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LCI was formed in 1997 By Glenn Ballard and Greg Howell as a way to develop and disseminate new knowledge regarding the management of work in projects.
Together, they experienced projects being managed by enforcing contracts, with little regard for principles and practices of production system design and management. At the time, improving worker productivity was the primary concern of most improvement efforts, though data suggested that under traditional project planning, only 54% of assignments made by foremen to be completed in the week were actually completed. It became apparent that the activity focus of traditional project management and controls was overlooking the causes and consequences of unpredictable workflow.
They realized that the construction industry had many of the same problems as those in the manufacturing industry: if you build parts that are not up to spec, there is a great deal of unpredictability as defective parts are introduced into the flow of work. They proposed a similar rule that Taiichi Ohno put into place at Toyota: Say "No," stop the line rather than release a defective part or assignment. Saying "No" was, and continues to be, a radical act in construction, an industry with deeply embedded "command and control" practice and traditions.
The development of the Last Planner® System provided the foundation for a new way of project management, creating predictable workflow and rapid learning. The "Last Planner®," typically the foreman, is essentially the last person able to assure predictable downstream workflow. LPS® is a conversation-based system designed to produce predictable workflow and rapid learning. As workflow became more predictable, sites became better organized, meetings were shorter, disputes fewer, and bottlenecks and interruptions to workflow became more obvious.
Over time, it became apparent that contracts were becoming a central concern, with the shift from local to project optimization. Traditional contracting and organizational practices contributed to unpredictable workflow, and limited collaboration; it restricted the ability of the team to move money across boundaries - to invest here and now for a larger savings there and then. Traditional contracts did not prevent Lean Construction, but they certainly did not help. Following a series of LCI-sponsored workshops to explore relational contracting practices, LCI board member Will Lichtig prepared a model Integrated Form of Agreement (IFOA), which soon became the basis for the Consensus Docs 300 series.
On the practice side, Owen Matthews of Westbrook, Inc. led Lean professionals to rethink teamwork. He organized the designers, consultants and contractors delivering a project into a single enterprise, a "one for all, all for one" venture, which allowed for costs to be paid and profits shared according to a pre-agreed ratio. His organization applied for and was granted a trademark for the term, "Integrated Project Delivery®" (IPD). This organization in turn granted LCI the right to use IPD in its work, which provides for measured focus on the front-end of projects where budgets and program are established, validated, and brought to construction.
Led by an experienced board of directors, LCI continues to advance the organization's goals to establish a common vocabulary, explore basic research opportunities, enhance educational offerings, and explore best practices for Lean Construction through our Communities of Practice (CoPs).