction. The objective of the paper is to show that construction
can, and should, be viewed as a manufacturing process. Much of the discussion is derived from the author's work
on the Eureka CIMsteel Project Ð a Pan-European research project concerned with the application of computer
integrated manufacturing (CIM) technology to the European constructional steelwork industry. # 1998 Elsevier
Science Ltd. All rights reserved.

1. Introduction keeping with the civil engineering mentality Ð is the

de®nition of manufacturing o€ered by Chryssolouris [2]
The automotive industry moved from craft-based pro- as:
duction to mass production almost a century ago, and
yet people still talk of moving the construction indus- ...the process of transforming materials and information into
try from a craft-based to a manufacturing industry. goods for the satisfaction of human needs.
Experience during the CIMsteel Project [1] has shown
that there is signi®cant reluctance by parties involved
in construction to view themselves as being part of a Lanigan [3] also o€ers a view of engineering as:
manufacturing industry. They point to the one-of-a-
...the application of technology to wealth creation by provid-
kind, project-based nature of construction, as evidence ing cost-e€ective solutions to human needs and problems.
that the principles and techniques of manufacturing
cannot be applied to construction.
At ®rst glance, the automotive industry may appear With these de®nitions in mind, the paper will exam-
to be far removed from construction, but its in¯uence ine manufacturing processes and, where appropriate,
on society goes far beyond manufacturing. Twice in will derive comparisons with the construction industry.
this century, its revolutions changed our most funda-
mental ideas of how we make things. These changes
have in¯uenced the way we work, what we buy, how
we think, and ultimately the way we live. 2. The rise of mass production

1.1. De®ning ``manufacturing''
People often think of manufacturing as mass-pro-
duction; i.e. high volume production on an assembly
line of relatively simple, standardized, self-contained
products. A more appropriate view Ð and one in
The ®rst cars (or ``horseless carriages'') were made
to order by craftsmen, ®tting parts together for a par-
ticular vehicle. Along came Henry Ford, who applied
(and extended) the Taylor philosophy of ``scienti®c
management'' [4] to the mass production of the auto-
mobile.

0045-7949/98/$19.00 # 1998 Elsevier Science Ltd. All rights reserved.

PII: S 0 0 4 5 - 7 9 4 9 ( 9 7 ) 0 0 1 4 7 - 8
390 A. Crowley / Computers and Structures 67 (1998) 389±400
After World War 1, Henry Ford and Alfred Sloan
of General Motors moved manufacturing from centu-
ries of (European dominated) craft-production into the
age of (US dominated) global mass production.
After World War II, Eiji Toyoda and Taiichi Ohno
at the Toyota Motor Company in Japan pioneered the
concept of lean production. As other Japanese compa-
nies copied this system, Japan quickly rose to its cur-
rent economic pre-eminence.
Today, manufacturers have to produce the vehicles
customers want; not simply the vehicles they want (or
are able) to produce. In Japan, the lean production
system enables a majority of customers to order the
cars they desire and have them delivered in less than
two weeks.
The success of mass production, from the ®rst indus-
trial revolution to the 1970s, was due to continuous
improvements in manufacturing processes resulting in
rapid productivity growth. Some of these improve-
ments can be attributed to technological innovation
such as:
* the development of better engineering materials,
* the application of mechanical power,
* the development of new tools suitable for
mechanization (turning, milling, and grinding).
* the application of precision measurement,
* the elimination of ``®tting'' (due to the interchan-
geability of parts).
Of course, the construction industry can, and does,
employ many of these technological innovations.
However, the signi®cant productivity gains were more
to do with the organization and management of pro-
duction than merely the application of technology.
3. The trouble with mass production
By the mid-1980s, the limitations and in¯exibility of
traditional mass production reduced the competitive-
ness of Western motor manufacturers, preventing them
from meeting the needs of an ever more demanding
customer.
The Taylor±Ford system of mass-production was
based on a fundamental assumption that seemed
obvious and therefore received little critical attention.
The ``division of labor'' concept implies that all indi-
vidual tasks in a job are independent and separable. It
follows that organizations can (and should) be struc-
tured hierarchically in a ``command and control''
structure with organizational components correspond-
ing to tasks.
However, the assumption of independence and
separability in a complex manufacturing operation is
faulty. Tasks are inescapably interrelated by the fact
that the output of one step in a complex sequential
manufacturing process becomes the input of the next
step. Ayres [5] argues that a Taylor±Fordist approach
to manufacturing, which attempts to maximize
throughput at the task level, tends to permit (even
encourage) an excessive number of errors and defects
in the product, resulting in the unnecessary down-
stream costs of inspection, repair, and rework.
One of the reasons for the persuasiveness of this
approach is that it has become embedded in practices
and procedures that (at ®rst sight) bear no direct re-
lation to mass-production technology. Accounting
practices still re¯ect the assumption that each activity
in each department is e€ectively independent of the
other and can therefore be evaluated in terms of some
``output'' per unit of labor and capital input. Even
though ``management by numbers'' tends to override
common sense, many ®rms have given in to their
accountants forcing individual activities to become
``pro®t centers''.
