LEAN PROJECT

MANAGEMENT
THE ORIGIN OF LEAN
PROJECT MANAGEMENT
The story of Lean begins in post-World War II. Japan’s devastation during the war led to
scarce equipment and resources, and manufacturers had to invent ways to thrive in a new
economic environment.
The United States sent consultants to Japan to help the country’s manufacturers rebuild
their production capabilities. It was from these consultants, as well as from visits to Ford
and American supermarket chains, that Japanese manufacturers, and Toyota in particular,
refined the concept of Just in Time (JIT). This technique aims to increase efficiency and
decrease the amount of stocked inventory by moving materials into position just before they
are needed for the next stage of the production process.
JIT is not used solely in manufacturing - the technique applies in any situation where a
supplier delivers materials using a timeline determined by customer demand. The success of
JIT depends on the ability to synchronize and coordinate steps of the manufacturing process
so that materials and products are where they need to be, when they need to be there.
THE ORIGIN OF LEAN PM
According to The Toyota Way, published by Dr. Jeffrey Liker, TPS created the 14
principles of lean management. The book analyzes challenges Toyota faced in
streamlining its car manufacturing production line. These challenges included:
Transport – moving products not necessary in the production process
Inventory – poor management of components, processes, and finished product
Motion – unnecessary movement of people or equipment in a process
 DEFINING LEAN

Lean System:
emphasizes the prevention of waste : extra time, labor or material spend that does not
add value to the product or service.
Lean Enterprise:
foster a company culture where employees constantly look to improve their skills
levels and production processes. Product and Services are driven the right amounts, to
the right location, at the right time and in the right condition.
THE COST REDUCTION
PRINCIPLE
Traditional thinking dictates that you set your selling price by
calculating your cost and adding on a margin for profit

In today’s competitive market the customer sets the price and

you don’t have the luxury of adding a profit margin

The only way to remain profitable and grow your business

is to eliminate waste from your value stream, thereby
reducing costs—cost reduction principle

2
 THE COST REDUCTION
PRINCIPLE
Traditional Thinking Lean Thinking
Cost + profit = price Price – cost = profit

Price
Price Price Price

Profit Profit

Cost Cost

3
 THE COST REDUCTION
PRINCIPLE
Determine the price customers are willing to pay, and
subtract your cost to determine what your profit will be

Eliminating waste is important because customers not

only set the price, but they also demand price reductions

4
 WHAT IS LEAN PROCESS
IMPROVEMENT?
Lean is a continuous improvement methodology
focused on managing processes, and improving them
by compressing time, rather than sweating assets

Every business is a collection of processes—primary

processes that create value and secondary processes
that support them (office and administrative functions)

Processes are sequences of steps that must be

carried out to create value for customers and
managed as a whole, not separately
LEAN AND
PROFITABILITY
LEAN THINKING: THE
SPREAD OF LEAN’S
INFLUENCE
The principles of Lean manufacturing, now more broadly referred to as Lean
thinking, have since been adopted outside of traditional manufacturing in fields like
construction, healthcare, financial services, government, project management, and
knowledge work. Using Lean for knowledge work has been met with some doubt
and resistance by people who argue that because the field is essentially
non-replicable and non-repetitive, it is not suited to standardization.
 GOALS OF LEAN
Improving the quality of the final product
Completing the project on time, and reducing the time to completion
Completing the project on budget and meeting project performance requirements
Eliminating waste
Reducing costs
Adding value
Standardization is another critical aspect of Lean project management. Since most projects
are novel (to some extent), standardizing tasks can both improve project performance in the
short term and help improve efficiencies for projects with similar tasks in the long term.
Improvement of tasks in the project lifecycle tends to be incremental, leading to gradual
progress towards goals.
 LEAN MANAGEMENT
PRINCIPLES
There are five key Lean project management principles:
1. Identify Value
2. Map the Value streams
3. Create Flow
4. Establish Pull
5. Seeking Perfection
THE FIVE CORE PRINCIPLES OF
LEAN THINKING
1. Specify value in the eyes of the customer
The first lean principle is to specify value of a product or service as “a capability
provided to a customer at the right time at an appropriate price, as defined in each
case by the customer.” Value is stated in the customer's word. The challenge here is
to focus on what the customer is willing to pay.
2. IDENTIFY THE VALUE STREAM
FOR EACH PRODUCT
A value stream includes “all the actions, both value added and non-value added,
currently required to bring a product from raw material to the customer or through
the design flow from concept to launch. First we need to create a value stream map
that reflects the current state of the process being treated. This map is then analyzed
for waste and value creation, and a future-state map is created, which represents how
the process could and should operate.
We generate then an improvement plan, which will enable the transformation from
the current state to the future state.
WHAT ARE VALUE
STREAMS?
A Value Stream is all the actions, both value-added and
non-value-added required to bring a product or service from
concept to launch and from order to delivery.
 TYPES OF VALUE STREAMS

