Transcript Engineering PRoject Management

Productivity Engg & Management
By Engr Dr. Ali Sajid
Special Presentation for
Pakistan Engineering Council
Leadership & Management
Development Associates (LMDA)
28 Jan, 2009
[email protected]
Tel: 051-2211791(off)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
LMDA
A vision to make
Pakistani Industry
More Competitive
By Enhancing
capacity of
Engineers
www.Lmda.com.pk
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Shakwa a Zulmat Shab
"Don't curse the
darkness -- light a
candle."
Chinese proverb.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
“The will to win, the desire to
succeed, the urge to reach your
full potentials are the keys to
unlock the doors to the personal
excellence”
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Confucius
Commencement address by Sir Winston
Churchill at a graduation ceremony:
"Never give up. Never
give up. Never, never,
never."
- this was his entire speech.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Good Mgmt
• Good management consists of
showing average people how
to do the work of superior
people."
• (John D Rockerfeller, 1839-1937, US oil magnate
and philanthropist.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Difficulty
•"Difficulty is not
an obstacle, it is
merely an
attribute".
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Stone Age
"The stone age
didn't end because
they ran out of
stones."
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
•Start viewing the
probable as possible.
You'll be surprised at
what you can
accomplish.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• All this will not be finished in the
first one hundred days. Nor will it
be finished in the first thousand
days, nor in the life of this
administration, nor even perhaps
in our lifetime on this planet. But
let us begin.
- John F. Kennedy
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• The best & most beautiful
things in the world
cannot be seen or even
touched.
• They must be felt
with the heart.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
•Self-actualized
people are
independent of the
good opinion of
others.
- Wayne Dyer
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• The greatest discovery of
our generation is that a
human being can alter his
life by altering his
attitudes.
- William James
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• Nature present us with an
infinite variety of Attitudes from gloomy mist to glorious
sunshine. Our own moods,
whether gloomy or bright,
radiate to those around us.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
We may affirm absolutely
that nothing great in the
world has ever been
accomplished without
passion.
- George Hegel
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Two Parts of Empathy:
Skill (tip of iceberg)
& Attitude
(mass of the iceberg).
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
•
Eighty percent of
success is related to
ATTITUDE rather
than competency.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Attitude
Your attitude
determines
your altitude.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
•Pride is a personal
commitment; it is an
attitude which
separates excellence
from mediocrity.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
•Attitude is a
little thing that
makes a big
difference.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Action
•Logic will not change
an emotion,
•but action will.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
The difference between a
successful person and
others is not a
“Lack of Strength”, not a
“Lack of Knowledge”,
but rather in a
“Lack of Will”.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
The mold of a man's
fortune
is in his own hands.
- Francis Bacon
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Passion
• We may affirm absolutely
that nothing great in the
world has been
accomplished without
passion.
- Georg Wilhelm Friedrich Hegel
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Believe
• If you do not believe in
yourself ...
chances are nobody
else will.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• You can have a positive attitude
without talent and you can have
talent without a positive
attitude, but things really start
happening when you have a
positive attitude combined with
talent.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
To be conscious that you are
ignorant is a great step to
knowledge.
- Benjamin Disraeli
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Leaders Are …
in a Hurry
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Flexibility
Whatever is flexible ….will
grow;
what ever is rigid
& blocked
will die
Lao Tzu
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Goodness
“Goodness
is the
Only Investment
that
Never Fails”
Henry David
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Proj Mgmt Good Practices
"I Praise Loudly.
Blame Softly."
(Catherine The Great, 1729-1796.)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Attitude in Projects
“Nothing can stop man with
“Right Mental Attitude”
from achieving his goals:
Nothing on earth
can help man with
“Wrong Mental Attitude”
-
July 18, 2015
Thomas Jefferson
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Importance of Ethics in Org
In law, a man is guilty
when he violates the
right of another.
In Ethics, he is guilty,
if only he thinks
of doing so
• Immanuel Kant
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Personal Integrity in Org
I look for three things in hiring People.
The first is Personal Integrity,
Second is Intelligence
Third is a High Energy Level.
But if you don’t have the first,
other two will kill you.
Warren Buffett,
CEO Berkshire Hathaway
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Rethinking in Industry
The complacent company
is a dead company.
Success today requires
“The Agility &
“Drive to Constantly Rethink,
Reinvigorate,
React, & Reinvent”.
