UNITS 1& 2 projectmanstrat.pdf

Project Management Strategic Issues

Aim is to raise students awareness as to

why the construction industry under

performs when compared to other industries

What is needed to bring the industry in line

with others

Project Management Strategic Issues

The Construction Industry: Practices, Performance and Development

The Manufacturing Industry: Learning from other industries

Lean construction and Process mapping

Lean and Planning

Performance Measurement and Benchmarking

Project Management Evaluation

Power, Politics and Influence: Project Teams

SCM, Partnering and Strategic Alliances

The Construction Industry: Practices,

Performance and Development

The Construction Industry: Performance

Current State: Industry and Practice

Current State: Project Management

Initiatives to influence the construction industry

Main findings and the change agenda

How does construction industry perform?

Industrys clients are not satisfied

The supply team is not satisfied

Industrys bad reputation

Low profitability

Lack of innovation and development


High cost of projects

(30% cost savings

being targeted)

Productivity is low

(duration is high)

A jumbo jet cost $250 million but takes only 2 weeks to assemble

Duration of assembly of construction projects

0

1

2

3

0 3 6 9 12 15 18 21 24 27 30

project value ( million)

pro

ject

du

rati

on

(years

)

public

private

Civil

Source Kaka (1996)

5 yrs late 400M over-budget

3.5 yrs late 300M over-budget 2 yrs late

9 yrs late 430M over-budget

1 yr late 5bn over-budget

8 weeks to 6 months!

Industrys not meeting targets According to the National Audit Offices report,

more than 70% of all publicly procured projects were over time or over budget

Value for Money

Failure of design to meet

clients needs (fitness for

purpose; over-design;

Buildability)

Cost of occupancy and

maintenance is high (focus

still on capital cost)


Quality of construction is poor (repairs and

reworks)

Inefficiency of the construction team to

respond to clients complaints and inquiries

Lack of innovation on behalf of the

contractor and designer

Disputes and claims

Incomplete as build drawings and

information about the building and its

requirements

Workers are not satisfied

Bad health and safety record (too many

accidents)

Bad working conditions (weather, facilities)

Job security

Frequently changing location of work

The supply team is not satisfied

According to the Egans rethinking

construction report, the health and safety

record of construction is the second worst of

any industry.

DETR statistics shows that people

working in the construction industry...

are getting older

are likely to work for a small firm

are quite likely to be self-employed

are working longer hours than other industries

are more likely to be involved in an accident

are paid around the average for all industries and

services

Industry has bad reputation

Lack of performance


Cowboy builders

Industry dominated by the old craft culture

Fragmented and adversarial

Industry has bad reputation

Applications to university courses have gone

down dramatically over the last five years, by

34% in the case of architecture rising to 50-

52% for construction and civil engineering.

The competition for the best talent is very high

(for example the choice between becoming a

doctor, lawyer or civil engineer).

Low profitability (short cuts, bankruptcy, lack of investment in

research and development)

High business failure (mainly

SMEs)

Profitability is low (across the

board)

30% making a loss

Low profitability

According to the Egans rethinking

construction report, the construction has a low

and unreliable rate of profitability

The City regards construction as a business

that is unpredictable, competitive only on price

not quality, with too few barriers to entry for

poor performers.


Lack of high technology in design and

construction

Lack of branding

Building products are behind in terms of value and intelligence.

High reliance on site based and unskilled labour

Demand for buildings is largely client led

Not all that bad!

Construction:

Pride, Challenge, Big

Very flexible

(accommodate late clients

changes)


Design and construction are two separate processes

longer than necessary duration

inefficient design

tension and adversarial culture

Architect is project leader

focus on design and aesthetics rather than cost, time

and quality of service

limited project management skills


Competitive tendering is the most common way in which

contractors and professionals obtain work

focus on cost rather than value

innovation suffer

discontinued project teams

high tendering cost

planning and estimating suffer


Construction is dominated by the old craft culture (site

based)

quality control suffer

sensitivity to weather and site conditions

less reliance on technology and modern production

methods

limited standardisation and hence high cost and

duration


Industry is fragmented and construction is performed by

specialist subcontractors

long supply chains that are difficult to manage and

control

training and development suffer

disputes and tension rise


Different projects are procured by different temporary

teams

discontinuity of teams means that on each new project

practitioners face an initial period of team building

different organisations would have different processes

and technology.

no branding and strategic product development

between design, manufacturing and assembly.


