December 20, 2024

Project Management - Introduction - Revision Article

Based on Meredith and Mantel Book

Definition: The Project Management Institute has defined a project as "A temporary endeavor undertaken to create a unique product or service."

Program refers to an exceptionally large, long-range objective that is broken down into a set of projects. The projects are divided into tasks. Tasks are further broken down into work packages. Work packages contain work units.

Project Management - Definition and Objectives



In the past several decades many organizations are using project management as a basis to achieve the objectives of the organzation. Project management approach is providing organizations with powerful tools that improve the ability to plan, implement, and control activities as the utilization of resources.

The development of the techniques and practices of project management were developed more in the military organization. Meredith and Mantel give credit to government and military organizations for developing project management approach.

The three project objectives are stated as performance (scope), time and cost.

Definition: The Project Management Institute has defined a project as "A temporary endeavor undertaken to create a unique product or service"

Distinction Between Program, Project, Task and Work Packages: The military is the source of these terms. Program refers to an excetionally large, long-range objective that is broken down into a set of projects. The projects are divided into tasks. Tasks are further broken down into work packages. Work packages contain work units.

Attributes That Characterise A Project:



Purpose: A project has a well-defined set of desired end results.

Life cycle: Project will have slow beginning, size gets buildup. Peaks, then declines and has to be terminated on some day. Either it is handed to the client or it is phased into the normal, ongoing operations of their organization itself.

Interdependencies: A project has relations with other project being undertaken by the organization for various facilities. It also will have relations with various functions of the organization like marketing, accounting, finance, human resoures management etc.

Uniqueness: every project being a one time activity has some elements that are unique. Project managers will have many exceptions or new issues that crop up that they have to manage.

Conflict: Projects compete with other projects as well as requirements of various functional departments of the organization for resources and personnel. Also, project managers have to manage the conflict between the demands of the client for more and features and changes, parent organization for profit, some demands made by public where the project is located, and the project employees’ demands.

Why Project Management?



Project management focuses the responsibility and authority for the attainment of the goals of the project on an individual or small group. The project form of organization allows the manager to be responsive to:
1. the client
2. environment
3. identify problems at an early and correct them in a timely fashion.
4. ensures that managers of the separate tasks or activities of a project do not optimize their individual tasks at the expense of the total project. Suboptimization is avoided.
The Structure of the Textbook by Meredith and Mantel
It begins with the creative idea that launches most projects and end with termination of the project. The authors wrote in the 5th edition that creation of initial concept of the project was universally ignored in books project management. In their book , Meredith and Mantel included two appendices on topics creativity and idea generation and technological forecasting. In the 5th edition they moved these topics from the textbook to internet. The appendices are now available in http://www.wiley.com/college/projectmgt/


12 Vital Rules for Project Managers



1. You have to understand the project purpose and context.
2. You need to identify the stakeholders in the project and understand their wants.
3. You have to accept and use the political nature of organizations in allocation of resources.
4. You have to recognize the conflicts that are arising as the project is progressing.
5. As a project manager you need to lead from the front.
6. You have to understand what “success” means for the project every day.
7. You have to build and maintain a cohesive team.
8. Remember enthusiasm and despair are both infectious.
9. Looking forward and planning is important. One look forward is worth two looks back.
10. Always be sure of what you are trying to do.
11. Manage time – Use time carefully or it will use you.
12. Plan, plan, plan
Based on the reading given in the book “Lessons for an Accidental Profession,” by J.K. Pinto and O.P. Kharbanda, Business Horizons, March-April 1995.

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Open Access Book

https://ecampusontario.pressbooks.pub/projectmanagementforconstructionanddeconstruction/

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Bibliography
Software Project Management - Summary Artlces
Chapter 1
Chapter 2 Software Lifecycle
Chapter 3 Project Planning
Chapter 4 Requirments Management
Chapter 5 Risk Management
Chapter 6 Cost Management
Chapter 7 Time and Schedule Management
Chapter 8 Measurement and Metrics
Chapter 9 Configuration Management
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Original post http://knol.google.com/k/narayana-rao/project-management-introduction/ 2utb2lsm2k7a/ 2140






Ud. 21.12.2024
Pub. 27.11.2011

December 18, 2024

Kaizen Costing, KAIZENshiro and Kaizen Cost Management

Top 100 Management Theory Article


                                        Narayana Rao K.V.S.S. on Cover Page of Business Today 
October 22 - November 6, 1997


Prof. Yasuhiro Monden and Prof. Kazuki Hamada explained  the key points in Toyota’s  Cost Management System in  book entitled “Toyota Management System: Linking the Seven Key Functional Areas”.