4. Improving the manufacturing process
Over the past 40 years, many innovations have
emerged to improve the manufacturing process, includ-
ing:
Quality systems:
* SQC Ð statistical quality control, which evolved
into
* TQC Ð total quality control, and
* TQM Ð total quality management.
Planning and scheduling systems:
* MRP Ð Materials Resource Planning,
* MRP II Ð Manufacturing Resource Planning,
* OPT Ð Optimized Production Technology, and
* JIT Ð Just-In-Time,
Manufacturing systems:
* GT Ð group technology,
* Cellular Manufacturing,
* FMS Ð Flexible Manufacturing Systems, and
* CIM Ð Computer Integrated Manufacturing.
These are discussed in detail elsewhere [5±7]. Of
these, CIM is of most signi®cance, and particularly rel-
evant to construction.
5. Computer integrated manufacturing
5.1. The need for CIM
Increasing product complexity and variety creates a
massive problem of information management and co-
ordination. The availability of too much information
of the wrong kind can cause problems of over-
loading and interference, preventing local increases in
 A. Crowley / Computers and Structures 67 (1998) 389±400
productivity being translated into global productivity
growth. Ayres [5] argues that the slowdown in pro-
ductivity growth is occurring not in spite of the infor-
mation processing power of computers but actually
because of it.
5.2. What is CIM?
CIM uses information technology to integrate the
various processes, which together comprise the total
manufacturing process. As de®ned by The Digital
Equipment Corporation [5], CIM is:
...the application of computer science technology to the enter-
prise of manufacturing in order to provide the right infor-
mation to the right place at the right time, which enables the
achievement of its product, process, and business goals.
Thus, CIM is centered on the decisions relating to the
planning and control of data ¯ow, data processing and
data dissemination. ``CADCAM'' is sometimes
regarded as being synonymous with ``CIM''. However,
Rembold et al. [7] state that CIM combines, in one
system, the activities of CAD (computer-aided design),
CAP (computer-aided planning), CAM (computer-
aided manufacturing), CAQ (computer-aided quality
control), and PP and C (production, planning and con-
trol).
CIM is also about the integration of people and
technology and linking manufacturing to other key
business functions. It is, therefore, concerned with the
organization of people within the total manufacturing
process and the integration of that process with
business planning, demand forecasting, and total qual-
ity management.
5.3. Implementing CIM
It is impossible to convert a traditional Taylorist±
Fordist manufacturing plant to CIM by simply instal-
ling sophisticated new equipment or incremental ad-
ditions to existing software. Successful conversion
requires a comprehensive ``top-down'' approach to the
problem of communication between di€erent ma-
chines.
There are also major risks in trying to computerize a
manufacturing system that has not been suciently
well-understood and rationalized. A CIM system can-
not be implemented with ``old-style'' division of labor
or ``old-style'' hierarchical management. In view of
this, Ayres [5] has proposed that a new type of non-
hierarchical network organization with distributed
intelligence and de-centralized decision-making powers
is evolving. Together with ¯exible automation, this
new form of organization is, he suggests, replacing
economies of scale with economies of scope.
391
6. Lean production
Womack et al. [8] describe lean production, and
suggest that it is the reason for the success of the
Japanese car industry. Their study of the global auto-
motive industry, shows that lean production emerged
from the set of conditions, in one country, at a time
when the conventional ideas for the industrial develop-
ment of the country seemed unworkable.
Lean production embraces many of the innovations
in manufacturing (particularly MRPII, JIT, TQM and
FMS) and rede®nes the production philosophy. The
basic aim of JIT (and other resource planning tech-
niques) is to reduce (or eliminate) unnecessary inven-
tory or work in progress. In Japan, where lean
production began, JIT is not thought of as a method
for lead-time reduction, inventory reduction, or cost
reduction, per se. Rather, these things are natural by-
products of a holistic management philosophy that is
best described as the antithesis of Taylorism, emphasiz-
ing the primary goal of product quality, and the criti-
cal importance of employees and customers.
An important consequence of the holistic view is
that extreme specialization of function (and of labor)
is counterproductive. Optimal performance of the sys-
tem as a whole is not achievable by maximization of
output at the component level.
Lean production combines the advantages of craft
and mass production, while avoiding the high cost of
the former and the rigidity of the latter. Towards this
end, lean producers employ teams of multi-skilled
workers at all levels of the organization and use highly
¯exible, increasingly automated machines to produce
volumes of products in enormous variety.
Lean production is lean because it uses half of every-
thing that mass production uses Ð half the human
e€ort in the factory, half the manufacturing space, half
the investment in tools, and half the engineering hours
to develop a new product in half the time.
The key aspects of lean production are summarized
into the following sections.
6.1. The lean production philosophy
The lean production philosophy states that there are
only two aspects of production systems that are im-
portant: conversion activities and ¯ows. Information
and material ¯ows are the basic units of analysis,
characterized by time, cost, and value. While all activi-
ties imply cost and consume time, only conversion ac-
tivities add value to the ¯ows. Therefore, lean
production concentrates on the two main conversion
activities: design (the main information conversion pro-
cess) and construction (the main material conversion
process). Lean production tries to improve those activi-
ties, and to eliminate all other activities.
