Chapter 4: Project Waste

Lean project management must reduce and eliminate project waste.

According to the classical understanding, activities and steps that do not add value to the product or service from the point of view of the customer, are waste. Thus, for example, all project meetings are considered a waste, but all activities that transform inputs into outputs are seen as value-added.

To avoid ambiguous interpretation and absurdities like "a necessary waste" and "a temporarily necessary waste", we take a different approach in the LeanPM framework.

Waste are those activities and steps whose costs outweigh the benefits and generate negative net value for the project. So, a project meeting or a transformation activity may or may not be a waste, depending on the benefits and costs it generates. 

Waste can be absolute when a negative net value is generated or relative when the net result is positive but suboptimal.

The project is a hypothesis based on assumptions. This hypothesis must be continuously tested and validated. Invalid assumptions destroy the logic of the project and are a symptom of waste.

Waste of resources can occur at all levels of the project hierarchy and in any workflow activity:

• We waste the resources invested in activities that are not needed to create project assets.
• We waste the resources invested in creating project assets that do not improve the value stream system.
• We waste the resources invested in changing the value stream system when this does not result in incremental value. Here, there is no causal relationship between the project objectives and the goal of the project (or the assumed relationship is not realized).
• Any suboptimal use of project resources is also a waste (relative waste).

Strategic Project Waste

Let's look at a project example.

The city council of a million-population city has implemented a project intended to improve the quality of the ambient air.

They have built a network of 22 monitoring stations to measure in real time the most common air pollutants (particulate matter, carbon monoxide, nitrogen dioxide, sulfur dioxide), together with air temperature, humidity and atmospheric pressure. The urbanized area of the city is over 5,000 km². Each station sends information to an open data system which uses cloud technology, analytical functionality and machine learning to facilitate timely action to improve the air quality. The system interface provides visual and machine-readable data, accessible via web interface and through smartphone and tablet applications.

According to city officials, the project applies new technologies (Internet of Things) to reduce the levels of fine particulate matter and improve ambient air quality.

 They have completed the project. The sensors send real-time data to a database. The data is visible on a public website.

What could be wrong with using new technologies to improve air quality?

To create benefits, a project must:

- Create a new value stream

or

- Improve an existing value stream

or

- From a problem-solving perspective, directly solve a problem (which improves a value stream)

Let's examine these options for the air quality improvement project.

1. Solving a problem

The project does not eliminate any root cause of air pollution. Air quality monitoring only records the status.

2. Creating a new value stream

The project does not create (nor does it have the ambition to create) a whole new value stream, such as a "cleaner air" or "better health" value stream.

3. Improving existing value stream

There are several hypotheses:

There is a “clean air” value stream created and maintained by the organization of the project owner. The project improves this value stream.

There is an existing “clean air” value stream created by the self-organizing social system of the city, and/or the citizens have their own individual “clean air” value streams. The project improves these value streams.

The city council, the society and the individuals have value streams that are merged into a common “clean air” value stream. The project improves this aggregate value stream.

Hypothesis about an existing value stream operated by the city council which will be improved by the project

• The city council operates a value stream that delivers clean air to citizens.
• Performance metrics for this value stream are defined. Improving value stream performance, as measured with the metrics, results in improved air quality.
• There is a mechanism for continuous identification, analysis and solving air quality problems, eliminating the root causes.
• The project was based on an analysis of the value stream. Various options for improving the value stream were considered, and the project is the most efficient and effective option.
• The air quality improvement project removes impediments to the effective functioning of the value stream.
• Data from the 22 stations for an area of several thousand square kilometers are statistically reliable and sufficient to enable decisions to improve the value flow.
• The data will be used to improve the value stream.
• Using the data will improve the efficiency of the value stream as measured with the performance metrics.
• The Improved value stream efficiency will reduce air pollution.
• The air pollution reduction will be cost effective.
•  There is a reliable mechanism for measuring the contribution of the project to reducing air pollution and it will be implemented.

