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LESSON 39
PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY
BROAD CONTENTS
Competitiveness
Productivity in the Context of PM
Definitions of Effectiveness and Efficiency
Types of Productivity
White Collar Productivity
Critical Barriers/ Problems to Productivity
Causes of Productivity Decline in Organizations
Productivity Improvement
Categories of Productivity Factors
Soft Factors
39.1
Competitiveness:
Competitiveness emerged strongly in new era of globalization describes "economic strength"
of any "organization" or position of certain company" with respect to its competitors in market
place.
Competitiveness is process by which one entity strives to outperform another. Competitiveness
in Organization is Ability to get customers to choose your prod or svc over competing
alternatives on sustainable basis.
Competitiveness continually "sustained incorporated in productivity" resulting in high wages
and living standards competitiveness - demonstrated by "ability to meet, rest of free
international markets" while "expanding real income."
39.1.1 Indicators of Competitiveness:
Macro level competitiveness of nations reflects standard of living of their citizens. National
competitiveness consolidation of micro-level performances of company's and individual is true
"Agents of Economic Growth".
Figure 39.1: Competitiveness Pyramid
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Competitiveness depends on productivity:
"Standard of living is determined by productivity of a nation's economy which is measured by the value
of goods and services (products) produced per unit of the nation's human, capital and natural resources".
Indicators of competitiveness:
Productivity: Efficiency with which goods and services are produced and provided and determined by:
 Previous investments
 Quality and performance of workforce,
 Technology innovation
 Quality of plant and equipment
 Efficiency with which these factors of production are utilized
Productivity of "local" industries is of fundamental importance to competitiveness. It depends on:
1. Sophistication with "which company's compete"
2. Quality of "microeconomic business environment".
When productivity and quality considered together competitiveness can be enhanced. Definition of
productivity successful project management organization create surplus through productive output,
productivity is output input agreement on consideration "quality and time".
Productivity = Outputs (Time /Quality) Inputs
39.2
Productivity in the Context of Project Management:
39.2.1 Definition of Productivity:
1. Ratio of output to input by large number of professionals.
2. ILO Definition: "Ratio between "output of wealth produced" and "input resources used up" in
"process of production".
3. Comparative tool for managers, industrial engineers, economists, and politicians.
Figure 39.2: Project Management System
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39.2.2 Difference between Production and Productivity:
Production: Concerned with activity of "producing goods and or services".
Productivity: "Efficient utilization of resources" (input) in "producing goods/services" (output).
The basic differences between production and productivity are as follows:
 Production is quantity of output produced.
 Productivity "ratio of output produced in input (s) used".
 Higher productivity means accomplishing more with same "amount of resources" or achieving
higher output In terms of volume/quality for same input.
39.2.3
Messages of Productivity:
Taylor's Message of Productivity:
 Various pay plans based on output for surplus increase labor productivity not possible work
order:
a. Provided ample reward
b. Adequate targets
c. Managerial help
 Careful advance planning by manager
 Managers to design work system for worker to do their best.
Fredrick Concluded:
Low productivity is matter of ignorance on part of labor and management ignorance. "Fair day's
work" and "fair day pay" productivity enhancement answer to high wages/profits.
Peter Drucker Says:
Problem faced in developing countries is problem not of "underdevelopment but rather of under
management". Actually productivity is most serious challenge confronting management.
39.2.4
Perspectives on Productivity:
Productivity ­ Manager's Perspective:
Use "accounting ratios" for management-usually interested in productivity measures that enable it
to easily assess the present profitability of company.
Productivity ­ Engineer's Perspective:
Seek measures of physical assets and other resources. For example: Production/hour.
o
Man hours/unit
o
Material required/unit, material/consumption, utilization,
o
Space utilization
o
May fail to relate to overall productivity.
Productivity ­ Behaviorist's Perspective:
View productivity of people in organization in terms of time they spend at work versus total time
available a misleading measure.
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Productivity ­ Accountant's Perspective:
"Costing and budgeting" approach to productivity budget figure, rather than optimum achievable
values, used as standards can be a false impression of high productivity.
Productivity ­ Economist's Perspective:
Partial measures, such as "labor productivity" employed by economists, total factor and total
productivity but again definitions do not agree.
39.3
Definition of Effectiveness and Efficiency:
Productivity implies effectiveness and efficiency both individual and organization performance.
 Effectiveness is "achievement of objectives". It entails promptly achieving stated objective.
 Efficiency is "achievement of ends with least amount of resources. Resources to achieve
objective weighted against what is actually accomplished.
