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Contemporary Practices In Project Management Km

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Engineering a robust interaction between the project management principles set forth by PMBOK® and contemporary practices like Six Sigma / TOC (theory of constraints), can actually yield rich dividends to organizations. In a complex world of rapidly converging technologies, philosophies and ideas, we often see that there is a synergistic overlap between project management and contemporary practices. The rigorousness and comprehensiveness of Project Management makes it a self-evolving philosophy that keeps enriching itself by continuously imbibing the goodness of contemporary practices. Philosophies like Six Sigma and TOC play a great complementary role in project management and have maintained their relevance because of their inherent strong focus on problem-solving and objectivity.

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Contemporary Practices In Project Management Km

  1. 1. Complementing Project Management with Contemporary Philosophies Krishna V R Muppavarapu Six Sigma Theory of constraints Project Project Project Phase Phase Phase Project Management
  2. 2. Complementing Project Management with Contemporary Philosophies Krishna V R Muppavarapu* Satyam Computer Services Limited, 3rd Floor, Lakeshore Towers, Raj Bhavan Road, Somajiguda, Hyderabad, India ABSTRACT Engineering a robust interaction between the project management principles set forth by PMBOK® and contemporary practices like Six Sigma / TOC (theory of constraints), can actually yield rich dividends to organizations. In a complex world of rapidly converging technologies, philosophies and ideas, we often see that there is a synergistic overlap between project management and contemporary practices. The rigorousness and comprehensiveness of Project Management makes it a self-evolving philosophy that keeps enriching itself by continuously imbibing the goodness of contemporary practices. Philosophies like Six Sigma and TOC play a great complementary role in project management and have maintained their relevance because of their inherent strong focus on problem-solving and objectivity. The case study of a unique outsourcing project being carried out at a major software services firm based in India highlights how Six Sigma and TOC were used to reinforce the effectiveness of project management for complex projects. TOC was used to identify constraints at the project management level iteratively, while Six Sigma was used to manage the constraints using historical data and benchmarks. Three mega-concepts viz., project management, TOC and Six Sigma were synergized with each other to align the project team goals with the organizational goals. The key learning is that each philosophy complements the others in a big way. Senior management should strive to create an organizational culture of project management based on PMBOK®’s recommendations and ensure that project managers develop an attitude of adopting contemporary practices. Failure to do so would straitjacket the immense transformational power these philosophies have on organizations. Keywords: Project Management, Six Sigma, theory of constraints, PMBOK® 1. INTRODUCTION Organizations worldwide are realizing the importance of a scientific approach to project management. Irrespective of their size, the sector in which they are in, the nature of their operations and the geographies they operate in, organizations are ensuring that project management is an indispensable part of their businesses. While a few organizations develop their own project management methodologies, by and large PMI’s PMBOK® has become a universal reference point as far as project management is concerned. This is mainly due to the exhaustiveness and comprehensiveness of the body of knowledge that PMI developed. The highly scientific approach as is evident from structure of the PMBOK® makes it an indisputable authority in the domain of project management. The various versions of PMBOK® are a testimony to its evolutionary nature. Apart from project management practices, there are also increasing references to concepts like Six Sigma and theory of constraints (TOC) that are being used in organizations irrespective of their domains and areas of operation. These concepts have been used widely with huge success and great results to their credit. * Further author information: E-mail: krishna_muppavarapu@satyam.com, Telephone: +91 9866176258
  3. 3. There has been a lot written about these two concepts – Six Sigma and TOC. Both these concepts are highly objective in their dealing with various types of problems. They are heavily oriented towards using metrics to arrive at solutions. The high level of objectivity somewhat compensates for the inability of these tools to be applied to some unique problems without making some startling assumptions. Nevertheless the number of case studies that are available for Six Sigma and TOC are enough proof that these concepts are quite effective in problem solving. This paper attempts to highlight the fact that a careful marriage of contemporary practices with project management practices can actually synergize and unleash their transformational powers. 2. PROJECT MANAGEMENT Projects and initiatives are the lifelines of organizations. The success or failure of a project has great implications for stakeholders and for the organization in general1. Projects need to be handled in such a way that there is alignment and harmony between the business goals, the external environment and the organizational scenarios to ensure success. Business External goals environment Project manage ment Organizational scenarios Figure 1. Project management as a business model aid Various sections of the PMBOK® Guide3 are dedicated to dealing with these factors in a most scientific way. In each Knowledge Area of PMBOK®, the interlinking between business goals, external environmental conditions and organizational scenarios is quite evident and is done through elaborate and rigorous models. Project managers who follow the recommendations of PMBOK® often find it easy to set stakeholder expectations right at the outset of the project and also to conform to those expectations over the project lifecycle. Project management is a relatively older and a more mature domain when compared to other practices or philosophies. The very fact that PMI was established as early as 1969 qualifies project management discipline as an established philosophy. Though project management is as contemporary in its approach as many other new philosophies, in this paper the author shall use chronological genesis and evolution as indicators of contemporariness. In that sense, for example, a new management philosophy founded in 1990 is more contemporary than one founded in 1950’s.
