Chapter 2: Lean Project Management (LeanPM) Principles

Lean Project Management (LeanPM) can only be fully utilized by an organization that builds and sustains a lean culture in its quest to become a Lean organization, that is one that continuously provides net value to its stakeholders in a continuously improving way. Given this important condition, LeanPM principles describe the philosophy and mindset necessary for project success. The principles are not independent. They reinforce each other and work as a system.

The Lean Project Management principles are one pillar of LeanPM, with the other pillar and theoretical foundation being the creation-flow-value generation model of project management. Read here about the concept and pillars of Lean Project Management.

The six lean project management (LeanPM) principles are:

1) Serve People

This principle is at the heart of LeanPM. Projects benefit people, and people undertake projects. That is why this principle has two aspects: “for people” and “by people”.

“For people”

To serve people is the only reason for a project to exist. Projects should serve customers, society members, employees, owners and team members. They need to receive specific benefits, depending on their particular interests and needs. These interests should not be seen as conflicting. In fact, they are mutually supportive. It is perfectly possible to align the interests of these stakeholders, and the project should aim for that. 

For example, the interest of a business organization and its owners in profiting from a project is realized by providing value to the customer who pays for the project products. To build a sustainable business, the organization must deliver value to the customer base on which the business depends. The client and the organization reward project team members in various ways for creating value for them.

Therefore, the most important question for any project is:

"How does this project serve people?"

“By people”

Projects do not happen just because:

• we have a brilliant idea
• the project is aligned with the strategy
• the top management supports the project
• we have secured funding for the project
• we have a good project plan
• the client is willing to pay for the products
• … etc.

All these things are important. But what turns a potential project into a real project is the people who work on it. They breathe life into the project, create its deliverables, and deliver benefits.

Projects are “human beings”:

• Success or failure of a project depends only on people.
• People create the whole value of a project.
• People's problems are at the root of all project problems.
• People make all decisions and all mistakes in a project.
• People build quality in.
• The untapped potential of people is the root cause of all project waste.

Therefore, the most crucial question of project management is:

"How can people's potential be unleashed so they can make a project successful?"

From this point of view, we should value any project management method, practice, technique or tool only in terms of its ability to facilitate and serve people working on and benefiting from a specific project.

2) Create Value and Eliminate Waste

The total project value is a combination of the following values:

• Value for the customer
• Value for the project owner (the sponsoring organization)
• Value for the project team members and project partners and
• Value for the society

We measure the success of a project by its net value. Projects that do not create value create waste. Projects that create value that is less than the costs they generate have a negative return, which is also a manifestation of waste. 

To increase the net value of the project and the return on investment, we need to:

• increase the value created by the project
• reduce project costs by eliminating waste

Project value is something beneficial, useful, worthwhile or important to a project stakeholder. The value for each project stakeholder is a function of the customer value resulting from a customer’s appreciation of project outputs.

Value is a subjective perception of a positive change in one’s status or state. It’s often pointed out that customers place value on project outputs through their willingness to pay for them. But for non-profit projects, we should replace the willingness to pay with a willingness to use/consume project outputs. 

The project translates the client's willingness to pay and/or use the project's outputs into certain characteristics, such as features, price, quality, time and place. These characteristics objectify the value, but we must remember that value always has subjective components and many aspects that we cannot easily objectify. 

Let’s assume a customer pays for and uses a project product. Has the customer realized the value of the product? Not necessarily. This will only happen if the customer's status or state has changed as desired because of using the project product. In other words, if the project product is used in the customer’s value stream, which generates the (expected) benefits for the customer. The expected value (the value paid for) and the realized value may differ.

The project value for an organization is measured by economic return (profit), or social return on investment for non-profit projects. The organization receives value from the project by delivering value to its customers. Value is delivered either directly from the project to external customers who use the project deliverables, or to the organization’s customers who use its products and services. In the latter case, the project deliverables are used within the organization’s value stream system. Therefore, the focus of any project should be to create value for the ultimate customer.

A project that creates value:

• is based on a complete understanding of customer value
• is aligned with the organizational strategy and the value stream system
• is designed to create and deliver value effectively
• applies value-based metrics
• fully engages the customer and adapts to changes in the needs and the perception of value
• manages value delivery
• continuously tests and validates value hypotheses

Waste in a project is anything that does not add value to the customer – and hence, to the project owner organization – but absorbs project resources. The greater the waste, the lower the return on project investment. As we will discuss in the next chapters, the waste can lead not only to lower return but even to a negative return, which may go below minus 100% of the initial investment. Therefore, one of the most important tasks of project management is to identify and eliminate project waste.

3) Build Knowledge and Continuously Improve

Knowledge building and continuous improvement are closely related and play an important role in project success.

Knowledge is understanding of something; knowing the facts, circumstances, relationships and behaviors associated with the project is important. What makes it even more important is that continuous improvement is only possible when we base it on knowledge intentionally created for this purpose. 

