Project production management

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Project production management (PPM) [1] [2] is the application of operations management [2] [3] to the delivery of capital projects. The PPM framework is based on a project as a production system view, [1] [2] [3] in which a project transforms inputs (raw materials, information, labor, plant & machinery) into outputs (goods and services).

Contents

The knowledge that forms the basis of PPM originated in the discipline of industrial engineering during the Industrial Revolution. During this time, industrial engineering matured and then found application in many areas such as military planning and logistics for both the First and Second World Wars and manufacturing systems. As a coherent body of knowledge began to form, industrial engineering evolved into various scientific disciplines including operations research, operations management and queueing theory, amongst other areas of focus. Project Production Management (PPM) is the application of this body of knowledge to the delivery of capital projects.

Project management, as defined by the Project Management Institute, [1] [2] specifically excludes operations management from its body of knowledge, [3] on the basis that projects are temporary endeavors with a beginning and an end, whereas operations refer to activities that are either ongoing or repetitive. However, by looking at a large capital project as a production system, such as what is encountered in construction, [4] it is possible to apply the theory and associated technical frameworks from operations research, industrial engineering and queuing theory to optimize, plan, control and improve project performance.

For example, Project Production Management applies tools and techniques typically used in manufacturing management, such as described by Philip M. Morse in, [1] or in Factory Physics [2] [5] to assess the impact of variability and inventory on project performance. Although any variability in a production system degrades its performance, by understanding which variability is detrimental to the business and which is beneficial, steps can be implemented to reduce detrimental variability. After mitigation steps are put in place, the impact of any residual variability can be addressed by allocating buffers at select points in the project production system – a combination of capacity, inventory and time.

Scientific and Engineering disciplines have contributed to many mathematical methods for the design and planning in project planning and scheduling, most notably linear and dynamic programming yielding techniques such as the critical path method (CPM) and the program evaluation and review technique (PERT). The application of engineering disciplines, particularly the areas of operations research, industrial engineering and queueing theory have found much application in the fields of manufacturing and factory production systems. Factory Physics is an example of where these scientific principles are described as forming a framework for manufacturing and production management.  Just as Factory Physics is the application of scientific principles to construct a framework for manufacturing and production management, Project Production Management is the application of the very same operations principles to the activities in a project, covering an area that has been conventionally out of scope for project management. [3]

Modern project management theory and techniques started with Frederick Taylor and Taylorism/scientific management at the beginning of the 20th century, with the advent of mass manufacturing. It was refined further in the 1950s with techniques such as critical path method (CPM) [1] [2] and program evaluation and review technique (PERT). [5] [6] Use of CPM and PERT became more common as the computer revolution progressed. As the field of project management continued to grow, the role of the project manager was created and certifying organizations such as the Project Management Institute (PMI) emerged. Modern project management has evolved into a broad variety of knowledge areas described in the Guide to the Project Management Body of Knowledge (PMBOK). [3]

Operations management [7] [8] [9] [10] (related to the fields of production management, operations research and industrial engineering) is a field of science that emerged from the modern manufacturing industry and focuses on modeling and controlling actual work processes. The practice is based upon defining and controlling production systems, which typically consist of a series of inputs, transformational activities, inventory and outputs. Over the last 50 years, project management and operations management have been considered separate fields of study and practice.

PPM applies the theory and results of the various disciplines known as operations management, operations research, queueing theory and industrial engineering to the management and execution of projects. By viewing a project as a production system, the delivery of capital projects can be analyzed for the impact of variability. The effects of variability can be summarized by VUT equation (specifically Kingman's formula for G/G/1 queue). By using a combination of buffers – capacity, inventory and time – the impact of variability to project execution performance can be minimized.   