If the project was justified by improving the existing value stream of the city council, but critical assumptions are invalid (or not validated), there would not be a sound reason to believe that the improvement would happen and the whole project would be considered a waste.

Hypothesis for existing citizens’ value streams

What is fundamentally different about this hypothesis is that it implies individual actions by the citizens – emission reduction measures or protective measures against air pollution effects, motivated or enabled by the project.

Some assumptions associated with this hypothesis are:

• People are aware of the project and know where to find the air quality information from the 22 stations.
• City residents will prefer the data from project measuring stations, rather than  from the existing measuring stations of civic organizations (whose data the city authorities consider unreliable).
• City residents know how to interpret the data from the air quality measurement stations.
• Citizens will find a motivation to reduce their individual air pollution, based on information from the city’s measuring stations, and will take appropriate measures.
• Individual measures to reduce air pollution will have a significant effect on overall air quality. This effect will be visible through the information from the 22 stations.
• The measures to reduce individual air pollution will be effective and cost-efficient.
• There is a reliable mechanism for measuring the effect of the project on the reduction of individual air pollution and the city council will implement it.
• The preventive measures taken will be timely (in real time, based on real-time information).
• The individual preventive measures will have a positive effect on the health status of people.

Similarly, if the project aims to improve the existing value streams of citizens, and the critical assumptions are invalid or are not validated, we could consider the whole project a waste.

The design of this air quality improvement project gives us reason to believe that it was not intended to be a means of improving value streams and that critical assumptions have not been converted into hypotheses to be tested and validated.

We can look at this project from different perspectives:

• From the perspective of problem solving, the project does not eliminate a root cause of air pollution.
• From the perspective of the systems approach, the project does not create a complete value stream.
• From the perspective of flow of value, the project does not improve value streams.
• From the perspective of value, the project does not create value for the customers (city residents).
• From the perspective of the declared goal of the project (improvement of air quality), the project does not achieve its goal.
• From the perspective of the return on investment, the project has a negative return.
• From the perspective of waste, all resources invested in the project are wasted.

This is an example of what we call a strategic waste – a complete waste resulting from the separation between the project and the value stream system that needs to be improved or from lack of alignment with the organizational strategy.

The whole investment is a waste, and the project is doomed to failure and doomed to waste from the very beginning. This waste cannot be overcome in the actionable phases because it stems from the ill-conceived conceptual design of the project. Efficient and effective implementation will not add waste. Poor implementation of a strategically wasteful project will cause additional tactical waste.

The project in our example is no exception. Such strategically wasteful projects are common.

How is that possible?

The main reason is the misunderstanding of both the project logic and the need to integrate the project into the value stream systems. This mental model leads to wishful thinking and to what we call project mimicry.

Project mimicry is the resemblance of a project that is separated from the value stream system, or not aligned with the strategy, to a project that is integrated into the value stream system or aligned with the strategy. The resemblance is achieved by unintentional or intentional definition of value-based goals and invalid assumptions, based on supposed but non-existent logical relationships, to justify a strategically wasteful project.

These are examples of value statements intended to justify the project:

- Ambient Air Quality Improvement Project (the name of the project)

- … to improve the quality of the ambient air (project purpose)

- … cloud technology, analytical functionality and machine learning to facilitate timely action to improve the air quality

- … the project applies new technologies (Internet of Things) to reduce the levels of fine particulate matter and improve ambient air quality

We believe that, in this case and in most other cases, project owners use such statements unintentionally and inadvertently, which makes the problem even bigger because they don't realize it. They don't identify critical assumptions and do not convert them into hypotheses that they should test. The masking statements express supposed logical relationships that do not exist.

And this is not the end. The story of the waste continues.

To illustrate how strategic waste grows further, we will formulate a hypothesis about how the air quality improvement project is developing.

One year later, the city council secures funding to extend the "successful" pilot project by installing 30 additional measuring stations. The initial strategic waste is doubled, with new investment and additional maintenance, support, replacement, and decommissioning costs.

And no, this is still not the end.

The project is featured in media publications and reports as a success story and best practice. As a result, the project (and the waste) is replicated elsewhere.