Bill Gates, Chairman Microsoft
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• Never to suffer would
never to have been
blessed.
• Edgar Allan Poe (1809 - 1849)
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LMDA Introduction by Prof. Dr. Ali Sajjid, TI
36
•Although the world is
full of suffering,
it is full also of the
overcoming of it.
• Helen Keller (1880 - 1968)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
37
• To do right is wonderful.
To Teach others to
“Do the Right”
is even more wonderful –
& much easier.
- Mark Twain
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
38
“Self-pity is our
Worst enemy &
if we yield to it,
we can never do
anything wise in
this world”
- Helen Keller
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
39
“Setting An Example”
is not the
“Main Means of
Influencing”
Others, it is
“the only means”.
July 18, 2015
- Albert Einstein
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
40
Education & Training in PM
A person who
graduated, yesterday
& stops studying today
is uneducated
tomorrow."
"
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Competitiveness
• Ability to get customers to
choose your product or service
over competing alternatives on
sustainable basis.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Competitiveness-
“Degree to which a country can, under free &
fair market conditions, produce goods &
services which meet the test of intl’ markets,
while
simultaneously
maintaining
&
expanding the real incomes of its people over
the long-term“.
OECD
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Competitiveness
Competitiveness ---- continually
sustained increases in productivity
resulting in higher wages & living
standards --- characterized by increasing
export market shares.
Competitiveness ---- demonstrated by
"ability to meet, rest of free intl markets
while expanding real income."
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
High
standard
of living
Trade
Productivity
(Quality should exist)
Investment in productive facilities
(Factors, R&D, technology)
Competitiveness Pyramid
Source: Based on US Council on Competitiveness, 1995.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Competitiveness depends on Productivity
"Standard of living is determined by the
productivity of a nation's economy, which
is measured by the “Value of goods &
services (products) produced per unit of
the nation's human, capital &
Natural resources".
Porter & Christensen, Harvard Business School
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
What is Productivity
Ratio of output to input by large number of
professionals.
ILO Definition:
“Ratio between o/p of wealth produced
& i/p resources used up in process of
production”.
Comparative tool for mgrs, industrial engrs,
economists, & politicians.
Contd…
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Operation Management System
Feedback
Inputs
Raw materials,
human resources,
capital (land,
buildings,
equipment),
technology
information.
July 18, 2015
Outputs
Product/
Service
Design &
Facilities
Transformation
Process
Control
Processes
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Products, services,
&
other (pollution)
Indicators of Competitiveness
Productivity is efficiency with which goods &
services are produced & provided.
Determined by previous “investments & by quality &
performance of workforce, technological innovation,
quality of plant & equipment, & effectiveness” with
which these factors of production are utilized.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Definition of Productivity
Successful Tech Org create surplus
through productive operations.
Productivity, is output-input agreement
on true meaning of due consideration for
“Quality & Time”.
Productivity = Outputs (within time
Inputs considered)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
period,
quality
Concepts of Productivity
Comparison b/w:
“Quantity of goods or services produced”
& “Quantity of Resources Employed”
in turning out these goods or services.
Stress is on productivity being
Concern of production function only.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• Relationship b/w output generated by
production or service system
& input provided to create this output.
Efficient use of resources –
Labor, capital, land, materials, energy,
information –
In production of various goods &
services.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Concepts of Productivity
“Ratio of o/p to inputs -expanded inputs to include
technology besides labor, materials, machine
utilization.”
Siegel Considers Productivity as:
“Class conceivable measure depicting output per unit
of associated input in sequence of compared period”.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Some Recent Attempt to Define Productivity
Mali - Rational departure to define productivity as:
“Productivity is measure of how well resources are
brought together in organizations & utilized for
accomplishing set of results.
Productivity is reaching higher level of performance
with least expenditure of resources”.
Further Elaborates as.
“Productivity is combination of effectiveness &
efficiency” & “ Effectiveness related to performance,
efficiency to resource utilization”.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Some Recent Attempt to Define Productivity
Concept of Productivity Must:
“Serve as a tool in the hands of mgt to take corrective
steps for productivity improvement & also should
provide ready reference & comparison of performance
with performance objectives of org.”
Productivity Perceived as:
“Indicator of how well goals or performance
objectives or mission have been achieved.”
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Concepts of Productivity
Faraday -Productivity as “Ratio of prescribed output
to resources”.