392 A. Crowley / Computers and Structures 67 (1998) 389±400
6.2. The lean manufacturer
The problems of large scale production of standar-
dized products led to an organizational structure and
philosophy of extreme specialization and a division of
labor that is unsuited to small-scale production of
non-standardized or customized products. Lean manu-
facturers have become ``system integrators'', providing
only some of the more specialized parts and ®nal
assembly of subsystems from a network of suppliers.
Their major role is design, marketing and service,
rather than production.
6.3. Lean design
The productivity gap seen between some automotive
manufacturers was not necessarily attributable to
di€erences in the levels of automation in the plants.
Rather, it had more to do with the manufacturability
of the rival designs. Womack et al. [8] assert that ease
of manufacture was not an accident, rather, it was of
the most important results of the lean design process.
In their study [8], MIT identi®ed ``craftsmen'' in a
mass-production automotive plant as a cause of waste,
and not (as was claimed) a proof of the manufacturer's
dedication to quality. From the standpoint of the lean
producer, the existence of these ``craftsmen'' shows the
failure of the manufacturer to design easy to assemble
parts and then a failure to identify defects as soon as
they are found. Their advice Ð stamp out this ``crafts-
manship''.
6.4. The lean plant
The truly lean plant has two key organizational fea-
tures. Firstly, it transfers the maximum number of
tasks and responsibilities to those workers actually
adding value to the product (the opposite approach to
``scienti®c management'' [4]). Secondly, it has a system
for detecting defects that quickly traces every problem,
once discovered, to its ultimate source.
6.5. The lean supplier
Another key component of lean production is the
way components are supplied to the lean producer. It
is not simply a question of ``outsourcing''; rather, the
lean producer and its suppliers form contracts which
not only establish ground rules for determining price,
quality assurance, ordering and delivery, proprietary
rights and materials supply but also express a long-
term commitment to work together. Without a funda-
mental shift away from a power-based bargaining re-
lationship, it is almost impossible to move towards
lean supply.
Together with the globalization of the manufactur-
ing industry, the result is that the number of suppliers
to car companies is being reduced from thousands to a
few hundred, who are being asked to design more new
products. Frequently, they must now design and
supply whole braking systems, for example, rather
than just drums or pads to be bolted together in the
car factory.
6.6. The lean enterprise
In a later paper [9] Womack and Jones recognize
that ultimately lean production requires a new organiz-
ational model Ð a model than can to satisfy the often
con¯icting needs of individuals, functions and compa-
nies. They refer to this as the lean enterprise, in con-
trast with proposals for virtual corporations Ð in
which ``plug-compatible members of the ``value
stream'' come and go Ð which, they argue, fail to
grasp the massive costs of casual interactions. Virtual
corporations are ®ne for industries in which product
speci®cation and market demand are subject to dra-
matic and unpredictable change, but are terrible, they
say, for the vast majority of commercial activities.
The lean enterprise is also very di€erent from the
vertical keiretsu of Japan, whose members cement their
relationships by taking equity stakes in each other.
Unlike keiretsu members, participants in the lean enter-
prise must be free to leave if collaborators fail to
improve their performance or refuse to reveal their
situation.
6.7. A lean Ford
So, has the move away from traditional mass-pro-
duction meant the demise of the Ford Motor
Company? As can be seen from its current dominant
market share (12.6% of 1996 world car production
according to [10] Ð second only to General Motors),
the Ford Motor Company is still alive and well, and
positively thriving in the post-Fordist age. This is
because, ironically enough, it is a prime example of a
post-Fordist company. In 1980, it began to lose vast
amounts of money and a large share of its market.
This gave Ford the incentive to investigate its methods
of production. As it had recently acquired a stake in
Mazda, Ford made a ``pilgrimage'' to Hiroshima. They
concluded that the Japanese competitors were doing
something fundamentally new Ð in short, the tra-
ditional explanations for the Japanese success (low
wages, basic, high volume products, and low rated cur-
rency) were inadequate. Ford then adopted the lean
production philosophy and has since adapted well to
the newer international market.
 A. Crowley / Computers and Structures 67 (1998) 389±400
7. Business process re-engineering
Although relatively new to the Western world, lean
production has been in use (in some form) within the
automotive industry for over 40 years. A more recent
innovation in manufacturing emerged in 1990, i.e.
``business process re-engineering''. Hammer [11] saw
that the usual methods of boosting performance had
not yielded the dramatic improvements that companies
needed. In particular, heavy investment in information
technology had delivered disappointing results, largely
because companies tend to use technology to mechan-
ize old ways of doing business and to leave existing
processes intact.
BPR calls for the examination and redesign of all
aspects of company operations Ð from product design
and manufacture to order ful®llment Ð to make them
more ecient.
BPR is the search for, and the implementation of,
radical changes in business processes. Its aims are
major gains in performance and reductions in un-
necessary costs. Although this reorganization of
business procedures often occurs as a result of the im-
plementation of technology, BPR cuts across func-
tional boundaries and focuses on producing new and
fully integrated systems.
Unfortunately, Michael Hammer now admits that
most attempts at re-engineering have ended in failure.
