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LAINE Kirsti – Managing Director SMAL-TUNNUS/AFTA NUMBER • LAINE Teemu – Konttoripäällikkö / Branch Manager FOREX. export products in major trading sectors and the rise in Forex allocation of investments at fair value Mr Teemu Meronen, Helsinki. ja K-Market Visamäki Hämeenlinnassa. Tavoitteena on saada malli vuoden Haaga-Helian rehtori Teemu Kokko Laine Anu kirjanpitäjä. CRYPTO GOFUNDME
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Therefore, the quality of the project managerial activities have also a significant impact on quality costs beside poor product quality. Hence, also the quality of project implementation and management is included in this study and taken into consideration in the quality gate model. In addition, customer satisfaction does not depend 9 2 only on the product quality, but also strongly on the project quality, and so the aspect of project implementation is very important.
In a wider context, the research topic is interesting as the importance of project business is increasing in organizations and project management is one of the growing disciplines. Also, the perspective on quality has changed significantly during recent decades, and at present the costs related to quality are also seen as a potential opportunity of profit maximization in organization. Combining the two, successful project management and project quality in order to maximize cost effectiveness has potential for notable performance improvement.
A new more standardized project execution model is created with the aim to improve the project as well as the product quality and ensure the right quality level in every phase through the project lifecycle. Hence, the delivery must satisfy the customer s needs as well as possible and also fulfill the financial objectives of the business.
The main financial objective is to reduce the quality costs in projects, and so to maintain satisfactory gross margin levels throughout the projects, from the sales phase to the end of the delivery. The project delivery begins already in the sales phase when the input for quotation is gathered and project specific requirements are set and agreed between the project parties.
In this study, the project flow is discussed starting from the sales phase and more precise from the point, where a valid contract of the project is existing. Sales phase is not concerned in this study as a whole, because the gates for the sales phase are done in a separate development project. The project delivery is covered in this study until the point where the project is transferred to service organization and the responsibility of the project organization has ended.
At the moment, there is another development project ongoing at Valmet corporation level regarding also the project execution. A new Project Execution Model PEM is being developed at Valmet corporate level, concentrating more on the project follow-up and financial issues at the project portfolio level.
The alignment of the quality gate model created in this study with the Valmet PEM model must be ensured, as the two models will be implemented at the same time with the same tool. Also, another project ongoing at Valmet level, which must be considered in this study, is the implementation of Lean into the operations. Therefore a requirement for the model is set, to apply suitable Lean methods and practices in the new gate model. Suitable principles must be utilized to implement Lean way-to-operate also in the project operations, and in addition to make the operations more cost effective.
Literature is reviewed in order to build deeper understanding of the subject area discussed in the thesis and to build theoretical basis for the construction phase of the quality gate model. Chapter two includes the basics of project and project quality management, literature review over project success factors and discussion about time, cost and quality factors in projects and the trade-off decisions between them.
Chapter two also includes an introduction to Lean thinking and the fundamentals of Lean. Also an understanding is built upon Lean project management and how Lean thinking can be considered in project management. In chapter three, a description of the research target and the project process of Valmet Automation is given.
The project flow of delivery projects is described and the chapter gives an understanding of automation project execution and the different phases of the project. In the same chapter is also described the current way of quality assurance in AUT projects. In chapter four the research methodology and the materials used in this thesis are described.
The chapter contains a brief summary of the research strategy used and describes how information was gathered during the study. Also the different stages of the constructive research process are advised in the chapter. Chapter five is a very important chapter of this thesis, as it presents the most significant results of the study. The structure of the chapter is based on the phases of the constructive research done in the thesis. In this chapter the recent state of project execution in Valmet AUT is presented and the observations made during the interviews are discussed.
The construction created in this study, a quality gate model for automation project deliveries, is presented and also the most important results of the pilot trial are discussed. In the next chapter, chapter six, the results are validated and discussed with related linkages to the theoretical background. The constructed model is evaluated mostly against the feedback gathered during the pilot trial. The final chapter, chapter seven, summarizes the results of the study and discusses how the thesis is fulfilling its objectives.
Also the next steps and needs for further development in the target company are discussed, as well as the suggestions for further research. First the basics of project management are presented and a literature review about project success factors is conducted. Next, the relationship between the most important project success criteria, time, cost and quality is discussed. Also a short introduction to project quality management is presented as well as the basics of Lean thinking.
