Unit II

Project Management &

Process Design
 What is a Project?
An interrelated set of activities with a
definite starting and ending point, which
results in a unique outcome for a specific
allocation of resources.
A project should be technically feasible,
commercially viable, politically suitable and
socially acceptable.
 Concept of project
The Project Management Institute
(PMI), USA defines project as a one-
shot, time limited, goal directed, major
undertaking, requiring the commitment
of varied skills and resources.
It also defines project as “a combination
of human and non-human resources
pooled together in a temporary
organization to achieve specific
purpose”.
 What is Project Management?

Project Management
A systemized, phased approach
to defining, organizing,
planning, monitoring, and
controlling projects.
Characteristics of a project
 The characteristics of a project differentiate it from
any other on-going activity, say production,
performed in an organization.
 A project is basically a work – one whole thing. It
means that although it comprises of contribution from
various different people but still it can be recognized
as one whole thing.
 Project is not a process that can perpetuate.
 There is some sort of missionary zeal, unknown
force, pushing people forward for achievement of
something that is beyond their immediate work.
Characteristics of a project
1. Objectives
2. Life Span
3. Single Entity
4. Team Work
5. Life Cycle
6. Uniqueness
7. Change
8. Successive Principle
9. Made to Order
10. High Level of Sub-Contracting
11. Risk and Uncertainty
12. Unity in Diversity
Characteristics of a project
S. Characteristic Characteristic Feature
No
1. Objectives A project has a fixed set of objectives. Once the objectives
have been achieved the project cease to exist.
2. Life span A project can not continue endlessly. It has to come to an
end. This end is defined through the objectives of the
project.
3. Single Entity A project is one entity and is normally entrusted to one
responsibility center while the participants in the project are
many.
4. Team Work A project calls for team work – a team is constituted of
members belonging to different disciplines, organizations
and even countries.
5. Life Cycle A project has a life cycle reflected by growth, maturity and
decay. It has a learning component.
6. Uniqueness No two projects are exactly similar even if the plants are
exactly identical. The location, the infrastructure, the
agencies and the people makes each project unique.

Cont….
Characteristics of a project
S. Characteristic Characteristic Feature
No

7. Change A project sees many changes throughout its life. While

some changes may not have any impact but some changes
may change the entire course of the project.

8. Successive Principle What is going to happen in the life cycle of a project is

not fully known at any stage. The details get finalized
successively with the passage of time. More is known
about the project when it enters, say construction phase,
then what was known in the engineering phase.

9. Made to Order A project is always made to the order of its customer. The
customer stipulates various requirements and puts
constraints within which the project must be executed.

Cont….
Characteristics of a project
S. Characteristic Characteristic Feature
No
10. High level of Sub- A high percentage of work in a project is done through
Contracting contractors. The more the complex the project is, the more
will be the extent of contracting. Normally around 80% of
the work in a project is done through sub-contracting.
11. Risk and Every project has risk and uncertainty associated with it.
Uncertainty An ill-defined project will have high degree of risk and
uncertainty.
12. Unity in Diversity A project is a complex set of thousand of varieties. The
varieties are in terms of technology, equipment and
materials, machinery and people, work culture and ethics.
But they remain inter-related and unless this is so they
either do not belong to the project or will never allow the
project to be completed.
 Categories of project
 The management of a project depends upon the
category it belongs to.
 The location, type, size, scope, and speed are the
factors that determine the efforts required to
execute a project.
 A grass root mega high project is not the same
thing as a modification work in a low technology
mini plants.
 Therefore, though the characteristics of all
projects are the same, they can not be treated
alike.
 Project
National International