“Whenever there is a product (or service) for a customer,

there is a value stream. The challenge lies in seeing it.”
There are three value streams for each product
family that overlap and flow together:
• Concept to Launch (engineering/design)
• Raw Materials to Customer (manufacturing)
• Order to Cash (administrative functions )
VALUE STREAM MAPPING
Value Stream Mapping – the process of identifying and
charting the flows of information, processes, and goods or
services across the entire supply chain from the supplier
to customer possession

Includes both value-added and non value-added activities

Allows for ―seeing all areas of waste in current state
Future state is roadmap and apt to change
Create icons specific to your business or industry
Maps should be the plan for 6 months – 2 years
Maps – many types
3. MAKE VALUE FLOW BY
ELIMINATING WASTE
Once the value is defined and the value stream is identified, the step here is to create
continuous flow by eliminating backflows, scrap, rework and interruptions. No
stoppages, no waste is accepted here. In analyzing value streams, work will fall into
one of three types:
 TYPES OF WORK
Value-Added Work: Those works are essential changes to product/service. You
would look at maximizing this category as there are providing customer value
(Capacity, information, materials).
Value-Enabling Work: Value-Enabling Work is a category that has potential for
elimination in the future (with identified improvements) but can't be eliminated
immediately. There are necessary to run the current process. Technology,
environment, culture require these activities. You would look at minimizing this
category of work.
Non Value-Added Work: Non Value-Added Work can usually be eliminated quickly
and is not dependent on improvement of other areas. This is the work nobody needs
and it is pure waste. You would look at eliminating this category of work.
 VALUE-ADDED
ACTIVITIES
Those steps the customer is willing to pay for
To qualify as value-added an activity must meet
the following criteria:
It changes the form, feature, or function that the customer
desires
It must be ―done right the first time
The customer is willing to pay for it
Business Value-added Activities
Activities the customer isn’t willing to pay for
but must be done to comply with
regulations, organizational policies,
and so on
You must periodically examine these activities
to make sure they are necessary, if not
eliminate them
Non-value-added Activities
Those activities the customer is not willing
to pay for and can be avoided
Your goal should be to eliminate these
activities because they are WASTE
 FOUR TYPES OF OFFICE WASTE
Information:
1. Redundant input and output from data
2. Incompatible information systems
3. Manual checking of data that has been entered electronically
4. Data dead ends
5. Reentering data
6. Converting formats
7. Unnecessary data
8. Unclear data
9. Lost data, discrepancy in data
 FOUR TYPES OF OFFICE WASTE
Process:
1. Defects
2. Scrap
3. Rework
4. Workarounds
5. Inspecting, checking and double checking
6. Approvals
7. Too much Inventory
8. Variable flow in process
9. Overproduction
10. Waiting
11. Over processing
 FOUR TYPES OF OFFICE WASTE
Physical Environment:
1. Travelling to another office for a meeting
2. Organizing a conference room after a messy meeting

People:
1. Unclear roles, authority and accountability
2. Lack of training
3. Work or task interruptions
4. Multitasking
5. Underutilization of talent
6. Hierarchy and structure
7. Recruitment errors
 UNDERSTANDING
WASTE
What would you be willing to pay for when ordering a
burger?

Meat
Cost of radio, TV,
Dough web ads
Ketchup
Cost of delivery truck
Electricity to run ovens signs
Electricity to run outdoor Cost of store manager
lights left on accidentally
Cost of cleaning
Person paid to inspect take-
out orders
Cost of menus
Cost of burgers not
sold Employee training
Distribution Center
Profit
 THE EIGHT DEADLY
WASTES

