Excelling at Material Handling Project Management
Track 3 Session 1
Director, Engineering and Global Operations ManagementClarkson University
[email protected](315) 268-5982
Mike Ensby
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Abstract
• Managing the life-cycle of a supply chain technology project is like nothing else. This collection of tools and topics includes the “Value of the Effort” (VOE) life-cycle, project stakeholders & tradeoffs, scope definition & creep, and emphasizes qualitative and quantitative tools of project planning based on Design for Six Sigma (DFSS) quality. This class will appeal to those who take on responsibility and accountability in project execution and bring insight on taking a more proactive approach to project management. 3
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Agenda• Process Project Management• Stakeholders and Scope• Design for Project Quality• Project Process Inputs and Outputs• Prior Proper Project Planning
4
ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
An organization’s program/project management system is a set of tools, techniques, resources and procedures used to manage a temporary effort. It can range from informal to formal, and aids in guiding a project to successful completion. The system is a set of processes and the related control functions that are consolidated and combined into a functioning unified whole.
• Project Management – the application ofknowledge, skills, tools, and techniques to variousactivities to meet the agreed-upon requirements.
Project Management as a Process
5
ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
Project Integration ManagementProject Scope ManagementProject Time ManagementProject Cost ManagementProject Quality Management
Project Human Resource ManagementProject Communications ManagementProject Risk ManagementProject Procurement Management
Project Management Knowledge Areas
Organizes the 44 PM processes into Nine Knowledge Areas
While the knowledge, tools, skills and techniques represented by these areas are important, effective Project Management also requires that project managers and teams understand and use special knowledge and skills from these and other sources.
Project Management System
6
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Integrated Management of Projects
CustomerEnvironmental Analysis
External InternalFirm
mission, goals, and strategies
Priorities
Projects Environmentand CultureSystem
Project Implementation
ScopeWork Breakdown
NetworksResources
Cost
Organization
Leadership Teams
Partners
7
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Project Management Challenges
• The definition of a project seems straight forward – Did you know?
• Several studies suggest that over 30% of all IT projects get cancelled before completion and that 88% of these projects are behind schedule, over budget or both?
• Why do you think that is?Scope Creep
8
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Project Expectations – Scope is Critical – The Big Q
Identify PotentialObjectives
Evaluate“Musts,” “Wants,”And “Like Tos”
Quantify the Opportunity
Cost Schedule
Scope
???9
ACHIEVE OPERATIONAL EXCELLENCE 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE SPONSORED BY HKSYSTEMS
“Value of the Effort” (VOE)Project Management Model
The “Theory” of the Triple Constraint:
Only One Variable can Dominate
One Variable must be “Relaxable”
The Customer Cannot Have, “Everything Right Now for Nothing!”
Time
Scope/Performance
CostQuality
Stakeholder Satisfaction
A change to any one of the attributes will result in a change in at least one of the other terms, fully evaluate and communicate the impact of any change to the entire project.
10
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Project Management TradeOffs – An Example
Big “Q”Quality
Performance
X
Cost
X
TimeX11
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
The Project Life Cycle
Cos
t Pro
gres
sion
Initial PhaseIntermediate Phase
Final Phase
Time
“Visible” use of resources across a project life-cycle.
Project Management Process Framework
[Monitor Control]
Define Plan Implement Closure
12
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
The Potential Consequence of “Planning Lite”
Holding The Gain
The “Sag” Principle
Pro
ject
Pla
n
Time
Not Holding the Gain
13
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
14
Three Views of Project Cost
Project Duration
CommittedActual CostScheduled Budget
Cos
ts$6,000
5,000
4,000
3,000
2,000
1,000
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Cost of Project Quality
• Refers to total cost of all efforts to achieve project process quality
• Includes all work to ensure conformance to requirements, as well as all work resulting from non-conformances to requirements
• Three types of cost are incurred:Prevention costsAppraisal costsFailure costs (internal and external)
15
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
16
Historical Cost of Quality Model
16
Prevention
Appraisal
Internal Failure
External Failure
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
17
Costs of Poor Project Quality
17
Engineering TimeManagement TimeProject Team Idle TimeIncreased Team TurnoverDecreased MoraleRework, Scrap, InspectionsLost Future Project Work
Cost OverrunsBusted Schedule
Contractual Claims TrueFailureCosts
CommonlyMeasured
FailureCosts
HiddenFailureCosts
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
VOE PLC – PMI PMBoK – 6 Sigma
• PMBoK Section 8.3: Perform Quality ControlMonitorAuditControlQualitative ToolsQuantitative Tools
• Proactive, Pre-emptive, and Possible!