Non-
Industrial
Industrial

Conventional Low
R&D High Tech.
Technology Technology

Mega Major Medium Mini

Grass Root Expansion Modification

Normal Crash Disaster

 Categories of project
 Normal Project: Adequate time is allowed for
implementation of the project. This type of project will
require minimum capital cost and no sacrifice in terms of
quality.
 Crash Project: Additional capital costs are incurred to gain
time. Maximum overlapping of phases are encouraged and
compromises in terms of quality are not ruled out. Saving
in time are normally achieved in procurement and
construction where time is bought from the vendors and
contractors by paying them extra.
 Disaster Projects: Anything needed to gain time is allowed
in these projects. Quality short of failure level is accepted.
Round-the-clock construction work is done at the
construction site. Capital cost go up very high, but project
time gets reduced drastically.
Categories of project
 New Service or Product Development
Process
Competitive priorities help managers
develop products and services that
customers wants.
New products and services are essential
for the long term survival of the firm.
New refers to both brand new products
and services or major changes in existing
products and services.
 New Service or Product Development
Process
New product development is the transformation of a
market opportunity into a product available for sale.
It can be tangible (that is, something physical you can
touch) or intangible (like a service, experience, or
belief).
The more complex the product, the more complex the
NPD process and management system.
The process for managing large scale complex
engineering products is much slower (10 plus years)
than that deployed for fast moving consumer goods
(weeks).
 New Service/Product Development
Design
 Service or
product not
profitable
 Need to rethink
Analysis the new offering
or production
process

Development  Post-launch
review

Full Launch
 New Service or Product Development
Process

Design:
Design stage links the new service or
product with the corporate strategy.
It defines the requirements for the firm’s
supply chain.
In this stage, ideas for new offerings are
proposed and screened for feasibility and
market worthiness.
 New Service or Product Development
Process

Analysis:
This stage involves critical review of the
new offerings.
It is evaluated whether the new offering
o fits into corporate strategy;
o is compatible with regulatory requirements;
o presents an acceptable market risk; and
o satisfies the needs of the intended customers.
 New Service or Product Development
Process
Development:
Development brings more specificity to new
offering.
Processes are analysed, activities are designed to
meet competitive priorities and to add value to the
service or product.
Market programs are designed.
Personnel are trained and pilot runs are conducted.
At this stage, supply chain might be redesigned
itself.
 New Service or Product Development
Process

Full Launch:
It involves coordination of many
internal as well as external processes of
supply chain.
Promotions of new offerings are
initiated, sales personnel briefed,
distribution processes activated, old
offerings are withdrawn (if required).
 What is Process Strategy?
Process Strategy
The pattern of decisions made in managing
processes so that they will achieve their
competitive priorities.

A process involves the use of organization’s

resources to provide something of value.
Business Function Processes

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall

Four basic process decisions
Process Structure determines how processes are
designed relative to the kind of resources needed,
how resources are partitioned between them, and
their key characteristics.
Customer Involvement refers to the ways in which
customers become part of the process and the extent
of their participation.
Resource flexibility is the ease with which
employees and equipment can handle a wide variety
of products, output levels, duties, and functions.
Capital intensity is the mix of equipment and
human skills in a process.
Process Strategy
Process Structure in Services
Nature of service processes -
Customer Contact

•A good process strategy for services depends

on the type and amount of customer contact.

•Customer contact is the extent to which the

customer is present, is involved and receive
personal attention during the service process.
 Process Structure in Services
Nature of service processes - Customer
Contact
•Face-to-face interactions, also called moment
of truth or service encounter, brings the
customer and service provider together.
•Nested process concept is applied to services
because some part of a process can have low
contact and other parts of a process can have
high contact.
 Process Structure in Services
DIMENSIONS OF CUSTOMER CONTACT IN SERVICE
PROCESSES

Dimension High Contact Low Contact

Physical presence Present Absent

What is processed People Possessions or information

Contact intensity Active, visible Passive, out of sight

Personal attention Personal Impersonal

Method of delivery Face-to-face Regular mail or e-mail

Dimensions of Process Structure in
Services
1. Customer Contact; 2. Customization;
3. Process Divergence; and
4. Flow
Customer Contact
◦ The extent to which the customer is present, is
actively involved, and receives personal attention
during the service process
Customization
◦ Service level ranging from highly customized to
standardized
 Dimensions of Process Structure in
Services

Process Divergence
◦ The extent to which the process is highly
customized with considerable latitude as to how
its tasks are performed.
◦ If the process changes with each customer,
virtually every performance of the service is
unique.
◦ High divergence is observed in consulting, law
and architecture.
 Dimensions of Process Structure in
Services
Flow
◦ How the work progresses through the sequence of
steps in a process.
◦ There could be a flexible flow or line flow.
◦ Flexible flow means the customers, materials or
information move in diverse ways with the path of
one customer or job often crisscrossing the path
that the next one takes.
◦ Line flow means the customers, materials or
information move linearly from one operation to
the next, according to a fixed sequence.
 Customer-Contact Matrix for
Service Processes
Less Customer Contact and Customization