Ramsay - Productivity as ratio of output to inputs
based on concept of value addition.
Formal definition of productivity:
“Productivity is Optimization (or maximization of
economic resources & generation of new resources
through creative thinking, research & development, &
by use of all possible improvement techniques &
methods”.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Some Recent Attempt to Define Productivity
“Productivity is measure of how well resources are
brought together in organizations & utilized for
accomplishing set of results.
Productivity is reaching higher level of performance
with least expenditure of resources”.
Further Elaborates as.
“Productivity is combination of effectiveness &
efficiency” & “ Effectiveness related to performance,
efficiency to resource utilization”.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Some Recent Attempt to Define Productivity
Concept of Productivity Must:
“Serve as a tool in the hands of mgt to take corrective
steps for productivity improvement & also should
provide ready reference & comparison of performance
with performance objectives of org.”
Productivity Perceived as:
“Indicator of how well goals or performance
objectives or mission have been achieved.”
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Term ‘Productivity’ encompassed
everything, which concerns an org.
Different meaning, definitions,
interpretations & concepts emerged as
experts working in various fields have
looked at it from their own emphasis,
perceptions & reference point they have
before them.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Difference b/w Production & Productivity
Production is concerned with Activity of
Producing goods & or services.
Productivity is efficient utilization of resources
(inputs) in producing goods or services
(outputs).
Production is quantity of output produced.
Productivity is ratio of output produced in
input (s) used.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• Higher productivity means
accomplishing more with same
amount of resources
or
Achieving higher output in terms of
volume & quality for same input.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Evolution of Productivity Concept in Modern Era
Frederick Taylor: Father of Scientific Mgt
Mech Engr – invented high speed steel cutting tools
Got opportunity to know:
First Hand Problems & Attitude of Workers.
“Major Concern”
To increase efficiency in production,
to lower cost,
Raise profits through higher productivity,
possible increase in pay.
To be Contd.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• “Concept of Economic Man”, - worker is
motivated primarily by economic gain &
o/p maximized only thru financial
incentives.
• Differential Piece-Rate system, - workers
receive higher rate of pay per piece
produced after a fix number.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Taylor’s Message of Productivity
• Various pay plans based on output for “surplus”.
Give People their best opportunity to be productive,
reward workers for individual productivity.
Increase labor productivity not possible w/o:
• a) Providing ample reward,
• b) Adequate training,
• C) or Managerial help.
Careful advance Planning by Manager
Managers to design work systems for
worker to do their best.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Fredrick Concluded:
“Low Productivity is matter of ignorance
on part of “Labor & Mgt”.
Ignorance? “Fair day’s work” &
“Fair day pay”
Not enough inc in surplus to get more
compensation.
Productivity enhancement –
answer to hi wages/profits.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Problem faced in LDC is problem
not of underdevelopment but
rather of under mgt.
Actually
productivity is most
serious challenge
confronting mgt.
Peter Drucker
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Contd…
Productivity can be improved:
1. By increasing outputs to with same inputs.
2. By decreasing inputs but maintaining same
output
3. By increasing outputs & decreasing inputs
to change ratio favorably.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity-Manager’s Perspective
• Use accounting ratios in achieving
objectives of general mgt, which is
usually interested in productivity measures
that enable it to easily assess the present
profitability of the company.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity-Engineer’s Perspective
• Seek measures of Physical assets & other
resources, such as
• “Production per hr.,
• man hrs. per unit,
• material requirements per unit,
• machine utilization,
• and space utilization”,
but they may fail to relate these to overall
productivity.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
ProductivityBehaviorist’s Perspective
• View productivity of people in organization, in
terms of “time they spend at work vs. total
time available”.
• A misleading measure.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity-Accountant’s Perspective
• Costing & budgeting approach to
productivity.
• When budget figures, rather than optimum
achievable values, are used as standards,
• Could be a false impression of high
productivity.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity-Economist’s Perspective
• Partial measures, such as Labor productivity,
Primary measures employed by economists.
• Total Factor & total productivity measures
proposed, but again definitions do not agree.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Misunderstanding about Productivity
Myth # 1
Profitability is Measure of Productivity.
Profit – Difference of some calculation of output
value & some calculation of input costs.
