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2008 | Buch

The Project Management Process Kapitel lesen Erstes Kapitel lesen

Industrial Project Management

Planning, Design, and Construction

verfasst von: Professor Stefano Tonchia

Verlag: Springer Berlin Heidelberg

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

For a continuously growing company that has to be ready and aware of market trends to implement its products and adapt them to the needs of increasingly demanding customers, it is no longer enough to have and pursue excellent technical and technological departments, quality products, to have at its disposal an effective and efficient sales network with qualified aggressive personnel and to invest in research. Today, fulfilling contract goals while keeping the customer satisfied and staying within the company’s budgetary requirements requires more and more ef- cient project management. As it has been ascertained that design success depends on the ability of knowing how to correctly and effectively monitor all management activities, a successful, efficient collaboration has been set up with the University of Udine and Prof. Tonchia in order to support research based on the best practice applicable to complex corporations. Describing management’s experience in this book shows the validity of the University/Corporation combination because it allows universities to get closer to industry, and the type of management used at Danieli & C. can be conveyed outside its specific field.

Inhaltsverzeichnis

Frontmatter

Engineer-to-order Projects

1. The Project Management Process
A project can be defined as a set of complex, coordinated activities with a clearly defined objective that can be achieved through synergetic, coordinated efforts within a given time, and with a predetermined amount of human and financial resources.
What distinguishes a project (no matter its degree of innovation) from all other activities carried out in a firm is that it always has a beginning and an end. It is temporary and sooner or later will finish (either because the objective has been achieved, the scheduled time has passed, the financial resources have been used up, or the organization involved has closed down).
But what does managing a project mean? Managing means dealing with variables that can be more or less influenced: it is impossible to manage when no variation is allowed or, likewise, when the factors are beyond control, since managing means making decisions and acting accordingly (i.e. planning and executing interventions).
2. Management of Contract Work
A contract is a legally binding agreement stipulated by two or more parties and characterised by specific obligations. Contracts usually consist of a list of conditions, which may be general (conditions that are standard to all, similar contracts), special (disciplining that particular contract) and technical (regulating how the contract is materially executed). Contractual clauses are listed both in the general and special conditions.
A sales contract provides for the mere transferral (obligation to give) of goods or services that already exist in the firm’s catalogue (standard goods or services); in the case of goods, it is unimportant whether these are made before or after the customer’s purchase order (make-to-stock or make-to-order, respectively).
Contract work, on the other hand, provides for the delivery of a good or a service that does not exist in a catalogue, and whose characteristics are specified by the client (obligation to do).
In practice, contracts are often a combination of both, so – given the legal implications – it is necessary to define the prevailing component. This assessment must be based more on the object of the contract than on economic considerations (i.e. whether the value of the work is greater than that of the materials): for this reason, it is appropriate to consider contract works – also known as work orders or job orders – as those that are necessary to deliver works that are not ordinarily massproduced, but are custom-built in response to a specific order (because in this case, work prevails on materials).
3. Product Design
Rather than merely referring to design, nowadays it is preferable to use the expression New Product Development (NPD — Clark and Fujimoto, 1991): this must not only process design, but also develop, update and integrate the product. For this purpose, it can also use parts of pre-existing product projects, or convert them from similar ones manufactured by competitors. In other words, these are designs characterized by a remarkable degree of carry-over (i.e. the percentage, in value, of the parts of a previous project that have been adapted and used for the new one).
4. Service Design
Despite the number and variety of opinions concerning quality expressed both in the literature and at a consultancy level, all agree on four issues:
1.
Quality involves the entire company, management included, which must endorse quality policies and ensure the necessary commitment.
 
2.
The focus must be set on customer satisfaction (rather than mere compliance with the standards), a customer who can also be internal (i.e. inside the company).
 
3.
The importance of continuous improvement (a company must also improve during the period between the issuing of two official specifications).
 
4.
The reduction/elimination of variance in the manufacturing processes is a source of quality (the qualitative level depending on the design process, which should have released specifications ensuring conformity of quality).
 