Service Package
Less Complexity, Less Divergence, More Line Flows

(1) (2) (3)

Process High interaction with Some interaction with Low interaction with
customers, highly customers, standard customers, standardized
Characteristics customized service services with some options services

(1)
Flexible flows,
complex work with Front office
many exceptions

(2)
Flexible flows with
some dominant
paths, moderate job Hybrid office
complexity with
some exceptions

(3)
Line flows, routine Back office
work easily
understood by
employees

© 2007 Pearson Education

 Service Process Structuring
Front office: A process with high customer
contact where the service provider interacts
directly with the internal or external
customer.
Hybrid office: A process with moderate
levels of customer contact and standard
services with some options available.
Back office: A process with low customer
contact and little service customization.
 Service Process Structures in the
Financial Services Industry
Front Office
Sale of financial
services
• Research customer finances
• Work with customer to
understand customer needs
• Make customized
presentation to customer
addressing specific
customer needs
• Involve specialized staff
offering variety of services
• Continuing relationship
with customer, reaction to
changing customer needs
© 2007 Pearson Education
Hybrid Office
Creation of quarterly
performance report
• Data obtained electronically
• Report calculated using
standardized process
• Report reviewed using
standardized diagnostic
systems
• Manager provides written
analysis and
recommendations in
response to individual
employee performance
• Manager meets with
employee to discuss
performance
Back Office
Production of
monthly client fund balance
reports
• Data obtained
electronically
• Report run using
standardized process
• Results checked for
“reasonableness” using
well-established policies
• Hard copies and electronic
files forwarded to analysts
• Process repeated monthly
with little variation
Process Structure in
Manufacturing
Many processes at manufacturing firm are actually
services to internal or external customers.
Product-Process Matrix is used to understand
manufacturing processes.
The elements of this matrix are:
Volume
Product customization
Process divergence
Flow
 Product-Process Matrix for Processes
Less Customization and Higher Volume

Product Design
(1) (2) (3) (4)
Low-volume Multiple products with low Few major High volume, high
products, made to moderate volume products standardization, to customer
Process higher Continuous Flow
Characteristics order volume
Less Complexity, Less Divergence, More Line Flows

(1)
Complex and highly
customized process, Job
unique sequence of tasks process

(2)
Small batch
process
Disconnected line flows,
c e s s es
moderately complex work ro
at ch P
B Large batch
process
(3)
Connected line, , highly
repetitive work Line
process
(4)
Continuous flows
Continuous
process

© 2007 Pearson Education

Process Structure in Manufacturing
Job Process:
A process with the flexibility needed to produce a
wide variety of products in significant quantities,
with considerable complexity and divergence in the
steps performed.
Companies choosing job processes often bid for
work.
They make products to order and do not produce
them ahead of time.
Specific needs of next customers are unknown.
Each new order is handled as a single unit.
Process Structure in Manufacturing
Batch process:
It is the most common process choice found in
practice.
Examples of batch process are making standard
components that feed an assembly line.
A process that differs from the job process with
respect to volume, variety and quantity.
Volumes are higher than job process.
A narrower range of products is produced.
Process flow is flexible with some dominant paths.
 Process Structure in Manufacturing
Line process:
A process that lies between the batch and continuous
processes on the continuum; volumes are high and
products are standardized, which allows resources to
be organized around particular products.
Products created by a line process include assembly
of computers, automobiles, and toys.
Divergence is minimum.
Production orders are not linked to customer orders.
Standard products are produced well in advance.
 Process Structure in Manufacturing

Continuous flow:
The extreme end of high-volume,
standardized production and rigid line flows,
with production not starting and stopping for
long time intervals.
Examples of continuous flow process are
petroleum refining, chemical process and
processes making soft drinks, steel, and
electricity.
 Production and Inventory Strategies
 Make-to-order strategy: A strategy used by manufacturers
that make products to customer specifications in low
volume.
 Assemble-to-order strategy: A strategy for producing a
wide variety of products from relatively few assemblies and
components after the customer orders are received. This
strategy often involves a line process for assembly and a
batch process for fabrication.
 Make-to-stock strategy: A strategy that involves holding
items in stock for immediate delivery, thereby minimizing
customer delivery times. The term Mass production is
sometimes used in the popular press for a line process that
uses the make-to-stock strategy.
 Links of Competitive Priorities with
Manufacturing Strategy