This (according to the Economist [12]) is partly
because many consultants treated re-engineering as a
cure-all for every ailment ignoring the human side of
management, sacri®cing such intangible goods as com-
mitment and creativity to short-term eciency. Recent
case studies by Belmiro et al. [13] have revealed that
there is also a great deal of confusion about BPR
among industrialists. This is partly caused by the pro-
cess of constantly rede®ning what is already de®ned
and creating too many new and di€erent words and
phrases. This is causing many industrialists to miss the
underlying essence of BPR, which they say, does in
fact have the power to drive a business, and its people
ahead of the competition.
8. Relevance to the construction industry
So far, this paper has concentrated on manufactur-
ing and how it has been changed by a number of inno-
vations. One must now ask what the construction
industry can learn from the transformation of manu-
facturing from a craft industry to mass production,
and its more recent evolution of lean production.
Within this context, this paper will now examine the
state of the construction industry and consider whether
CIM is appropriate to construction processes, and
393
whether the construction industry is ready to be re-en-
gineered?
8.1. The state of the construction industry
Phase 1 of CIMsteel Ð the project de®nition phase
Ð carried out a detailed investigation into the state of
the structural steel industry in Europe. It found that
the traditional market for a number of large construc-
tion companies had fallen away, and that these compa-
nies, having su€ered large losses, faced a period of
dramatic restructuring if they were to adapt to the new
market environment. In 1988, constructional steel com-
panies were making only 1% return on sales, and a
return on capital of 5%. This compared with the best
practice in the manufacturing industry of 10% and
25% respectively.
In a more recent study [14], the CIMsteel Project
reported that the market conditions will remain very
dicult for the foreseeable future. The overall picture
is one of a construction economy in severe contrac-
tion.
The CIMsteel Phase 1 Report [15] identi®ed a num-
ber of problems within the structural steelwork indus-
try, and proposed solutions which are relevant to the
wider construction industry. It recognized that
improvements in the ``manufacturing process'' of con-
struction would require both the harmonization of
working practices as well as the optimization of e-
ciency and productivity using advanced computer-
based technology.
8.2. The industrialization of construction
For most of this century, architects and builders
have been seduced by the idea of producing houses in
factories [16]. The ideas of Le Cobusier and others
resulted in completely new methods of construction,
and were to strongly in¯uence design and construction
philosophy into the 1960s with the evolution of sys-
tems building. Three main principles underpinned the
industrialization of construction: standardization, pre-
fabrication and systems building. Standardization of
building components was a perquisite for their pro-
duction under factory conditions ( prefabrication)
which Ð together with dimensional co-ordination Ð
enabled the growth of systems building.
In the 1970s, Syohichiroh Toyoda started a housing
business (Toyota Homes), trading on the experience in
automobile production in terms of quality, reliability
and high levels of investment in advanced manufactur-
ing techniques. Gann [16] discusses the relative suc-
cesses of the producers of industrialized housing in
Japan. But the author feels that their success is due to
their application of a technique to a particular type
of product in a particular situation, which would be
394 A. Crowley / Computers and Structures 67 (1998) 389±400
dicult to reproduce elsewhere due to political, more
than technical, reasons. Evidence from the 1960s [17]
suggests that systems building did not raise overall
productivity (except in school building projects), and
was rarely cheaper or much quicker than traditional
construction techniques. Further, it often resulted in
products that were socially unacceptable [18].
8.3. Computer integrated construction?
The CIM philosophy views manufacturing as an in-
formation-processing industry. If the CIM philosophy
is to be applied to construction, the industry will also
have to be viewed in this way.
In common with many industries, construction is
laden down with paperwork. The paper based systems
evolved partly as a result of the technology of the day
(i.e. pre-IT). Simply computerizing this type of system
does not necessarily eliminate duplicate data and does
not take full advantage of the ¯exible access to infor-
mation o€ered by IT.
According to research by CSC (UK) Ltd [19], more
than 50% of the information related to a building is
still generated by hand. There are obviously opportu-
nities for improving the eciency of these information-
processing tasks, leading to improvements in overall
productivity.
Those involved in the industry started to use compu-
ter applications mainly to support existing processes;
improving the accuracy, quality and cost e€ectiveness
of those individual activities. These applications
focused on the generation of the same communication
media as before; e.g. drawings, schedules, speci®ca-
tions, etc.; and these documents have to be interpreted
by humans before their information can be used in
other applications. Thus, even though some engineer-
ing information is now held in digital form, this infor-
mation is (typically) still being conveyed using
traditional (paper) representations. It can been seen
that poorly implemented IT strategies are duplicating
paperwork, rather than reducing or eliminating it.
Improved, easy-to-use computer systems and soft-
ware, have brought us to the point where every process
in the construction life cycle is in¯uenced by IT. As it
becomes more cost-e€ective to create and manipulate
engineering information in digital form, the construc-
tion industry will face growing pressure to revise work-
ing methods so that they are more suited to the
management of this digital information and the related
computer systems.
The basic idea of CIC is to facilitate communication
of data, knowledge and design solutions between pro-
ject participants. Early development e€orts focussed
primarily on technical issues, such as the data structure
of the constructed product and production processes.