Managing Project Variables

5. Managing a Project
A rational approach to projects requires the use of logical hierarchical structures or Breakdown Structures that replicate the way the human mind reacts when facing a problem, namely, breaking it down into sub-problems, in order to analyse them at a greater level of detail.
A project is the result of an idea, more or less destructured (concept idea), combining a why and a how, namely the reason why something new should be created (market demand, unsatisfactory performance, compliance with new regulations, etc.) and how to make the required change in the best possible way (technical, organizational and/or management innovation).
The concept idea is the starting point for defining a structure, known as PFS, that describes the functions of the project’s output (a product, a different internal organisation, etc.) in a clear, hierarchical manner.
6. Project Strategy Management
Strategy can be considered in terms of content and process. The content refers to both competitive priorities (performance-related macroobjectives that can become Critical Success Factors — CSF) and the interventions made to achieve them. The latter can deal with technological levers (relative to the product/process and to information/communication), internal organisational choices and those to interface with suppliers/customers, and managerial levers (for example, Just-in-Time, Total Quality Management and Concurrent Engineering). The process, on the other hand, refers to the formulation and implementation of the strategy.
Traditionally, corporate strategy relies on three options: cost leadership, differentiation and segmentation (Porter, 1980). The current trend of overcoming performance trade-offs questions this distinction (Filippini et al., 1998): the aim is the joint achievement of multiple performances, giving them different importance throughout time (the sand-cone model – Ferdows and De Meyer, 1990).
Nowadays, strategy is mostly about defining priorities, which are not standard, but more of an order-winning and qualifying type (Hill, 1989): the former ones make it possible to steal customers from the competitors; the latter simply allow the company to enter into a certain competitive arena. Both are equally important, and when analysing the scenario, a company must decide whether to invest in one or the other type of strategy.
7. Project Quality Management
The most important design techniques aimed at satisfying customer requirements (i.e. the modern definition of quality) include Quality Function Deployment (QFD), Robust Design, Value Analysis and Value Engineering.
QFD, a method created in Japan in the 1960s, is aimed at translating the customer’s desires into technical details, using a scale of priorities that is also dictated by comparison with similar products made by competitors. Applied for the first time at the Mitsubishi shipyards in Kobe (Japan) in 1972 and later in Toyota, it owes its formalisation to Professor Yoji Akao (who first described it in 1966, although his most famous and complete work is that published in 1990). QFD became popular in the Western world, thanks to Don Clausing, professor at the MIT in Boston, and was soon adopted by General Electric and Ford, where it is now one of the most used methods for product development (www.qfdi.org).
8. Project Time Management
Time was the first variable in Project Management to be supported in a coherent manner by specific techniques. Thanks to the great repercussions caused by variations in the costs and delivery times for the high-profile military and civil orders made after the war. But while costs could be ascribed to a number of causes that, although often impossible to predict or control (as in the case of cost fluctuations), could be managed through various techniques (see Chap. 10), in the case of delays, management seemed less complex, and problems easier to solve.
The situation at the time is illustrated by two research projects dating back to the 1950s, one of which was carried out by the Rand Corporation (Marshall and Meckling, 1959) and focused on military projects, whereas the other, on civil projects, was carried out by the Harvard Business School (Peck and Scherer, 1962). The investigations reveal a cost factor (i.e. the ratio between actual and forecasted cost of the project) of 2.4 and 1.7, respectively, and a time factor (the ratio between actual and forecasted implementation times) of 1.5 and 1.4, respectively. Hence, although the delays were similar, there was a large gap between the two cost factors, which was ascribed to the greater degree of innovation characterising the military projects.
However, even before attempts had been made to improve project management, the first steps in this direction date back to 1911, when Frederick W. Taylor experimented on scientific production management (coinciding with today’s times and methods) and Henry G. Gantt (1861-1919) was working for the US Army.
9. Project Organization and Resource Management
Projects, even the more conventional ones for new products, are created and developed thanks to the contribution of resources belonging to various departments (although Design department plays the principal role). In other words, even those functions whose tasks do not include the definition of project specification may and indeed must contribute to the project (the matrix structure – typical of a project, as we shall see later – has the objective of formalising this call for competencies).
Figure 9.1 depicts the involvement of three specialisms in a project: Marketing (whose task is to ensure that the output of the project appeals to the market, thus justifying the investments made), Design (whose specific task is to develop and implement the project) and Production/Delivery (in charge of delivering the product/ service specified in the project in an efficient manner and with a high level of conformity). However, other functions can be involved, such as Purchasing, the Engineering or Technology Department, Quality Management, Machinery Maintenance, Technical Assistance, Customer Service, and so forth.
Their contribution to a project is not constant throughout time, but varies according to the stage reached by the project, as illustrated in Fig. 9.1. By tracing an upright line, it is possible to see the percentage of involvement of the various functional units at a given time.
10. Project Cost Management
Traditionally, Cost Accounting consists of three stages:
1.
Collecting, classifying and recording all elements of cost
 
