Cost

“Doing more, with less”

Posted on by arif598sum15

“Doing more, with less” is a phrase most small business owners can relate to. This phrase refers to reaching goals and standards with reduced or limited resources compared to other organizations. This limitation of resources creates obstacles in various aspects in an organization, particularly project management. Having firsthand experience in a small business for the past 10 years I can attest to the phrase “doing more, with less”. Small businesses face many challenges, but by utilizing the following tools effective project management can still be delivered

Schedule

Maintaining a schedule is important in all businesses, particularly small businesses. Many projects in a small business context are limited in time and resources but also need to meet a high standard. As a result, utilization of PERT or Gantt charts can effectively manage the progress of a particular project. I have personally have not used these charts in my small business, but understand the benefit in doing so. By having a Work Breakdown Structure, each project can have more specific deliverables and evaluation of these deliverables is more easily done.

Cost

“Doing more, with less” is often times speaking to financial resource limitations. In a small business setting, financial resources are almost always a challenge. There are various programs and software used in the business world to track costs, but in my organization we utilize a budget system. The budget allows us to see what we estimated for a project and what we have paid for that project. By comparing the estimated and actual cost we can determine if we are on track to meet the budget for a given project or if we need to re-evaluate the estimations and/or find other cost effective ways to meet the budget.

Control

Controlling costs and scheduling is pivotal to successful project management. For example, if you do not control employees who are purchasing products for the project or you do not have control measures in place for scheduling then there will be a greater variation from the mean timeline and budget you have set forth to begin with. Generally, this issue has not been a problem in my organization particularly because I have been solely in charge of developing projects, estimating costs, scheduling, and carrying out the projects. This article sheds light on the areas of improvement that my small business can achieve.

Evaluation

Effective communication and developing a work culture where collaboration is valued and sought after is an important aspect for evaluations. Individuals must understand that their input is valued and there will not be blame or punishment for voicing their opinions. This environment is conducive to learning from previous projects and as a result improves project management processes for future projects.

 

I aim to further develop and improve on my project management by utilizing the tools discussed above. As a result I will be more effective at “doing more, with less”. Have you had a time in your organization or life where you had to “do more, with less?”

 

URL: http://smallbusiness.chron.com/effective-project-management-small-business-organization-41274.html

Citation:

Markgraf, B. (n.d.). Effective Project Management in the Small Business Organization. Retrieved August 10, 2015, from http://smallbusiness.chron.com/effective-project-management-small-business-organization-41274.html

Balling without a Budget

Posted on by damion598sum14

My company is notorious for running almost all small and some medium size projects without an “official” budget or with no mention of budget at all.  Many of these projects are either product developments or internal process improvements.  Upper management believes that these types of projects shouldn’t be limited to the constraints of a budget primarily because a successful new product or major process overhaul is invaluable to the company and they want our Engineers to have freedom when doing their “thing”, whatever that may be.  Major costs are approved/denied by the management team and these costs are recorded throughout the project but no one sets a limit.  Management also believes, rightfully so in some cases, that the team will eat up a project for a budget even if it doesn’t add any saleable value to the end result.

I’ve seen this work exceptionally well in some cases.  The most prominent was the recent development of a new product for the automotive market.  The project team successfully completed the development with total hard costs of ~$150k.  By the end of this year we should accumulate ~$100M in cumulative revenue from this product.  Winning!  If we had set a budget for this development my guess is that it would have been in the $2-3 million range given the scope.  This project was particularly interesting because the development team took “no budget” as a challenge to keep the project costs as low as possible.  This allowed the team to come up with some really creative solutions to the more challenging aspects of the development.  There was a very respectable amount of reuse of existing automation equipment, never before seen manufacturing processes, and they leveraged a significant amount of existing raw materials.  Give these guys a raise!

On the other hand I’ve also seen this philosophy blow up in our happy little budgetless faces.  We had a team start developing software for order entry, marketing, and other internal processes.  Here we are many millions of dollars later and we have nothing usable to show for the development.  This team took the “no budget” philosophy as an opportunity to try and reinvent the wheel despite the fact that we’re not in the business of selling wheels.  Plus, square wheels don’t have much use in the world we live in.