18
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
PLC Effort: Visible vs. Value
Low
High
Define Plan Implement Closure
[Monitor Control]
Leve
l of E
ffort
Value of Effort
19
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Design for 6 Sigma Project Process
FEEDBACK LOOPS
FEEDBACK LOOPS
FEE
DB
AC
K L
OO
PS
Develop“Prototype/
Mockup”
StakeholderFeedback
Resource-Laden
Schedule
“Customer”IDs Need
DevelopFunctional
Specs
Verify Specs w/
“Customer”
“Ballpark”ResourceEstimates
FunctionalSpecs toDesign Specs
Design Specs to
Engineering Specs
20
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
The Inputs and Outputs of VOE PLC
VOE PLC Stages DEFINE PLAN IMPLEMENT
Process Outputs
Process Inputs
CLOSE
Scope/Big Q
Resource Laden Schedule
Turnover(Sat/Dis)
Org Learning
Resource Laden Schedule
Overarching Checks and
BalancesMonitor Control
Metrics, Measures, and Measurement
Bounded Solution Deliverables
DeliverablesScope/ Big Q
21
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Effective VOE Metrics
• Meaningful to Stakeholders• Understandable• Show Trends• Timely• Economical• Actionable
METRICS
Project Processes
Objectives
Planning Tools
Key Deliverables
ProjectScope
22
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Progressive Cost of Quality Model
Prevention
Appraisal
Internal Failure
ExternalFailure
23
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Quality Tools for DFSS Project Management
• Seven Statistical Tools
Ishikawa DiagramForce Field AnalysisHistogramPareto ChartControl Chart with Spec LimitsCheck SheetScatter Diagram
24
• Seven Planning ToolsAffinity DiagramInter-relationship DiagraphTree DiagramPrioritization MatricesFlowchart/Process MapProcess Decision Program ChartActivity Network Diagram
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Control Chart – Voice of the ProcessUpper Specification USL
Lower Specification LSL
Upper Control Limit UCL
Lower Control Limit LCL
XControl Limits+ 3 σx
Distribution of Averages
Process Spread+ 3 σ
Distribution of Individual Values
25
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Ishikawa Diagram – Planning Tool
MATERIAL MACHINE
MANPOWERMETHOD
TASKDEF’N
FACTOR 1
26
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Prior Proper Planning –The Sub-processes• The “Resource-laden Schedule” is:
Work Breakdown Structure (WBS)Risk Breakdown Structure (RBS)
o Failure Modes and Effects AnalysisOrganizational Breakdown Structure (OBS)Schedule Development
o Time Estimationo Activity Sequencing
Bottom-up Budgetingo Setting Up for the “Three Views of Project Cost”
27
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Work Breakdown Structure
28
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Prior Proper Planning –The Sub-processes• The “Resource-laden Schedule” is:
Work Breakdown Structure (WBS)Risk Breakdown Structure (RBS)
o Failure Modes and Effects AnalysisOrganizational Breakdown Structure (OBS)Schedule Development
o Time Estimationo Activity Sequencing
Bottom-up Budgetingo Setting Up for the “Three Views of Project Cost”
29
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Structured Risk Analysis - FMEA. Risk Assessment Matrix
Risk EventProba-bility
Undetecta-bility Severity Score
Order of Importance Trigger Response
Evaluate Market 7 9 10 630 1Skewed Results
Use a bigger and more
Representativesample
Design and Development
Plan 4 5 8 160 5
Forgot Customer
neededfeature
Have list of needed features
present
Risk Analysis 6 4 9 216 3
Non-Identified
RiskHave extensive checklist and
visuals
30
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Prior Proper Planning –The Sub-processes• The “Resource-laden Schedule” is:
Work Breakdown Structure (WBS)Risk Breakdown Structure (RBS)
o Failure Modes and Effects AnalysisOrganizational Breakdown Structure (OBS)Schedule Development
o Time Estimationo Activity Sequencing
Bottom-up Budgetingo Setting Up for the “Three Views of Project Cost”
31
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Organizational Breakdown Structure
Task Name
Junior MarketingSpecialist
MarketingMgt
OpsSpecialist
ProjectMgr.