Related to the application of Lean principles in the gate model, the biggest differences of traditional and Lean project management are also discussed. A project is composed of unique set of processes, including coordinated and controlled activities, performed to achieve the project objectives ISO , p.
Project management instead can be seen as the application of knowledge, skills, tools and techniques to project activities to meet the project requirements PMBOK , p. According to Lock , p. According to the international standard of project management, ISO , organizations generally formulate strategy based on their vision, mission, policies and factors outside the organizational boundary, and projects are often the way to achieve strategic goals.
The objective of a project is to produce measurable benefits that contribute to strategic goals, and project is managed through processes throughout its life cycle ISO. For their temporary nature, projects are usually organized into phases which are collectively known as the project life cycle. To manage project efficiently through its life cycle, project management processes are needed to use as a whole, for individual phases or both. ISO , p. Processes can be viewed from two different perspectives, as process groups for the management of the project or as subject groups for collecting the processes by subject.
Processes are grouped into five categories Process groups ISO , p. The planning processes are required to establish the baselines of the project, against which the course of action required is defined and project performance can be controlled and measured. Implementing processes are used to carry out the project management activities and complete the work defined in the project plan according to project specifications.
Controlling processes are used to measure, control and monitor the progress and performance of the project. Also preventive or corrective actions may be taken and changes to the plan made, in order to achieve project objectives. The management of project ends with the Closing process group, in which the processes are used to finalize all activities and formally close the project phase or project.
On the whole, there is no clear consensus about the impact of project management on the project success and the topic is not yet so much discussed. Instead, a much more debated theme is the project success in general, and as project quality is the key subject in this thesis, the understanding of the success factors is deepened next, and also other factors influencing to the project performance are discussed. To define and recognize the factors influencing the success of projects, it is necessary to evaluate the concept of project success first.
Success may be measured against several different sets of objectives, but the focus in this study is set on the project objectives, excluding the business and social or environmental objectives. Three often discussed project success criteria can be distinguished among the project management literature: Cost, Time and Quality Mishra et al.
These criteria can be fairly called as the basic criteria, since those three project objectives have been discussed in the literature at least since the s. Atkinson , Cooke-Davies During 21 st century more stakeholder focused project success criteria has been developed Davis , p. According to Williams et al. As projects have different features, such as size, uniqueness and complexity, so are the consistent success factors missing. Most of the factors discussed before 21 st century were concentrating strongly in identifying tools and techniques or general factors of the project success, but still less soft factors and people dimension have been researched Mishra et al.
Mishra et al evaluated the critical project success factors based on a survey research in Indian project organization context. According to Mishra et al. Contrary to the most literature regarding the success factors, Mishra et al. Mortaheb et al. Mishra et al. For the projects to be on time, Williams et al.
Project management performance, in all three phases of the project planning, execution and delivery , has a strong impact especially on the customer relationship quality and customer satisfaction, execution performance being the most critical factor Williams et al. Dvir et al. The study is relevant especially regarding this thesis, as automation project delivery consists of both hardware and software delivery.
Over the course of the research, certain factors were found to have an impact on all types of projects and Dvir et al. Especially, in satisfying the customer, the preparation of detailed contract documents proved to be vital Dvir et al. For all projects, Dvir et al. Also project milestones were found to be important to almost all types of projects Dvir et al.
Also risk management and schedule control can be seen less critical for low scope and small projects, but extremely critical for high scope projects Dvir et al. Williams et al. Not only creating the schedule but also controlling and following a realistic project schedule are important in successful project Mishra et al.
Good project communication is a widely distinguished project success factor Lock , and according to Mishra et al. Also according to Mishra et al. Also in correlation were the number of employee with the adequate funds and resources Mishra et al. Table 2.
As mentioned in the beginning of the chapter, there does not exist any consistent perception about the project success factors among the project management literature, and the criteria differs especially between the time periods from s to 21th century. The summary of the most common project success factors. The discussion is strongly concentrated on certain areas of managerial skills that are seen also otherwise important success factors in projects, such as communication and communication skills of the project manager.
Also most of the studies contained general statements about project managers competence having an effect on project success, but no more details on how or what kind of effect was at stake. Much less and almost no discussion exists about the leadership style of the project manager, Mishra et al.