I have a couple of questions that I’m hoping my top notch MBA classmates and friends may be able to help me address.

Can you think of situations where budgets may be detrimental to a project development?  Are there, or can there be, guidelines established on which types of projects require firm budgets and which can be looser from a cost standpoint?  Or, in your opinion, do all projects need a firm budget, period?

Can you determine during your hiring process which PMs are “budget eaters” and which ones would take the “no budget” project plan as a challenge to keep costs low?  How can we go about identifying these distinctly different personalities during the interview process?

Wanted: Competant Project Managers

Posted on by seanv598

Over the past few years there has been a significant push, especially in the United States on the importance of math and science education for the young.  There has been an understanding that emerging nations like India and China have passed the United States in graduating engineers and scientists from the university.  The math and science shortage has been felt in places like the UK, U.S. , and even Australia.  The latest stories have spotlighted the skills shortage overall in the Project Management field.

The shortage in very good, and competent project managers has significant implications for large scale projects moving forward.  The downside of having issues with project management is the reality that project overruns and extending time estimates on projects have negative effects for progress in building and other projects.  Scope creep is an effect that starts to affect large scale projects.

The article spotlights some findings that they studied in India with the help of PMI India and KPMG.  India is in a building phase in their country life cycle.  Lots of new infrastructure is needed to handle the more than 1 billion people that inhabit their country.  People will start to expect certain amenities as people start to gain a little bit of wealth and move towards the middle class.

There is an expected 1 trillion dollars in infrastructure that will be spent in the next four years.  80% of the developers of the different projects are unable to find good project managers to execute this increased infrastructure build.  The study that KMPG facilitated found that “some projects are delayed by external factors such as land acquisition or regulatory approvals which are beyond the control of the executing agency, a majority of projects are delayed by factors that can be controlled at the project level through proper planning and project management.”

While this article focuses on India, it seems to me that this is a world wide problem.  Just like there is an aversion to math and science all over the world, project managers have become something that has been very hard to find.  Project managers have a lot of responsibility on different projects.  They are forced to be “experts” in statistical analysis, manufacturing, operations, and forecasting among other things.  They need to be able to multi-task on many different jobs to be successful.

The long term effect of a shortage of math and science and project management could be catastrophic.  China is ahead of the curve by having 106 universities that focus on project management and their skills.  All countries need to focus its efforts on these skills in order to keep up with proper infrastructure.  We are getting to a point in America where we need new bridges and roads, and if every project we have continues to have scope creep, we will put our economy into a further tailspin.

Do you think that having a skills shortage for project managers is a problem?  What are the long term implications? How do you fix this problem?

Main Article:

http://articles.economictimes.indiatimes.com/2013-07-08/news/40443485_1_land-acquisition-projects-lakh-crore

Supporting Docs:

http://www.bbc.co.uk/news/education-18957712

http://www.math.vcu.edu/g1/journal/Journal7/Part%20I/Sterling.html

http://www.theaustralian.com.au/opinion/editorials/remedying-our-skills-shortage/story-e6frg71x-1226267136876

Death of American Industry

Posted on by seanv598

This article is interesting in many ways.  It highlights the shift that is taking place that is slowly taking shape around the world with China and their “industrial revolution.”  The steel industry has long been an American dominated industry because its superior manufacturing processes.  China has been making serious in roads to compete locally.  The article talks about the implications of opening the proverbial “can of worms” of using Chinese steel to build United States infrastructure.  It speaks of the price differential between Chinese and US steel, and it talks about the future of the steel industry.  The United States steel industry could have an uphill battle for future construction and bridge work if the steel used in the bridge projects in New York and San Francisco prove out to be high quality.

The common thought within the United States manufacturing and building sector was (and still is) that Chinese steel was inferior and could not be trusted.  The American Recovery and Reinvestment Act was supposed to help out industries like construction and the steel industries by putting limitations on where you can buy material and employing people.  The problem with this restriction, is there has been so much consolidation in the steel industry that many items are not made by ANY American producer.  In some cases, even if there is the American alternative, the price can be much higher and the project manager needs to reassess its job priorities.  The article talks about the situation where a company was able to find material in the United States that was almost double the price of the imported steel.