Projects undertaken under uncertainty should be viewed as knowledge-creating initiatives. We should base them on hypotheses that we should test and validate. If we prove a hypothesis to be invalid, we must change the project based on the knowledge gained. The knowledge creation continues with definition and testing of new hypotheses. Each cycle of knowledge creation should improve the net value of the project. Similarly, stakeholder feedback should be used on product increments to build knowledge, to improve project value. 

Knowledge alone is not sufficient to judge, decide, and act. It works in a system together with learning, skills and wisdom. 

Knowledge-building refers to creating, transmitting and keeping knowledge. In the context of the project management process, knowledge about successful and unsuccessful practices for improving the process needs to be created. We create such knowledge through the application of a defined process that is continuously subject (after we establish a baseline) to change through experiments. We measure the success of the experiments by the change in the net value of the project. Through the experiments, we create knowledge that serves to improve the process and create a new baseline, which is challenged in its turn.

Explicit knowledge can be formalized and codified in written, verbal or audio-visual form. This makes it easier to pass on to others.

Tacit knowledge, on the other hand, is gained from personal experience and is expressed as intuition, subjective judgment, or insight. It cannot be formalized, and it is difficult to transmit.

"We know more than we can tell." 

- Michael Polanyi

The following may be useful to retain explicit and tacit knowledge:

• Establish a culture of knowledge-creation and sharing
• Foster social interaction
• Mentoring
• Use of cross-functional project teams and on-the-job knowledge sharing
• Osmotic communication
• Formalizing knowledge in guides, manuals, tutorials, lessons learned, standard work processes, audio-visual materials

There are two aspects of continuous improvement related to project management.

The first aspect refers to the improvement of the project management process. In lean project management, the areas subject to continuous improvement are:

• Customer value definition and project alignment
• The design of the temporary value stream (project design)
• The customer pull system
• Waste elimination
• The flow of project value
• Plan-do-check-act processes
• Teamwork

The second aspect relates to the organization’s continuous improvement. A considerable part of it comprises daily improvements. Other improvements require greater effort and management structure, and we implement them through projects. The success of these projects plays a key role in continuous improvement of the organization.

4) Apply Systems Thinking

A system is a collection of entities and links between them that form a whole which is more than the sum of the individual entities. There are several project-related systems:

• the organization that owns the project
• the extended enterprise that includes the organization and its customers, suppliers and partners
• the value stream systems of the organization and customer
• the individual value streams (the value streams of each product and service)
• the project itself
• the configuration of project deliverables
• the project team

System thinking requires that:

• We should not try to analyze the components of the system independently.
• We should not attempt to improve individual components, but rather the whole system.
• We must account for the interrelations between the components of the system. A change in one component may affect other components or the whole system.
• We should create systems whose components fit well together.
• We should be conscious of system dynamics.

For example, we should not aim to improve the productivity of individual team members or specific parts of a value stream, but the productivity of the team and the whole value stream, respectively.

Human behavior and mental models are the major factors that affect the performance of project-related systems.

Unless project management takes into consideration the systemic character of projects, many projects are doomed to failure.

5) Communicate and Collaborate Effectively

Undoubtedly, inefficient communication and collaboration are a major reason for project failure. They are at the root of any delay, cost overrun, quality issue, misunderstanding of stakeholder expectations, lack of project alignment, and waste.

Communication is the act of sharing meanings between people. The purpose of communication is to inform, express feelings and emotions, share ideas, thoughts and knowledge, and to influence. Through communication, people reach mutual understanding and facilitate each other's growth. 

One cannot perform project management, and project stakeholders cannot co-create value without communication. To be effective, the project-related communication should be:

• Meaningful (should add value)
• Clear
• Transparent (everyone on the project should be able to see the work of the others, which will facilitate finding ways for improvement)
• Emphatic
• Respectful
• Timely
• Decentralized

… and as much as possible:

• Frequent
• Simple
• Informal
• Face-to-face
• Synchronous
• Visual

In a project context, collaboration is a process where stakeholders work together to co-create value for each party. Effective collaboration requires involvement of all stakeholders in creating project value from concept to realization. Those stakeholders should be empowered to own the project and motivated to bring project benefits into existence. Lean projects are not created for the customer, but created with the customer.  

Co-creation continually engages all stakeholders in reaching mutual understanding and consensus on the shared goals and the value that the project will create for each party. This process relies on the collective wisdom and the full potential of people involved. Co-creation is facilitated by effective communication, servant leadership, collaborative and decentralized project management, and a self-organizing project team that includes the client and the partners.

6) Simplify

“Simplicity is the ultimate sophistication.”

- Leonardo da Vinci

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[1] de Bono, Edward (1998). Simplicity. Penguin Books

[2] Ibid.