  4. 4. 3. SIX-SIGMA Six Sigma is one of the most interesting concepts of modern management. From being a statistics based tool used for reducing defects in the manufacturing industry, it has grown into being a philosophy applicable to a variety of industries and a variety of problems. 3.1 The Genesis Six Sigma as a concept was developed and used aggressively by Motorola in the early 1980s. A lot has been written about the origin of this concept and its subsequent popularization as a philosophy. There are interesting tales about Six Sigma that add flavor to its mysticism2. 3.2 Six Sigma Fundamentals Six Sigma started off as a great refinement to the concept of process capability studies. The entire concept revolves around the pivots called “mean”, “normal distribution” and “variance / standard distribution”. It has been nature’s way to give us a lot of data that is normally distributed. Then there is the “central limit theorem†” that empowers Six Sigma professionals to optimize their analysis costs by allowing the data population parameters to be estimated using reasonable sample sizes and apply Six Sigma concepts. The very nature of the normal distribution function and other similar functions facilitates statisticians and decision makers to analyze performance in terms of the number of standard deviations that are contained in between the specification limits. Hence a Six Sigma process is one that behaves in such a way, that 12 standard deviations of the process output fall within the upper and lower specification limits. 3.3 Practicality of Six Sigma For a “Six Sigma process”, the shape of the normal distribution curve allows only 0.00034% of outputs to fall outside the specification limits. This, in practical terms converts to just about 3.4 defects for million opportunities (DPMO)‡, and this is the most popular measure that Six Sigma professionals use. To achieve such high levels of defect-free production, a variety of tools and techniques need to be used. This has led to Six Sigma becoming a philosophy that focuses on achieving quality using various tools – statistical and non-statistical. The immense data-orientation and objectivity has made the Six Sigma philosophy applicable to almost any type of problem; the problems can be as diverse as reduction in cycle times, improving the quality of business leads, reducing the cost of operations, etc. In subsequent sections, the author would showcase how Six Sigma was used to manage a bottleneck in the project execution phase. 3.4 Methodologies of Six Sigma While Six Sigma was originally meant to be used for process improvements, it also started to be used as a product / process design methodology. These methodologies have a common fundamental in being data and analysis oriented. At least two Six Sigma methodologies, DMAIC and DMADV are now popularly being used across various organizations and industries. † Central limit theorem states that, “As sample size increases, the sampling distribution of sample means approaches that of a normal distribution with a mean the same as the population and a standard deviation equal to the standard deviation of the population divided by the square root of n (the sample size)” ‡ Though Six Sigma is often equated to 3.4 DPMO, in reality 3.4 DPMO corresponds to only 4.5-sigma. It has been empirically derived that a process performing at 6-sigma levels in the short run is likely to slip to 4.5-sigma levels in the long run and hence this correction. In fact 6-sigma corresponds to 2 defects per billion opportunities (DPBO); but 3.4 DPMO has come to be generally accepted as Six Sigma
  5. 5. 4. THEORY OF CONSTRAINTS Theory of constraints (TOC) is a concept based on a deep rooted philosophy that is in turn based on a set of principles, processes and application of logic. Unlike Six Sigma that is purely data-driven, TOC also takes into account certain soft and subjective factors like respect for people and policies. Like Six Sigma TOC was originally applied to manufacturing and logistics. But there are references to the fact that it has grown enough to be applied to other fields. In subsequent sections the author would explain how TOC was used to resolve a typical sales-type problem in the project he is working on. 4.1 Genesis of TOC This is a theory popularized by Dr. Eliyahu Goldratt through his series of books titled “The Goal” since 1984. TOC has become quite popular because of the amazing business results that resulted from its application. 4.2 TOC Fundamentals Unlike Six Sigma, TOC relies on systematic dealing of problems using focus, cause-and-effect and continuous improvement. It is based on a set of principles as follows: Convergence Consistency Respect These principles are based on experience rather than on any statistics and are treated as axioms. The convergence axiom states that the more complex a system is to describe, the simpler it is to manage. Consistency would mean that if two parts of a system are in conflict with each other relative to a common goal, it means that the reasoning that led to the conflict must contain at least one flawed assumption. The third axiom – respect, brings in the human component by stating that there is an inherent logic to whatever people do, however flawed the activities appear to be. Using these principles TOC sets 5 focusing steps to manage a goal. The improvement target for the management is the constraint that limits the “throughput” of a system. This, in other words can be called “de-bottlenecking”. It has an underlying philosophy echoed by great personalities in the history and that is, “a chain is as strong as its weakest link”. By reading through the TOC philosophy one would make out how it differentiates itself from Six Sigma on many accounts. Nevertheless as we go by, we would understand the complementary effect each philosophy has on the other. 