Tactical Project Waste

Tactical waste is waste that occurs regardless of whether the project is separated from the value stream system. It can appear in any project.

All forms of waste described in Chapter 1 can be present in projects, too, depending on the project. In this chapter, we will discuss only project-specific waste.

The major forms of tactical project waste are:

1. Wrong deliverables or features
2. Delays
3. Poor quality
4. Duplicate efforts
5. Lost productivity
6. Over-processing
7. Overcomplicating

1 - Wrong deliverables or unnecessary features

Wrong deliverables or unnecessary features waste all the resources invested in them and may cause schedule overrun and added cost of delay. After the project, they generate handling and/or operating costs and accumulate additional waste.

Wrong project deliverables are those that:

• are not related to the objectives of the project, or
• are based on invalid assumptions about causal relationships with project objectives, or
• the customer does not use, or
• generate life cycle costs that are greater than their benefits.

We can summarize the reasons to work on wrong deliverables as faulty project logic and lack of customer involvement.

Unnecessary features of deliverables are those that:

• the customer does not use, or
• generate life cycle costs that outweigh their benefits.

Common reasons for creating unnecessary features are:

• A desire to provide the customer with more value through a more sophisticated product, to increase satisfaction and sales
• An effort to combine different ideas about the design of the deliverable or different use cases in a common set of features
• Overcomplicated product design
• Misunderstanding of customer requirements and lack of customer involvement
• Invalid assumptions about the value of features

2 - Delays

For each project deliverable (or feature) there is a point in time – or a time period – at which the customer must have it available to maximize the net benefits over its entire period of use. This is the optimum timeframe for the project deliverable or feature to be delivered to and absorbed by the customer. Any delay beyond the optimum timeframe will cause additional cost to the customer. The cost of deferred use is among the most significant forms of tactical project waste. Ironically, earlier delivery (outside of the optimum timeframe) does not create additional value for the customer but results in what we call cost of premature delivery (learn more in Cost of Time).

A great variety of reasons can cause project delays, including:

• Waiting for resources, information, approval, decision, permission, feedback or an upstream activity to finish
• Multitasking and task switching
• Lack of prioritization and coordination
• Multiple team coordination problems
• Lack of capacity
• Lack of knowledge and skills
• Handoffs
• Working in large batches
• High-level inventory of work-in-process
• Idle time
• Interruptions and unnecessary meetings
• Process queues

3 - Poor quality

The waste of poor quality constitutes the incremental costs that would not exist if quality of project deliverables and project management were good enough. The waste is the difference between the cost of quality in a poor-quality scenario and the cost of quality in a good-quality scenario.

Poor quality is not only about defects. The quality of project deliverables has two aspects:

• External quality, which we associate with fitness for purpose from the customer’s perspective
• Internal quality, which we relate to the design of the product or service

The cost of poor external quality includes:

• Rework, including additional planning, inspection and testing
• Additional efforts to track defects
• Cost of delay – the lost benefits of delaying the use of a deliverable which can be a completely lost opportunity
• Costs to fulfil warranty and service-level agreement obligations
• Costs resulting from customer dissatisfaction, including loss of reputation
• Costs incurred by the customer ­– lost opportunity, lost productivity, repair after warranty period, corrective measures

Poor internal quality does not necessarily affect the fitness for purpose. Low internal quality and high external quality are not always incompatible. A deliverable with poor design requires extra effort and time for changes and maintenance. This also means adding the cost of delay. For instance, code complexity can make it harder to add new features to a software product and more difficult to maintain it.

