Lean project management
Johann Packendorff
Ek dr, docent
Kungl Tekniska Högskolan
Skolan för Industriell teknik och management
Development trends
Management
Line-based
operations
Management
Management
Line-based
operations
Line-based
operations
Projects
Project-based
operations
1980
2000
Industrialized
Project operations
Projects
?
Towards project portfolio
management
Mass
manufacturing
Project portfolio management
Project management
1900
1920
1940
1960
1980
2000
Benefits from Portfolio Management
• Alignment
– Projects are aligned with business objectives
• Value
– Focus on projects that deliver value to customers and
shareholders
• Strategic
– Focus on projects that increase the strategic capability
• Timeliness
– More projects are completed on time and budget
• Balance
– Portfolio has the right balance of high, medium and low
risk projects
• Right Number
– Portfolio has the right number of projects
plus Develops Trust, Shared Vision and Communication
with the Business
Source: Portfolio Management for New Products, Cooper, Edgett, Kleinschmidt (Perseus Books, 2001)
Where does your organisation stand in relation to
Portfolio Management?
1. Projects are aligned
with business objectives
2. Portfolio contains very
high value projects
3. Spending reflects the
business strategy
4. Projects are done on
time
5. Portfolio has good
balance of projects
6. Portfolio has right
number of projects
1
Poor
2
3
Source: Portfolio Management for New Products, Cooper, Edgett, Kleinschmidt (Perseus Books, 2001) p149
4
5
Excellent
Maturity levels for Portfolio Management…
1
Value
INITIAL
2
REPEATABLE
3
DEFINED
4
MANAGED
Ad Hoc
Making Lists
Portfolio View
Refined Metrics
Initiatives are selected
for investment based
on ad hoc processes.
No overview is
maintained of all
investments Business
cases may be needed
for initiatives: Typically
based on simple
financial metrics.
Business cases are
considered in isolation.
Once approved, there
is no consistent or
effective management
and tracking of
benefits.
Business cases are
needed for most
initiatives. Business
cases are scored and
assessed primarily on
financial measures. An
investment approval
lifecycle is established
and followed. But there
are no effective processes
to track the outcomes of
investments and to
manage the investment
portfolio as a whole.
Business cases are
essential for all initiatives.
The whole portfolio is
captured and outcomes are
tracked and reported, using
basic measures of financial
value, alignment, risk and
initiative health.
Robust metrics of financial
value, alignment, risk and
health are established.
Initiatives are categorised.
Scorecards are used to
summarise portfolio
composition and health.
Project selection is
integrated with resource
management. Portfolio
management is pro-actively
used as a means of
aligning the portfolio to
business strategy, through
a cyclical investment
process.
Initial tool
implementation
and investment
capture.
Capability
Extended
metrics and
scoring.
5
OPTIMISING
Dynamic
Execution
There is feedback and
continuous
improvement. The
portfolio is continuously
monitored and adjusted
to maximise its value.
Portfolio management is
no longer tied to cycles.
Dynamic portfolio
management is the
accepted process.
Dynamic
analysis and
measurement.
Key PMI Standards
Organizations
Projects
People
The Symptoms We Regularly See Arising
From Poor Portfolio Management
Situation
Leads to..
Reluctance to say no
to projects
Over budget
Too many projects,
resource collisions
Lack of Capacity Focus
Can’t kill projects
Projects are “sold” on
emotional basis -- not
selected
No strong review process
Overemphasis on
Financial ROI
Quality of execution
suffers
Underestimation of
risks and costs
Projects not aligned
to strategy
No clear
strategic criteria
for selection
Results in..
Projects Late
Business needs
not met
Benefits not
received
Lack of
confidence (in
IT)
The ”evil circle” for project workers
Competition and rationalisation
Market
1. Neglect of capacity issues
5. Success out of
heoric action
2. Assumptions of
organisational slack
4. Too much work
ordered to individuals
Project
Organisation
Individual
3. Assumptions of
high individual
capacity
Lean Project Management
Points of departure
Value = A capability provided to the customer
at the right time and at an appropriate price,
as defined in each case by the customer.
Features of the product of service,
availability, cost and performance are
dimensions of value.
Waste = any activity that consumes resources
but creates no value.
Value-adding time
• Typically 90-95% of total lead time is non-value
added
• Examples of non-value adding activities:
- Overproduction
- Excess inventory
- Defects
- Waiting
- Underutilized people
- Excess motion
- Transportation
Lean manufacturing
A manufacturing philosophy which
shortens the time line between the
customer order and the shipment by
eliminating waste.
Lean Manufacturing
Order-to-Delivery Cycle
Manufacturing
Cumulative Lead Time
Customer
Places
Order
EngiOrder
Schedneering
Entry
uling
Design
Manufacturing DistriLead Times bution and
Customer
Purchasing
Service
Lead Times
Order-to-Delivery Cycle
• Lean manufacturing focuses on eliminating waste
in processes
• Lean manufacturing is not about eliminating
people
• Lean production is about expanding capacity by
reducing costs and shortening cycle times between
order and ship date
• Lean is about understanding what is important to
the customer
Lean thinking
• Specify value
- can only be done by the ultimate customer
• Identify the value stream
- exposes the enormous amounts of waste
• Create flow
- reduce batch size and WIP
• Let the customer pull product through the value stream
- make only what the customer has ordered
• Seek perfection
- continuously improve quality and eliminate waste
Non-blaming culture
• Problems are recognized as opportunities
- It is OK to make legitimate mistakes
- Problems exposed due to trust
• People are not problems, they are problem
solvers
- Find solutions, do not ask ”who did it” and
”how shall we punish him/her?”