39.3 Types of Productivity:
1. Partial Productivity
2. Total Factor Productivity
3. Total Productivity
Total ­ Factor Productivity:
Ratio of "net output to sum of associated labor and capital" (factor) inputs net output- total output
minus intermediate goods and services purchased.
Finding of Survey in Different Industries
o  Average, only 4.4 hours per day used productively
o  1.2 hours lost due to personal and other unavoidable delays
o  hrs are simply wasted because of management's inability to effectively "plan and control"
the worker's tasks.
Productivity Loss:
 Percent due to poor: "Planning and scheduling" of work.
 25 Percent due to: "Unclear and untimely instructions".
 Percent due to: "Inability to adjust staff size" and duties during "peak and valley workload
periods".
 25 Percent due to: "Poor co-ordination" of material flow, unavailability of needed tools, excess
travel time.
39.5
White-Collar Productivity:
Productivity of "white-collar workers" is no less important than that of direct labor or manufacturing
employees. It is usually least known, least analyzed, and least managed of all factors of productivity.
White collar employees are productive only 50% of time. Remainder is non-productive time and can
be traced to personal delays (15%) and improper management (35%).
Examples of White Collar Waste:
o  Poor staffing
o  Inadequate communication
o  Unproductive meeting and telephone conversations
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Poor scheduling
o
Slack start and quiet times
o
Lack of communication between function
o
Information overload
o
39.6
Critical Barriers/Problems to Productivity:
o  Family-controlled industry
o  Earning easy money
o  Monopolistic market, in some segments, some high competitive
o  Erratic inflow of orders
o  Lack of productivity and quality culture
o  Shortage of funds low level codification
o  Automation -not encouraged
o  Low priority of market and commercial activities
o  Poor after service
o  Complicated government policy, rules and regulations
o  Poor infra structure support/road transport
o  Energy shortage
o  Poor working conditions, light, ventilation, safety, housekeeping
o  Non availability of basic material components (to be imported)
o  Unreliable suppliers
39.7
Causes of Productivity Decline in Organizations:
Inability to measure, evaluates, and manages productivity of white collar employees. This
o
causes shocking waste of resources.
Rewards and benefits given without requiring equivalent in productivity and
o
accountability
Diffused authority and inefficiency in complex organizations, thereby, causing delays and
o
time lags.
Organization expansion lowers productivity growth result in soaring costs.
o
Low motivation among rising number of affluent workers with new attitudes.
o
Late Deliveries caused by schedule have been disrupted by limited materials.
o
Unresolved human conflicts difficulties in teamwork, resulting in project inefficiencies.
o
Include legislative intrusions antiquated laws, resulting in constrained "management
o
options and prerogatives".
Specialization in work processes resulting in monotony and Boredom.
o
Rapid technology changes and high costs, resulting in decline in new opportunities and
o
innovation.
Include demand of leisure time causing disruption in operations.
o
Project manager's inability to keep pace with the latest information and knowledge.
o
39.8 Productivity Improvement (PI):
o  How can projects improve their productivity?
Productivity is composed of:
o  People
o  Operations variables
To improve productivity, management needs to focus on the following two points:
o  Productivity does not just happen by "trying harder". It must be planned.
o  But how do you plan for productivity, and what factors are involved?
Improvement means "increase ratio of output of goods and services produced divided by input used to
produce". Ratio can be included by either increase output, reducing input or both.
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Financial and social benefits of "productivity improvement strategy" in project manager should be
greater than "implementation cost", in long run.
Task of project manager is to evaluate those factors that have bearing on productivity and take
appropriate measures to use effectively. In order to raise productivity and to reduce cost, we must
eliminate bad features in design and specifications that cause excessive work contents.
Figure 39.3: Productivity Wheel
39.8.1 Productivity Improvement Factors:
Productivity improvement (PI) is not just "doing things better", but more importantly, it is "doing
right things better". Inter-relationships between labor, capital and socio-organizational environment
are important in a way that they are balanced and co-ordinate into integrated whole.
Three Main Productivity Factor Groups:
There are three major productivity factor groups:
o  Job-related
o  Resource-related
o  Environment-related
39.9
Categories of Productivity Factors:
There are the two following major categories of productivity factors:
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External (not controllable)
o
Internal (controllable)
o
External Factors: Beyond control of individual enterprise. Understanding of them can motivate
certain actions which migrates change enterprise's or project behavior and its productivity in LR.
Internal Factors: Within its control first step towards productivity improvement is to identify
problem areas within these factor groups.
