The invisible costs of projects

Measuring and reducing waste

What is waste in projects?

Waste in projects is an often underestimated but widespread problem that can have a serious impact on the success and efficiency of projects. According to a comprehensive study on measuring waste in projects, the Project Management Waste Index (PMWI) averages around 25 percent. The PMWI study shows that waste not only affects financial resources, but also consumes time, talent and energy.

Types of waste

The Project Management Waste Index (PMWI) identifies several specific types of waste that frequently occur in projects and can impair efficiency and success:

• Waiting times: Time lost when projects come to a standstill due to delays, bottlenecks, lack of information, missing materials or unclear decisions. Long waiting times can jeopardize the entire project schedule and lead to increased costs.
• Overprocessing: Work that goes beyond what is necessary to fulfill the requirements. This includes unnecessarily detailed or overly elaborate work that does not add value.
• Errors: Defects or faults that require reworking or corrections. Errors are often caused by misunderstandings, a lack of care or unclear requirements and lead to additional work and costs.
• Misallocation: Inefficient allocation of resources where employees or funds are used for the wrong or less important tasks, which impairs productivity and slows down the project. However, misallocation is also when there is a lack of resources, as a result of which work packages are not processed, only processed superficially, incorrectly or for too long.
• Misdirection: On the one hand, a misdirection can be the start of unnecessary or nonsensical projects.
  However, it can also involve incorrect instructions or misunderstandings that lead to work that does not meet the project objectives. This can be caused by unclear communication, misunderstandings or a lack of coordination. Unclear priorities, a lack of agreements or unclear responsibilities also lead to postponements, discussions and undesirable behavior and are therefore a cause of waste in the project.
• Unnecessary movement: Superfluous movements of people or materials that do not create any direct added value. For example, this could be unnecessary travel or travel time that has no added value for the project. However, this waste can also be caused by poorly designed workstations or inefficient processes. Superfluous changes in project results, processes or organization, such as new superiors, also cause unnecessary movements. Multitasking and task switching also fall into this category.
• Underprocessing: Underprocessing occurs when tasks are only processed superficially. This is the case, for example, when plans and results are insufficiently documented. However, this type of waste also often occurs when communication within the project is not optimal, so that, for example, results do not meet expectations and have to be reworked. According to the PMWI study, the most significant types of waste in projects are waiting, misallocation and overprocessing, with waiting for deliveries, lack of personnel capacity and insufficient documentation being the most common reasons for waste.

Identify waste in projects

Recognizing waste in projects is a crucial step in being able to identify its causes and then make targeted improvements. There are various methods for this:

1. Value Stream Mapping:

Value Stream Mapping is a visual method for analyzing and depicting all steps of a process, from order placement to delivery. This method helps to visualize the entire project flow. This makes it possible to determine which steps actually deliver added value and which are inefficient or result in unnecessary waiting times.

2. Time records and process analysis:

Systematically recording the time spent on various tasks and activities in the project is another method of measuring waste. This involves recording how much time is spent on value-adding activities and how much on non-value-adding activities. In this way, waiting times, interruptions or inefficient processes can be identified.

3. Cost analysis:

A detailed review of project expenditure can also reveal where financial resources are being used inefficiently. This includes analyzing expenditure on materials, personnel, external services and other project costs. By comparing actual costs with the budget, areas of unnecessary expenditure can be identified. This analysis helps to reduce costs and better control the budget.

4. Process Key Performance Indicators (KPIs):

Key performance indicators (KPIs) are specific metrics that evaluate the success and efficiency of processes. KPIs such as cycle time, throughput time, error rate and resource utilization can be used to measure waste. By continuously monitoring these KPIs, sources of waste can be easily identified. At the same time, trends that indicate waste can be identified by analyzing them with a business intelligence solution, for example.

5. Feedback loops and employee surveys:

Employees and project participants often have valuable insights into inefficient processes and waste, as they are directly involved in them. Through regular feedback loops and targeted surveys, companies can therefore collect qualitative data that points to waste.