View on profits
• Old way: Price = cost + profit
• New way: Price – cost = profit

Uncovering Production Problems
Visible Production
We must lower the water level!
Problems are Only
5% of the Total!
Machine
Breakdowns
In-Process
Inventory
Workload
Imbalances
Worker
Absenteeism
Out-of-Spec
Materials
Material
Shortages
Quality
Quality
Problems
Problems
Implementation success factors
•
•
•
•
•
•
•
•
•
•
Prepare and motivate people
Employee involvement
Share information and manage expectations
Identify and empower champions
Strategic alignment of lean initiatives
Ask WHY? At least 6 times
Deep commitment to excellence
Atmosphere of experimentation
Wise and realistic measurement and reward systems
Implement pilot projects and market quick wins
Evicence of progress
•
•
•
•
•
•
•
•
•
•
Smaller lot sizes
Increased capacity/throughput
Higher inventory turns
More available floor space
Improved workplace organization
Improved quality
Reduced inventories
Reduced lead times
Greater gross margin
Improved participation and morale
Waste--Operations
(1) Waste from overproduction
(2) Waste of waiting time
(3) Transportation waste
(4) Inventory waste
(5) Processing waste
(6) Waste of motion
(7) Waste from product defects
Individual effectiveness
Wheelwright & Clark (1992)
Three kinds of time
1. Calendar time: The actual duration of a
task from start to finish
2. Work time: The percentage of the calendar
time that resources are available
3. Value-added time: The amount of work
time that is actually value-added, i.e. that
something is done during that time that the
customer will gladly pay for.
Principles of lean project
management
1.
2.
3.
4.
Precisely specify the value of each project
Identify the value stream for each project
Allow value to flow without interruptions
Let the customer pull value from the
project team
5. Continuously pursue perfection
1. Precisely specify the value of each
project
• Value is anything that a customer will gladly pay
for
• Internal and external customers
• An activity on a project is value-added if it
transforms the deliverables of the project in such a
way that the customer recognizes the
transformation and is willing to pay for it.
• Get rid of excessive hidden features, excessive
complexity. Use one-page project summaries.
2. Identify the value stream for each
project
• Every task within a project should be
directed toward creating deliverables (i.e.
outcomes with a customer value).
• The sequence of activities producing the
project’s deliverables is the project’s value
stream.
• Value stream mapping – focusing on
assumed high-waste segments
3. Allow value to flow without
interruptions
• A started project represent accumulating value
• Projects that are kept queuing or waiting represents waste.
• Projects are resource constrained, not time
constrained. Think ”critical chain” instead of ”critical
path”!
• Do not start projects ASAP, start them when there are
available resources. Starting a project sooner does not
mean it will end sooner.
• Construct reservation systems for key resources. Use
dedicated resources, calculated buffers, identify
bottlenecks. Never use FIFO, always make priorities.
• Use just-in-time decision making, just-in-time information
flows and urgent stand-up-meetings
Critical path thinking
Identify logical task flow in order to see what path of
activities is the longest. By making sure all
activities on the critical path is performed on time,
the project as a whole will be delivered on time.
Activities should be given time estimations and the
started ASAP in order to keep the deadline.
Problem: Resources often forgotten, high risk of
delay when overloading resources
Critical chain thinking
After identifying the critical path, one must also
consider the resources necessary to perform these
activities.
The critical chain is the longest path through the
project after resource leveling, i.e. making sure
that each resource are used no more and no less
than its availability.
In the critical chain, buffers are used to handle
variations – if not you must estimate each activity
at its worst case duration. Otherwise there will be
collisions => bottlenecks => delays
The critical path uncovered
Resource leveraged critical path
Resource leveraged critical path with
50% duration reduction and buffers
Buffer management
Buffer management at portfolio level
Obstacles to the value flow
• Functional departments. Lack of resources (caused
by bad resource planning or project collisions)
imply bottlenecks, queues and waiting times.
• Executive gate meetings and sequential approval
cycles.
• Fire fighting and expediting.
• Changing requirements.
• Managerial interference
i.e. organizational problems causing both waste and
human irritation!
4. Let the customer pull value from
the project team
• Each deliverable in a project has a downstream
customer.
• That customer must be identified and activated as
a demanding recipient of the deliverable.
• Tasks are linked to each other, not dependent.
• Customers are involved in the execution of the
task from the beginning and are expected to
provide frequent review and feedback
• Customers are expected to participate in stagefreeze-processes
5. Continuously pursue perfection
• Continuous efforts are required for the
maintenance of a lean project management
system.
• Teams must be persistently intolerant to
waste.
For each theme
• Introductory lecture, ended by a set of discussion questions
• Set of articles published at the course homepage or handed
out in paper format
• Hand-in of group report, containing (1) literature review,
(2) group’s opinions/answers to discussion questions
• Plenary discussion seminar, all groups expected to be able
to make short presentations and participate actively,
following the instructions of the lecturer
• Of the five questions in the final written exam, at least four
will be identical with discussion questions raised during
the course
Discussion questions for April 13th
• Each group shall make short summaries of the literature and be
prepared to present this summary in class (about 4 pages)
• Give examples of the seven wastes as applied to (1) a construction
project, (2) a corporate training project
• Formulate five arguments for, and five arguments against, the
application of lean thinking to project management
• Consider the five principles of lean project management in this lecture.
For each principle, identify at least two success factors to make the
principle work in practice
• If you succeed to implement lean project management, what would be
the unwanted consequences of this success – i.e., what do you not want
to happen?
• All summaries and answers/reflections to questions shall be handed
over to Johann in paper format at the beginning of the seminar. Use
the standardised cover form!!!