[image]

The steel industry and the manufacturing world run in tandem.  Manufacturing has been sputtering in the United States and the steel industry is dependent on people buying cars, appliances, and building infrastructure.  The manufacturing sector has defected overseas to places like China and India because of cheap labor. The majority of the construction industry has stayed within the United States because of the superiority of the American made steel products.  Companies like Nucor have had a stranglehold on the construction industry because of the high quality, yet economically made steel that they were able to produce. The danger, as the article talks about, is the threat on the construction industry which has started to shift towards Chinese steel.  I think that if President Obama extends tariffs, it will have a temporary positive effect on the industry by putting China and the US on equal footing in terms of pricing, but what is the long term game?

While I agree that it is important for China and the United States to be on an equal playing field, I think that the bigger problem is the need for more planning within the industry to become a feasible and efficient producer of steel and employer of American jobs.  Assessing our risks of bringing in more capacity to the industry vs. not being a significant player will be something to watch for.  How does the industry help bring manufacturing jobs back into this country without a plan towards the future?

 

Main Article:

http://online.wsj.com/article/SB10001424127887324049504578545431938331880.html

Supporting Articles:

http://www.nbcnews.com/business/jobless-claims-rise-manufacturing-growth-slows-6C10387815

http://www.silive.com/news/index.ssf/2013/06/staten_island_lawmakers_charge.html

 

Flying Through Quality

Posted on by spr1324czarate
Boeing 787 (Google Images)

Quality is an important factor when producing goods and services. Each organization sets its own quality standards based on customers’ demands and needs. If we look at quality from the customers’ perspective we will want to have products that we can rely on when using them, otherwise if the product is defective we might want to stop using it. On the manufacturers’ perspective if the customers are unsure of quality on their products, it is their job to make the necessary adjustments to make the product attractive to the customer again.  When the situation is created by defect on fabrication it can mean big amount of money losses for the manufacturer, therefore it should work on fixing the defects as soon as these are detected in order to avoid bigger losses and not get their reputation hurt.

 

An example of a company restoring confidence in its product is Boeing and the battery problems that its passenger jet 787s has been facing since January and that it cost them to stop flying them. According to an article in the New York Times by Christopher Drew and Jad Mouawad, the Federal Aviation Administration approved in April the company’s plan to fix the batteries of 50 jets that where delivered at that time. The authors explain that the lithium-ion batteries problems were detected when two of them had overheated in two different jets. As soon as the problem was detected its engineers worked on finding the causes of the defective batteries and the best approach to fix it. Collection of data was necessary to support the changes and come up with a plan.  Luckily, the 800 orders that were already planned for the plane were not affected, the authors explain, since it promised a 20 percent fuel savings. After collecting data and analyzing it, the company decided to send several technicians around the world to fix the batteries and install the new system which includes better insulation and other features to prevent batteries incidents (Drew and Mouawad). The article goes on by explaining that even after this efforts by the company to fix the problem, Japanese airlines have asked for more assurance that the incidents will not be likely to happen again or at least detected by introducing monitoring systems for the batteries that would send information about the batteries conditions and replacement of them every certain time period. All this efforts are done in order to recover the customer’s confidence.

 
We can see in this example how a defect might represents serious consequences in the company’s reputation and generate monetary losses. This illustrates the importance of having systems that monitor the quality and processes on production and if problems are presented look for the causes and fix them as soon as possible.

 
Do you think Boeing’s approach to solve the problem was appropriate? Should the company provide monitoring systems that Japanese airlines demand or do you think is enough just by replacing the batteries and the insulation system implemented?

