Productivity in project management

Productivity in project management

89 PRODUCTIVITY IN PROJECT MANAGEMEkT L.F. Williams Abstract Gcncrally the pc:oplc omploycd la11into two basic c;ltcgorics as f’ar ;IS production ...

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89

PRODUCTIVITY

IN PROJECT MANAGEMEkT

L.F. Williams

Abstract Gcncrally the pc:oplc omploycd la11into two basic c;ltcgorics as f’ar ;IS production ic conccrncd: direct Mmur, and indirect labour. The ratio 01‘the latter to the former has grown considerably over rcccnt years, and the concept ol prod’uctitity thcr:forc should bc applied to both.

The ratio 01’ indirect to direct labour has grown considcrubly over ieccnt years not oryly itt the manuf~c*turing unit Icvcl but at nrltionir: Icvcl with thLb transfer ol’ more and niorc’ people l’rum the productive to the public scrvicc sector. It is argued that this transfer of people away tr0111 the wealth creating sectors of industry is due largely to the massive incrcasc in legislation ulrd Surcaucracy emanating from government \olrrcc?. For a country that must rely on trading in d cc9mpctitivc world it is absolutely nccessary thcrcl’orc l’or the link lxtwccn improved productivity WCI greater prosperity to bc seen to apl9ly lo cvcryonc. cvcn those in tllc nonI9rodiriing public sciviccs. ‘l‘l~c* U.f;.‘b ot.:r;lll ~lcrt’orrn;l,l~*c on productivily 3% u~iulxm*d witli li)rcign competition has IIOI txx-11 at ;rli good. Our ;;ll9our productivity in lc)55 W;IS 15% iibovc F~~~IcL’ :nd <&-many but they rapidly overtook IIS and by 1973 wcrc

INTRODUCTION

0167-188~/8~1/0000-0000/$02.25

In the U.K. tlic produc.tivity comp’arcd with other counties. with workers at all levels. including managemcnt, and the under-utilisation of resources. c.6. dcfcnsi*,c labour practices. inept and weak miintigcm~n+ (it is rcsponsiblc for 50% of idle In;lchinc ,imc) and lack of communication.

o 1980

I
C’olnpany

90 tion lcvcls of other countries. wrong?

around 3&h ahead. In the 1973-77 period product!.vity rose only [email protected] in the U.K. against 12? in the U.S.A. and 19%) in West Germany and Japan and 15% in France (Fig. 1). Table 1 shows that dllring the last twelve months spart from France and Belgium our improvement as ;I percentage change on the year previous is still lower than the five other countries. The world recession, dearer oil prices and difficult export ma:rkets hit these countries as well as the U.K.. perhaps a little more because they have no North Se<1oil, but they responded by r&ing productivity substantially while it stagnated in lhe 1.J.K. Any general ,-riticism of the inherent capacity of people in this country to manage and work effectively (or hard for that matter) I wouldcertainly refute. In my experience of visiting manufacturing units and plants and engineering organisations around the world, is that given the right attitudes and motivation, WP are second to none. There are however, far too many cases I&ere given the identical equij>ment and services we do not achieve the produc-

TABLE 1 World industrial production 1970 = 100 _____ -pe-.---_ country Aug. ‘78 July ‘78 -..._

-__.___

U.S.

_ ~_.__

139.9

iIx. Japan italy The Netherlands W. Germany

France

Belgium

-__

_.

