Sharing PPC Results in Trust-Worthiness
July 25th, 2006 by HalUnreliable or unexpected behavior of trade contractors in allocating resources is a major source of variation in construction. Last Planner® acts to reduce variability.
How Last Planner Motivates Subcontractors to Improve Plan Reliability
Rafael Sacks
Contractors are involved in multiple projects. They tend to optimize for their own benefit by sending workers to projects. Contractors are motivated by profits, cash flow, risk, and reputation.
Sharing information about reliability — PPC — changes the behavior and consequently the equilibrium state.
The starting case is a naive subcontractor who provides enough people for the work that is available. Clever subcontractors assess the reliability of the project manager to provide the work that was promised. Rafael modeled the behavior using game theory. He concludes from the model that subcontractors will provide fewer resources than requested and the project manager will ask for more than is needed. Neither has the knowledge of what the other is doing. This is the equilibrium case. The situation changes when they are using the Last Planner.
Sharing information about reliability — PPC — changes the behavior and consequently the equilibrium state. Both parties are more likely to ask for and provide for exactly what is needed.
- When plan reliability is made transparent by means of PPC
- Plan reliability continues to improve
- Honesty improves
- The entire project moves to a higher performing situation
Rafael concludes: use a pull approach and share reliability data. Only then will people become more trusting and trust-worthy.
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