Function of several factors:a) Status of demand & supply:
b) Value of output:Value of output can rise because of hi market prices
resulting from more aggressive marketing, improved
quality of product, influence with buyers.
c) Input Costs:-
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
July 18, 2015
• Profit is not solely result of increased production
efficiency. At expense of the LT objectives, it can
be obtained by curtailing:
• (a) Training / HRD, (b) Maintenance, (c)
Advertisement. (d) SHE (e) QWL (f) BMR
Company may raise profit by:
• (a) Production building monopoly power,
• (b) Bribing purchasing agents,
• (c) Hypnotizing consumers,
• (d) Undermining a union or getting public
subsidy. /export rebate
• Conclusion : Profitability can not be equated
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
with productivity.
Myth # 2
When you increase Quality,
You decrease Productivity as Cost of Input
increases.
Quality & productivity go hand in hand
•Deming circle
•Quality is a specific dimension of productivity.
•A high productivity is not outcome of lowered
specifications of products manufactured or services
rendered.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Quality & Productivity Go Together
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity & Managerial Performance
Productivity is a summary measure of
the quantity & quality of work
performance, with resource utilization
considered.
It can be measured at the individual,
group, or organization level.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
THE QUALITY PRODUCTIVITY RELATION SHIP
Less
Re-Work
Improve
Quality
July 18, 2015
More
Productivity
Lesson
Re-work
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Contd…
Deming’s Chain Reaction
Improve Quality
COST DECREASE
BECAUSE OF LESS
REWORK, FEWER
DELAYS, BETTER
USE OF RESOURCES
CAPTURE MORE
BUSINESS WITH
BETTER QUALITY
AND LOWER PRICE
July 18, 2015
STAY IN
BUSINESS
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
PRODUCTIVITY
IMPROVES
Less Production COST
JOBS, MORE PROFIT
Quality is All Consuming Focus
Deming’s Chain Reaction
Improve
quality
Decrease
costs
Improve
productivity
Decrease
prices
Increase
market
Stay in
business
Provide jobs
& more jobs
Return on
investment
Org which seeks to decrease costs, improve productivity, decrease
prices, increase market share & increase return on investment - without
first building quality into systems – is gambling its long-term survival
for short-term advantage.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Positive Relationship b/w Quality &
Productivity
Reduced productivity is caused by
quality defects, rework, & scrap.
“Improvement of quality transfers
waste of man hours & of machine time
into manufacture of good products &
better service”.
(Dr. Edward Deming)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Positive Relationship Between Quality
& Productivity
Reduced productivity is caused by
“Quality Defects, Rework, & Scrap.
“Improvement of quality transfers
waste of man hours & of machine
time into manufacture of good
products & better service”.
(Dr. Edward Deming)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Contd…
Certain “hidden” & “Non-productive Plant
exists to rework & repair defects & returns, &
if quality is improved, this hidden plant would
be available for increased productivity.
Any Quality Improvement that reduces defects
- improvement in productivity.
Same can be said, for services & for those firms
in services businesses. Cost of quality
improvement rarely exceeds savings from
increased productivity.
(Feigenbaum)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Contd…
Myth # 3
Productivity Can Be Judged by Output
•Output may be rising without increase in
productivity e.g. input cost risen,
disproportionately
•Increase in o/p compared with last year
should also consider like price hike/inflation.
•Such an approach is result of being process
oriented at the expense of paying attention to
final results.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Myth # 4
Productivity is Applied only
in Manufacturing &
Production alone.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Myth # 5
Cost cutting always improves
productivity
When done in an indiscriminately make
matters worse in long run
Cut on info Tech use, Ban on Training
etc.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Myth # 6
Productivity is “Labour Efficiency or Labour
Productivity
False assumption - single factor productivity analysis.
•1976-82, UK Productivity in Agri Labor :
•Rose to 60% due to breeding, fertilizers sprays, land &
tech (yield/hectare also increased)
•One Unit of Energy (fertilizer) grew less wheat in 83 than
1963. (Surprise)
•More appropriate yardstick of efficiency is then yield
produced for each monetary unit spent.
•Productivity - much more than labour alone & take into
account cost of energy, raw material & concern for
unemployment / QWL.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Myth #7
Productivity improvement requires billions
of Rs and millions of trained persons.
•Common sense
•Short courses/formal train.
•Top level commitment
•Principles of TQM
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• “Greatest opportunity for
increasing productivity is surely
to be found in knowledge worker
itself, & especially in mgt”.
