The real estate and construction sector needs fundamental change

The real estate and construction sector needs fundamental change

The real estate and construction sector must become a service business since traditional models no longer meet clients’ needs. The ongoing change offers the most agile sector actors wholly new business opportunities. RYM Oy, Fira Oy and Vison Alliance Partners Oy are together preparing a SHOK program to ensure the success of the change.

The development direction of the sector was outlined at the Lean Construction Day on December 4, 2014 in Helsinki. The fourth LCI Day brought together at the Niemi Center more than 100 experts engaged in the development in various sector companies.

Jussi Aho, CEO of Fira Oy, addressed in his speech the issue of leading an enterprise toward a lean organization. According to Aho, lean culture is about human-oriented business where both clients and employees are at the center of the activity. This cultural change needs, however, to be extended all the way to the business models of companies. His address was published in the newspaper Helsingin Sanomat on Oct. 27, 2014.

The CEO of RYM Oy, Ari Ahonen, continued in the same theme: tools and leadership in themselves are incapable of making the sector generate more added value. It must be also able to serve clients better as well as solve a wide array of user problems. Besides improved productivity and customer orientation, Ahonen demanded that companies show courage and challenge themselves and others to come up with new ways of thinking and novel business models.

University of California, San Francisco (UCSF) shows the way

The main speaker at the LCI Day, Michael Bade, Director of Capital Projects for UCSF, emphasized the importance of the example of client organizations in changing sector practices. According to Blade, UCSF has had to develop completely different methods of implementing projects since traditionally controlled projects and projects under separate contracts resulted in continued budget and schedule overruns as well as disputes between parties.

– UCSF has had to change the attitudes and practices of its staff and the procurement and contract models it uses, as well as demand changes from its service providers. UCSF does not select contractors on the basis of lowest bid, but chooses the best partners to design and implement projects with it based on its own goals and cost frameworks, Bade explained.

Lean thinking is gaining devotees also in Finland

The fifth year of lean construction development in Finland is underway. The work has been led in a Tekes-funded lean construction development project (LCIFIN2) by, for instance, Fira Oy, Consti-Yhtiöt Oy, Lemminkäinen Infra Oy, Skanska Talonrakennus Oy and Vianova Systems Finland Oy. The Finnish Transport Agency has been the client organization leading the change with them.

The message of Lauri Merikallio from Vison Alliance Partners Oy, the company coordinating the CIFIN2 project, was that better performing real estate and infrastructure can be produced only by exploiting systems thinking. Instead of mere buildings and roads, we should focus on the design and construction of systems that integrate the processes of different actors, work and information. Instead of individual projects and contracts, we should aim at optimizing the overall flow of the production system and the system in general.

One sign of the need to renew traditional operational models is the increasing demand for collaborative projects and alliance models. There are more than 20 real estate or infrastructure projects based on a collaborative or alliance model underway or about to be launched in Finland. Their combined value already exceeds one billion euros.

For further information:

The To the Next Level Program invites leaders for the 2020s

www.lci.fi

Jussi Aho, FIRA OY, jussi.aho(at)fira.fi

Ari Ahonen, RYM Oy, ari.ahonen(at)rym.fi

Lauri Merikallio, Vison Alliance Partners Oy, lauri.merikallio(at)vison.fi

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