4.3 Practicality of TOC Seemingly the TOC is quite a subjective approach with the very basis for the axioms not being based on data. But the philosophical strength overcomes these limitations. When complemented with data-driven approaches like Six Sigma the concept of TOC becomes a very useful technique to solve problems relative to the organizational goal. In fact many organizations are forming Centers-of-Excellence or internal practices pertaining to TOC. There are many consultancies that are offering TOC as a service offering to organizations. 5. SIX-SIGMA AND TOC IN PROJECT MANAGEMENT Having discussed about Six Sigma and TOC from an organizational application point of view, it becomes quite pertinent to explore their linkage with project management. The PMBOK® Guide defines a project as “a temporary endeavor to undertaken to create a unique product or a service” and project management as “the application of knowledge, skills, tools and techniques to project activities to meet project requirements”. This definition of project management is quite
  6. 6. profound. Since PMBOK®’s project management methodology hinges on this definition, it becomes quite clear that project management is a very versatile philosophy that encompasses many other philosophies. It also emphasizes the fact that the project management methodology is very flexible and open to be complemented by other philosophies. 5.1 Six Sigma and Project Management Six Sigma has been predominantly used as a philosophy to improve quality. According to the American Society for Quality (ASQ), quality is the “degree to which a set of inherent characteristics fulfill requirements”. This has been adopted by PMBOK® Guide 3rd edition (Chapter 8, Project Quality Management). The PMBOK prescribes that quality management approach for projects should comply with that of Six Sigma alongside other approaches, especially with a focus on continuous improvement. The 44 project management processes that PMBOK® Guide mentions have linkages to each other within and outside their respective Process Groups and Knowledge Areas. We now explore in detail how Six Sigma can apply to the other Knowledge Areas and Process Groups. Since it is a vast subject and also thoroughly researched, we take the approach of using representative examples rather than developing fresh theories. In fact it is paradoxically delighting that the principles of project management are also applicable to “Six Sigma projects”. Six Sigma enables managers and the management to be on the same plane of understanding and interpretation because of its aggressively statistical nature. Every project has some defined phases. Each phase has its set of Process Groups – Initiating, Planning, Executing, Monitoring & Controlling and Closing. These Process Groups repeat in various phases of the project in varying degrees. The project management processes, mentioned in the Project Quality Management Knowledge Area apply to a large extent to the Planning, Executing and Monitoring & Control Process Groups. Here we look at a few representative examples of how concepts of Six Sigma are helpful across various Process Groups. For example, the DMADV methodology can be used to develop a project management methodology that suits the organizational requirements and also specific project requirements. A variety of techniques including simulation can be used to achieve this goal. The project management methodology in turn becomes a key technique in developing the project management plan and its subsidiary plans. The risk management plan, for example should be robust enough to identify and manage a variety of risks that a project can be faced with. A careful measurement of the past history of various similar or dissimilar projects can help the project manager to “design and validate” a good risk management methodology. Similarly at every phase in a project, a combination of DMADV and DMAIC methodologies can be used to develop a foolproof execution mechanism and to continuously improve the project performance. Finally the DMAIC methodology can be used to create a common language of understanding between various stakeholders during the monitoring of the project across its various phases. This is especially true with objectives like cost reduction, efficiency improvement, processing time improvement, etc. Of course, project managers should bear in mind that the application of Six Sigma across various Process Groups demands the understanding of the complex interactions that project management processes have on each other. For example, as depicted in table 1.1, any improvement using Six Sigma in one Process Group can go as a learning input into the other Process Groups. A careful study of the PMBOK® Guide explains these complex interactions in the most scientific way.
