Cutting on project costs

India lost nearly Rs 1, 24,000 crore due to delay in projects, says a MOSPI report. India is looking forward to investing $500 billion in the 12th Plan in infrastructure projects. Even if 10 per cent of this money is saved, we would end up with $50 billion, a sum that is enough to construct hospitals, schools, desalination plants, solar power plants etc. in almost all panchayats in India. Is there anyone to take this call seriously? Should all Government projects be mandatorily managed by certified project management professionals to save tax payers' money and precious time? It is high time the construction industry, especially the infrastructure industry, adopted some of the proven techniques like Value Engineering, Lean, Six Sigma to the advantages of all stakeholders, in general and the tax payers of India, in particular.

VALUE ENGINEERING

In value engineering terms,

Value = (Functions or Features/ Performance)/Cost

Value engineering is a systematic approach that uses Function Analysis System Technique (FAST) diagram for achieving maximum value at the minimum total cost of any project or product. In short, if you want to increase the value of an item or element of a project, you either reduce the cost of that item or increase the features/functions/performance with the same cost or improve both. In construction/infrastructure projects, plenty of opportunities are available. For example, the total length of perimeter fence, usually a masonry wall or pre-cast concrete wall with barbed wire at top according to “standard” specification, around any mega project site will run into several hundred meters.

Most designers or project managers just go ahead with the construction of the perimeter fence in the conventional way without thinking deep into it. But, in VE, you need to ask what function does it (the perimeter fence) basically serve? Can the “same basic function” be achieved with the “least cost” (worth)? A VE job plan is created, FAST diagram constructed, brainstormed to get creative ideas, alternative ideas are submitted to the client for approval and then constructed.

In this case, a chain-link fence would, possibly, do the function of providing the necessary security for the project site, provided the “basic function” of the fence was clearly defined and understood by all key stakeholders.

Lean basically addresses the waste and speed of a process. Any project is full of processes. We can use lean tools/techniques like 5S, mistake proofing (poke yoke), value stream mapping etc to reduce waste and increase speed. We can take, for example, a manual concrete mixing/preparation process at an infrastructure project construction site.

If the ingredients (cement, sand, gravel, water, admixtures) are kept at different places, do a motion study, construct a spaghetti diagram, find a location that is nearest to most of the concrete structures so that all materials can be stored near-by each other in order to reduce waste movements, and ensure faster output (reduced motion/transport time) thereby making the process more efficient. This simple improvement will lead to reduction in the overall construction project time, resources and cost.

In general, there are several myths floating around about Six sigma and it applicability to various industries other than manufacturing/auto industry. One is that six sigma cannot be employed in small and medium enterprises. Six sigma can be applied even in a micro businesses. It may be highly motivating to note that Mumbai Dabbawalahs deliver millions of lunch-boxes in a month to six-sigma performance level ( only 3.4 defects per million opportunities).

When simple and less-educated Dabbawalahs can deliver such performance, why not the highly-educated IT or construction industry stalwarts.

SIX SIGMA

Six Sigma, in general, focuses on reducing the variation and defect in a process output (deliverable, product, etc). A project manager can use six sigma tools/techniques such as VOC, QFD, statistical sampling, DOE, lateral thinking, control charts.

For example, in an IT or software product development project, requirements gathering, coding or testing processes can be improved to reduce the project's overall completion time, cost and resources.

It is clear from the above simple examples that we can reduce the total cost of the project using any or all of the above techniques or approaches without changing the quality or scope, but at the same reducing the duration of the project, which adds more value to all the stakeholders, especially the citizens.

It is time that the public project management authorities, banks, and MOSPI take adequate steps to enhance capacity building in modern project management and process improvement techniques for staff so that the proposed $500 billion worth infrastructure projects in the 12th Plan are executed by certified project management professionals.

(The author is CEO, International Institute of Project Management, Chennai.)

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