2.
Allocating costs to cost centres (identified on the grounds of homogeneity, the existence of a person responsible for the costs, and of a certain budget calculated using prospective or standard costs)
 
3.
Summarising and analysing costs to determine the selling price of the products
 
Costs are classified according to various criteria; the main ones are described in Fig. 10.1. All these costs must be considered in a project: the total cost (100) of the project must therefore be analysed according to the nature and origin of the costs, and according to the project size (some costs are fixed; others vary according to the size of the project, whether small, medium or large); it is moreover essential to distinguish between costs that can be directly (= objectively) ascribed to a certain project and those that are indirectly (= using subjective parameters) ascribed “pro quota” to each project. Finally, a classification must also be made on a time basis, distinguishing between prospective, current and final costs.

International Contracting

11. Project Initialization
Danieli & C Officine Meccaniche S.p.A. has been in business for more than 90 years and is one of the three foremost companies in the world for the supply of machines and plants in the steelmaking industry.
Danieli & C is a leader in the design and construction of minimills, of which it is a forerunner, and comprises an integrated network of companies specialised in the design and construction of plants for the entire steelmaking process.
It also possesses the necessary flexibility and versatility to meet the needs of the steelmaking market by, in fact, supplying a wide range of diversified products and services from single machines to complete turnkey plants, thereby giving its customers the benefit of the high-level integration and coherence among the various departments. Figure 11.1 gives the base network of Danieli Group.
Today the minimill is the ideal solution for the needs of a primary steelmaking industry, because of the flexibility and limited investment required to purchase and run it, compared with full-cycle plants.
F. Cozzi
12. Project Execution Phase
While everybody theorizes the need of continuous improvement, the high-performance companies are the only ones that fully implement it. Because they consider the ability to change as a key skill to achieve excellence.
The ability to organise everything in view of the result, to take decisions and to lead to the right direction, to negotiate with suppliers and/or customers and/or institutions, to understand the basic financial rules (L/C, bonds, guarantees, payments, etc.), as well as the knowledge of the project phases (i.e. until delivery to the Customer), are the essential requirements for a good PM.
F. Cozzi
13. Project Risk Management
The risk and the possibility of suffering damage arising from circumstances that are more or less foreseeable.
The profit and loss account is one of the fundamental elements that determine the result of the job order; this means that the PM needs to know the details to calculate it and, during the job order process, must be able to foresee any corrective actions that may be needed to stay within the budget or improve the result itself. This is not really management of the profit and loss account but of the activities and phases that determine its result.
Consequently, the PM must be aware of the economic impact on the product line, caused by correct management of the job order; therefore, meetings are held periodically to define the general progress of the product line and the various business units to be able to set priorities and take general action.
F. Cozzi
14. Snapshots of PM: Pictures From PM World
Some issues relevant to the management can be represented by pictures that are commonly used as samples. Here are some spot images (Figs. 14.1–14.11, Tables 14.1–14.4).
Backmatter
Metadaten
Titel
Industrial Project Management
verfasst von
Professor Stefano Tonchia
Copyright-Jahr
2008
Verlag
Springer Berlin Heidelberg
Electronic ISBN
978-3-540-77543-0
Print ISBN
978-3-540-77542-3
DOI
https://doi.org/10.1007/978-3-540-77543-0

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