~._. -.-. June ‘78

_~~

139.2

138.0

131.9

May ‘18

July ‘17

June ‘78

104.6 136.2 127.5 129.0* 106.9*

104.2 135.7 134.2 126.0 119.0

102.9 135.7 ‘133.2 123.0 120.2

102.4 125.9 123.5 124.0 100.1

June ‘7b

May ‘78

April ‘78

June?7

------

127.0 -.---_-__ May ‘78 April ‘78 -2

“Provisional

-... -._..-._._._ AUQ. ‘77 5s’chanpc on year -. -._. .--.. -... ~--_

July ‘78

126.0

-

_ .____

.~

119.1

123.4

__--

31.0

127.9

March ‘78

May *7i

119.6

121.7

+ 6.1

+ 2.1 t 8.2 + 3.2 + 4.0 + 6.8

- I.5

- 2.1 .-_-.-

Whcrc do WCgo

91 is to rccognisc

poor productivity, then to diagnose its cause and finally apply the trcatrnwt. Certainly defensive labour practi&, inept and weak management arc the main culprifs for our low productivity. Another major wcakncss is the Lick of communic*;~tinn at all le~cls -- this must be rmproved. It means treating all pcop)c as collcagucs, and informing them of what is going on, irrcspcctive of their role, Nobody can bc cxpectcdl to have true lo),alty to the cntcrprisc if hc dvcs nof know whaf is going on, what the aims are, and how the various problems arc to hc tackled and overcome. The

rcscarch studies

Ilnivcrsity

of Sinningham,

t:ngil:ccring Economic

Production Planning

of’

for the period

unmistakably

tion c*Duld be increased utilisarion

Drpartmcnt

for the West Midlands

Council

196$-- 1975 showed ficient

carried out by fhc

that produc-

up to IQO? by more ef-

of existing

resource!.

Another

profits or reduced prices. It is this last item that the Government stressed implying that socia]lyrcsponsiblc productivity schetnes, as well as hcnefiting the company and the employees, should

beneiit

the public by way of price reduc-

or price stability. Productivity and incentive schemes come in vast variety. Some are based on meticulous tio11

work

mcasurcmcnf.

known

stop-watch

sophisticated methods.

using not only the welltcchniqucs

but also

film analysis and other modern

At the rlppositc

arc $ystctns

end of the scale, thcrc

for sharing profits

or paying

bonuses rclatcd to overall company Bcforc

any tcchniquc

to L.lcntify

those aspects of cost which are

$znilicLtnt

in the total value of the company’s

producfs.

and whit

h can bc controlled

Ilucnccd by the employees in the produc*F:‘:ity

scheme. Although

labour cost is the most obvious

time.

(rcduccd wastage, lowcar cost partsj;

1 bclicvc, bcttcr communication,

bcttcr

wider undcrstanding of the cconotnic facts of lift, will Icad to a commitment by all conccrncd that will bring about the dcsircd iniprovcmcnt in our productivity. utilisatior

of rcsourccs

PRODUCTIVITY

illld

SCHEMES

a

I. indirect

the on1y itrm

in the cost structure

and service labour;

improvl-mcnt

(including

direct

of these, it is by

which can bc covcrcd. Other

no mtaiis

possibilities 2. material

include: usagf’

3. quality

some reduction

rcjcct pc’rccntagc%); 4. maintcnanoc; ity of labour (clirnination

or in-

who will participate

fact ;hat emerged regarding utilisa%ion of machines is that management were responsible for almost 50% idle muchin: very important

perform:,nce.

can bc used. it is cssentiaj

in fhe

5. flcxibil-

of demarcation,

rcadincss to clta~l~cfobs, individual hand-over ;it shift chsngt*s, etc. 1. The first decision that managcmcnt must make, cithcr bcforc negotiations or in prcliminary consultation

with

the unions,

is whether

a

simple or a complex schcm~! is to bc adopted.

arc, of course, pros and cons. Simple schemes usually group numbers of cmployccs

Tharc

logcthc’r,

perhaps a whole dcpartmcnt

or cvc’n

tlrce total

faclory.

in

and nicasurc output

~il~lptific~d [email protected], 511~41as the number of avcragc ot typical

urlita prodtwd

Ml)rc* compl~ax

prbr day or pt*r wck.

~chc~lws tend to mcz8l~t’ the per-

li~rmanc~~s 01’ irrdividtrrrl or ++mall rclatcd groups in tc*rnlh ot camed rnintctc-s or hours, and to lake dctilijcd account 01’ diffcrcnccs in products or ~ircumst;in~cs which may itlflucncc potential

ou1 put.