There is a strong contrast between the literature on project and general management regarding the success factors, because in general management literature the manager s leadership style is seen widely as one of the most important success factor contributing strongly to the successful performance of an organization.
Of course, it may be that the managerial skills have no such a significant impact on project success, but it seems unconvincing, because that conclusion is in direct contrast with all general management literature. Hence, there is a need to further explore the human aspects and leadership skills related to project success. Especially, since the target of the thesis is to create a model which will improve project quality and minimize quality costs, but still stick to the ontime delivery in projects, it is interesting to study the relationship between time, cost and quality factors and possible trade-off decisions between them.
Almost all projects have certain demands with relation to their execution, most projects are undertaken with the expectation of financial benefits and all of the projects should be controlled against detailed cost budgets Lock , p. The actual progress of the project has to match the progress planned, and all significant project phases must take place no later than their specified dates Lock , p.
Suggested to be the most important factor, also the performance objectives of the project must be met, but the project quality characteristics depend on the nature of the project Lock , p. In general, the most important definition of quality is customer satisfaction, how well the result meets the customer s needs Juran , p. Juran , pp divides the meaning of quality in two critical components: customer satisfaction and freedom of deficiencies, the latter meaning the freedom of errors that require rework or that result in customer dissatisfaction, field failures or customer claims, and so on.
In this sense, quality is closely related to costs, and lower quality usually causes higher costs Juran , p. The project should be completed before due dates and within the budget given Kim et al. Yet a more important project target than minimizing the costs or time spent is reaching the minimum contentual and qualitative level of the result in the end of the project Ruuska , p. The primary objective then being rather proportion of minimizing costs and time spent to the benefits gained Ruuska , p.
According to Kim et al. Optimizing all three factors is not always possible, and decisions regarding putting more weight on some factor compared to others is sometimes demanded. What is interesting is, what are the impacts on the other two factors in situations where the trade-off decisions must be made?
Time and money have usually direct and very important relationship in projects, and the time-cost trade-off often originates when activity time is attempted to be reduced with some extra direct costs Lock , p. As project is often a changing entity, and the variance between the assumptions made regarding a project and actual outcomes might be significant, completing a project as scheduled often requires some rework or modification Kim et al.
Due to fluctuating nature of projects, budgetary and scheduling pressures can be common results of sudden unexpected changes in human resources, technology, materials or technique. Changes and modifications may in turn increase the possibility of failure. Kim et al. The cost effect then consists of the increased amount of resources, such as labor or equipment, needed to be allocated due to shortened activities Kim et al. In real situation, in order to make practical and cost effective project schedules, the possibility of rework and modifications when crashing activities, must be considered Kim et al.
The selection about crashing activities must be properly made, in a cost effective manner, and the need for special care regarding non-conformance risk activities identified Kim et al. The former theoretical approach of project management literature in time-cost trade-off problems may not necessarily illustrate the real project environment and scheduling problems very realistic.
Time-cost analyses from the late s mostly concentrated on shortening the overall project duration by crashing activities, the traditional models approximating the time-cost relationship as linear. But soon after, the studies in the area recognized the nonlinear nature of the time-cost relationship, assuming the linear model suitable only for individual activities.
In its simplest form, the nonlinear model represents the linear relationship of the time and cost of one separate activity, as presented in figure 2. According to the model, the activity has a direct cost function and continuous time range, the minimum time to complete the activity being 15 weeks. Linear time-cost model for individual project activity. In many situations project managers need to evaluate alternative options for accomplishing project activities, in order to best achieve the project objectives.
When the traditional discussion about the trade-off is concentrated in project manager s focus on minimizing project completion with minimal costs spent, the problem is that once the project is completed, the key issue, instead of time or cost, is quality Kim et al. Simply finishing the project by the given due date and within budget is not sufficient, as the project must also be delivered with acceptable quality Kim et al. Hence, the amount of existing models and procedures considering the project activity quality also is notably smaller, compared to the traditional time-cost trade-off.
In traditional analysis, the implicit assumption is made, that an equal level of quality is maintained throughout the analysis. The assumption of equal quality is too optimistic, while in actual project it is definite, that the level of quality is affected by the changes in time or cost factors. The overall project quality then being a function of quality levels attained at the separate project activities.
In figure 2. Project costs presented on the horizontal axis and completion time on the vertical axis. Figure 2. As the budget value increases, the completion time reduces and depends much more on the quality requirement, the completion time being longer with high quality standards. The assumption of continuous quality level in each activity may not be applied in practice, where quality deviations are possible or sometimes even to be considered, when project manager is evaluating different alternatives.
