The “Lean” Project
Lean is an often-used adjective in business these days, but there’s some confusion over its exact definition. In essence, the goal of Lean is to maximise value while minimising waste. In other words, creating more value for the customer with fewer resources. Lean was born on the factory floor, so many people think of it as a manufacturing technique. However, that’s a misconception because every process, whether in production or services, can benefit from a Lean approach. Today, Lean is finding a home in every industry from finance to healthcare.
The attached slideshow developed for classroom presentation purpose, will help demystify and describe Lean. You’ll find here some useful information to guide you through a Lean implementation project. Lean practices can also be applied to the project management process itself.
The adoption of Lean thinking owes much to how it was presented to James P. Womack and Daniel T Jones, the authors of The Machine that Changed the World and Lean Thinking. Womack and Jones defined five core principles of Lean thinking:
- Understand Value: This first principle stresses understanding a product’s (or service’s) value in the eyes of the customer. The amount a customer is willing to pay for a product or service is directly related to how much they value it, so understanding the value of a product is the first step towards effective pricing and Lean management. Toyota, for example, adopted a top-down pricing approach defined by how much customers were willing to pay for a product with a certain value, and then focused on eliminating waste from their manufacturing processes in order to meet this price.
- Map the Value Stream: The value stream is the complete sequence of activities involved in delivering an end-product with an agreed-upon value, and mapping the value stream means using visualisation techniques such as Kanban and flowcharts to represent this flow. Toyota pioneered the technique of value stream mapping, which allows business managers and strategists to identify those parts of the value stream where waste occurs, and thus reduce waste to optimise the value stream.
- Ensure that the Value Stream Flows: The ultimate goal of value stream mapping is the preservation and optimisation of flow — the rate and “evenness” with which items and information proceed through the value stream. This is the principle of just-in-time (JIT) manufacturing in action: because excess, early, or unexpected inventory creates waste, synchronisation is the key to optimising flow. Identifying and eliminating work that adds no value (either directly or indirectly) can also improve the flow of a value stream.
- Employ a “Pull” Approach: Traditional manufacturing employed a push approach, where production targets were set based on an internally-determined schedule and production quota. This approach was not very responsive to customer demand, and commonly led to production exceeding or failing to meet demand. In the first case, we would have to store the surplus product; in the second, we would have to increase the rate of production, possibly beyond optimum efficiency levels, to meet the demand. Either way, this approach created a lot of unnecessary waste. By contrast, a pull approach allows customer demand to determine production, so that nothing is created unless a customer asks for it. Done correctly, this eliminates waste caused by inventory costs and overwork. A pull approach is, however, difficult to implement effectively because it relies on timely, accurate, effective assessment of the market and the ability to vary production quickly and on demand. Delivery must be speedy to ensure that customer demand still exists by the time the end-product is ready. Finally, a pull approach also requires effective coordination of information throughout the value stream, so that everyone is aware of production requirements and inefficiencies don’t arise because of confusion and mismatched expectations.
- Pursue Continuous Improvement: At its heart, Lean management is an ongoing, incremental process. A waste-free system may be practically unattainable, but as a stretch goal, it drives a need for constant improvement. The Japanese word Kaizen is often used to describe this practice. With Kaizen, the value stream is continually optimised, and defective processes are consistently improved or replaced in an effort to improve quality.
Lean and Project Management
Proper use of Lean techniques will result in cutting waste in your projects, producing greater customer satisfaction and improved profit margin. Lean principles and the recognition of waste can help us project managers avoid, mitigate, or control situations that might otherwise lead to project failure. Here’s a list of common project pitfalls that Lean thinking can help us avoid:
- Failing to Establish Customer Value: Not understanding what a customer values in our project can cause us to misprice the project, and waste work and resources. When we understand the value our undertaking offers customers, we can more clearly establish project requirements, price the project according to what a customer is willing to pay, and revise work streams to meet this target price.
- Scope Creep: Scope creep occurs when the value of our project is increased (usually due to customer requests), but where corresponding changes in budgeting and pricing don’t account for the increased value. We can avoid this problem by understanding and re-evaluating value to the customer when proposed scope changes arise, and ensuring that increased value is accompanied by a change in pricing.
- Failing to Define the Value Stream: Value stream mapping is an excellent way to see how project activities create value, and is vital for trimming activities that don’t create value for the project. If we do not map or define the value stream with an eye to optimising it, non-value-creating activities may continue to strain the project budget and extend the project schedule.
- Lack of Stakeholder Commitment: In a perfect world, projects would always finish on time and never exceed their planned cost. In reality, many projects suffer due to cost and schedule overruns, so having the stakeholder’s full backing is vital. A stakeholder who is not fully committed to the project may be less likely to extend support when a project needs to dip into its contingency reserves or request emergency funds, thus drastically exacerbating the waste creation issue.
- Lack of a Communication Plan: An effective communication plan streamlines the flow of information between a project’s stakeholders. Without effective, timely communication, projects run the risk of wasting time and resources on time-consuming approvals, delayed progress, and value mismatches.
Project Value Management
Lean project management has many ideas in common with other lean concepts; however, the main principle of lean project management is delivering more value with less waste in a project context. Although not mentioned in the PMBOK, once our draft project plan is prepared we might then see if we can make it more Lean through a project value management (PVM) intervention:
- PVM is the formal and systematic study of a project to identify ways to achieve the functionality needed at lowest cost without adding risk or without loss of value or performance.
- Some expressions equivalent to Value Management are Value Methodology, Value Analysis, Value Engineering, and Value Optimisation.
- It’s potentially effective for all types of projects, but best results are usually obtained with larger and more expensive construction projects.
- PVM usually adds greater value if applied prior to project execution, but might also be undertaken periodically during project execution.
- PVM intervention is in the form of a study (typically of one day’s duration) undertaken by an expert facilitator and attended by invited experts and selected project stakeholders.
- Unfortunately, PVM is often only initiated when project budgets seem insufficient or profit margins are under pressure.