92

jccts iti dctoil. 18 of’ which were cornplctcd. tlic r~~maining 11 were under c*onstructir>n. Additioi\ally, 3 postal survcy was conduCtcd of’45 conlplctc projects 29 of which wcrc forcbign. I’t,om thc’be conlparisons the working ilarty ;lgrcxxi unanimously that the simple :!nxwtr trl the qucstio*ls “1s the UK really worse than her compctitcro? Don’t the‘ Europeans and the ilnxric:ins have’ the s;~mc difficulty irl cor;lplcting the 1;trgc complex prqiccts’! “Ycs, our ,>c’rIormancc‘ is worse th2n that of our compclitor5”. The working party’s finding ai’tcr comparing basically similar projctcts and summzriscd as

Generally qx&ing, the silnplcr the scheme. the lower the imiividual,incentive, and the smalIcr t!x percentayee improvement in prrformancc whicl; may bc expecte<..g On the other hand, the 111(irc’ con;p!c:u the scheme. the more costly it will bc in management time and :ffort, and the longer it wiil take to negotiate. Only those close enough to the actual activity will bc ahlc to decide whether a relatively simple or more’ complex scheme would be appro?riatc in each p:irticular case. 2. PRODUCTIVITY

DN CONSTRUCTION

‘i’OllOWS:

SITES

U.K.. projects took 10tigcr lo complctc than similar fort-ign prt)jL*t-ts. This i\ shown in Fig. 2 which compares the numh2r 01’ months taken to complete the various groups 01’projects. (a) Project time.

The lap construction site’s for many >‘~;trs have been cited as typical of the United Kingdom’s low productivityz poor performance and industrial relaticns in the er lgineering and conqtructi*)n business. This has been the subject of a number of inquiries arid lengthy reporx. 7%: “Engineering construction performance” (Nuedcl 1976) study was carried out by a Neddy working party made up of rcprcscntatives oi Acnts. contractor:, trade unions and Governr,xnt. They investigated 29 UK and foreign pro-

Ethylene unit; Dust lkrs

U.K. projects sut‘fercd ;:reater delays and overrun on programme. Even though more titne was allowed for the CO Ipletion of projects, many U.K.-constructors were less able than their ovcrscas COlltltCrpilI3S to conlpletc- their projects to programmc. Fir;. 3 SIIOWS t11~ Ilumbcr of months by which ci\c*ll pryjc’ct 0vc’rratI its pK~gIXflltllC. (b) Projects delays.

UK France

UK

UK HoI&ncr

I fC

Retuner les

UK1 UK2 Holland

Methanol PIarts

UK Holland France

Power statfons

I



UK1 UK2

-

-..I_, _L.I-I 10

20

30 Total

r-ig .:!.Project time comparisons.

40 project

Source N.1T.D.C. [ 2 1.

50

60

ttme (months)

70

80

90

(cl Construction manning levels. Mantling

.’ .’

I

,

level>

94

Distillers

--T------I Reftneries

UK 1 UK 2 Holland

Msthanol

UK Holland France

P3wer stations

UK 1 UK2 Italy

L

I

I

25

50 Average

&fer from Few productivity and poor pertirmance some of the smaller sites have proved t?tat the productivity can be as good as any in the world. Some of the reasons that have been stared as contributing factors to the U.K. poor site performance are: U.K. constructors seem less able to cope with &lays in design and pro-urement (thoT.& these delays are just as common abroad). Often, insufficient time is allowed for completion of the earlier stages of projects prior to the start of the construction stage, this resu’ts in too little design information and material Being available to engineers on site and can be a direct cause of delay and low productivity. A common response to delays is to make a sharp increase in site manpower, this xeduces productivity, strains site facilities, strains relationships and is not effective in reducing lost time. More time is lost through absenteeism and unofficial extensions to work breaks; Uncoordinated incentive schemes are more common, have little effect on -productivity and may well lead to continual bargaining and disagreement on multi-contractor sites;