Most of the models designed to help in the scheduling problems and decision making between time, cost and quality trade-off, are made from a very theoretical point of view. Using the calculation functions in actual project setting situation would presume a lot of extra work and a very detailed defining of the quality levels, estimated costs and durations of single activities. Therefore, the usability of the models is still quite far from the needs of actual project environment.
Nonetheless, some of the studies have made useful conclusions about the consequences of certain tradeoff decisions that might be practicable in actual decision making situations, and are well related to the subject matter of this thesis as well. The summary is presented in figure 2. The critical path length on the horizontal axis illustrates the shortest possible completion time of the project.
As described in the figure 2. Otherwise, there exists a time limit in projects, if the project is executed with less time than the minimum, the certain quality level cannot be reached. The relationship between project total cost, critical path length and quality illustrated with iso-quality curves. For instance, for the quality level of 74 presented in figure 2.
Quality-cost trade-off is very relevant subject regarding this thesis also, as one of the targets of the Quality gate model is to reduce quality costs occurring in projects. In the model, prevention costs are those resulting from quality activities done to avoid deviations and errors. Appraisal costs then consists all the costs associated with evaluating, measuring or auditing products to determine if they conform to their requirements.
Failure costs instead are those losses associated with the production of non-conforming product. Failure costs include the costs associated with the defects found before delivering the product to the customer as well as those costs that occur when a non-conforming product reaches the customer.
As presented in the figure 2. According to the PAF model, the more the preventive plus appraisal costs are, the less failure costs occur. The optimum point of the costs, which is the location of the minimum point on the total quality cost curve, depends on the shapes of the two lower curves. Instead, project managers should put their effort to eliminating all defects and do things right the first time. Those hidden costs, such as customer goodwill or future lost sales, can have a significant impact not only on the project success but also on the success of the business.
The control of the trade-off and reasonable decision making between the three factors is difficult, especially as the sufficient quality level should be always attained. Maintaining the minimum level of quality even after the trade-off decisions sets requirements for the quality management of the project. In order to understand more about sustaining the right quality level at the project better, the principles of project quality management are presented in the following chapter.
As project quality is described as meeting the customer s needs or performance objectives set in the start Juran , p. According to the ISO standard , p. Emphasizing top management responsibility in achieving project quality objectives, ISO standard , p. Each of the processes occurs at least once in every project and in one or more of the project phases. PMBOK , p. Identifying standards and requirements and determining how to satisfy them is one of the key activities during project planning, and that is the foundation for quality being truly planned and build in, not inspected in Rose , p.
Rose , p. According to the ISO standard the planning process includes at least determining and agreeing the objectives and relevant standards with project sponsor and other stakeholders, defining relevant tools, procedures, techniques and resources to achieve the objectives, determining methodologies, techniques and resources to implement planned quality activities and as an primary output developing quality plan for the project.
The next process after quality planning is quality assurance which includes the planned and systematic activities, including processes, tools, procedures, techniques, and resources necessary to achieve the project objectives. Activities include the efforts made to determine if the project performance is meeting the requirements of quality objectives and standards.
Rose ; ISO Assuring process includes ensuring the communication, understanding 26 19 and acceptance of objectives and standards to be achieved by the project members, executing the quality plan as the project proceeds and ensuring the usage of established tools, procedures and techniques. Also quality audits are one primary mechanism to determine the performance of the quality process and activities made, and then recognize the need for recommended action.
The primary input of the process is usually quality plan and output instead the change requests made after recognizing the need for change in the course of action. Involving monitoring precise project results to see if they comply with quality objectives and relevant standards, quality control is performed to identify ways to eliminate unsatisfactory performance.
Control is conducted to determine whether the objectives and requirements are met in the project, and the process should be carried out throughout the project life cycle. Rose ; ISO Quality control process is including detecting defects with the established tools, procedures and techniques and monitoring that the quality of deliverables is according to objectives, analyzing possible causes of defects, determining change requests and preventive actions and communicating the actions and requests to the appropriate project organization members.
The primary inputs in controlling process are quality plan, deliverables and progress data, while the outputs are change requests, inspection reports, corrective actions and quality control measurements. According to Rose , p. Therefore, the fourth process, quality improvement, is added presenting a deliberate process that begins with data collection.