Later researchers have seen CIC as the key to a wider
revolution.
8.3.1. An IT strategy for construction
The construction industry now requires a coherent
and agreed IT strategy that will facilitate the unam-
biguous, meaningful ¯ow of digital information, as
well as the e€ective provision of information manage-
ment at all levels within an organization.
Di€erent levels of IT exploitation can support or
induce di€erent levels of business transformation to
enhance the competitive capability of an organization.
The CIMsteel Project [20] identi®ed ®ve levels of IT
implementation:
(1) Localized exploitation Ð introducing new tech-
nology, such as a new software product, into an exist-
ing organization.
(2) Internal integration Ð introducing digital infor-
mation exchange or communication between di€erent
parts of a company, without a€ecting existing com-
pany organization.
(3) Business rede®nition Ð re-organizing a company
and its way of doing business to maximize the advan-
tages o€ered by new technology.
(4) Redesigning external links Ð rede®ning links
with other companies to enable digital transfer of in-
formation that was previously exchanged by traditional
means such as postal services.
(5) Rede®ning the industrial sector Ð totally altering
the way in which the sector operates, in¯uencing the
long term and contractual relationships between com-
panies, as well as simple information exchange.
Gray and Fowler [21] assert that the correct im-
plementation of information technology should pro-
vide e€ective communication links and thereby
improve management in the industry.
8.3.2. EDI: the driver for change?
It can be seen that localized exploitation (level 1)
and (to some extent) internal integration (level 2) have
already been achieved. The redesign of inter-company
links (level 4) is based on the ability to exchange infor-
mation electronically, but it involves more than just
the implementation of the technology. electronic data
interchange (EDI) has been de®ned Ho€man [22] as:
...the electronic exchange of structured and normalized data
between computer applications of parties involved in a (trade)
transaction.
The EDIFACT (electronic data interchange for ad-
ministration, commerce and transport) standard was
rati®ed by the United Nations in 1987 and has
since become the basis for agreement on a common
 A. Crowley / Computers and Structures 67 (1998) 389±400
structure for documents, such as those for trading, so
that they can be interchanged electronically [23].
However, EDI is only the enabling technology that
allows the strategic linking of the business and techni-
cal processes of organizations. The substantial part of
the work to be done in achieving this level of electronic
integration (i.e. level 4) concerns the resolution of the
commercial and legal issues involved in utilizing elec-
tronic links.
The initiative to adopt EDI was taken by companies
such as Marks & Spencer, Tesco, B&Q, Ford, ICI,
and Rover. These companies persuaded their largest
suppliers to do likewise, creating a number of EDI
communities with the major manufacturer or retailer
as the hub to which an increasing number of compa-
nies are connected.
Since the companies listed above are major clients to
the industry, the growing use of EDI will probably
force the construction industry to fall into line. One
pointer to the future is provided by EDICON, a con-
struction consortium promoting EDI within the indus-
try. Another is the CITE initiative (construction
industry trading electronically) Ð a drive by some of
the largest players in construction to use electronic
data exchange rather than paperwork [24].
8.3.3. Data exchange standards
The success of EDI is due to the fact that it formal-
izes relatively simple messages or documents, which
even in their paper versions are highly standardized.
The transmittal of full building designs as standardized
EDI-messages would be a totally di€erent story. It has
been suggested that EDI transfer of construction draw-
ings would only include general information about
drawings in the EDI-message. The actual graphics
could then be transferred using special purpose data
exchange standards such as DXF [25] or STEP [26].
STEP Ð the standard for exchange of product
model data Ð is a series of standards currently under
development within the international standardization
organization. The aim of STEP is to improve engineer-
ing communications and enable integration through
the provision of coordinated open standards for data
exchange and data sharing. Although its ®rst release
only became an International Standard at the end of
1994 (IS0-10303: 1994), it is expected that STEP will
play a key role in the future exchange and sharing of
engineering information between computer appli-
cations and collaborating companies.
Because STEP will not o€er the construction indus-
try a solution for some time, the CIMsteel Project
developed the CIMsteel Integration Standards
(CIS) [27] Launched in September 1995, the CIS are
open standards for the management and exchange of
product data. They are aligned with ISO/STEP and
address steel-framed structures.
395
8.4. ``Lean construction''?
One must now ask whether the lean production phil-
osophy can be applied to construction. Many compa-
nies involved in construction Ð particularly specialist
subcontractors Ð already regard themselves as lean.
Having cut costs to the bone, they feel that there is no
more fat left to trim. Some have ``restructured'',
``downsized'' and ``outsourced'', choosing to concen-
trate on their preferred ``core business''. And yet, they
are not achieving the pro®t margins seen in manufac-
turing.
8.4.1. The ``conceptualization of production''
Koskela [28] argues that at least parts of the philos-
ophy of lean production are applicable to the building
industry. He claims that those pursuing Computer
Integrated Construction encountered barriers to pro-
gress because they initially focussed on the traditional
construction activities while neglecting ¯ow processes.