Recognizing the causes of waste

Once the biggest sources of waste within projects have been identified, the next step in avoiding waste is to understand the causes. Root cause analysis can help with this. In lean management, for example, techniques such as the 5 Why method or Ishikawa diagrams (fishbone diagrams) are used for this purpose.

5-Why-Method:

The 5 Why method is a simple but effective technique for root cause analysis. It is used to identify the root cause of a problem by asking the question “Why?” five times. Each “Why?” step deepens the analysis by asking about the cause of the immediately preceding problem. The process is repeated until the deepest or most fundamental cause of the problem is identified. This helps to address the root of the problem rather than just treating the symptoms.

Example: The project deadline was missed.

1. Why was the deadline missed? – Because the last task was not completed in time.
2. Why was the last task not completed on time? – Because the required information was missing.
3. Why was the information missing? – Because the team responsible was not informed.
4. Why wasn’t the team informed? – Because there was no clear communication.
5. Why was there no clear communication? – Because there are no defined communication processes.

The root cause here would be the lack of clear communication processes.

Ishikawa diagram (fishbone diagram):

The Ishikawa diagram, also known as a fishbone diagram or cause-effect diagram, is a visual tool for root cause analysis. It helps to systematically identify and present the various potential causes of a problem and is particularly useful for visualizing complex problems and promoting a structured discussion on root cause analysis. The diagram is in the shape of a fishbone with the problem at the “head”. Once the problem is defined, the main categories of root causes are identified. These are added to the diagram as individual “bones”. These can be different categories, such as people, methods, machines, materials, environment or management. Under each category, the specific causes that could contribute to the problem are then listed. These causes can then in turn be analyzed for the root cause of the problem.

Example: In the case of a quality problem, the diagram could show that the causes lie in the categories “Materials” (e.g. faulty raw materials), “Machines” (e.g. incorrect calibration) and “People” (e.g. inadequate training).

Taking measures against waste

Once the causes are known, measures can be developed to counteract them. This can include, for example, the redesign of processes, the introduction of new technologies or changes in work organization.

1. Waiting times: If waiting times are based on bottlenecks, these can be eliminated quite easily by allocating new or more suitable resources and planning ahead. Where possible, the automation of routine tasks also helps to reduce waiting times and free up resources. Clearly defined communication channels and regular status updates also help to make and pass on decisions quickly.
2. Overwork: Waste in the area of overwork can be avoided through clearly defined requirements, good prioritization of tasks with a focus on the minimum requirements and clear quality standards. If you are currently working according to traditional project management methods, switching to agile methods with iterative development processes and regular feedback can prevent unnecessary work from being carried out.
3. Errors: Regular tests and quality assurance measures during the project help to identify errors in good time and take countermeasures. Training and further education enable the project team to recognize and rectify errors.
4. Misallocation: Good resource management is also important when it comes to misallocation in order to avoid waste. Resource management tools help to allocate the right employees and skills as well as all the necessary resources to projects. Regularly reviewing and optimizing resource allocation also helps to quickly identify and intervene in the event of any misallocations.
5. Misdirection: Measures should be taken to prevent misdirection before the project begins.
   Good project portfolio management makes it possible to select and prioritize the right projects and clearly define their objectives. In addition, responsibilities should be clearly defined and communicated before the project begins in order to avoid misunderstandings. During the implementation of a project, effective project management with regular reviews helps to ensure that the project stays on track. Clear communication processes and good project documentation also help to provide all team members with the necessary information and instructions.
6. Unnecessary movement: Unnecessary physical movement can be reduced through good workplace design, a clean process layout and the use of digital tools. Good resource management and clear priorities reduce multitasking and task switching. But good change management is also important to minimize necessary adjustments in projects.
7. Sub-processing: In the case of sub-processing, clear communication is important, particularly with regard to expectations of how a task should be fulfilled. In this way, misunderstandings and errors can be avoided. In addition, work results should be thoroughly documented. Regular feedback loops also ensure that the work meets expectations and make it possible to rework promptly if necessary.

Conclusion

Waste in projects is a widespread problem that can have a significant impact on success, efficiency and costs. By systematically identifying and measuring waste, targeted measures can be taken to eliminate it.

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