-75

4

100

productlvlty*

Supervisors, [email protected] experienced craffsmcn, often have insufficient training and experience in like role: of supervisor. The prospect ot’lay-offs at the end of the job is probably greater and conscqucntly has a more damaging effect on the attitude of U.K. construction workers. Typical bonusiproductivity

scheme

The approach taken by our company on construction sites is that failing the availability of a d&ailed job analysis by work and method study, we qse the simple comparison of time taken agai,Ist. time allowed with a monetary productivity factor for the job site. ‘Webelieve that the simpler the schCmc, the bt!ttcr it will bc undcrstood, and more importantly, it will bc trust4 by the work force. Our schemes gcticrully i’ollow the pat tcrrt 4 multi-discipline: trades working to a set of “norms”. That is, a time is given to perform a function with a known multiple of trade disciplines. Tile “norms” are based on empirical studies of actual returns and achieved costs. All the “norms” times take into account

Establishing a monetary value to productivity. A In the office. An isornutric. document,

ia ~ub-dividd

c*lcmcnt?,. TIN ‘13rying

hours

a few hours

lor each clcmcut

The clm~nt

tirnc i:llowcd.

I ,catcd

establishes

total

hours

the

I;@.

gibes ii Wp

payr;lcnt.

.i.

for c*iich tic*-

mcnt of work. Alsc-r incl;,dcd on the job ad JII mtcrial

required

for th:lt elmcnt

whit-d1 must bc avaiidblc prior

’ .*

will be a list ol’

,-

of work.

to commmcc-

mcnt (91’the work. On the site. Work to the work known plctctl

is prc-planed

allocatctf

of

wc9rk. As work

is COIW

time taken is com~9arcd with

actual

lime allowd.

Constan

~9ropn:ss is tuaintaind

mtrniturir~g

of’ work

but 60%

on

P-------______

i

c*g. ;I jot9 c9f

actual obscrvJtion

hiIS been

cc\ntagcwould

colllpl~tt!d,

be c*rditcri

I.C.

it may be found the higher pr’f-

to the hontrs

~~hc*n9e.

--

_-_7

_----

.:

I

not only bq the j(9n cd

but dst9 by observation.

5OY

*

/

.

the

200 hours dlowcld niuy have used 100 hours th;tt

s

! ;:

ti9rcc \ia the jot9 cards based on th<

total VO’~IIIIC

svstm

w.cI

1

of

is shown of

per hour bonuq’pro

aI-

to a ,job c*nrd.

.Iliowd

the d.dation

h. In the cum:plc* givc’n achi~vcment

drrctivity

of the

is .~ded ;md

transfcrrcd

model illustrating

nmnctarq. ret urns for performance 100 “mm9”

to iI9 cxccss of two

dcpcnding on the canplexiiy

?.vork rcquird. This

or cimilar work

into m;m:tgcabl~ work

allocated

from

hundred

typical

lif--/

it;

96 specific work element, e.g. small bore pipc,work. as the wholl: total of hours allocatd in the “norms” 2; usu2.11~too large to m&c any scnI sible and re;,distic comparison. Relates to agreed slope of the line and is very much dition of what Is considered reasonable, on the potential bonus performance for type of work involved. Payment for 700 performance.

the a conbased the

Slope of the line. The unions tend to try and negotiate the productivity line (see Fig. 6) (a) as steep as possible so that a minimal incrcssed etfr.,rt over 1OO will give a greater reward, on the other hand, when the achievement of 100 p:rformani:e looks difficult a flatter line trb) will be req.aested so that the reduction to their monetary retur& is kept to a minimum. it is essential for the successful operation of s:ich scherrues: o That the true potential of the scheme i:; known. o That the strengths and weaknesses of t!~e scheme drt‘ fully realised anr! understootd. o That the staff know how to operate the scheme. (Operatives that hate b?cn exp~~scd to such schemes over a number of years are fully aware of the vulnerable areas). e That a borIUS steward is established where size of. site permits.