The ultimate lean target is the total elimination of waste. Waste, or

muda, is anything that adds cost or time without adding value. Seven
deadly waste have been identified over the years. Recently an eighth
waste has been identified—underutilization of people.
 TYPES OF WASTE
All of the waste (“pure” or “necessary”) in a process can be classified as one of the
following 7 types:
Over Production: Producing more than is needed before it is needed
Waiting: Any non-work time waiting for approval, supplies, parts, etc.
Transportation: Wasted effort to transport materials, parts, or finished goods into or out o
storage or between processes
Over Processing: Doing more work than is necessary (customer requirements) or double
work
Inventory: Maintaining excess inventory of raw materials, parts in process or finished
goods
Motion: Any wasted motion to pick up parts or stack parts, also wasted walking
Defects: Repair or rework
THE SEVEN DEADLY WASTES
Inventory
Excess inventory that is not directly required for
current customer orders
Manufacturing—excess raw materials, WIP and
finished goods
Office/Service—unneeded files, extra
supplies, unnecessary copies, excessive unread
emails, etc.
THE SEVEN DEADLY WASTES
Overproduction
Excessive use of resources—producing too much
of something, faster than needed, or before it is
needed
Manufacturing—units made for stock or inventory
Office/Service—Producing reports before they are
needed, performing more analysis than required
 THE SEVEN DEADLY
WASTES
Over-processing
Extra operations, such as rework, reprocessing, handling
and storage that occurs because of defects,
overproduction, and too much or too little inventory,
includes redundant activities, such as checking someone
else’s work. Obtaining multiple signatures, or excessive
reviews
The time spent producing product/service features which
are irrelevant to the customer
Manufacturing—reworking defective product
Office/service—multiple approval signatures, entering data in
multiple systems and or ―stand aloneǁ spreadsheets for reporting
purposes

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 THE SEVEN DEADLY
WASTES
Motion
Extra steps taken by employees and equipment to
accommodate inefficient process
layout, defects, reprocessing, overproduction. More
walking, reaching or bending than necessary
Any movement of people which does not contribute added value
to the product or service
Manufacturing—operators having to walk back and forth to retrieve tools or materials
not stored in the immediate work area
Office/service—selecting additional keystrokes and fields to retrieve previous
information, searching for misplaced files
 THE SEVEN DEADLY
WASTES
Defects (Rework)
Refers to all processing required creating a defect or
mistake and the additional work required to correct it
Manufacturing—defective units of product
Office/service—incorrect/missing information on a
form, handling a report numerous times

Do it
again!
4.LET THE CUSTOMER PULL
THE FLOW
The challenge here is to avoid delivering value before the customer request it. Also
you should not provide to the customer more than the agreed initial scope. In
manufacturing, we let the customer pull the flow by means of a Kanban system.
Kanban allows the implementation of a just-in-time system. It uses cards to signal
the need for an item by triggering the movement, production, or supply of a unit.
5.CONTINUOUSLY IMPROVE
IN THE PURSUIT OF
PERFECTION.
The final step is pursuing perfection which would lead the transformation to a lean
culture. The pursuit of perfection implies process improvement is endless. We should
constantly question the value of all activities. Obviously we would certainly not
achieve perfection, but we must constantly strive to get closer.
BENEFITS OF LEAN PROJECT
MANAGEMENT
Enhanced customer service – deliver exactly what the customer needs
Improved productivity – improve the output and value-add per person
Quality – implement rigorous quality checks to reduce product defects and rework
Innovation – improve the project through brainstorming and creative ideas
Reduced waste – less transport, waiting, inefficient use of space, and physical waste
Improved lead times – respond quicker to project requirements with fewer delays
Improved inventory management – less work in progress and inventory, resulting
in fewer bottlenecks
 APPLYING LEAN TO PROJECT
MANAGEMENT
The concept of the value stream is central to Lean project management. This is the
sequence of activities involved in delivering a project with an agreed-upon value
(both the inputs and outputs). Value stream mapping, sometimes called business
process mapping, an effort to understand how value and waste are created during the
project lifecycle with the goal of optimizing the value stream. In doing so, Lean
project management can help achieve a number of goals including:
IMPLEMENTING LEAN PROJECT
MANAGEMENT
Plan based on a long-term philosophy rather than short-term financial goals
People in your project need a sense of purpose to achieve project goals. Motivation
creates a clear vision for aligning themselves with these goals. Identify gaps or waste
in your project management process. Project success comes from lessons learned in
making the project more efficient. ROI and profit are not the only measure of
business success
IMPLEMENTING LEAN PROJECT
MANAGEMENT
Use the “pull” systems to remove overproduction

