The Relation between Lean Construction and Performance in the Korean Construction Industry

The construction industry of South Korea takes a relatively big portion of the nation's economy. A common sense is that, if there are systematic problems hindering project performance in the industry, the overall economy of the nation might be harmed to a high degree. This concern has already been raised by some industrial researchers' and in some public sectors research projects. If we can diagnose the industry in terms of the appropriate causal factors improving performance, we can make recommendations to improve the industry. That presumption is the motive of this research./nLean Construction has developed many components such as `Incentive based on integration,' `Set Based Design (SBD),' `Process Improvement based on Value Stream Analysis (VSA)' and `Production control based on plan reliability, Last Planner TM (LP)' in order to bring value that the owner exactly wants instantly without waste. Many research projects and relevant national innovative movements in the USA, Hong Kong, the UK and Singapore support the hypothesis that Lean Construction improves project performance./nThe research hypothesis that Lean Construction improves project performance was confirmed by the survey on several projects that were believed to have employed Lean Construction to a certain degree, which showed strong correlations between the `LP' and project performance, and between the `Incentive based on integrity' and performance. Considering the `LP' is known as the most popular tool of the Lean Construction, this result is very encouraging and leads to recommending Lean Construction to the Korean industry. In addition, the two effective components, `Incentive based on integrity' and the `LP,' are inter-correlated, which means they are indispensable to each other in order to achieve better performance./nTo make effective recommendations, I diagnosed the Korean Construction Industry with a more detailed survey measuring Lean Construction and project performance using a stratified random sample. Only SBD was strongly correlated with project performance but additional interviews and analyses pointed at the reason why the other components of Lean Construction have not been effective in the Korean industry. For example, the LP demanding specialty contractors' participation is not appropriate because a general contractor in Korea selects his/her specialty contractors after completing most of the schedules so that we cannot expect any specialty contractor to participate in that scheduling effort. Value Engineering has been developed to be just another form of a change order to relieve an owner's burden of issuing an official change order. In addition, even SBD was proven to be seriously correlated with Point Based Design (PBD) that has been used as the concept opposite to SBD because the relevant regulations force the design processes to be separated contractually, so that most of the survey respondents could not imagine any collaborative design without recalling PBD./nBased on the survey and supplementary case studies, this research produces policy recommendations to the Korean Construction Industry for better market competitiveness. For example, 1) Based on the current state that there has been no criterion evaluating the degree of production control, I recommend that bid evaluation criteria should include measurement of implementation of production control achieved by means such as LP; 2) Based on the current state that the bid evaluation criteria of Design-Bid-Build (DBB) stick to superficial numbers such as financial credibility or proximity of the bid price to a certain level (e.g., 88%) of the estimated price determined by chance, which do not incentivize project performance, I recommend that past project performance as an incentive for better performance should be more dominant than the aforementioned superficial numbers in the bid evaluation criteria; 3) Based on the current state that Design-Build (DB) and Alternate Design Bid (ADB) have produced negative iteration in design and have maintained a bid evaluation system much more favorable to the biggest construction companies, I recommend that a schematic design, the most important bid document in DB and in the modified version of ADB (in this research ), should be simplified and customized so that the evaluation becomes more realistic in selecting the bidder; and 4) Based on the current state that many barriers among construction works such as separation of electrical works from a whole project contractually, I recommend that the barriers be removed in order to achieve more project integrity./nIn conclusion, the Korean Construction Industry has not been familiar with integrated approaches toward project performance and has maintained unclear attitudes toward the market competitiveness so that many Korean Project Delivery Systems have not taken advantage of their merits. This research contributes to knowledge in that it suggests how to renovate the Korean Project Delivery Systems in terms of Lean Construction, the principles to achieve the best performance, and does so with clear academic support.

Advisor: Ballard, Herman G.
Tommelein, Iris D.