• Peter F. Drucker
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
 Financial & social benefits
of productivity
improvement strategy
should be greater than
implementation cost, in
long run.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Definition of Effectiveness & Efficiency
Productivity implies effectiveness &
efficiency individual & organizational
performance.
Effectiveness-Achievement of Objective.
Efficiency: Achievement of ends
“with least amount of resources”.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
•Efficiency is
concerned with
means
•Effectiveness with
ends.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Efficiency is ratio of actual
output attained to standard output
expected. Example
Output of machine is 120 units per
hours while standard rate is 180
pieces per hour, machine's
efficiency is 120/180 = 0.6667 or
66.67 percent.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Efficiency
• Extent of useful output compared to
input.
• Least amount of resources must be used
to achieve useful output.
• Wastage reduction.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• Efficiency -relationship between inputs & outputs
and its comparison . If you get more output for a
given input, you have increased efficiency.
• Managers deal with input resources that are scarce
money people, equipment they are concerned with
the efficient use of these sources.
• Mgmt- concerned with minimizing resource costs.
(Efficiency).
• Mgt concerned with getting activities completed(effectiveness).
• When managers achieve their org goals- effective.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Balancing Effectiveness & Efficiency
Effectiveness entails promptly
achieving stated objectives.
Efficiency enters picture when
resources required to achieve an objective
are weighed against what was actually accomplished.
Mgrs are responsible for balancing
effectiveness & efficiency.
Too much emphasis in either
direction leads to mismgt.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Efficiency & Effectiveness
Mgt, is concerned with minimizing resource
costs w/o chances of failure.
Efficiency is “doing things right”.
Mgt is also concerned with getting activities
completed, so it seeks effectiveness.
Effectiveness is:
“Doing right things”
So efficiency is concerned with means &
effectiveness with ends.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• It is easier to be effective if one ignores
efficiency. Some Production orgreasonably effective
but
extremely inefficient.
• They get their jobs done, but at a very
high cost.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
 Mgt in Engg Org must be concerned, then
not only with
Getting activities completed (effectiveness),
but also with doing so as
Efficiently as possible.
Can organizations be efficient & yet
not effective?
Yes,
By doing wrong thing well !
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Management Seeks Efficiency & Effectiveness
Ends:
Effectiveness
Means:
Efficiency
Low
Waste
July 18, 2015
Goals
High
attainment
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Effectiveness/Efficiency
Peter Drucker
• Efficiency
– Doing things right
• Effectiveness
– Doing the right thing
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity Index =
Output Obtained
Input expended
Performance achieved
Resource consumed
= Effectiveness
Efficiency
Productivity Index= f (Effectiveness)
F (Efficiency)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
• Efficiency & effectiveness are interrelated.
• It is easier to be effective if one ignores
efficiency.
• Federal Govt. in Islamabad are reasonably
effective -extremely inefficient jobs done
but at a very high cost.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Major Issues of Productivity in
Pakistan
• Inability to understand the basic concept
of productivity.
• Inability to measure & manage productivity
of white collar employees- main reason for PS
inefficiencies.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Major Issues of Productivity in Pakistan
• Considering productivity enhancing
initiative as an additional overhead.
• Across the board Rewards / benefits
disregarding - equivalent in productivity.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Major Issues of Productivity in
Pakistan
• Diffused and unclear authority
under institutional setup & inefficiency in
complex organizations, cause delays and time
lags.
• Low labor productivity in Pakistan is causing –
”competitive imbalance”.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Major Issues of Productivity in Pakistan
• Manufacturing -we are losing
competitiveness, due to higher costs of
production as customers turn to low cost
product.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity in Pakistan:
Issues & Lessons
• Financial & social benefits of Productivity
Improvement Strategy are far
greater than implementation cost in the long
run.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Increasing Productivity can break Vicious Circle
of Poverty, Low Productivity & Unemployment
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Low Productivity Trap in Pakistan
Conditionalities
of donors.
Low productivity growth
(compared with input prices esp.
labor and energy).
Lagging capital
formation
(insufficient
capital-labor
ratio).
Lower
utilization of
domestic plant
capacity.
July 18, 2015
Rising prices
(domestic and
export goods).
Sluggish sales (in domestic
and foreign markets).
Unintended inventory in
warehouses.
