Lean and Green Blog: Finding waste in a barrel

February 29, 2012

Each week as I think about this weekly blog, I try to find a topic that is not only green, but a universal opportunity.  What I mean is no matter how important green is to your company, market or consumers, these green tips should help you save money whether you want to be green or not.  One aspect of green is finding ways to avoid cost increases. 

Over the past two weeks, I have started to hear rumblings among trades of the dreaded return of fuel surcharges, especially if gas prices continue to rise. Nationally, the average price of unleaded and diesel has gone up $0.30 and $0.20 in the past 4 weeks. According to most analysts, that will only get worse before it gets better.  How will rising fuel costs affect your building activities?  How much should that surcharge be for your homes? Can it be zero?

I ran through a few calculations (if you are interested in the details I will post the results on the TrueNorth Facebook page, http://on.fb.me/TrueN). A 2600 square foot, single family home with an average build time of 65 work days will consume about 1750 gallons of fuel.  This includes material transport and construction activities onsite.  It does not include manufacturing, customers travel, warranty, or office overhead allocations for employees.  So, if anything this number is conservative.  At current gas prices, the cost of fuel to build a house is over $6,800.  A huge number when you consider none of that cost is actually found in the final project. (Imagine presenting a line-item charge to your buyer for all fuel charges. Would they pay it?)

If you can reduce this, no doubt, you will be a greener organization. So, exploring the potential of this opportunity, if you can shorten construction time by 1 week by being more efficient in your scheduling and more strict with deadlines, fuel usage will drop by 100 gallons. As you do this, you will be more efficient with your trades and inevitably reduce the number of trips a trade makes to the jobsite. For example, if your lumber estimates are right the first time, you will not need an add-on order (or 2 or 3) and your lumber company can save a trip to the site.  Those efficiencies translate to an additional 300 gallon savings, totally over 400 gallons, or $1600.

The value of these savings will help give you the leverage to renegotiate any potential fuel surcharges and save green while going green. What more evidence do you need to start exploring LeanBuilding opportunities, especially when no companies can afford cost increases for waste?

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