  7. 7. Table 1. Six Sigma relevance to Project Management Knowledge Areas Process Group Planning Executing Monitoring & Control Project management processes Quality Planning Use Six Sigma DMADV methodology to develop components of project management plan (of which quality management plan is also a component) and a suitable project management methodology Perform Quality Use Six Sigma Assurance DMADV methodology to develop an execution mechanism Interactions for quality assurance Use Six Sigma DMAIC methodology for continuous improvement during execution of the project Perform Quality Control Use Six Sigma DMAIC methodology to monitor and control project results across Interactions various phases, Process Groups and Knowledge Areas Major areas of impact: Project Time Management, Project Cost Management, Project Risk Management 5.2 Theory of Constraints (TOC) and Project Management Projects, however small or big, simple or complex are faced with constraints at various stages in their lifecycle. In its initial chapters the PMBOK® Guide mentions the triple constraints of project scope, time and cost. Every phase of a
  8. 8. project is bound by these constraints. In a way, PMBOK® rationalizes the constraints at the outset and prescribes balancing of these constraints throughout the project lifecycle. Scope Time TOC Cost Figure 2. TOC as a guide to focused management of constraints The most prominent manifestation of TOC in project management is the “critical chain” concept. The critical chain acts as the bottleneck and constrains the “throughput” of the project relative to the project goal. The other important manifestation is in terms of anticipated events that can have an impact on cost and scope. The PMBOK® Guide gives a very good approach to manage these constraints in the form of “reserve analysis”. The reserve analysis forms a part of at least three Knowledge Areas – Project Time Management, Project Cost Management and Project Risk Management. The reserves, used effectively by project managers can help them address the time, cost and scope constraints. For example, a careful and legitimate manipulation of the critical chain using the reserves or buffers can address the “time constraint” of the project while not compromising on the cost and scope objectives. A preliminary look gives an impression that the triple constraint management prescribed by PMBOK® is not very inclusive and is quite different from what TOC proposes. This perception arises due to fact that TOC treats constraints from a “process” point of view whereas PMBOK® generalizes the constraints over various Process Groups. Moreover, PMBOK® Guide only gives a general guideline. PMBOK®, which is the superset of the PMBOK® Guide, can be treated as the domain that project managers should use to extend the prescriptions of PMBOK® Guide. TOC becomes even more relevant when dealing with programs. The deep-rooted philosophy on which TOC is based allows it to be applied to multiple layers of project hierarchy. Constraints can be identified at various levels in the work breakdown structure (WBS) and even at the lowest level of WBS i.e. work packages. The constraints managed at the lower levels in turn get aggregated to address the constraints at higher levels in the project hierarchy. The essence of TOC is “focus” and project managers tend to gain a lot by way of actually focusing on critical constraints and resolving them. For example, it is a common experience for many project managers that techniques like resource leveling can alter the critical path. This is akin to a “shifting constraint” that TOC describes as part of continuous improvement. 5.3 Combining Project Management, TOC and Six Sigma Having discussed the relevance of TOC and Six Sigma in project management, it becomes quite easy to understand how the three philosophies can actually be brought together to manage projects. In practical terms project management philosophy empower project managers with a powerful and a structured guideline. TOC enables project managers to identify and focus on the most critical problems with an eye for continuous improvement. Six Sigma gives the project managers a statistical approach to manage constraints effectively and maintain a common platform of understanding
  9. 9. among stakeholders. This completes the discussion on the synergistic interlinking between three mega philosophies each complementing the other in many ways and helping scores of project managers manage their projects well. 6. A CASE STUDY In this section we discuss a brief case study to emphasize the practicality of the concepts discussed in the previous sections. The case study pertains to a project that the author is working on for his organization. Specific details of the case study have been deliberately masked or distorted to conform to the organization’s information security policy. The organization had embarked on a path breaking strategic initiative that combines business and social objectives. A project team was formed at the outset and was mandated with driving the initiative. In line with the organizational ethos, the project team was formed as a decentralized and empowered strategic business unit. The project charter was created with a clearly stated objective of cost reduction and improvement in business process efficiency. The next step was to identify a logical “phasing” of the project. Since it was a unique project with no benchmarks or known industry practices, the project team procured a buy-in from the management to conduct a few experiments in the form a pilots. Various models were used and data recorded about the learning from the experiments. Stakeholder identification was also a part of these experiments. The project team realized that it was a fairly