A set of key results used to analyze and optimize the work in projects were originally articulated by Philip Morse, considered the father of operations research in the U.S. and summarized in his seminal volume. [8] In introducing its framework for manufacturing management, Factory Physics summarizes these results:

  1. A perfect world of maximum profitability and service occurs when demand and transformation (also called supply) are perfectly synchronized: all demand is met instantly at minimum cost
  2. Because there is variability, demand and transformation can never be perfectly synchronized.  In some cases, detrimental variability can be removed. An example would be the statistical quality control techniques used in manufacturing to control deviations, but even then, there is residual detrimental variability that causes demand and supply never to be perfectly synchronized.  This leads us to:
  3. Buffers are required when synchronizing demand and transformation in the presence of variability
  4. There are only three buffers: capacity, inventory and time

There are key mathematical models that describe the relationships between buffers and variability. Little's law [11] – named after academic John Little – describes the relationship between throughput, cycle time and work-in-process (WIP) or inventory.  The Cycle Time Formula [11] summarizes how much time a set of tasks at a particular point in a project take to execute.  Kingman's formula, also known as the VUT equation [11] – summarizing the impact of variability.

Journals

The following academic journals publish papers pertaining to Operations Management issues:

Related Research Articles

Project management is the process of leading the work of a team to achieve all project goals within the given constraints. This information is usually described in project documentation, created at the beginning of the development process. The primary constraints are scope, time, and budget. The secondary challenge is to optimize the allocation of necessary inputs and apply them to meet pre-defined objectives.

Operations research, often shortened to the initialism OR, is a discipline that deals with the development and application of analytical methods to improve decision-making. The term management science is occasionally used as a synonym.

Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, but it is possible to conduct MRP by hand as well.

<span class="mw-page-title-main">Inventory</span> Goods held for resale

Inventory or stock refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation.

The theory of constraints (TOC) is a management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints. There is always at least one constraint, and TOC uses a focusing process to identify the constraint and restructure the rest of the organization around it. TOC adopts the common idiom "a chain is no stronger than its weakest link". That means that organizations and processes are vulnerable because the weakest person or part can always damage or break them, or at least adversely affect the outcome.

Project management software (PMS) has the capacity to help plan, organize, and manage resource tools and develop resource estimates. Depending on the sophistication of the software, it can manage estimation and planning, scheduling, cost control and budget management, resource allocation, collaboration software, communication, decision-making, quality management, time management and documentation or administration systems. Numerous PC and browser-based project management software and contract management software products and services are available.

<span class="mw-page-title-main">Program evaluation and review technique</span> Statistical tool used in project management

The program evaluation and review technique (PERT) is a statistical tool used in project management, which was designed to analyze and represent the tasks involved in completing a given project.

<span class="mw-page-title-main">Kanban</span> Japanese business method

Kanban is a scheduling system for lean manufacturing. Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. The system takes its name from the cards that track production within a factory. Kanban is also known as the Toyota nameplate system in the automotive industry.

<span class="mw-page-title-main">Operations management</span> In business operations, controlling the process of production of goods

Operations management is an area of management concerned with designing and controlling the process of production and redesigning business operations in the production of goods or services. It involves the responsibility of ensuring that business operations are efficient in terms of using as few resources as needed and effective in meeting customer requirements.

Takt time, or simply takt, is a manufacturing term to describe the required product assembly duration that is needed to match the demand. Often confused with cycle time, takt time is a tool used to design work and it measures the average time interval between the start of production of one unit and the start of production of the next unit when items are produced sequentially. For calculations, it is the time to produce parts divided by the number of parts demanded in that time interval. The takt time is based on customer demand; if a process or a production line are unable to produce at takt time, either demand leveling, additional resources, or process re-engineering is needed to ensure on-time delivery.

<span class="mw-page-title-main">Computational engineering</span>

Computational Engineering is an emerging discipline that deals with the development and application of computational models for engineering, known as Computational Engineering Models or CEM. At this time, various different approaches are summarized under the term Computational Engineering, including using computational geometry and virtual design for engineering tasks, often coupled with a simulation-driven approach In Computational Engineering, algorithms solve mathematical and logical models that describe engineering challenges, sometimes coupled with some aspect of AI, specifically Reinforcement Learning.

Factory Physics is a book written by Wallace Hopp and Mark Spearman, which introduces a science of operations for manufacturing management. According to the book's preface, Factory Physics is "a systematic description of the underlying behavior of manufacturing systems. Understanding it enables managers and engineers to work with the natural tendencies of manufacturing systems to:

A glossary of terms relating to project management and consulting.

