units 1& 2 projectmanstrat.pdf
TRANSCRIPT
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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
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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
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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
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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
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Industrys clients are not satisfied
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)
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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
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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)
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Industrys clients are not satisfied
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
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Workers are not satisfied
Bad health and safety record (too many
accidents)
Bad working conditions (weather, facilities)
Job security
Frequently changing location of work
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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.
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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
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Industry has bad reputation
Lack of performance
Lack of innovation and development
Cowboy builders
Industry dominated by the old craft culture
Fragmented and adversarial
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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).
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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
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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.
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Lack of innovation and development
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
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Not all that bad!
Construction:
Pride, Challenge, Big
Very flexible
(accommodate late clients
changes)
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Current State: Industry and Practice
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
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Current State: Industry and Practice
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
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Current State: Industry and Practice
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
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Current State: Industry and Practice
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
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Current State: Industry and Practice
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.
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Current State: Industry and Practice
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.
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Current State: Industry and Practice
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
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Current State: Industry and Practice
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).
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Current State: Project Management
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)
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Current State: Project Management
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?
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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?
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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.)
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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)
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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
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The Manufacturing Industry:
Learning from other industries
Development in manufacturing industry
Craft production
Mass production
Lean Production
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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).
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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.
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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)
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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)
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Product and Transformation System Design
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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)
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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)
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Transformation system selection
and design
Continuous process
Flow Shops
Job Shops
Project Operations
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Continuous process
This manufacturing process involves moving fluid
continuously through vats and pipes. highly standardised
and in extremely large volumes. (gazes, chemicals, flour,
cement).
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Flow Shops
Produce discrete, standardised, outputs on a
continuous basis by means of assembly lines
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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
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Job Shops offer a wide range of possible outputs using a number of
functionally specialised departments
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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).
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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
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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).
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Output Characteristics Effect
on Transformation Systems
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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.
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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.
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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.
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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.
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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).
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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.
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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.
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Conversion of a Job Shop Layout
to a Cellular Layout
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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).
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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).