Project team responsibility ends at completion of

construction

life cycle costing is not taken into account

information on the performance of the building in

meeting consumers (occupiers) needs are not fed back

to project teams.


Client is not the consumer and industry is dominated by

occasional clients.

lack of real customer focus

misalignment of interest between stakeholders.

Clients are inexperienced and have limited power to

exert change in industry


Need to price before production

high financial risk

need to complete all design before construction cost

can be estimated.

project performance is judged by the extent to which

cost can be kept to the estimated (rather than the extent

to which value is maximised).


Main focus was on setting cost, time and quality

targets and then meeting these targets.

Construction was unique and hence management

concepts and tools had to come from within

PM in the main is to do with maximising efficiency

and predictability given the scenario. Boundaries and

rules of the game were assumed to be fixed (e.g.

use of standard forms of contracts)


In traditional project management, a project has a well-

defined scope and can be understood as a sequential

dependent series of activities

The project is managed by central authority to ensure

activities meet schedule and budget targets

Control actions attempt to return the project to its plan

So how would project management look like if, for

example, design was not completed at start of construction?

Questions to be asked

How can the Construction Industry be improved?

What are the developments needed?

How can project management contribute to this

development

Assuming that road for change is a long one, where do we

initially put our effort to get maximum returns?

Initiatives to Influence the Construction

Industry

Major government led studies and investigations (Technology

Foresights, Latham, Egan)

Related organisations and departments (DTI, CRISP, RC)

Major initiatives (M4I, CBPP, IMI, KPI, RfP, Trust and Money,

etc.)

Main Findings and the Change Agenda

Procurement system should be concurrent and integrated

(concurrent engineering)

Tackle fragmentation and adversarial culture by partnering

and teambuilding

Improve productivity, quality and cost by adopting new

management concept (Lean, Benchmarking, VM, SCM,

Process mapping and Reengineering)

Industry must measure its performance and define scopes

for improvement (KPI)

Briefing the team (client empowerment, visualisation)

Move away from competitive tendering and cost as the

selection criteria

Incorporate WLCC and sustainability in design

More use of standardisation and pre-assembly

Respect the people working in the industry (training, better

working conditions, etc)

Take full advantage of IT and other new technology

Develop people and culture necessary to facilitate all of the

above

The Manufacturing Industry:

Learning from other industries

Development in manufacturing industry

Craft production

Mass production

Lean Production

Craft production

This is how manufacturing looked like at its

initial stages

Skilled labour (craft men) individually or

in-groups carried out the entire design and

production process (typical example is a

carpenter making a chair).

Mass production

Drivers Supply of products using craft production

principles could not cope with demands

Prices as a result were too high and only

very few could afford products such as a car

demand for goods was plentiful as long as

the price was low, companies desired to

minimise the unit cost of items.

Concept of Mass Production

Fords contribution came from his approach

of breaking larger jobs into smaller, highly

repeatable tasks

minimising the cost of each task using

standardisation (company level, industry

level)

Modularity

With more competition consumers

demanded variety and customisation.

modularity obtain variety and still hold

down cost is

A car that has 3 engines, 2 transmission, 5

exterior colours and 3 interiors available to

customer (13 modules but 90 different

versions)

Product and Transformation System Design

Stage 1: Selection

Generation of ideas: Ideas can come from Customers,

market research, salespersons, internal research and

development laboratories, suppliers and even competitors

(market pull and or technology push.

Screening and selection: Ideas pass a large variety of

tests before receiving the final go a head (1 in 50 or so

will pass) (analyses and forecasts of customers needs,

assessment of the reaction of competitors, analyses of

economic viability, studies of technical feasibility, and

checklists for organisational fit)

Stage 2: Product and Service Design

Preliminary design: major aspects of the product; cost are

first set as goals; various designs are considered; Critical

trade-offs

Prototype testing: test appearance, or operation to test

technical performance and customers reaction and tastes.

Final design: based on prototype analysis a final design is

developed, with all information needed for the production

system (a new prototype may be needed)

Transformation system selection

and design

Continuous process

Flow Shops

Job Shops

Project Operations

Continuous process

This manufacturing process involves moving fluid

continuously through vats and pipes. highly standardised

and in extremely large volumes. (gazes, chemicals, flour,

cement).