Quality improvement uses objective measurement and data to create beneficial change in organization. This improvement process is necessary for many reasons and is strongly associated with customer satisfaction and competitiveness, hence having an effect on the whole business survival. Rose , pp Making processes and performance better continuously is critical, as well as understanding the customer needs and requirements in the very beginning of the project PMBOK ; Rose Also the ISO standard for quality management in projects which is based on the ISO Quality management standard mentions customer focus and continual improvement as two of the eight quality management principles which should be applied to the processes of project quality management: 1.
Customer focus 2. Leadership 3. Involvement of people 4. Process approach 5. System approach to management 6. Continual improvement 27 20 7. Factual approach to decision making 8. Mutually beneficial supplier relationships Within the framework of the standard ISO , customer orientation is seen as crucial principle to take into account in project quality management, as organizations are dependent on their customers and project success on customer satisfaction.
Relative to project quality management, customer requirements should be taken into consideration in every process and possible trade-off situation between time, cost or quality. If conflicts arise between requirements of the customer and other interested parties, excluding statutory requirements, customer requests should be taken precedence.
The second principle considers leadership as a strong contributor for project quality, starting from the creation of a culture for quality in organizations. As for project and project quality management it is important to appoint a project manager as early as possible, so that establishment, implementation and maintenance of project s quality management system is ensured.
The competent personnel assigned for the project should be provided well-defined responsibility and authority for their participation as well as appropriate tools, techniques and methods. Also cross cultural management should be addressed in the case of multi-national, multi-cultural or international projects as well as joint ventures. In alignment with ISO standard, process approach is seen crucial also in ISO , enabling more efficient achievement of results if project activities and related resources are managed as a process.
Project processes should be identified and documented, so that experience gained in developing and using the processes can be applied in new projects. In order to accomplish that, certain subjects regarding project processes must be identified, such as inputs, outputs and objectives of the processes, process owners and their authority and responsibility and the interrelations and interactions among the processes.
Defined as one of the project quality management principles in ISO standard , a systematic approach to management enables the coordination and compatibility of an organization s planned processes and a clear definition of their interfaces. To align project processes with the originating organization s overall system, it is necessary to define and link the processes to manage them as a system. It is necessary for project organizations to continually seeking to improve the efficiency of the processes and learn from the experience.
Therefore, the information gained during the project should be systematically collected and analyzed, for use in a continual improvement process. Also opportu- 28 21 nities for improvement are important to identify, and to perform that internal and external quality audits can be conducted, with the consideration of the time and resources needed. The seventh principle, factual approach to decision making, emphasizes the importance of performance and progress evaluations in effective decision making, and the ISO standard gives an example about analyzing the information from project closure reports of previous projects to use to support the improvement of current and future projects.
The eighth principle involves also suppliers into project quality management and emphasizes the beneficial relationship between the organization and the supplier. The cooperation with the supplier when defining strategies is important especially in the case of products with long lead times, and the requirements towards suppliers processes and product specifications should be developed jointly among the organization and the supplier. The aim in this research is not to create a quality gate model by following Lean principles, but more to choose those concepts and methods from Lean thinking that truly benefits the goals of this study and fit beneficially to project environment.
The target is to get familiar with Lean philosophy and find suitable and value adding factors to utilize in the quality gate model. The market is getting even more competitive and companies are constantly demanding more profitable solutions. Therefore, Lean approaches such as efficient application of resources, cost reduction and excellence in processes, are making it essential to consider Lean philosophy in this development project also.
Lean concept is one of the most widespread management concepts in the world, and there is no unambiguous definition of Lean. Liker demonstrates one well noted approach to Lean philosophy in his book The Toyota Way. Liker , p. At least some of those approaches provide a reasonable value basis to use in this project development study also. Next, a short introduction to general Lean philosophy is conducted, the main focus kept in concepts that can be useful from quality development and project point of view.
The roots of Lean philosophy are in Japanese car production industry, especially in Toyota s culture and way of working. The auto industries of North America and Europe were stuck with outdated mass production systems and techniques, simply lagging the development and losing market share for the pioneering Japanese companies. Unable to learn from their Japanese competitors, Western companies were concentrating on very wrong issues and an idea about undertaking a closer study of the new Japanese techniques came up.