In the text of the book the authors talk about the basics of Target Costing (Toyota calls it Genka Kikaku) and Kaizen Costing (Genka Kaizen). Toyota puts a lot of work into  planning the cost and monitoring  actual costs associated with a vehicle. Just as industrial engineers watch  every second  on the shop floor to identify waste, every dollar in a component is analyzed for improvement in vehicles as well. Accounting and measurement alone will not produce results.  Measurement is just a piece of the improvement process  just as “Check” is only a part of the Plan-Do-Check-Action cycle for improvement. A critical piece of Toyota’s strength in terms of financial results lies in the realm of the overall cost planning process and the structured VA, VE, & VI activities that occur during the life cycle of the program.
https://www.theleanedge.org/2386-art-smalley-financial-benefits/  Not available now.



In the Japanese language Kaizen Costing is called ‘Genkakaizen’ with ‘genka’ meaning ‘cost’, ‘kai’ meaning ‘change’ and ‘zen’ meaning ‘good’. In other words Kaizen means change to good ways and good results. In english it is termed  continuous improvement.  Imai (1986) in his glossary of terms defines Kaizen in relation to the workplace as meaning ‘continuous improvement involving everyone – managers and workers alike’. Imai (1986) argues that a Kaizen strategy involves relatively small improvements. Monden and Hamada (1991, p. 17) suggest that ‘Kaizen Costing is the system to support the cost reduction process in the manufacturing phase of the existing product … Kaizen refers to continuous accumulations of small betterment activities rather than innovative improvement’. They also argue that target costing and Kaizen Costing can be linked together and ‘constitute the total cost management system of Japanese companies’


Kaizen eno Yon Dankai - Improvement in 4 Steps - History of Kaizen in Japan


Kaizen costing is variant of standard costing. Standard costing specifies a cost target for the production team for the coming period. Normally standard cost is set for an year. It will be revised every year. It is constant for an year as a planning device. Any variances from it are examined and the reasons are identified and understood.

Kaizen costing is cost planning that incorporates kaizen philosophy or philosophy of continuous improvement and implementation of the principles of learning effect.

According to learning effect principle, the average cost of an item is certain percentage of average cost of earlier volume. It is expressed  as  volume of production and sales doubles(X becomes 2X), the average cost of total sales (2X) is say, 90% of the average cost of producing and selling X units. There is a learning effect in every activity undertaken by the organization right from the lowest cadre employee to the CEO and Board and cost comes down.

Japanese implemented this cost reduction philosophy in a systematic manner. They made planned reductions in the standard costs of an item every year. So the production and sales team have to plan their department and activity cost to achieve reduction in standard cost. The idea was extended by them to monthly costs. They said we cannot achieve cost reduction in one day. So having a standard cost for an year and then asking for reduction in it next year is not the right approach for cost reduction. They came with a reducing cost target for every month. Such a reducing cost target for every month demands some effort on cost reduction by departments every month. Hence cost reduction is on the monthly agenda of every department in the company. Kaizen costing is providing the monthly cost target information and accounting for actuals during the month.



KAIZENshiro Budgeting


KaizenShiro Cost = Cost of Non-Productivity  = Cost of Not-Improving-Productivity





Total cost of an organization has KaizenShiro Cost. If  KaizenShiro cost is estimated, plans to identify projects that reduce it can be developed and implemented. Kaizen cost management is driven by KaizenShiro projects. Project identification and formulation is driven by KaizenShiro cost.