Evaluate market Primary Secondary Tertiary
Develop Business opportunity Tertiary Primary Secondary
Customer preference study Primary Secondary Tertiary
Business evaluation (NPV, etc.) Primary Secondary Tertiary
32
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Prior Proper Planning –The Sub-processes• The “Resource-laden Schedule” is:
Work Breakdown Structure (WBS)Risk Breakdown Structure (RBS)
o Failure Modes and Effects AnalysisOrganizational Breakdown Structure (OBS)Schedule Development
o Time Estimationo Activity Sequencing
Bottom-up Budgetingo Setting Up for the “Three Views of Project Cost”
33
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Activity on Node Scheduling
34
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Prior Proper Planning –The Sub-processes• The “Resource-laden Schedule” is:
Work Breakdown Structure (WBS)Risk Breakdown Structure (RBS)
o Failure Modes and Effects AnalysisOrganizational Breakdown Structure (OBS)Schedule Development
o Time Estimationo Activity Sequencing
Bottom-up Budgetingo Setting Up for the “Three Views of Project Cost”
35
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Bottom-up Budget
Task Name Task ActionHourly
RateDailyRate Task Time
Total Task Cost
Project Management Tasks Proj. Mgr. $147 $1,176 200 $29,400
Evaluate Market Condition Jr. Mktg. Spec. $51 $408 96 $4,896
Develop Business Opportunity Mktg. Mgr. $101 $808 112 $11,312
Customer Preference Study Jr. Mktg. Spec. $51 $408 168 $8,568
Business Evaluation (NPV, etc.) Jr. Mktg. Spec. $51 $408 32 $1,632
Period Cost= $55,808 36
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Prior Proper Planning –The Sub-processes• The “Resource-Laden Schedule” is:
Work Breakdown Structure (WBS)Risk Breakdown Structure (RBS)
o Failure Modes and Effects AnalysisOrganizational Breakdown Structure (OBS)Schedule Development
o Time Estimationo Activity Sequencing
Bottom-up Budgetingo Setting Up for the “Three Views of Project Cost”
37
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Voila! – Resource-laden Schedule
ction Equipment
CelebrationStart: 6/10/09 ID: 14Finish: 6/10/09 Dur: 1 day
Res: Design Engineer[400%],
onentsID: 11
9 Dur: 5.83 days?
sing Agent
Install Production EquipmentStart: 5/4/09 ID: 13Finish: 6/9/09 Dur: 25 days?
Res: Development Engineer[300%]
38
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
VOE PLC: Organizational Learning
Levelof ValueofEffort
Low
High
Project Evaluation (Audit) Process
Change Management System
Project Manager Roles and Responsibilities
Closed-Loop Planning-Monitor-Control System
Goal/Budget Priorities Org. Monitor/Control
Proj. Estimates- Time- Risk- Budget
Resource (Re)allocationCrashingControl
Cost Containment
“Learn Curve”Termination
Goal AssessmentFinal Report
Define Plan Implement Close
39
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Key Takeaways
• Project Management is a Key Strategic Enabler• A Systems Approach to PM Makes Sense• A Systems Approach Requires Six Sigma
Principles• A Systems Approach is not Simple….• ….But then again, Nothing Long-lasting usually
is!
40
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Additional Resources
• “A Guide to the Project Management Body of Knowledge,” 3d Edition, Project Management Institute, ISBN: 1-930699-45-X
• http://www.pmi.org• “Project Management: the Managerial Process”, 4th
Edition, Gray and Larson, McGraw-Hill Irwin, ISBN: 978-0-07-352515-4
• “Project Management: a Managerial Approach”, 7th Edition, Meredith and Mantel, John Wiley & Sons, ISBN: 0-471-49996X
• “Project Management: a Systems Approach to Planning, Scheduling, and Controlling,” 8th Edition, John Wiley & Sons, ISBN: 0-471-22577-0 41
ACHIEVE OPERATIONAL EXCELLENCE ○ 2008 MATERIAL HANDLING & LOGISTICS CONFERENCE ○ SPONSORED BY HKSYSTEMS
Questions?
42