Flow Shops

Produce discrete, standardised, outputs on a

continuous basis by means of assembly lines

Flow Shops

Advantages: low per unit cost, bulk purchasing, lower labour rates, efficient utilisation of factory space, low in-process inventories, simplified managerial control

Disadvantages: limited variety, changes in design require substantial changes in equipment, dehumanisation of workers, if line is stopped the entire production come to a halt, high capital cost and risk of obsolescence

Job Shops offer a wide range of possible outputs using a number of

functionally specialised departments

Advantages of Job Shop are:

provide flexibility to respond to individuals, small volume demands

larger base of experience with these equipment and risk of obsolescence is low.

Because of the functional arrangement of equipment, resources maybe centralised at separate location (high utilisation rate, distracting or dangerous equipment can be segregated)

Staff highly skilled and similar people grouped together

Pace of work is not dictated by a moving line (productivity is not hindered by a machine braking in another function).

Disadvantages are:

general purpose equipment is slower than special purpose ones

cost of skilled labour is high.

initial cost of general purpose equipment is significantly less but variable cost is significantly higher

need for high stocks of raw materials, parts and in-process inventories become very large

management and control is difficult and expensive as production varies

Project Operations

One of a kind, massive, labour and

equipment are brought to a site

rather than fixed production facility.

Frequently the output is unique (a

dam, fire fighting) but it need not be

(ship, house).

Output Characteristics Effect

on Transformation Systems

Commercialisation

The earliest typewriter was the mechanical

one (25 years). Then electromechanical

typewriter (15 years). Then entirely electric

typewriter (7 years). Then first generation

of microprocessor-based machines (5

years). Now the next generation

microprocessor-based became the market

leader.

Success of mass production

Labour was cheap and people were hired and fired as the

product demands rose and fell.

Customers wanted variety only if it was inexpensive and

did not disturb the philosophy that cars were produced

only to satisfy the societys need for transportation

Initially, styling was important only in what the occupants

of the autos wore.

Automakers felt no particular pressure to redesign basic

automobile styles.

Suppliers, like the workers themselves, were secondary

and could be abandoned if necessary.

Huge inventories could be kept in hand because business

was booming.

Minimum amount of product inspection was performed,

and only the more obvious defects were reworked to

satisfy the customers demand for quality.

Problems with mass production

The simplification of workers span of responsibility did

not come without a price.

By dramatically increasing the number of tasks that must

be managed in an environment already stressed by

increased production rates and product mixes, the job of

managing the facility was greatly complicated.

Rigid production control methods now had to be put in

place to organise and co-ordinate long, variable sequence

of operations.

The result was two layers of skills: a group of highly

trained individuals to manage the overall production

process, and a much larger group of more specialised

workers to perform the manufacturing process.

Departments were created to buffer workers from

engineers, suppliers and consumers and as a result rigorous

communication channels became necessary to enable the

free flow of information.

Underestimating or over-planning of capacity, supplies and

raw materials. This necessitate the use of high inventories,

large stocks of materials and buffers to schedules.

Also the segregation of production into many small tasks

resulted in large need for factory space and problems in

material handling (cost of transportation and wasted time).

Lean production

Drivers Toyota had a much lower demand for its product

(produced far fewer cars in a decade than were shipped

from Ford in a single day!).

Company had little access to investment capital

Had agreement with its trade unions that virtually

guaranteed lifelong employment to the workforce.

Lean production

Actions An emphasis on creating an environment of workforce

flexibility and empowerment was central to the strategy.

Workforce trained for multiple disciplines

Variations in production levels within each task were

eliminated.

Equipment was moved closer and procedures were

developed to permit the fabrication of parts in very small

batch sizes (Cellular production) which enabled

equipment to be setup rapidly.

Conversion of a Job Shop Layout

to a Cellular Layout

Elimination of activities that added no real value to the

final product.

Strong emphasis was placed on minimising production

rework.

Continuous improvement (or kaizen) was adopted where

workers were asked to chase down the root cause of

problems and identify means to improvement.

Take additional measures to ensure the quality and timely

delivery from its suppliers.

Substantial effort was made in designing products for this

type of manufacturing (processing capability drove

complexity, minimum complexity of set up between

different items).

Main principles

eliminate variations in the production process

setup the infrastructure to accommodate variations should

it happen (people and equipment) (cellular production)

Production system should drive design where possible

(concurrent engineering)

Supply chain management and long term partnering

Getting it right first time (eliminate rework)

Continuous improvement or kaizen (emphasise on

measurement).

UNITS 1& 2 projectmanstrat.pdf

Documents

Transcript of UNITS 1& 2 projectmanstrat.pdf