<span class="mw-page-title-main">Industrial engineering</span> Branch of engineering which deals with the optimization of complex processes or systems

Industrial engineering is an engineering profession that is concerned with the optimization of complex processes, systems, or organizations by developing, improving and implementing integrated systems of people, money, knowledge, information and equipment. Industrial engineering is central to manufacturing operations.

Applied engineering education is defined as a program that generally prepares individuals to apply mathematical and scientific principles inherent to engineering to the management and design of systems, execution of new product designs, improvement of manufacturing processes, and the management and direction of the physical or technical functions of an organization. Includes instruction in basic engineering principles, project management, industrial processes, production and operations management, systems integration and control, quality control, and statistics.14.0103 2020 CIP Code

The following outline is provided as an overview of and topical guide to production:

Industrial and production engineering (IPE) is an interdisciplinary engineering discipline that includes manufacturing technology, engineering sciences, management science, and optimization of complex processes, systems, or organizations. It is concerned with the understanding and application of engineering procedures in manufacturing processes and production methods. Industrial engineering dates back all the way to the industrial revolution, initiated in 1700s by Sir Adam Smith, Henry Ford, Eli Whitney, Frank Gilbreth and Lilian Gilbreth, Henry Gantt, F.W. Taylor, etc. After the 1970s, industrial and production engineering developed worldwide and started to widely use automation and robotics. Industrial and production engineering includes three areas: Mechanical engineering, industrial engineering, and management science.

<span class="mw-page-title-main">Production planning</span>

Production planning is the planning of production and manufacturing modules in a company or industry. It utilizes the resource allocation of activities of employees, materials and production capacity, in order to serve different customers.

Within supply chain management and manufacturing, production control is the activity of monitoring and controlling any particular production or operation. Production control is often run from a specific control room or operations room. With inventory control and quality control, production control is one of the key functions of operations management.

Donald G. Malcolm was an American organizational theorist, professor and dean at Cal State L.A.'s College of Business and Economics and management consultant, known as co-developer of the Performance, Evaluation, and Review Technique (PERT).

References

  1. 1 2 3 4 5 Arbulu, R. J.; Choo, H-J.; Williams, M. (3–5 October 2016). "Contrasting Project Production Control with Project Controls". Proceedings of International Conference on Innovative Production and Construction (IPC 2016). Darwin, Australia.
  2. 1 2 3 4 5 6 Shenoy, R. G.; Zabelle, T. R. (November 2016). "New Era of Project Delivery – Project as Production System". Journal of Project Production Management. 1: 13–24.
  3. 1 2 3 4 5 A Guide to the Project Management Body of Knowledge, Fifth Edition, Project Management Institute Sec 1.5.1.1, p13 http://www.pmi.org/pmbok-guide-standards/foundational/pmbok
  4. ↑ ' "Construction: one type of Project Production System". Proceedings of 13th Annual Conference of the International Group for Lean Construction. Sydney, Australia: 29–35. 19–21 July 2005.[ dead link ]
  5. 1 2 Stauber, B. Ralph; Douty, H. M.; Fazar, Willard; Jordan, Richard H.; Weinfeld, William; Manvel, Allen D. "Federal Statistical Activities". The American Statistician. 13 (2): 9–12.
  6. ↑ Malcolm, D. G.; Roseboom, J. H.; Clark, C. E.; Fazar, W. (September–October 1959). "Application of a Technique for Research and Development Program Evaluation" (PDF). Operations Research. 7 (5): 646–669. doi:10.1287/opre.7.5.646.
  7. ↑ Schmenner, R. W. (1990). Production and Operations Management: Concepts and Situations (Fourth ed.). Macmillan.
  8. 1 2 Schmenner, R. W. (1993). Production/operations management: from the inside out. Macmillan College.
  9. ↑ Muhlemann, A.; Okland, J.; Lockye, K. (1992). Production and Operations Management (6th ed.). London: Pitman.
  10. ↑ Johnson, R. A.; Newelll, W. T.; Vergin, R. C. (1972). Operations Management. Houghton Mifflin.
  11. 1 2 3 'Hopp, W.; Spearman, M. (2011). Factory Physics (3rd ed.). Waveland Press. pp. 289, 327–328, 674–675.

Further reading

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