3. DEVELOPMENT FOR IMPROVED PRODUCTIVITY ON CONSTRUCTION SITES The eve; increasing complexity and size.. together H !th the rapid escalation of costs over the last few years, has made it necessary to serioL.sly consider methods a.ld techniques to improve prolductivity, reduce site construc,;:ion time and rniltimise costs. Co:nstrikction of process plants in the field is a 7eor 13bour intensive activity. Over recent

years sit*: labour rates have risen at a rapid rate and, :It the same time, thl:rc has !,CCI~:I tcndcncl for productivity io t‘all, thcr~b!~ incrc:lsing 111~ site construction costs ;15;1 proportio!\ of total project cost:;. It has, :.hcrcl’urc, bccomc r)I‘ paramount importanS;e to adopt mcthtids and techniques that not only reduce cost? but. at the same time, llav.2 an cl’Kcct on sitrb l:~ho~i: productivity. Module or unit design concept

Tlic niod.~lu, or ;I complete lrnit ul pl:nlt. which L”.I~I.w f’abricatcd or +rc-asscmblcd in ;I I‘abricatur’s :,il~)p 01 yard is 3 coiiccpt that is gaining in popularity and cc‘r+ainly has hail great SLICC~SS in off-shore work. A module or unit cube is gcncrally ;I fabricated unit of plant th:lt can be prcassembled in a fabricator’s shop or yard and it is usually the largest practical grouping of cquipmcnt and auxillarics that can be economically assembled and transported to site and installed as a single unit. There are some obvious advantages alld disadvantages in this technique. The lower shop labou- costs as compared with l’iclcl labour is one advantage, shop fabrication or CVCIIyard fabrication is not greatly affected by weather conditions. The installation time for nlodulc 01 unit construction can be much shorter than the conventional field fabrication and crcction. The design of foundations should be simpler with consequentlo savings in cost, Thcsc advun tagcs have to be offset against more cngillccring and planning effort in sclacting and designing the various sections of the plant flow sheet to fit the module or unit system of constructior , together with a critical appraisal of the most economical density of components to bc Eneluded in cac!.~unit or 11lod1~1c.The inspcctiau and expediting of the various components bccomes of critical importance to ensure that the assembly of the nlodule in the shops is Ilot delayed. More steelwork will be required, not

Application and methotiolu

98 Eco:lornic Developmr,xt Oft’icc (NEDO). t hc earnings of skilled cnginccring workers co!npared with labourcrs ;u-e at their lowest point for ;hc past fi0 years This has bc~n one 01’the undixlying grievances of British Leyland toolmakers just recently. Today a skilled man often 1Ircfcs.s to do an unskilled job because of pay acid conditions. A l.ot of skilled cn;;incering wo;!
are almost a; many nc’tified vacancies for skilled workers as there are unemployed. Perhaps the most popular culprit. for the shortage of skilled manpower has been the erosion elf differentials, a trend which many argue has br:en exawrbadea by government pay restraint over :he past threle years. Though differentials have been closing since they reached a :.I.ak in 19761, for most skilled occupations the past five years have seen the gap close considerably, particularly in the engine cring indIJstry. According to a survey into differentials published ‘by the National

I~-__-._._-.___._-___.-_-.

- _.__

By Region

Toolmakers

Reported unemsloyed ant +nottflec! unfilled

--._-..-._-.- -... _..Reglonal unemployr>ent and vacancle? ,forcraftaPd sk lled NcTkers(June1978) -_-_______--_-

,CXLVAKERS. TOf,Fi lT;RS

L

I i ---_ -

I_

--’

_‘F’

Jo-_------L_ Y’.

.:

:.-_.’

100%

200”.

Fe. 7. Hoi\ the shortage varies from case to :ase. Source:

-4L 300%

‘I

repx-tlng 71-1 1960 ____.--

.A

_c

‘62

Financial Times [ 3 1.

i....

‘64

sktlled I

labcxr

i 1 1 IL.1 Gh Ylf3 ‘70 .._. ~____-_

shortage I 72

I I

‘74

1.1 ‘70

.I 107E

one

of the

mm-t- absurd i1sp1ct\ of t 1~’ working5

of the British

Lconomy

that. at a ti nc when

most cornpanics ate’ :;tiii working

bc low

capacity hc‘cau~ oi lack of clcrnJnd. _III~ some 4-40 million

pooplc ;sfe uncmployccl.

manufacturer

in five complains

will bc limited problem

The

is undcrlincd

ago, when uncmplo)

structural

complaints.