 

Source: http://www.nytimes.com/2013/04/20/business/faa-endorses-boeing-remedy-for-787-battery.html?_r=0&adxnnl=1&pagewanted=all&adxnnlx=1370203420-Yz8jS+nRMM8ILF6/hvaO2g

How The Light Bulb Got Its Groove Back

Posted on by Marco


incandescent_light_bulbLED_Bulbcfl_light_bulb

In the 19th century, the only type of bulb available was the incandescent light bulb. This bulb was “the biggest thing since sliced bread” and incredibly effective at its job. Unfortunately for the light bulb, the business world seems to continuously search for improvements or replacements of the once great predecessor. Today, the incandescent light bulb seems like an antique compared to the variety of light bulbs available. Consumers can choose now choose from incandescent, fluorescent, halogen, HID (high-intensity discharge), and LED (light emitting diodes) light bulbs. Each light bulb usually provides a longer life and brighter light than their respective predecessors. Consumers also now have the option to choose from a variety of light types (i.e. warm, cool, natural) and whether they dim or not. At a certain point, a consumer can be quickly flooded with and drown in the massive amount of information and options of light bulbs.

At this point, someone may be thinking to themselves “why should I care about light bulbs?” I’ll admit that when considering a single light bulb the selection of said bulb would not save someone or a company millions of dollars, but an impact will be evident. The average person, especially not a company, does not utilize a single light bulb. Let’s consider an average home to use for as example: three bedrooms, two bathrooms, one kitchen, one dining room, etc. Each room requires at least one lighting fixture, and each fixture uses three light bulbs (if we stay on the conservative side). All these rooms and fixtures amount to a possible minimum of 30 light bulbs.

LED

Compact Florescent

Incandescent

Price per bulb

$ 35.95

$ 3.95

$ 1.25

Life Span

50,000 Hours

8,000 Hours

1,200 Hours

Kilowatts per year

329

767

3,285

Annual Oper. Cost

$ 32.85

$ 76.65

$ 328.59

Now imagine the impact this has over the possible minimum of bulbs established earlier. Although a single light bulb, or even light bulbs in general, might not seem to have a large impact on finances, this myth is quickly proven false. Buildings owners, whether residential or commercial, must take into consideration the price of and the operating costs of light bulbs into their expenses. This affects large buildings even more because of the massive amount of light bulbs in use at any given times. The light bulb is no longer solely symbolic of an idea and can now come to represent money, or $$$.

How could something so small and seemingly insignificant come to have such a large impact on the financial aspect of households and businesses? Should the government require homes and businesses to replace current light bulbs with more efficient ones? Would the requirement even be worth the hassle?

 

http://business.time.com/2013/05/09/long-live-the-lightbulb/

http://www.energystar.gov/index.cfm?c=lighting.pr_lighting_landing

http://www.megavolt.co.il/Tips_and_info/types_of_bulbs.html

Can Quality be Bought?

Posted on by spr1332umoroz

best-of-baselworld-2013-gear-patrol-lead-full

BaselWorld Video

BaselWorld is a prestigious watch show, where the world’s top watchmakers and designers present their newest models. Most of these watches, naturally, cost more than my DePaul tuition. This brings a question to my mind; does a higher price guarantee better quality? It depends how you view quality.

Most of these watches displayed in the video are designed by huge names such as Hermes, Hamilton, Bentley, and Omega. The dimension of quality that is most appropriate for these brands is the Transcendent definition. This definition means excellence. In class we discussed this in detail, stating that many people assume a certain product is of better quality just because of the name that is associated with it.

The man in this video says that the American watch brand, Hamilton, got their big break when Elvis Presley wore it. From then on they became a popular watch, which let them charge hefty prices. A standard Hamilton watch is over $1400! Now, the watch presented in the video, from the Jazzmaster collection, is special for one reason: it has a two-in-one feature, two watches that you can flip over in one overall watch. The point of this is to let the wearer match the watch to his or her mood. Does this make it a better quality watch? Not necessarily, but they are taking into consideration what some of their customers might want.

The next watch the video talked about was one made by Hermes. This was very brief because Hermes is mostly known for their scarves and handbags, but not their watches. There is nothing that distinguishes them from other cheaper watches, such as Fossil or Michael Kors, buts its name. It had a sleek finish so that it would not weigh down on the wearer’s wrist. Omega is another brand that was named which had a watch that was made of “senda” which is just another name for rose gold. The Swatch group, a company known for their quality watches, but with a more affordable price tag, developed this term.

