Creating Value or Waste? Evaluating the Production of Real Estate Services with Lean Thinking

This thesis is interested in the production of value in real estate services. Real estate literature has not addressed the value creation but has rather adopted input-output thinking: services are managed by the ratio of output to input instead of managing the actual value creation. How can we expect a better output if the work done between the input and output is not changed? The aim of this thesis is to contribute to the knowledge on the value creation of real estate services.

In the thesis, value creation is studied using lean thinking as a framework. The thesis includes four in-depth case studies with more than 120 interviews and workshops.

This thesis has two main research questions. The first research question addresses how capable the current value creation is in customer value delivery from the lean thinking perspective. The findings indicate that the capability of the current value creation to deliver customer value is limited. The current value creation processes and practices do not provide customer value coherently throughout the value creation and thus the likelihood that the outcome is not in line with the case-specific customer value increases.

Based on the findings regarding the first research question, the second research question was focused on waste, i.e., how value creation is interrupted from the lean thinking perspective. In the cross-case analysis, six common sources of waste were identified as interrupting the value creation: (1) poor information management, (2) unresponsive processes, (3) adversarial bidding, (4) lack of systematic improvement, (5) overload of employees, and (6) separate sub-processes.

The sources of waste can be viewed one by one, although they also interact with and aggravate each other. For example, poor information management with flooding, lacking and missing information generates more wasted activities, such as searching for information, and thus increases the overload of employees. Similarly, the overload of employees aggravates poor information management. The interaction between the sources of waste creates a vicious cycle. To break the vicious cycle, attention should also be paid to the root source of waste: separate sub-processes. For example, separate sub-processes stimulate poor information management when information is passed from one sub-process to another. Therefore, breaking the vicious cycle becomes more difficult, if the improvement actions do not minimise the sub-processes.

The results of this thesis encourage to continue utilising lean thinking in the real estate field. Lean thinking is available to all practitioners and academia and offers a different perspective on how to improve the value creation of real estate services.