The main causes of poor quality are:

• Poor quality processes, including poor defect prevention processes
• Unclear quality criteria
• Quality is not built-in
• Quality is not the team responsibility
• Not fixing defects immediately by eliminating the cause
• Working in large batches and excessive work-in-process which hides quality issues
• Delayed feedback on quality
• Poor design of deliverables
• Insufficient resources
• Lack of knowledge and skills
• Lack of motivation
• Ineffective communication
• Time and cost pressure
• Lack of customer involvement (building for the customer instead of building with the customer)

4 - Duplicate efforts

This form of waste may include efforts and time to:

• create something that has already been created
• reinvent and learn again
• do something that is already being done by someone else

Examples of duplicate efforts are:

• Creating items (such as software components, designs and documentation) that exist already and can be reused
• Creating project documents from scratch instead of using templates or documents from previous projects (the same applies to project management processes)
• Finding solutions repeatedly to the same challenges as lessons learned are not used
• Two team members working on the same task or the same problem

The main causes of duplicate efforts are:

• Lack of knowledge capture and continuous improvement processes
• Lack of expertise
• Ineffective communication
• Lack of transparency and collaboration

5 - Lost productivity

Productivity is the efficiency of production. It can be measured as a ratio of needful project outputs to project inputs.

All resources that do not contribute to creating needful project deliverables (or can be saved) are wasted. In this sense, most forms of tactical project waste are waste from lost productivity.

With reference to team productivity, major sources of loss of productivity are:

• Ineffective communication and collaboration
• Excessive work-in-process
• Multitasking and task switching
• Idle time
• Overqualified team members
• Overwork, overtime, frustration and stress
• Queues
• Manual work (e.g., testing) when automation is possible
• Unused employee creativity and untapped human potential

6 - Over-processing

In project management, we can define over-processing as excessive use of resources to create project outputs. When this results in delays, the cost of delay increases the waste.

Examples of over-processing are:

• Excessive planning (especially upfront) and requirement-gathering
• Providing higher quality than the customer expects
• Creating more iterations of a deliverable than needed
• Working on product features beyond the minimum feature set
• Creating excessive documentation
• Excessive information and communication
• Excessive reviews and reporting 
• Overanalyzing
• Micromanaging

7 – Overcomplicating

Complex projects, deliverables and project management processes require excessive efforts and time and produce waste. Overcomplicating is about going beyond “good enough”, “minimum viable” and “absolutely necessary”.

Complexity in project management leads to:

• Lack of focus
• Reduced reliability and flexibility
• Increased risk
• Lack of clarity of requirements, process of work and communication
• Lack of understanding
• Difficulty in management and changes

Examples of overcomplicating are:

• Overly complex projects that we could limit to Minimum Viable Projects
• Project products with too complex design
• Complicated communication and collaboration process
• Complicated planning, review, approval and decision-making process
• Complicated project organization

Total Project Waste

Total Project Waste (TPW) comprises all types and forms of waste on a project, including where applicable Strategic Waste, Tactical Waste, Accumulated Waste and Multiplied Waste.

Strategic Project Waste is the waste resulting from separation between the project and the value stream system that needs to be improved, or from lack of alignment with the organizational strategy.

The strategic waste is 100% of the project investment and the subsequent operating and decommissioning costs, assuming efficient and effective project execution (absence of tactical waste). For an aligned project, there is no strategic waste.

Tactical Project Waste is the waste from inefficient and ineffective use of project resources, regardless of whether the project is aligned with the organizational strategy and the value stream system. When there is a strategic waste, the tactical waste is added to it.

Accumulated Project Waste comprises the additional operating and decommissioning costs resulting from wrong project deliverables, low quality, complications or unnecessary features.

Multiplied Project Waste is the waste resulting from extending or replicating a wasteful project or wasteful project management practices.

• Lean project management should aim to reduce and eliminate waste.
• Waste are those activities and steps that generate negative net value for the project.
• All levels of the project hierarchy and any workflow step can produce waste.
• When a project does not improve the value-creating system or isn’t aligned with the organizational strategy, it’s strategically wasteful (Strategic Waste).
• The additional operating and decommissioning costs resulting from wrong, complicated or low-quality project assets or unnecessary features, accumulate project waste (Accumulated Waste).
• Extending or replicating a wasteful project or wasteful project management practices multiplies project waste (Multiplied Waste).
• The seven forms of Tactical Project Waste are wrong deliverables or features, delays, poor quality, duplicate efforts, lost productivity, over-processing and overcomplicating.