KAIZENshiro Budgeting is  the new paradigm for planning and developing synchronous and profitable operations for Speed-Based Target Profit Planning (SBTPP).  KAIZENshiro Budgeting is  budgeting the projects to  cost of losses and waste, which  are feasible to be improved for the year for which the budgeting is done.  Improvement is achieved by developing  and implementing  the most effective and efficient Strategic KAIZEN and KAIKAKU projects, supported by daily improvements of Gemba kaizen. Thus engineering inventions and innovations are utilized as well as ideas of shop floor operators, supervisors and engineers who are focusing on delivering to market demand utilzing the shop and supply chain capacity.






Kaizen Cost Management





For More Detailed Reading


Kaizen Costing and Value Analysis

Control Measures for Kaizen Costing - Formulation and Practical Use of the Half-Life Model

Introduction to Kaizen Budgeting

 B. Modarress;  A. Ansari; D. L. Lockwood,  “Kaizen costing for lean manufacturing: a case study” International Journal of Production Research, Volume 43, Issue 9 May 2005 , pages 1751 - 1760.




Included in Knol Handbook of Industrial Engineering - 2019

Index of articles on Cost Accounting, Costing and Cost Management


Full List of Articles on Kaizen

Kaizen eno Yon Dankai - Improvement in 4 Steps - History of Kaizen in Japan

Rules for Successful Kaizen Management


Kaizen - Engaging Front-Line Staff in Continuous Improvements - Industrial Engineering

Leading and Managing Kaizen Events

Agile Kaizen

Kaizen - The Japanese Style Productivity Improvement Methodology

Industrial Engineering is Kaizen in Engineering

Kobetsu Kaizen - Focused Improvement of Machine and Machine Work in TPM

Front Line Kaizen for Product and Process Industrial Engineering


Gadget-based improvement is widespread as improvement activities that can not only eliminate losses but also inspire the workplace.

Karakuri Kaizen - Introduction

Industrial Engineering is Kaizen Engineering

Toyota Kaizen Methods: Six Steps to Improvement - 2010 - Book Information

Kaizens - Production Improvement Ideas Implemented - India - Kaizen Eye

Kaizen Assembly: Designing, Constructing, and Managing a Lean Assembly Line - Book Information

Kaikaku: The Power and Magic of Lean : a Study in Knowledge Transfer - 2004 - Norman Bodek - Book Information


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Originally published on Knol
http://knol.google.com/k/narayana-rao/kaizen-costing-and-kaizen-cost/2utb2lsm2k7a/  381  7500+ page views


Updated on 19.12.2024,   9.11.2024,  8 May 2019, 27 January 2012


Cost Behavior Analysis and Relevant Costs Concept


Cost behavior is identified by estimating cost functions. Cost function is mathematical relationship between cost and the level of an activity. Examples of activities used in cost accounting to develop cost functions are units of output, direct manufacturing labor hours, machine hours etc. A cost function can be depicted on a graph by showing activity level on the x-axis and cost on the y-axis.

Two basic assumptions are used in estimating cost functions.


1. Variations in the cost under consideration are explained by variations in the level of a single activity (Single activity is sufficient to capture the variation in the cost).
2. Cost behavior is adequately approximated by a linear function within the relevant range. (Even though the function is shown on the graph from zero to infinity, the decision maker knows that the graph is valid only between some range and not from zero to infinity).

Cost Estimation Procedures


1. Industrial Engineering Method
2. Conference Method
(W. Wichelll, Realistic cost Estimating for Manufacturing, 2nd ed., Society for Manufacturing Engineers, Dearborn, Michigan, 1989)
3. Account Analysis Method
4. Quantitative Analysis Method
a. High-Low Method
b. Regression Analysis

Learning Curves


Learning has an effect on efficiency and productivity. The effect was first identified and described in aircraft industry. As workers become more familiar with their tasks, their efficiency improves. Managers learn how to improve the allocation and scheduling of the work among available operators and machines. Some of the machines are provided facilitating devices like jigs and fixtures to increase production. As a result of improved efficiency, unit costs decrease as output increases. This effect is nonlinear and in cost estimating for future this effect needs to be considered.


Cost estimation related thesis at Ohio



Originally posted at
http://knol.google.com/k/narayana-rao/cost-behavior-and-cost-estimation/2utb2lsm2k7a/3158



Ud. 19.12.2024
Pub. 9.12.2011