LMDA
Introduction by Prof. Dr. Ali Sajjid, TI
Rising per unit
(labor and
energy) costs.
Low Productivity in Pakistan
• This vicious cycle of poverty &
unemployment can be broken by increased
productivity.
• Increased productivity results in:
– Optimal use of resources.
– Better balance between different stakeholders
of society.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity Improvement in Pakistani Environment
• Productivity improvement will cause direct
increase in standard of living.
• Pakistani GNP can grow without adding more
input factors when productivity is improved.
• Productivity improvement will trigger
economic growth.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Lessons for Pakistani Industry
• Caterpillar has achieved 27% greater sales,
through investments in productivity
enhancement of its workforce & technology.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Difference B/W Production & Productivity
Production is concerned with the activity of producing goods and or
services.
Productivity is efficient utilization of resources (inputs) in producing
goods or services (output)
Production is the quantity of output produced; productivity is the ratio
of the output produced to the input (s) used.
Efficiency is the ratio of actual output attained to standard output
expected. Example
Output of a machine is 120 units per hours while the standard rate is
180 pieces per hour, the machine's efficiency is 120/180 = 0.6667 or
66.67 percent
Effectiveness is the degree of accomplishment of objectives.
How well a set of result is accomplished reflects effectiveness, whereas
how well the resources are utilized to accomplish the results refers to
the efficiency.
Productivity is a combination of both effectiveness and efficiency,
since effectiveness is related to performance while efficiency is related
to resource utilization.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Efficient & effective use of resources – labour, capital, land,
materials, energy, time, information, etc. in production of
goods & services that meet users, needs & requirements.
“Productivity is combination of effectiveness &
efficiency” while “Effectiveness is related to
performance & efficiency to resource
utilization”.
Rising & improving quality of working life do
tend to go hand in hand.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
How can Orgs Improve Their Productivity
 Productivity is composite of
people & operations variables.
 To improve productivity, mgt
needs to focus on both.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI

Productivity does not just happen by
“trying harder”. It must be planned.

But how do you plan for productivity, &
what factors are involved?
Frank. E. Cotton, Jr.
Mississippi State University
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Task of mgt is to evaluate those
factors with have bearing on
productivity & take appropriate
measures to use effectively.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Increase Productivity Is Key To Global
Competitiveness
 Japan’s prosperity in 1980s -due to growth in manufacturing
productivity.
Between 1979-86
Japan’s productivity increased - 5.5%
U.S productivity gained only 2.8% annually.
US firms responded over in 1990s -dramatic improvements.
Caterpillar investments in productivity (workforce & its
tech) resulted in:
 Higher customer satisfaction.
 Increasing market share
 27% greater sales
 With 29% fewer employees.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Critical Barriers/Problems Affecting Productivity
Improvement
Application on South Asia
• Family-controlled industry leading to earning easy
money.
• Some Segments have monopolistic market, some hi
competitive one.
• Erratic inflow of orders.
• Lack of productivity/quality culture.
• Shortage of funds & codification are at low level.
• Automation is not encouraged.
Contd…
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Critical Barriers/Problems Affecting Productivity
Improvement
Application on South Asia Contd…
• Low priority of marketing & commercial activities,
poor after service.
• Complicated govt. policy, rules & regulations.
• Inadequate communication facilities, particularly
road transport.
• Energy shortage.
• Poor working conditions (light, ventilations, safety,
housekeeping).
• Non availability of some basic material &
components (to be imported), unreliable suppliers.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Causes of Productivity Decline in Org
 Inability to measure, evaluate, & manage productivity
of white collar employees. This causes shocking waste
of resources.
 Rewards & benefits
given without requiring
equivalent in productivity & accountability. This
causes spiraling inflation.
 Diffused authority & inefficiency in complex org,
thereby, causing delays & time lags.
 Org expansion that lowers productivity growth.
results in soaring costs.
 Low motivation among rising number of affluent
workers with new attitudes.
 Late deliveries caused by schedules that have been
disrupted by scarce materials.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Contd…
Causes of Productivity Decline in Projects
 Unresolved human conflicts & difficulties in
teamwork, resulting in firm’s ineffectiveness.
 Increased legislative intrusions or antiquated laws,
resulting in constrained mgt options & prerogatives.
 Specialization in work processes resulting in
monotony & boredom.
 Rapid technological changes & high costs, resulting in
decline in new opportunities & innovations.