In his view, the ``conceptualization of production'' in
construction is based on the ``conversion process
model'', as it once was in manufacturing. His proposal
is to view a construction project as consisting of three
basic ¯ows (design process, material process and work
process) and supporting ¯ows. For most participating
organizations, these processes repeat from project to
project with moderate variations.
Koskela argues that traditional managerial concepts,
based on the conversion conceptualization, have
ignored and often deteriorated ¯ows in construction.
Consequently, construction is characterized by a high
proportion of non value-adding activities and low pro-
ductivity.
He o€ers a number of solutions to the peculiarities
of construction (one-of-a-kind projects, site pro-
duction, temporary organizations, etc.) which often
prevent the attainment of ¯ows as ecient as those in
general manufacturing. In spite of the peculiarities,
construction ¯ows can be improved through the appro-
priate application of the general principles for ¯ow de-
sign, control and improvement.
At the third annual conference of the International
Group for lean construction held in 1995, Johnson [29]
reported on the productivity improvements already
seen at the Swedish construction company Arcona
during its on-going development of lean construction.
8.4.2. From ``fast track'' to concurrent engineering
``Fast track'' and concurrent engineering are
approaches aimed at shorter project durations. ``Fast
track'' is a method already practiced in construction
projects, while concurrent engineering comes from
other industries' product development projects. Both
approaches have emerged as alternatives to sequential
project realization.
396 A. Crowley / Computers and Structures 67 (1998) 389±400
Huovila et al. [30] argue that ``Fast track'' is a prac-
tically oriented approach, without a solid conceptual
or theoretical basis. Its practice of overlapping design
and construction does not always lead to an optimal
design. Concurrent engineering, on the other hand,
aims at reducing the duration of engineering time,
increasing the value of the product, while at the same
time reducing the cost. Following the lean production
philosophy, these aims are achieved by eliminating ac-
tivities that do not directly contribute to the conver-
sion of requirements to the ®nal design, and by
assuring that maximum value is added by those activi-
ties contributing to this process.
8.5. BPR and construction
Applying technology to existing processes has led to
duplication of e€ort, without the apparent improve-
ments in local productivity being translated into
improvements in global productivity. For this to be
recti®ed, it has been suggested that the business pro-
cesses of the construction industry be re-engineered.
Fowler [31] suggests a construction oriented de®nition
of BPR as:
...the analysis and design of work ¯ows and processes within
organizations in the same industry sector and between related
industry sectors to ful®l the requirements of the client.
With this in mind, the industry as a whole must
examine the activities it performs, question why these
activities are being performed in the way they are
being performed, and question whether these activities
need to be performed at all. Further, each player
involved in construction should examine the process or
processes in which they are involved, and discover
what the product of that process is. If there is no pro-
duct, then they should ask what value is being added
by the process. If the answer is ``none'', they should
ask whether the process is necessary. This should be
done against the background of the lean production
philosophy, whose key principle is that only conversion
activities actually add value.
In line with Koskela's proposals [28], the ®rst thing
that should be cast o€ is the ``one-o€'' mentality. The
aim should be to produce a standard range of building
``products'', using common techniques, common ma-
terials, and common standards. For example: a steel
fabricator, taking on the manufacturing mentality,
views the fabrication shop as a production line for
converting raw steel into building components; which
building or project these components belong to is of
little importance. The main consideration is to keep
the fabrication shop running at an optimum level. This
requires coordinated and correctly scheduled input
from the pre-production (or design) oce Ð i.e. the
design data required by the manufacturer to convert
the (steel) materials into the ®nished products.
9. The real lessons from the automotive industry
9.1. Misunderstanding manufacturing
Ford's return to pro®tability was accompanied by
(and largely caused by) a change in organizational
structure. The ®rst major change occurred in 1995
when Ford's European and North American automo-
tive and components operations were merged into a
single global organization. The second signi®cant move
was into ®nancial services.
Increasingly, car makers earn better pro®ts from
®nancing car sales or leases than from the cars them-
selves. For example, ®nancial services accounted for
almost one ®fth of Ford's revenues in 1995 and more
than half of its net income. It is clear that ®nancial ser-
vices are more pro®tably than car production, return-
ing a pro®t margin of 7.8% compared with 1.9% in
Ford's case [32].
In other words car companies are becoming provi-
ders of a service rather than just a commodity; per-
sonal mobility rather than just steel boxes. This would
explain why Ford bought the car-rental company
Hertz. The author sees this as merely ``vertical inte-
gration'' taken to its logical conclusion.
9.2. Misunderstanding taylorism
Many of the theories of later management gurus [12]
have their origins in (and bear a striking similarity to)
``scienti®c management'' [4]. Taylor was just as deter-
mined as his successors to build quality and pro-
ductivity into the manufacturing process. Taylor
asserted that his ``one right way'' guaranteed zero-
defects, and he was opposed to inspectors. Henry Ford
claimed that his assembly line built quality and pro-
ductivity into the process [33].
It would appear that the ``failure'' of Taylorism was
due to inappropriate or incomplete application of the
theory. It can now be seen that more modern manage-
ment theories are failing for the same reason [12]. For
(as Drucker points out) just as one business theory
becomes mainstream, the world moves on to make it
obsolete [34].