Figunzs

probicms

cnginccring gr;rdualiy

II Iturc of ;hc

mcnt was CVC?Ihigher, wcrc maE inp similar

7 and # illustrate

of skill

indl.strj

shortages

the n thr

and how the actuation

dclcriorotcd

Undoubtedly system

I ?dlQrtil&!C

by the llrct t’rat 3 ycar

22 per cent of companies serious

that his output

this year hcc;lusc of

skilled workers.

of

orid’

?J;Js

over rcccnt icars.

Britain’s

in;rdcciu;ltc tt;Girlg

must bear ii large parr of t1.c hlamc feat

the shortage of skilled the probicm

workers

in rndustry.

But

is bcirg exaccrbatcd by ;1 failure

retain craftsmen

in the indllstry

of job

to

which

they were trained. . ~~-__

.-..-

--.-. ---. -

-. .-I_

-

_....,

I60

15G

4 1-1

Fluctuatmr-s

In A;p-unttcr:

lrrtakc All

OCCUDatlfJn:

100 gave iow pay as a reason. Over half the respondents were now in different occupations, with a tlrird of those saying that thc:ir engineering skill5 were hardly useful, if a: a!l. in their prcs\cnt ociupdti.3ns. Even though the owners of process and chemicaJ plants appear to have been hit less badly than other sectors of industry, the effect of shortage of skills has been dramatically demonstrated at ICI’s Wilton site, where plants have been clojcd down due to the shortage of mstrunicnt artificers. C:rtainly prodLtL::ivity will never improve unICSSs:cp*; arc taken ‘to improve 1:he skilled workers role in indusiiy. Whatever one’s iavo~.~irt remedy may be, there is no doubt, tAat if WCarc to get bright school leavers to take up apprenticeships for the skill needs of tomorrow, and if wc are to stop existing craftsmen from going to sell ice-cream, then management, unions and ;;ovemment will have to give a lot more though1 and attentioln to encouraging job nlobility to ensure that ‘we have the right skiAs in the right place at 1:he right time, and to making life more attractsve and rewarding for the skilled worker. Furthermore, the apprenlice:;hip system itself is In need of overhauling and requires to be flexible in training ppople.

out t2xperiencing too much pain in tlic process. Wc must take this opportunity, but wl~tcvcr policic3 and chang~3 ari: made, the one cs!,crIti;il rcq~!irCiiit?llt COIiC~riis’ JLIr ii:ltI.lrd l’hlir;lL;ti’i-. the way wc behave to ~~11 other as pcopic. Paying people a lot of money is not the only rcward - the status and cstcem accord4 and thy knowlcdgc, and appreciation of contributing greatly to all our lives, arc also of great importance. If we are to get the I:ommitment from pcop~c in industry that brings about improvcmcnts in productivity and reduces inflation they must IX given the right lead and thcrc must bc ;I rctum to a sense of purpose regarding work. if’ WC;Irc to succeed it will be because wc as ;I Naticbu ;IIY determined to succeed it still must he our National Aim. REFERENCES

IBIOGRAPHICAL

The L. nsequences of low productivity and the impact on the proc+ss plant and engmeering indu:,try have bren amply demonstrated. They are undoubtedly the main factors influencing all ma.ior decisions regarding future investment and expansion of British Industry. The engineering industry is Britain’s major creator c f wealth employing some 4 million pecple a.ld producing 50% of visible exports so ever_l poGblc effort must be made to continue the fight to reduce inflation and improve our pro,ducti,vity. North Sea oil estimated to be worth f. .SJbn to the balance 0.f payments next vear gives Btitain a unique opportunity to do something :gositive and really constructive with-

NOTE

Lawrence F. Williams is an Associate Director with Huniphrcys and Glasgow Limited, London and a Director of :I Bristol firm of con:ulting Engineers.