Those techniques were started to name as Lean production and a major research project launched with MIT and motor vehicle manufacturers around the world to find out about competitiveness differences and reasons behind them. The source of competitive advantage resulted from the Lean production model developed by Toyota during the years, giving the Japanese companies copying the model a huge lead in productivity and quality compared to their competitors.
Womack et al. That kind of thinking is a huge barrier and an annoyingly often occurring phenomenon, preventing companies to improve their performance with Lean. While there is not existing any unambiguous explanation or definition of Lean and in literature the authors seem to have divergent opinions about the characteristics associated with Lean concept, for organization planning to implement the concept it is therefore essential to identify the variations and make active choices to discover the most suitable components and concepts Hines et al.
Hines et al. Hines at al. In this study it is more reasonable to concentrate on the strategic level and thoughts that can be transplanted into project business. Big part of Lean literature concentrates on Lean production and Lean tools for waste elimination and other productivity improvement techniques. From this thesis point of view the specialties of Lean production are of minor importance, and the concepts suitable for project development are collected to this literature review.
The basic principles of Lean thinking are studied via commonly known definition provided by one of the basic works of Lean, The Toyota Way Liker The 14 Lean principles, that are important for the management to embrace, are divided into four categories in the 4P model shown in the figure 2.
The first category, Philosophy is about the principle, that management decisions should be based on a Long-term philosophy, even at the expense of short term goals Liker , p. All the activities in a company should be evaluated by the value they are producing for the 30 23 customer, society and economy. Responsibility and self-confidence are especially valued, and one should always maintain and develop one s skills to make more additional value.
Toyota Way s 4P model with four categories for the 14 management principles. Liker The second category, Process, includes the statement, that following the right process, the right results can be achieved. According to Liker , p.
The principles in the Process category are pursuing more the optimization, concentrating more on the technical side of Lean. According to the principle number two, it is important to create a process flow to reveal the problems and get rid of waste, the useless and unnecessary work Liker , p. The pull system should be used to avoid the overproduction principle 3 and the inventory of finished and incomplete products kept in minimum by reacting fast to daily changes and stocking up the inventory often.
Principle number four states that the workload should be balanced, so that the overload of the workforce and the equipment is minimized. The working culture should be created so, that a stop is made, when a problem is noticed principle 5. Problems should be handled quickly after occurring and the quality level of the product should be closely guided 31 24 by the customers demands.
It is also important to have standardized tasks to enable the continuous improvement, commit employees and gather best practices principle 6. To promote continuous improvement and reveal the problems a Visual Control should be applied to work principle 7. Simple visual systems and indicators can be used to inform the employee immediately if the standard circumstances are diverging, helping to maintain the process flow.
Also related to remaining the effective flow, only reliable and thoroughly tested technology should be used to serve people and processes according to Toyota way principle 8. Liker , pp According to Liker , p. The aim is to produce added value to the organization by developing people and partners, holding the people as the most valuable asset. The organization should grow talented leaders, who understand the work thoroughly and act as role models and most competent teachers of the philosophy principle 9.
All the individuals in the organization should know and comply with the philosophy well to get the best results principle People should be empowered and the organizational culture stable and strong, so that the company values and visions spread and obeyed. Also partners and suppliers should be respected by giving them challenges and helping them to grow and develop principle Liker , pp The fourth category, Problem Solving, is essential to internalize if organization is willing to change into learning organization.
Problems should be always solved, and the best way to do it is finding one s way close to the source of the problem principle The information related to the problem should be gathered on the spot, and even the high level managers and directors should get into the place to understand the situation thoroughly.
Principle 13 states that the decisions should be made slowly, considering and weighing the options, while the implementation after should be made rapidly. Consensus in decision making is important and eases the implementation process. According to the last principle, learning organization should be made by tireless evaluation and continuous improvement. After achieving stable processes, continuous improvement should be used to figure out the origin of inefficiency and waste elimination.
The improvement of performance is possible in the short run when implementing Lean tools and following few Toyota way principles. But getting a competitive edge and maintaining it requires understanding and compliance of all the key principles. Without getting into much details on how organization should put the change into practice, Liker discusses more about the cultural and philosophical part of the Lean concept.
Only the principle number two is more about the tools, the rest principles explaining more about the management approach and mindset required in order to succeed in the change. The similar approach with the same five main principles is also adopted among Valmet and chosen as the future way-to-operate. The five Lean principles are illustrated in the figure 2. Instead, the focus should be more on a question: What need does the product meet? The fundamentals of Lean thinking: five main principles.