9.3. The role of automation
In the late 1980s, General Motors is reputed to have
spent in excess of $30m on new automation, yet failed
to make a return on its massive investment. This was
because it was used to improve existing processes, i.e.
 A. Crowley / Computers and Structures 67 (1998) 389±400
to make the assembly line more ecient. However, the
process became less ¯exible and less able to accomplish
rapid change.
Similarly, Toyota Ð alongside other Japanese car
makers in the early 1990s Ð opened huge new car
plants that were the last word in automation, but the
promised economies proved to be false ones. They
found that, although the number of line workers was
reduced, the number of maintenance personnel rose
dramatically. Since they alone understood the robots,
there was little scope for kaizen, or continuous
improvement. On more recent production lines,
Toyota have favored people to machines [35].
9.4. Overcapacity
There is one problem that is common to both con-
struction and manufacturing; i.e. overcapacity.
According to most forecasters [10] car production will
expand so much that by 2000 world capacity will have
grown to almost 80m vehicles a year, while demand
will have risen to 60m. Put another way, every car fac-
tory in North America could close and there would
still be excess capacity. The prediction is that there will
either have to be straightforward consolidation into
fewer producers of volume cars (by mergers or bank-
ruptcies), or car companies will have to turn them-
selves into system integrators rather than metal
bashers. The ones that survive will be those which
make their factories ¯exible enough to manufacture
pro®tably at lower volumes.
In construction, there are still too many companies
chasing too little work [36], with a consequent e€ect
on pro®t margins.
9.5. Comparing pro®t margins
An examination of the ®nancial results of the top 50
UK companies in construction and manufacturing,
actually shows little di€erence in the average declared
pre-tax pro®t margins. In both cases they are around
8% for 1994. However, the ®gures for company pro®ts
hide the fact that the construction activities are actu-
ally much less pro®table; the best margin being
0.07% [36].
9.6. The real pro®t makers
The pro®t margins in manufacturing pale into insig-
ni®cance when compared to the fastest growing sector
of industry: IT. For the past 5 years, Microsoft has
reported a 25% return on net revenues [37], with net
revenues for 1996 being $8.67bn. Even Toyota Ð the
leanest and meanest car maker in the world Ð can
only return an operating pro®t for 1996/7 of 5.2% [38].
397
10. Misunderstanding the construction industry
E€ectively, the construction industry is still at the
``horseless carriage'' stage in its development. Each
building is unique and made to order by ``craftsmen''.
As in manufacturing, this ``craftsmanship'' is not a
result of some dedication to quality, it is merely a
source of ineciency. But those trying to force the
construction industry and its professionals into the
automotive mould are misunderstanding the very com-
plex nature of the businesses of construction. The
author feels that the ``single model view'' Ð declaring
all industries to be the same Ð is an oversimpli®ca-
tion. Solutions from the manufacturing industry can-
not be simply applied to the problems of the
construction industry, without those solutions ®rst
being ``re-engineered'' themselves.
The construction industry has been slow to adapt to
technological change, and remains largely labor inten-
sive and a user of low-technology. The author feels
that this is not (as many assert) because those involved
in the construction industry are by nature resistant to
change. The author feels that this does a disservice to
many professional people, who are not so much lud-
dites, but realists. Construction professionals will
adopt new techniques and new technology when it is
seen to be bene®cial. One only has to look at the rise
of composite construction, or how quickly steel lintels
were adopted to see this. They will not, however,
adopt new technology for the sake of being new.
There are two approaches to the evolution of a
craft-based industry into a manufacturing industry.
The ®rst is to standardize buildings Ð such as seen in
the (ill-fated) systems building technique (as discussed
earlier). The second is to make the production process
as ¯exible as possible allowing a large variety of build-
ings to be made up of a small number of standard
components. The whole point of lean production is
that all end-products are unique Ð up to a point; i.e.
they are all variations on a theme; constructed in stan-
dard ways from standard components. Flexibility of
production is an essential element of construction.
Indeed, clients continue to demand more of it [14].
Thus, in common with those in manufacturing, con-
struction companies will have to o€er both standardiz-
ation and ¯exibility at low cost.
It is not that the industry performs individual activi-
ties in an inecient manner. On the contrary, it is di-
cult to see where the 30% reduction in costs Ð as
demanded by Latham [39] Ð is going to come from,
when one examines the existing activities. Rather, it is
that these activities Ð when put together Ð are an
inecient way of producing buildings.
Construction is not a high technology industry, but
it does not need to be. It is, however, a big user of in-
formation. The author believes that if a method is
398 A. Crowley / Computers and Structures 67 (1998) 389±400
developed that reduces the cost of handling infor-
mation, then it will be adopted. This cost reduction
could arise from time reduction, avoiding re-entering
data, improving accuracy of data, or avoiding losses of
information.
10.1. Move to manufacturing Ð not mass production
Manufacturing does not necessarily equate with
mass production. ``Construction as a manufacturing
process'' does not automatically imply ``systems build-
ing'' or assembly lines. The key to mass production
was not Ð as many people still believe Ð the moving,
or continuous assembly line. Rather, it was the com-
plete and consistent interchangeability of parts and the
simplicity of attaching them to each other. These were
the manufacturing innovations that made the assembly
line possible.