Figure 39.4: Integrated Model of Project Productivity Factors
39.10 Soft Factors:
People: Principal resource central factor in productivity improvement, drives people in organization
all have role to play as workers, engineers, managers, entrepreneurs, trade union members.
Each role has two aspects:
o  Application
o  Effectiveness
Application: Degree to which people apply themselves to their work. People differ not only in their
ability but also in their will to work.
Law of Behavior: Motivation decreases if it is either satisfied or blocked from satisfaction. Workers
may do their jobs work order working hard (no motivation), but even if they work to their full
capacity they would not be satisfied (motivation is blocked from satisfaction).
Motivation is basic to all human behavior and to efforts in productivity improvement. Material needs
predominant, but does not mean that non-financial incentives not effective or have no place.
Project manager see what stimulates and maintains motivation to bring about changes in attitude of
managers, engineers and workers. Develop set of values conducive to higher productivity.
Workers' success in increasing productivity by:
 Rewards
 Improving recognition
 Involvement
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Learning Opportunities
Elimination of negative rewards
Execute effective incentive schemes, result significant improvement in productivity. Wage incentives
related to amount of change accomplishes.
Project manager should work to encourage workers to apply their creative talents by taking special
interest in their problems by promoting favorable social climate.
2. Effectiveness: Effectiveness is extent to which application of human effort brings desired results in
output and quality. It is the ability to do productive job improved through:
 Training and development
 Job rotation and placements, systematic job progression (promotion)
 Career planning
Key approaches, methods and techniques to improve labor productivity:
 Wages and salaries
 Training and education
 Social security ­ pensions and health plans
 Rewards
 Incentive plans
 Participation or co-determination
 Contract negotiations
 Attitudes to work, to supervision and to change
 Motivation to higher productivity
 Co-operation
 Organization development
 Improved communications
 Suggestion systems
 Career planning
 Attendance
 Turnover
 Job security
Financial Incentives (Individual and Group):
Individual plan is made to give financial incentives on basis of individual performance.
Types of Individual Plan:
Piece work plan
Standard hour plan
Measured day work plan
Emerson plan
Group plan is made to give financial incentives on basis of group performance.
Types of Group Plan:
Scanlon plan
Ruker plan
Kaiser plan
Tonnage plane
Dollar sales plan
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Profit sharing
Improshare
Fringe Benefits:
Some intangible means of rewarding and encouraging management employee. These are referred to as
"fringes" and include the following:
Free Medical
Insurance
Free Air
Fares
Entertainment
Company Car
Telephone
Subsidized education etc.
Employee Promotion:
Both financial and non-financial form of motivation: Up gradation of employee status is
natural way to recognize skill knowledge, proficiency, and efforts to job.
Maslow's Hierarchy of Needs.
Only dissatisfied needs can motivate workers to high productivity,) physiological, safety, security,
belongingness, self esteem, self actualization (realizations of one potential)
 Japanese on basis of seniority
 USA on basis of extra ordinary performance
 Debatable issue
Job Enrichment:
Non-financial-motivation technique that provides
Variety in assigned tasks
Employment autonomy and discretion in performing talks
Feed back on performance
Herzberg's two-factor theory applied
Two Factors Theory:
"Motivators" factors leading to job satisfaction. Achievement recognition, nature of work responsibility,
growth etc. Factors leading to dissatisfaction avoidance are Hygiene, Company's policy, admin,
supervision, pay status
Job Enlargement:
 Enlargement of responsibilities associated with job.
 Enhanced scope and responsibility. Proponents say job get to be boring and monotonous, causing
high absenteeism, high turnover, and low morale, with consequent low productivity.
 Volvo Sweden. Worker could stamp name on engine.
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Job Rotation:
Involves rotation of workers in different jobs for short periods of time provide "all-rounder" in
company's op ­for which - not originally hired for:
 Relieves boredom by flexibility in job assignments.
 Not retraining conscious -on going basis effort to provide opportunity to exercise freedom in
staying on a job for a fixed period.
Workers Participation and Empowerment:
Over coming resistance to change through employee involvement in planning and implementing change,
mental and emotional involvement in groups encourage workers to contribute in group goals sharing of
responsibility.
Workers Participation Approaches:
Following are the approaches for workers participation in quality culture change and empowerment:
Quality control circles
Productivity quality teams
Productivity action teams
Productivity circles
Productivity maintenance group
Employee participation group
Skill Enhancement:
Formalized techniques to increase skills needed to perform job. Skill training needed for employee when
employee's attitude is positive but his abilities are low.
In information age there is a great need for skill at all levels.