© 2007 Pearson Education

 Layout
 The physical arrangement of operations (or
departments) relative to each other.
 Layout design involves three steps:
 Gathering information
 Developing block plan
 Designing detailed layout
 Three types of information are required:
 Total space requirement
 Available space
 Closeness factors
Problem Based on Layout
 A defense contractor is evaluating its machine shop’s current
layout. The figure below shows the current layout and the
table shows the closeness matrix for the facility measured as
the number of trips per day between department pairs. Safety
and health regulations require departments E and F to remain
at their current locations.
 a. Use trial and error to find a better layout
 b. How much better is your layout than the current layout in
terms of the wd score? Use rectilinear distance.
 Solution
a. In addition to keeping departments E and F at their current
locations, a good plan would locate the following department pairs
close to each other: A and E, C and F, A and B, and C and E.
The below figure was worked out by trial and error and satisfies all
these requirements.
• Start by placing E and F at their current locations.
• Then, because C must be as close as possible to both E and F, put C
between them. Place A below E, and B next to A.
• All of the heavy traffic concerns have now been accommodated.
Current Proposed
 Customer Involvement
Improved Competitive Capabilities: More
customer involvement can mean better
quality, faster delivery, greater flexibility, and
even lower cost.
◦ Customers can come face-to-face with the service
providers, where they can ask questions, make
special requests on the spot and provide additional
information.
Self-serviceis the choice of many retailers
such as gasoline stations, supermarkets, and
banks.
 Customer Involvement
However customer involvement can be
disruptive and make the process less efficient.
◦ Greater interpersonal skills are required.
◦ Quality measurement becomes more difficult.
Emerging Technologies: Companies can now
engage in an active dialogue with customers
and make them partners in creating value.
Wal-Mart shares sales information and works
closely with P&G in managing inventories
and warehousing operations.
 Resource Flexibility
Flexible workforce: A workforce whose members
are capable of doing many tasks, either at their own
workstations or as they move from one workstation
to another.
◦ Worker flexibility can be one of the best ways to achieve
reliable customer service and alleviate capacity
bottlenecks.
◦ This comes at a cost, requiring greater skills and thus more
training and education.
Flexible equipment: Low volumes mean that
process designers should select flexible, general-
purpose equipment.
 Relationship between Process
Costs and Product Volume

Process 2:
Special-purpose
Total cost (dollars)

equipment

Break-even
quantity

Process 1:
F2 General-purpose
equipment
F1

Units per year (Q)

 Application
BBC is deciding whether to weld bicycle frames manually or to
purchase a welding robot. If welded manually, investment costs
for equipment are only $10,000. The per-unit cost of manually
welding a bicycle frame is $50.00 per frame. On the other hand,
a robot capable of performing the same work costs $400,000.
Robot operating costs including support labor are $20.00 per
frame.
At what volume would BBC be indifferent to these alternative
methods?

Welded manually Welded by Robot

(Make) (Buy)

Fixed costs $10,000 $400,000

Variable costs $50 $20
 Application

F m – Fb $10,000 – $400,000
Q = cb – c m = $20 – $50 = 13,000 frames
Capital Intensity
Capital Intensity is the mix of equipment and
human skills in the process; the greater the relative
cost of equipment, the greater is the capital
intensity.
Automation is a system, process, or piece of
equipment that is self-acting and self-regulating.
◦Fixed automation is a manufacturing process
that produces one type of part or product in a
fixed sequence of simple operations.
◦Flexible (or programmable) automation is a
manufacturing process that can be changed easily
to handle various products.
 Economies of Scope
In certain types of manufacturing, such as
machining and assembly, programmable automation
breaks the inverse relationship between resource
flexibility and capital intensity.
Economies of scope are economies that reflect the
ability to produce multiple products more cheaply in
combination than separately.
With economies of scope, the often conflicting
competitive priorities of customization and low price
become more compatible.
Taking advantage of economies of scope requires
that a family of parts or products have enough
collective volume to fully utilize equipment.
 Decision Patterns for Service Processes

Major process decisions

High customer-contact
process
• More complexity, more
divergence, more flexible flows Front office
• More customer involvement
• More resource flexibility
• Capital intensity varies with
volume.