Valmet Lean After attaining an understanding of the value, all the steps required to deliver the value to the customer must be identified. The value stream includes all the specific activities in all processes, and to create a value stream, all the steps in the delivery chain must be defined and described. There can be specified three types of activities in the value stream: 33 26 Value-adding activities: Those activities that unambiguously add value to the flow unit.
Value is added when the flow unit is being processed or moved forward. In automation delivery project for instance when the system is shipped over to customer s site. Type one Muda waste : Those activities that create no value but are unavoidable with current production assets and technology. In a project for example conducting the quality check for the system over again on customer s site. Type two Muda waste : Those activities that create no value and should be immediately avoided.
In a delivery project that can be for example delivering a system that does not meet the customer requirements. Waste of waiting: All unnecessary waiting should be avoided, and the production should be organized in a way that no machine or worker have to wait for no reason. Waste of transportation: Transporting material and products should be avoided.
Waste of processing itself: Extra work on a part or a product, that customer does not require, should be avoided, including the unnecessary use of expensive or too precise tools for example. Waste of inventory: Inventory that is capital tied up in the process should be avoided.
Waste of movement: Unnecessary movement of things, information, or workers should be avoided. Waste of making defective products: Only fault-free products should be made in every step of the process. But for instance in project environment, when many issues are not only dependent on the project organization but also from the customer or the supplier, it is harder to minimize for example waiting time for information, when the delivery time depends upon the customer.
Also, in many circumstances various types of controls are necessary, especially regarding project quality assurance. Mandatory reviewapproval chains must be conducted to assure the quality of documents for example and the approvals might be demanded even in the project contract. Even though those chains might create unnecessary waiting time to the processes. One could assume the Lean principles a bit more suitable for stable manufacturing environment rather than project environment, where there is much more changing factors present and the process is not that foreseeable.
However, after identifying the value stream, according to the third principle of Lean, a continuous flow to the process must be created. Flow can be described as a progressive achievement 34 27 of tasks along the value stream, so that the product proceeds into the hands of customer with no stoppages, scrap or backflows. In a manufacturing environment it is more about abandoning the traditional batch-and-queue principle and trying to create the flow for single products.
The fourth Lean principle of pull can be defined so that nothing should be done by the upstream supplier until the downstream customer communicates a need. When speaking of projects, it is quite obvious that nothing starts before the project is ordered by the customer. But there is more to think about on how to maintain the customer pull throughout the project and create a system of cascading production and delivery instructions from downstream to upstream.
As there will always be activities that are considered as waste, the process must be started again and again making the effort of improvement continuous. In reality, cutting of all the extra costs of operation can be also dangerous regarding customer satisfaction.
Hence, the customer requires a reliable product delivered with supportive project delivery, and recently for example the sustainability of operations has been a growing trend required by the customer. Relative to those demands, a delivery with no waste and extra costs can be at least difficult to combine.
Clearly, most of the Lean principles are aimed for the manufacturing environment, and as said before, applying Lean thinking in the traditional environment is already extensively researched, but the intention of the next chapter is to deepen the understanding of Lean in project environment as well. The major differences are studied to build an understanding about how Lean thinking can be applied into project environment and what possible benefits that might bring from the project management and quality point of view.
Hence, Lean project management is much less discussed concept compared to Lean manufacturing or Lean construction, but it has already shown significant benefits especially among difficult and complex project areas Gabriel , p. As Lean thinking is based on values, also in Lean project management the value is defined by the end customer, and can be seen as any action or process that the customer would be willing to pay.
Hence, all that expenditure of resources for any other goal then the creation of value for the customer can be considered as wasteful also in projects. As the focus in Lean thinking is on the end customer, increasing quality beside eliminating the costs is crucial, because quality is critical to satisfy the customer.
Kliem , p. Although Lean project management and general project management share the same objectives, there is still remarkable differences between the concepts, and some of those are presented next, the summary table being presented in the end of this chapter. According to Kliem Uniqueness is fine, however, when delivering a product or service standardization is critical. Also Kliem , p.
The more a component is based upon a common standard, the less time and labor are required to make a change Kliem , p. Also document and construction, especially off-site manufacturing, are seen important parts of project standardization. Also value analysis presents a basis for project standardization as functional value evaluation focuses on identifying the value of the function as well as correlates this value with the significance of the function.