This should be seen as a starting point for the con-
struction industry. The concepts of assembly decompo-
sition and re-composition are of fundamental
importance when planning the construction of build-
ings. If more components (beams, columns, ®xings,
etc.) were standardized, and were designed to be
assembled in a simple and standard manner, it is
obvious that productivity gains would result. This
would also e€ectively move the industry from being
design-led to being production-led.
In steel construction, fabricators are at the center of
this transition as they manufacture the components
and assemblies. They therefore have knowledge and
control of the processes of manufacturing and assem-
bly; which are seen as the keys to high productivity
and lower cost [21]. However, to achieve the total pro-
ject gains, their knowledge must be harnessed and
brought forward to help the upstream design activities.
For example, the CIMsteel Project also identi®ed the
large variety of bolted connections used in steel frames,
and consequently produced guidelines [40] for standard
bolted connections, based upon a standard set of nine
bolts.
11. Future trends in construction
If the trend towards design-build increases to the
point where it becomes the norm, the main contractors
will become the lean producers of buildings (or other
construction products). They could then form close re-
lationships with their ``lean suppliers'' Ð the archi-
tects, engineering design consultants and
subcontractors. These suppliers would not tender on
the basis of each project, but on the basis of supplying
their services, thus displaying a long-term commitment
to working together on a number of projects. The sup-
pliers would be continually producing ``design pro-
ducts'' (mainly in the form of information) on demand
to suit the needs of the main contractor.
Some of the more ``advanced'' clients, such as BAA,
may also become the lean producers in their domain,
but the author feels that this will be the exception
rather than the rule.
Of course, close (and sometimes long-term) relation-
ships already form between companies over a number
of projects. Partnering [41] is one example of this, and
a step in the right direction. But too often, these ``alli-
ances'' are informal, and skewed by one-sided contrac-
tual arrangements [42]. The ``suppliers'' still have to
bid for work in (usually) open tender (even where the
supplier is wholly owned by the main contractor).
Some contractors already return handsome pro®ts
from their facilities management businesses. The tran-
sition to ``system integrator'' will be completed when
they provide the client with the complete service. This
would include, not only the planning, design, and con-
struction of a project, but also the operation and main-
tenance of the completed facility. The capital cost of
the project would ®nanced by the new ``system integra-
tor'' (perhaps via a stock market ¯oatation), while rev-
enues would be generated for the entire life cycle of
the facility via a ``leaseback'' scheme. This ®ts in with,
and extends, the revised private ®nance initiative (PFI)
of the UK government [43].
The change in operations will tend to result in a
change in organizational structure of many companies.
More and more construction companies will become
part owned by other companies (which may or may
not be construction related). This is not just a case of
one contractor merging with, or taking over, another
contractor. Larger contractors Ð with sucient (land)
assets and ®nancial backing Ð will acquire (in whole
or part) architects, consulting engineers, and specialist
sub-contractors. The recent spate of mergers and take-
overs in the construction industry is an indication of
the future shape of the industry. Today's large compa-
nies will seem small in comparison to the collective
assets of the future conglomerations.
12. Conclusions
The overwhelming conclusion that the author draws
is that corporate pro®tability has little to do the e-
ciency of production. For as fast as you improve your
productivity, you can be sure that your competitors
have improved theirs. Advances in technology and glo-
bal competition are combining to drive pro®t margins
irreversibly downwards in both construction and man-
ufacturing sectors. Instead of making products Ð be
they cars or buildings Ð companies should concentrate
on making money. Providing the ``complete service'' is
far more pro®table for the new ``system integrators'' in
 A. Crowley / Computers and Structures 67 (1998) 389±400
manufacturing. Similarly, building can be seen as ``fa-
cilities'' that will generate income from its ``servicing''
for its entire life cycle.
Computers have done a great deal to speed up the
existing processes, but they are not a panacea for the
poor productivity Ð or rather the poor pro®tability Ð
of the construction industry. The driving force is Ð
and always will be Ð the market, not the technology.
Technological innovation is unlikely to be implemented
unless there is a market for it. The future pro®tability
of the construction industry does not lie in any single
innovation in technology or manufacturing technique.
Lean production o€ers a revolution as great as that
instigated by mass production, and is not simply
another facet of the ``technological revolution''. It is a
holistic approach to production, necessitating organiz-
ational change Ð at company and industry level, and
not simply a manufacturing technique.
If applied correctly and appropriately to the con-
struction industry, the lean production philosophy will
allow the integration of the internal processes, enable
concurrent engineering, remove historic divides.
Indeed, it should lead to the whole scale ``re-engineer-
ing'' of the business processes involved in construction,
and produce higher quality buildings at a reduced cost,
and ultimately, more pro®table construction compa-
nies.
Acknowledgements
I am grateful for the assistance of my colleagues in
the CAE Group, in particular Alastair Watson, Mike
Ward and Peter Riley, as well as Neveen Moussa.
Indirect inputs from CIMsteel collaborating organiz-
ations are also acknowledged, as is the ®nancial sup-
port of the UK Department of Trade and Industry.
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