 Increasing demand of leisure time causing disruption
of time commitments.
 Practitioner’s inability to keep pace with latest
information & knowledge.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Critical Barriers to Productivity
Improvement in any Project
• Too many hierarchical levels.
• Poor utilization of old factory & machinery.
• Skilled worker shortage. Overloaded engineering
& design groups.
• Lack of time for development work.
• Trade unions adversity to productivity.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Critical Barriers to Productivity
Improvement
•
•
•
•
•
•
•
•
July 18, 2015
Inadequate human resource development.
Poor industrial relations.
High absenteeism.
Inefficient materials-handling facilities.
Rigid & authoritarian management style.
Excessive diversification.
Poor documentation of technical problems.
High social orientation.
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
TOTAL WORK CONTENT
=
+
July 18, 2015
+
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Productivity Thru
Time and Motion Study
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Time and Motion Study: Defined
• A method created to determine the ‘correct
time’ it takes to complete a certain task
• A method to establish ‘the one best way to
perform a task’
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Time and Motion Study: Purposes
• To end ‘goofing off’ and to establish what
constituted a fair days work
• To make sure that the job being evaluated does
not include any unnecessary motion by the
worker
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Functions of Time Studies
• Establish work standards: e.g. recommended
times in which tasks should be completed by
qualified, trained operators, without excessive
fatigue,
• Set expectations which are fair to both employee
and company.
• Identify sources of error, difficulty, sub-optimality,
• Improve an existing process, tool, or work
environment,
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Functions of Work Standards
• Establish reasonable productivity targets for
experienced workers,
• Provide productivity goals for training
purposes,
• Eliminate waste,
• Make processes more consistent,
• Reduce product variability, improve quality.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Time and Motion Study: History
• Frederick W. Taylor and his followers
developed and refined the Time Study
• Frank B. Gilbreth and his wife Lillian
developed and refined the Motion Study
• Historically the two studies are discussed
individually, today they generally are
discussed as one
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Time and Motion Study
Historically: T&M Studies
were used in the
manufacturing industry to
evolve pay scales with the
thought that money was
the only motivation for
work
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Time and Motion Study
• Today:
– T&M Studies can be effective for
performance evaluations
– T&M Studies can be used for planning
purposes in order to predict the level of output
that may be achieved
– T&M Studies can be used to uncover
problems and create solutions
– T&M Studies can be used for time cost
analysis
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Time and Motion Study: Objective
The objective of the Time and Motion Study is to
determine a ‘normal’ or average time for a job, by
using observers to record exactly how much time is
being devoted to each task.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
SCOPE ENHANCEMENT
July 18, 2015
•
In 60s measurement alone
found of little use
•
Method Improvement made
an integral part of TMS
•
Now called Work Study
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
•
Work Measurement Divided into Two parts
–
Method Study
–
Work Measurement
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
METHOD STUDY
Systematic Recording & Critical Examination of
existing and proposed processes as a means of
applying easier and effective methods
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
OBJECTS OF METHOD STUDY
 Improvement of Processes and Procedures
 Improvement of Shop-floor layout
 Economy in human effort and reduction in fatigue
 Improvement in use of machines, material and
manpower
 Development of better physical environment
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
There are two major
categories of
productivity
External (Not
controllable)
Internal (Controllable)
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
External Factors Affecting Enterprise
Productivity
External factors include government polices and
institutional mechanisms: political, social and
economic conditions; the business climate; the
availability of finance, power water, transport,
communications and raw materials. They affect
individual enterprise productivity, but the org’s
concerned cannot actively control them.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Internal Factors require different institutions, people, techniques
& methods.
External Factors – during planning phase.
First step towards improving productivity in Services is to
identify problem areas.
External Factors are internal to govts, regional institutions,
associations & pressure groups.
Contd…
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Model of Internal Productivity Factors
Internal
Productivity
Factors
Soft Factors
Hard Factors
Service or Product
Plant and Equipment
Technology
Organization and Systems
Work Methods
Materials and Energy
July 18, 2015
People
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
Management
Productivity Simple Rule# 1
How can Organizations Improve Their Productivity?
Productivity is composite of people &
operations variables.
To improve productivity, mgt needs to
focus on both.
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI
•THANKS
July 18, 2015
LMDA Introduction by Prof. Dr. Ali Sajjid, TI