Hybrid office

Low customer-contact
process
• Less complexity, less
divergence, more line flows Back office
• Less customer involvement
• Less resource flexibility
• Capital intensity varies with
volume.
Low High

© 2007 Pearson Education

 Decision Patterns for Manufacturing Processes

Major process decisions

Low-Volume,
make-to-order process
• More complexity, more Job
divergence, more flexible flows process
• More customer involvement
• More resource flexibility
Small batch
• Less capital intensity
process
ce s se s
ch Pro
Bat Large batch
process

High-Volume, Line
make-to-stock process process
• Less complexity, less
divergence, more line flows
• Less customer involvement Continuous
• Less resource flexibility process
• More capital intensity

Low High
© 2007 Pearson Education
 Strategies for Change

Process Reengineering is a fundamental

rethinking and radical redesign of processes
to improve performance dramatically in
terms of cost, quality, service, and speed.

Process improvement is the systematic

study of the activities and flows of each
process to improve it.
Process Reengineering
Key elements
◦ Critical processes

◦ Strong leadership

◦ Cross-functional teams

◦ Information technology

◦ Clean-slate philosophy

◦ Process analysis
 Process Selection
 Though product design is very important for a company,
it cannot be done separately from the selection of the
process.
 All processes can be grouped into two broad categories:
intermittent operations and continuous operations.
 Intermittent operations processes used to produce
many different products with varying processing
requirements in lower volumes.
 Continuous operations processes used to produce one
or a few standardized products in high volume.
Process Selection
 MANUFACTURING TECHNOLOGY
DECISIONS

Advancements in technology have had the

greatest impact on process design decisions.
Technological advances have enabled
companies to produce products faster, with
better quality, at a cheaper rate.
Many processes that were not imaginable
only a few years ago have been made possible
through the use of technology.
 MANUFACTURING TECHNOLOGY
DECISIONS
Automation is machinery that is able to
perform work without human operators.
Automation can be a single machine or an
entire factory.
Automation has the advantage of product
consistency and ability to efficiently produce
large volumes of product.
Because automation brings consistency, quality
tends to be higher and easier to monitor.
 MANUFACTURING TECHNOLOGY
DECISIONS

Types of Automation
◦ Automated Material Handling
◦ Computer-Aided Design (CAD)
◦ Flexible Manufacturing Systems (FMS)
◦ Robotics
◦ Computer-Integrated Manufacturing
 MANUFACTURING TECHNOLOGY
DECISIONS
Automated Material Handling
Material handling devices are used to move
and store products.
An automated guided vehicle (AGV) is a small
battery-driven truck that moves materials from one
location to the other.
An automated storage and retrieval system
(AS/RSs), which are basically automated
warehouses, uses AGV to move material and
computer-controlled racks and storage bins.
 MANUFACTURING TECHNOLOGY
DECISIONS
 Computer-aided design (CAD) is a system that uses
computer graphics to design new products.
 Computers combined with graphics software allow the
designer to create drawings on the computer screen and then
manipulate them geometrically to be viewed from any angle.
 By computer-aided engineering (CAE) engineering design
calculations can be performed to test the reactions of the
design to stress and evaluate strength of materials.
 Computer-aided manufacturing (CAM) is the process of
controlling manufacturing through computers.
 MANUFACTURING TECHNOLOGY
DECISIONS
A flexible manufacturing system (FMS) is a
type of automation system that provides the
flexibility of intermittent operations with the
efficiency of continuous operations.
An FMS consists of groups of computer-
controlled machines, automated handling devices
for moving, loading, and unloading, and a
computer control center.
Usually they can only produce similar products
from the same family.
 MANUFACTURING TECHNOLOGY
DECISIONS
In manufacturing a robot is usually nothing more
than a mechanical arm with a power supply and a
computer control mechanism that controls the
movements of the arm.
Robots range in their degree of sophistication. Some
robots are fairly simple and follow a repetitive set of
instructions. Other robots follow complex instructions
The advantage of using robots is that they can
perform delicately fine, small, motor movements very
smoothly.
MANUFACTURING TECHNOLOGY
DECISIONS
Computer-integrated manufacturing
(CIM) is a term used to describe the
integration of product design, process
planning, and manufacturing using an
integrated computer system.
A complex CIM system might integrate
purchasing, scheduling, inventory control, and
distribution, in addition to the other areas of
product design.