The only watch that was really worth its expensive price tag was the Type 22. The prices weren’t listed, but this watch had chrome finishes, real Italian leather, and a special feature. In each watch there is a pendulum that swings about 28,000 times a minute, which makes its time 72 times more accurate.

I think many watches especially Hamilton, Omega and Rolex are able to have such steep price tags because their reputation, primarily, performance, service and performance, which are all important dimensions of product quality.

Based on all this information, are these watches better quality than something cheaper? If yes, is it because of the name of the maker or is it because of some features? If no, why not?

 

 

Photo source: http://gearpatrol.com/2013/05/02/best-of-baselworld-2013/

Video Source:http://live.wsj.com/video/what-makes-a-luxury-watch-worth-its-price-tag/2EBED16E-ED6F-491C-A174-5A5DAABE0F4E.html?mod=WSJ_article_outbrain&obref=obnetwork#!2EBED16E-ED6F-491C-A174-5A5DAABE0F4E

More Money & Less Features, Does Not Make Sense!

Posted on by f1222sghatila

More Money & Less Features, Does Not Make Sense!

 

Any flight feels long because time wasted in traveling is just time wasted. Airlines are trying to figure out how to cut time and provide the best service. According to American Airlines and cutting time in placing the carry on baggage is too much trouble. They believe that due to the small compartments over the seat, there is typically not enough space and trying to accommodate carry on space has created many delays. The article says that the carry on spaces are always over booked due to people bringing a lot of access luggage. American Airline thinks by allowing only a small baggage like a purse that can be places under the seat is the way to do and people can check in everything else.

 

They are trying to do quality control for the time of luggage delays. Even though it only eliminates 2 minutes of the delay time, they think it will add up in the long run. In addition, there are cost savings because the luggage industry has created revenue in billions. I do not think this is a good strategy. The airline prices are continuously increasing due to the gas price and they are taking out amenities. I know when I travel I like doing it on Southwest because it’s cheap and allows luggage, other airlines  are more expensive and we have to pay additional for baggage. Even though it will eliminate some time in the flight, but that can be made up in other ways, such as boarding early. I think many people only carry a small luggage for a small distance and retrieving it in the luggage area would increase the traveler’s time. Also the issue to luggage getting lost is a big deal people have their carry on as their safety net and taking that away is a big deal.

 

Before American Airline makes this huge transition and purchasing, new aircraft they should construct many surveys to determine is this is worth it. Travelers want to get from point A to point B in as little hassle as possible and I believe this is just creating an unnecessary hassle. The airline will need to employ more people to put the baggage away and there is a change of loss baggage just to eliminate a 2 minute deplays. They should invest in creating a flow chart and figuring out where the problem is and eliminating or supplementing that feature. Quality control is improving quality overall not just making one area better and adding on problems in other areas.

 

What do you think are eliminating carry on luggage a good thing for American Airline to have? What would you prefer as a traveler?

 

http://www.businessweek.com/articles/2013-05-17/american-airlines-doesnt-want-your-bags-in-the-cabin#r=hpt-lst

 

Be GREEN, or be SQUARE!

Posted on by suhanip301s12

More and more customers now are looking for companies to be transparent, but it’s kind of hard to be competitive and sustainable at the same time.  Companies are now using value chain processes to get the job done fast.  They are not only focusing on suppliers but also taking into account By-Product-Synergy, which is “taking waste from one part of the production process and using that waste in order to generate a new product.” But how can companies become more sustainable if only “80 percent of management uses just 20% of the available opportunities?!”  The remaining 80 percent is where management needs to focus the rest of their energy.

It’s crucial for management to set goals and assess their risks, thereafter they can easily seek out opportunities for future improvement.  The first step to become a transparent company is to implement a sustainability program, and of course to develop a strategy.  The next step is to identify the companies “main processes and map data throughout the value chain.”  By using life-cycle-assessment software, the companies will have a more clear idea of how to lower their costs.