complex project and it was not going to be easy to convince key stakeholders about the usefulness of the project. Hence a substantial amount of effort was identified as being essential to “drive” the new concept across the organization. That resulted in the formation of the first phase of the project – “internal business development”. Business development would consist of promotional activities where the project team would reach out and convince stakeholders to be part of this initiative. Since it was an outsourcing project, the second logical phase was that of “process transition” and the final phase would be “delivery”. Contiguous phases would have some overlapping with each other. The DMADV methodology was used to design the phases in terms of the project management processes that would comprise each phase. Data was used from the pilots to measure the effectiveness of the processes for this project. The already robust organizational project management framework was used as the underpinning as depicted in figure 3. The project management framework in turn borrows from PMBOK®. Six Sigma Theory of constraints Internal Process Delivery business transition phase development phase phase Organizational project management framework Figure 3. Project phases – underpinned by project management and complemented by Six Sigma and TOC
  10. 10. Each phase was identified to have a definite start point and sign off point. Various project management processes were put together for each phase to arrive at a robust “outsourcing methodology”. This would act as the “project management methodology” that in turn would become a key input or technique for managing the outsourcing project over its lifecycle. As part of designing the outsourcing methodology the project team used simulations and the experimental pilots to identify the selection of project management processes. At the same time the “throughput” across each phase was base-lined, as the success of the project would depend on a key metric of the amount of work outsourced. As the project progressed, the project team identified that the internal business development phase was acting as a bottleneck as not much business was coming in. Consequently the subsequent phases of process transition and delivery were getting affected. This was the project team’s first encounter with TOC. The project team realized that this constraining phase was poorly designed – in the sense that not enough awareness existed in the organization about this initiative and there were issues of change management that were difficult to overcome. Applying the principles of TOC, the project team had only the option of “elevating” the constraint – improve the throughput of the internal business development phase. The project team used DMAIC to improve the efficiency and quality of business lead generation. The improvement was registered as a Six Sigma project with the key achievement of improving the number of “good business leads”. The major improvement plans that were implemented were: 1) The creation of a proper communication platform for the initiative 2) Getting more commitment from the top management for the initiative Once this constraint was addressed, the project immediately looked into the process transition phase as part of the TOC philosophy of continuously identifying the subsequent constraints. Not surprisingly the process transition phase indeed became the new constraint. There were enough good business leads coming in, but were not getting transitioned within the stipulated time or were not getting transitioned at all. A close look into the transition phase revealed that the planning Process Group of this phase was totally missing as the project team initially presumed that the existing information systems and infrastructure would be sufficient for the process outsourcing. In fact the existing information systems were not designed for outsourcing. The project team used the DMADV methodology to statistically prove that the information systems needed quite a bit of reengineering. Subsequently the process transition phase was “re-built” with a proper planning component thereby reducing the “time-to-transition” from about 6 months to a more acceptable 2 months. The delivery phase was left to the outsourcing service provider for improvements and the service provider’s organization had used DMAIC methodology to improve the delivery to Six Sigma levels. This in turn improved their project management capabilities by freeing their time through reduction in rework, better appreciation and enhanced employee morale, etc. It is quite clear from the case study that a conscious interweaving of the project management philosophy with contemporary philosophies can actually help project managers to achieve significant business results by way of focus, objectivity and stakeholder commitment. ACKNOWLEDGEMENTS 1) Mr. Surya Gadiraju for reviewing the Six Sigma project and for his tacit encouragement through testing times 2) Mr. Ravi Kumar Meduri for the excellent support, encouragement and good insights 3) Jaipal Naidu and Krishna Chaitanya Vutla for their valuable contribution in the form of discussions, brainstorming and the excellent support they have rendered during the course of the project. REFERENCES AND BIBLIOGRAPHY 1. Ram Charan, Larry Bossidy, Confronting Reality: Doing What Matters to Get Things Right, Oxford University, New York, 1992. 2. http://www.isixsigma.com/library/content/c020815a.asp 3. A Guide to the Project Management Body of Knowledge (PMBOK® Guide) Third Edition
  11. 11. Disclaimer: The views expressed in this paper are the author’s personal views and in no way are representative of his organization, nor is the organization liable for any outcome that is related to this paper.