The different elements of project standardization. After all, Lean underlines standardization and modularization to allow adding, deleting or rearranging components with as little disruption as possible in response to changing conditions Kliem , p. According to Ballard , p. Otherwise, processes can be improved through acting on the root causes of breakdowns and by reducing variation through experiments.
Another major difference between traditional project management and Lean project management is the timing of assuring the quality in project. According to Kliem , p. As quality is critical to satisfy the customer, among Lean the best way to deliver quality to the customer is to address it at the source, for example during design or development phases Kliem , p.
Among traditional project management instead, quality is often controlled through inspections and other quality controls, which are conducted after the product has reached certain state of completion. Traditional ways of dealing with quality as checking if the product fulfills its requirements or late quality inspections are not Lean ways of working, as inspecting the product just before delivery to customer is wasteful Kliem , p.
According to Kliem inspection just before the delivery can slow down the cycle time, block the value stream and requires often overheads such as labor or spare parts, which can lead to passing the additional costs on to the customer. Not addressing quality at its source can result also in returns or dissatisfaction of the customer Kliem , p. In addition to the principle of pursuing quality at its source, also the attempt of minimizing waste has a strong foothold in Lean philosophy, and among project management, there exists many methods and forms to realize the principle.
Identified as Set-based design, deferring decisions is done in order to allow more time for weighing and analyzing the options and so ensure that work is done only once. Whereas in traditional project management practice, selecting options and conducting the work as soon as possible is a common way to operate.
Set-based strategy suggests to analyze thoroughly the options and hold up the decision contrary to rushing into one resolution, allowing interdependent specialists to proceed within the limits of the set of options under consideration. This can result in situation where projects have organizations that resemble silos, with each function organized vertically and separated from each other. Instead, in Lean project management the early involvement of project key participants is used to generate a higher level of integration and communication of the parties in the project initial phases.
In addition, when considering the best way of eliminating waste and satisfying the customer, processes will likely to be improved best by the people who know them, especially if they have an understanding of the process as a whole. Related to involving key personnel in projects, one feature very much accentuated among Lean project management is communication. Communication is also mentioned in traditional project management literature, but discussed from a slightly different point of view.
The biggest differences on the discussion between the two project management approaches are the communication related to customer and the communication manners. Traditional project management emphasizes the importance of planning and managing project communications, and recognizing different stakeholders needs for communication in certain phases of the project ISO ; Lock ; PMBOK Whereas in Lean project management, the offset is not so much in recognizing the customer s needs for communication, but more in soliciting the customer involvement in every phase of the project, and persistently engage and inform the customer Kliem , p.
In Lean approach the emphasis is on enhancing the communication constantly, even if it needs persistency towards the customer Kliem , p. For instance project meetings are not held only when needed, but instead regular meetings are organized and the customer is informed about the cost and progress of the project Gabriel , p. Another Lean project management specialty is that all formal communication between the customer and the project team in both directions is conducted always via project manager.
Using always only the mechanisms the project manager has set up, communicating via one channel aims to the reduction of unnecessary controls and decision-making processes, which can occur if multiple members of the project or client organization are permitted to communicate and state requirements with work in progress Gabriel , p. Enhancing and controlling the communication is seen as a way to eliminate all forms of waste in addition to ensure the customer satisfaction Kliem , p.
Also the usage of visual signals differentiate Lean and traditional project management approaches, as visualizing is a Lean way to communicate information and improve performance Kliem , p. In Lean project management visual signals are used to coordinate and adapt to situations, and for example dashboards can visually display reports of progress, potential risks, trends and statuses Kliem , p.
Effective decision making is done in order to ensure the continuous flow of the value stream, which is in turn based upon pull Kliem , p. As mentioned in chapter 2. Hence, the tasks and activities are defined and sequenced so that their completion releases work, and only work releasing tasks are those not producing waste.
Another key factor characterizing Lean project delivery is the type of contract used and pursued. In a real project environment, some of the Lean project management methods may sound quite surreal, while these days for instance contractual issues are impossible to base only on trust between the parties. The financial pressures of the project organization as well as the client may be high and no risks are taken willingly only based on trust.
Also the contractual form is not always even questionable when doing business, while some organizations and business fields may have very strict requirements and ready-made forms for the contract.
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