How do you know when you should stop sending a shipment of products to your
client? For obvious reasons, the client would call you and tell you to stop. Focus on
effective communication with all stakeholders. Create a demand and supply based
project management process. Each stakeholder gets notified about work status.
IMPLEMENTING LEAN PROJECT
MANAGEMENT
Divide the workload evenly across your team
This principle helps minimize waste by not overburdening employees in your
project. Remember that each stakeholder in your project has a predefined role to
play. If they feel exhausted with one project task, they won’t add quality. As a
project manager, your key takeaway should be on prioritizing quality vs. quantity.
Assign tasks to employees based on the workload that they can handle.
IMPLEMENTING LEAN PROJECT
MANAGEMENT
Create a culture of fixing problems to maintain the highest quality standards
All stakeholders in your project have an equal say on implementing solutions. They
should have the authority to signal any quality issue. Be open to feedback throughout
the project management process.
Focus on reliable and tested technology for your team and project
Identify tools and softwares to improve the project management.
 IMPLEMENTING LEAN PROJECT
MANAGEMENT
Maintain consistency of tasks and processes for continuous improvement and employee
engagement
Create a standardized project by maintaining quality control checklists and standard
operating procedures. If you don’t standardize project management parameters, project
quality won’t improve
Use visual controls like Kanban to highlight problem areas and reporting
This principle uses the 5S program of lean management. The 5S stands for:
1. Sort
Sort through materials, keeping only the essential items needed to complete tasks. (This
action involves going through all the contents of a workspace to determine which are needed
and which can be removed. Everything that is not used to complete a work process should
leave the work are
IMPLEMENTING LEAN PROJECT
MANAGEMENT
2. Set in order:
Ensure that all items are organized and each item has a designated place. Organize all the items left in the
workplace in a logical way so they make tasks easier for workers to complete. This often involves placing
items in ergonomic locations where people will not need to bend or make extra movements to reach them.
3. Shine
Proactive efforts to keep workplace areas clean and orderly to ensure purpose-driven work. This means
cleaning and maintaining the newly organized workspace. It can involve routine tasks such as mopping,
dusting, etc. or performing maintenance on machinery, tools, and other equipment
4. Standardize
Create a set of standards for both organization and processes. In essence, this is where you take the first three
S's and make rules for how and when these tasks will be performed. These standards can involve schedules,
charts, lists, etc.
5. Sustain
Sustain new practices and conduct audits to maintain discipline. This means the previous four S's must be
continued over time. This is achieved by developing a sense of self-discipline in employees who will
participate in 5S.
IMPLEMENTING LEAN PROJECT
MANAGEMENT
Empower leaders who understand the work philosophy and mentor it to team
members
Without constant innovation, these principles can fade away. These principles should
be part of project management process. Your employees should have the latest
training to create a learning organization.
Develop teams to follow your company’s philosophy
Create teams that comprise at least 4-5 people from different management tiers. The
success of your project depends on the team and not the individual.
IMPLEMENTING LEAN PROJECT
MANAGEMENT
Respect your network partners and suppliers by helping them to improve their
processes
This principle may not apply to you as a project manager. Collaborate with other
team managers and respect their best practices of project management.
Educate yourself and team members on key project requirements
Project management is a continuous learning process. Take a note of lessons from
project failures and successes.
IMPLEMENTING LEAN PROJECT
MANAGEMENT
Make a decision based on consensus after considering all options
Sometimes a project plan does not meet expectations. To avoid such situations,
follow these parameters:
Find out what is going on (go-and-see)
Determine the root cause of problems
Consider other alternatives
Create consensus on the resolution
Create a learning-based organization through continuous reflection and
improvement
 TRANSPORTING
Examples Creates Tools/Solutions
• Poor office design - not • Longer cycle time • Value stream maps
accounting for work • Increased costs • Creating work cells/
teams and flow • Lost capacity teams for high volume
service areas
• Properly leveraged
technology
• Spaghetti Diagram
 INVENTORY
Examples Creates Tools/Solutions
• Filled inboxes • 5S and Visual
• Backlog in email inbox • Bottlenecks Management
• WIP • Performance goals
• Supply storage
 MOTION
Examples Creates Tools/Solutions
• “Search parties” in • Longer cycle time • Evaluating workflow
the office • Increased costs • Properly set up work
• Forms/Supplies centrally • Chaos centers
located
• Trips to printer/copiers
 EXCESS PROCESSING
Examples Creates Tools/Solutions
• Performing more work • Non-value added project • Understanding the VOC
than necessary time • Training/Development
• Over-documentation • Increased costs
• Creating “works of art” • Lost capacity
• Bottlenecks
 ATTITUDE
Examples Creates Tools/Solutions
• Whether you think • Redundant discussions • Performance metrics
you can or can’t, • Inaction to pressing that promote the right
you’re right issues behaviors
• Not respecting needs • Inefficient, low quality
of the citizens work
WAYS TO REDUCE THE
BOTTLENECKS
▪Eliminate non-value add activities
▪Level-load work responsibilities
▪Develop consistent work practices
▪Quality control before the bottleneck
▪Minimize re-work and loops
▪Add resources
LEVEL LOADING
▪3R’s – Right people, right roles, right
time.
▪Without this you will most likely end up
with bottlenecks because you will have
higher level people performing way too
much lower level work (and possibly vice
versa).
▪It is important to shift workload to the level
and expertise it’s most practically done at.
▪Match capabilities to the job.