A similar approach was taken by ThyssenKrupp (FWB: TKA), a German elevator company.  Since ThyssenKrupp uses a considerable amount of steel in the manufacturing process, they thought the operational aspect had the greatest environmental impact. To their surprise,  the “company’s elevators themselves left a greater carbon footprint then their manufacture or any of the company’s other operations.”

As a result, ThyssenKrupp dramatically changed their product line after implementing a sustainability program.  They made the following changes to their products and services:

  • Elevators use LED lights which reduce energy consumption by 80%, and automatic fan and light shutoff which reduces CO2 emissions by 193,000 tons per year.
  • Getting rid of harmful chemicals used to manufacture the elevator.
  • Using petroleum based biodegradable fluid, with a vegetable-based option called “enviromax.”
  • Elevators are equipped with regenerative technology, meaning that the energy generated from the braking system is put back into the building.

In a way the article gives motivation to other companies who are taking their first steps towards becoming a transparent company.  It gives them few ideas and pointers on “unlocking supply-chain opportunities.” It’s important for different industries to decipher various ways to be more environmental friendly.  After all, there is more to being sustainable than just showing off your environmental initiatives.

Do you think ThyssenKrupp can take additional measures to make their company more sustainable?  Or better yet, are there any companies that you want to see become transparent in the near future? How would they need to change there operations?

Links:

http://www.thyssenkruppelevator.com/Sustainability/products-services

http://www.greenbiz.com/blog/2013/04/26/whirlpool-thyssenkrupp-supply-chain-transparency?page=0%2C1

https://opsmgt.edublogs.org/2012/06/28/transforming-waste-into-profit/

 

Wrong CEO, Crazy Damages!

Posted on by f1222sghatila

Wrong CEO, Crazy Damages!

Someone might think that a big company might have all the resources and very intelligent people working because they can afford to do so. In addition, those people will make the right decisions to improve the quality of work and increase the profit in the long run. J.C. Penny is one of the big companies that with one critical decision they lost almost a billion dollar. The hired the wrong person, which lead to critical changes that did not work out in the favor of J.C. Penny and increasing their profits. When Ron Johnson was announced as the new CEO of J.C. Penny the stock prices was $34 and within 2 years, the current stock price is at $14. The reason behind such a dramatic change is the structure of J.C. Penny. The CEO made changes to update the entire store and eliminate the coupons. Johnson did not pivot the idea that start off small and once people accepted the change and wanted that change increase though out the nation. Johnson took a big leap and caused J.C.Penny’s regular customers to look elsewhere for their purchasing needs.

Myron Ullman who was the CEO before Johnson had agreed to go back to and reverse the changes implemented by Johnon. He has agreed to stay until J.C. Penny has the right CEO. The changes made by Johnson eliminated the middle-market customers, which where their target market. Even though someone might think that updating the store and keeping a low price while eliminating coupon will cause more people to come is not necessarily true. Ideally, any idea sounds good but pivoting the idea is to make changes without losing a lot of money. Ulllman’s plan is to change things back and bring back the lost customers what where their target market but getting someone to come back after they have lost the trust is somewhat hard. Ullman has the niche to fix things, which he has done before and J.C. Penny is counting on him to bring back the people and profit into the stores again. His biggest challenge will be to remind the customers that what J.C. Penny was before and nothing has changed.

Quality of management makes a huge difference in the success of any company. Being in this state and losing a lot of money is very critical for J.C. Penny. If they continue to do so they will soon have to declare bankruptcy and that is a whole other situation. Being in economic crises right now and extreme competition from places like Macy’s and Kohl’s’ it will be hard to J.C. Penny to gain the customers because the rivals are trying to take up as much market has they can of lost customers. J.C. Penny is at a critical position right now; the question now remains whether they will be able to reverse the damage.

Do you think the J.C. Penny will gain its customers back and be able to create profit that they use to?

http://www.businessweek.com/articles/2013-04-11/j-dot-c-dot-penney-rehires-myron-ullman-to-clean-up-ron-johnsons-mess#p1