Management by Objectives (MBO):
Managerial motivation techniques, aids motivation on all participation by having superior and subordinate
managers jointly identify common goals, carefully define them. Together monitor progress towards
achieving results to both employer and employee.
In setting up goals care must be taken.
Set simplistic goals.
Set goals without adequate resources.
Not set harsh goals that cause resentment.
If properly administered, MBO can create joint goals and can help in team building.
MBO goals provide fairness to both employee and employer.
Working Condition Improvement ­ Quality of Work Life (QWL):
It is often emphasized but rarely applied technique that involves detailed audit of working conditions
designing improved conditions of working installing and maintaining improvements in working
conditions.
Designing Improved Factors:
They include:
 Temperature, light and humidity
 Noise
 Colors of surroundings
 Extent of handling hazardous material, parts or product
 Extent of manual handling of heavy items
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Training:
 Seeks to achieve improved human productivity by increasing ability levels of workforce
 Seeks to meet demands of growth and change
 Training may actually decrease total productivity initially
 Some type of training
 On the job targets
 Apprenticeship
 Internship
 Outside course
 Visitation training
Role Perception:
 Refer to manner in which individual defines his or her job
 Type of effort employee believes is essential for effective job performance.
 If workers see high or low productivity as path to attainment of one or more of their personal
goals in work situation, they will tend to be high or low processors.
Quality of Supervision:
 Concerned with work of creating and maintaining environments in which people can accomplish
goals efficiently and effectively.
 In order to improve supervision quality itself, supervisors must be trained in
o  Interpersonal skills
o  Human management
o  Group dynamic
o  Other behavioral tools
Recognition:
Management shows acknowledgement of employee's outstanding performance in terms of improved
productivity, ideas, or any act of good workmanship. They include:
 Pay raise
 Bonus
 Awards
 Certificate of appreciation
 Special highlights in company newsletter
 Special parking provision
 Engraving on plaque in cafeteria
Punishment:
 Punishment contingency attempt to decrease likelihood of particular behavior occurring by
making punishment contingency on behavior.
 Common punishment contingencies used in work organizations include:
o  Disciplinary layoffs
o  Transfer to undesirable jobs
o  Withholding salary increases
Quality Circles: Group of employees who voluntarily cooperative to solve problems related to
production, quality, work environment, maintenance scheduling, or anything that affects these
areas.
Productivity and Quality Teams:
Small groups of people doing similar tasks meet regularly to select, investigate, and solve problems
related to workplace, products, and services. Effective means of improving employee morale, quality,
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and productivity in organizations. Team spirit, positive thinking, and philosophy of achieving
excellence are three important characteristics of productivity and quality teams.
Zero Defects:
Zero defects program attempts to improve quality by changing workers attitudes. Their theme, "do it
right first time" stresses error free performance. It relies on workers to identify error prone situations
with assumption that people best prepared to eliminate errors are those who create them.
Time Management:
 Powerful technique, particularly for white collar, supervisory and management personnel
 Time management involves minimization of wasteful elements of person's administrative work.
 Interruptions by drop-in visitors (without appointment)
 Attending lengthy and unnecessary meetings that accomplish very little
 Inability to say "no" for some tasks
 Procrastination and lack of decisiveness
 Inability to delegate work
 Taking on much more than can be handled
 Lack of responsibility and authority to do certain jobs
 Delayed, inaccurate or inadequate information
 Taking orders from too many people
 Handling too many "crisis" situations
 Lack of organization of tasks by priority or target dates
 Lack of determination to complete tasks assigned
 Lack of organization on and around desk
 Unnecessary socialization
 Poor filling system
 Making unnecessary trips to people, departments, copy machines etc.
 Excessive conversation time
 Too many rescheduling of meeting, personal engagements etc.
To minimize these "time-wasters", time management applies simple, common-sensible but very effective
programming rules to very item of work, one of which is: "never handle same paper twice". Time
management always improves human productivity. It is too often ignored, particular by management
people who preach productivity to their subordinates.
Flex Time:
Employees are given freedom in determining their hours of work
Core time (hours when all employees must be at work)
Flexible time (hours when employees can vary their time of arrival and departure)
Compressed Work Week:
 Working for same number of hours but for fewer days week
 Hours
 08 hours 05 days
 10 hours 04 days
Harmonization:
Integration of interest of stockholders, board of directors, management at all levels and all employees in
consistent manner both within and outside physical boundaries of organization.
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Table of Contents:
  1. INTRODUCTION TO PROJECT MANAGEMENT:Broad Contents, Functions of Management
  2. CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS:Why Projects are initiated?, Project Participants
  3. CONCEPTS OF PROJECT MANAGEMENT:THE PROJECT MANAGEMENT SYSTEM, Managerial Skills
  4. PROJECT MANAGEMENT METHODOLOGIES AND ORGANIZATIONAL STRUCTURES:Systems, Programs, and Projects
  5. PROJECT LIFE CYCLES:Conceptual Phase, Implementation Phase, Engineering Project
  6. THE PROJECT MANAGER:Team Building Skills, Conflict Resolution Skills, Organizing
  7. THE PROJECT MANAGER (CONTD.):Project Champions, Project Authority Breakdown
  8. PROJECT CONCEPTION AND PROJECT FEASIBILITY:Feasibility Analysis
  9. PROJECT FEASIBILITY (CONTD.):Scope of Feasibility Analysis, Project Impacts
  10. PROJECT FEASIBILITY (CONTD.):Operations and Production, Sales and Marketing
  11. PROJECT SELECTION:Modeling, The Operating Necessity, The Competitive Necessity
  12. PROJECT SELECTION (CONTD.):Payback Period, Internal Rate of Return (IRR)
  13. PROJECT PROPOSAL:Preparation for Future Proposal, Proposal Effort
  14. PROJECT PROPOSAL (CONTD.):Background on the Opportunity, Costs, Resources Required
  15. PROJECT PLANNING:Planning of Execution, Operations, Installation and Use
  16. PROJECT PLANNING (CONTD.):Outside Clients, Quality Control Planning
  17. PROJECT PLANNING (CONTD.):Elements of a Project Plan, Potential Problems
  18. PROJECT PLANNING (CONTD.):Sorting Out Project, Project Mission, Categories of Planning
  19. PROJECT PLANNING (CONTD.):Identifying Strategic Project Variables, Competitive Resources
  20. PROJECT PLANNING (CONTD.):Responsibilities of Key Players, Line manager will define
  21. PROJECT PLANNING (CONTD.):The Statement of Work (Sow)
  22. WORK BREAKDOWN STRUCTURE:Characteristics of Work Package
  23. WORK BREAKDOWN STRUCTURE:Why Do Plans Fail?
  24. SCHEDULES AND CHARTS:Master Production Scheduling, Program Plan
  25. TOTAL PROJECT PLANNING:Management Control, Project Fast-Tracking
  26. PROJECT SCOPE MANAGEMENT:Why is Scope Important?, Scope Management Plan
  27. PROJECT SCOPE MANAGEMENT:Project Scope Definition, Scope Change Control
  28. NETWORK SCHEDULING TECHNIQUES:Historical Evolution of Networks, Dummy Activities
  29. NETWORK SCHEDULING TECHNIQUES:Slack Time Calculation, Network Re-planning
  30. NETWORK SCHEDULING TECHNIQUES:Total PERT/CPM Planning, PERT/CPM Problem Areas
  31. PRICING AND ESTIMATION:GLOBAL PRICING STRATEGIES, TYPES OF ESTIMATES
  32. PRICING AND ESTIMATION (CONTD.):LABOR DISTRIBUTIONS, OVERHEAD RATES
  33. PRICING AND ESTIMATION (CONTD.):MATERIALS/SUPPORT COSTS, PRICING OUT THE WORK
  34. QUALITY IN PROJECT MANAGEMENT:Value-Based Perspective, Customer-Driven Quality
  35. QUALITY IN PROJECT MANAGEMENT (CONTD.):Total Quality Management
  36. PRINCIPLES OF TOTAL QUALITY:EMPOWERMENT, COST OF QUALITY
  37. CUSTOMER FOCUSED PROJECT MANAGEMENT:Threshold Attributes
  38. QUALITY IMPROVEMENT TOOLS:Data Tables, Identify the problem, Random method
  39. PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY:Messages of Productivity, Productivity Improvement
  40. COST MANAGEMENT AND CONTROL IN PROJECTS:Project benefits, Understanding Control
  41. COST MANAGEMENT AND CONTROL IN PROJECTS:Variance, Depreciation
  42. PROJECT MANAGEMENT THROUGH LEADERSHIP:The Tasks of Leadership, The Job of a Leader
  43. COMMUNICATION IN THE PROJECT MANAGEMENT:Cost of Correspondence, CHANNEL
  44. PROJECT RISK MANAGEMENT:Components of Risk, Categories of Risk, Risk Planning
  45. PROJECT PROCUREMENT, CONTRACT MANAGEMENT, AND ETHICS IN PROJECT MANAGEMENT:Procurement Cycles