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Masaryk University

Faculty of Economics and Administration

Field of study: Business Economics and Management

LEAN & AGILE PROJECT MANAGEMENT

AND THE CHALLENGES FOR ITS

IMPLEMENTATION IN THE SMES

Thesis supervisor: Author:

doc. Bc. Nika Mrdalj

Brno, 2020

Name and surname of author: Bc. Nika Mrdalj

: Lean & Agile Project Management and the challenges for its implementation in the SMEs

Department: Corporate Economy

Maste:

: 2020

Abstract

The purpose of this research was to investigate the possibilities, challenges and benefits of implementing Lean & agile project management in manufacturing SMEs. Lean & agile project management methods were originally developed for the software development industry, where they have revolutionized the way projects are managed. In the last decade, practitioners outside software development industry have started to realize the potential and benefits of implementing the agile approach. However, there are still only a few researches devoted to agile hardware development, and even fewer on the possibilities of its implementation in SMEs. By conducting a case study in the only Serbian manufacturing SMEs that has successfully implemented Scrum, analyzing internal companys documents and interviewing several employees and top managers from different sectors, who participated in the projects where Scrum was implemented, the lessons this organization has learned and that could be beneficial for both researchers and practitioners, are reported. The findings from this research show that although some adaptions of the Scrum framework were required, the applicability of the Scrum in this manufacturing SME was possible and beneficial.

Keywords

Agile for SMEs, Agile hardware development, Lean & Agile Project management, Scrum beyond software development, Scrum in mechanical development

Declaration

I certify that I have written hesis

challenges for its implementation in the SMEsdoc. Ing. and I have listed all the literary and other specialist sources in accordance with legal regulations, Masaryk University internal regulations, and the internal procedural deeds of Masaryk University and the Faculty of Economics and Administration.

Brno, 2020

author's signature

Acknowledgement

I would like to thank my supervisor, doc. Ing. Alen, for guidance, helpful ideas, and support during the entire process of writing this masters thesis. I would also like to express my gratitude to the personnel of Metalac Print d.o.o., for their participation in my research and allowance to publish the organizations internal documents for the purpose of this study.

Table of contents

INTRODUCTION ................................................................................................................................................. 7

LITERATURE REVIEW ..................................................................................................................................... 9

1 TRADITIONAL PROJECT MANAGEMENT .......................................................................................... 9

1.1 PROJECT ................................................................................................................................................... 9

1.2 PROJECT MANAGEMENT ............................................................................................................................ 9

1.3 TRADITIONAL PROJECT MANAGEMENT PRINCIPLES ................................................................................. 10

1.3.1 Waterfall model .............................................................................................................................. 10

1.3.2 Standards ....................................................................................................................................... 12

1.3.3 Roles............................................................................................................................................... 13

2 LEAN & AGILE PROJECT MANAGEMENT ........................................................................................ 15

2.1 LEAN PHILOSOPHY .................................................................................................................................. 15

2.1.1 Lean principles............................................................................................................................... 16

2.1.2 Lean tools ....................................................................................................................................... 17

2.2 AGILE PROJECT MANAGEMENT ............................................................................................................... 18

2.2.1 Agililty in management .................................................................................................................. 18

2.2.2 Agile manufacturing ....................................................................................................................... 18

2.2.3 Agile project management ............................................................................................................. 19

2.3 AGILE PROJECT MANAGEMENT METHODS ............................................................................................... 21

2.3.1 The common principles of agile methods ....................................................................................... 21

2.3.2 The differences of agile methods .................................................................................................... 23

2.3.3 Scrum ............................................................................................................................................. 24

2.3.4 Kanban ........................................................................................................................................... 26

2.3.5 Scrumban ....................................................................................................................................... 27

2.3.6 Extreme Programming (XP) .......................................................................................................... 28

2.3.7 Scrum/XP hybrid ............................................................................................................................ 30

2.3.8 Lean startup ................................................................................................................................... 30

2.4 LEAN AND AGILE VS. TRADITITIONAL PROJECT MANAGEMENT ............................................................. 31

3 IMPLEMENTATION OF L&A PROJECT MANAGEMENT .............................................................. 34

3.1 AGILE IN SOFTWARE DEVELOPMENT ....................................................................................................... 34

3.1.1 Key success factors ........................................................................................................................ 34

3.1.2 Challenges in software development .............................................................................................. 36

3.2 AGILE IN HARDWARE DEVELOPMENT ...................................................................................................... 37

3.2.1 Benefits ........................................................................................................................................... 40

3.2.2 Drivers ........................................................................................................................................... 40

3.2.3 Challenges ..................................................................................................................................... 42

4 RESEARCH METHODOLOGY ............................................................................................................... 44

4.1 RESEARCH OBJECTIVES ........................................................................................................................... 44

4.2 RESEARCH METHODS .............................................................................................................................. 44

4.3 RESEARCH STRATEGY ............................................................................................................................. 45

4.4 DATA COLLECTION TECHNIQUES ............................................................................................................ 45

4.5 RESEARCH PROCESS ................................................................................................................................ 45

4.6 INTERVIEW COMPOSITION ....................................................................................................................... 46

5 FINDINGS AND ANALYSIS ..................................................................................................................... 48

5.1 ABOUT THE ORGANIZATION .................................................................................................................... 48

5.2 FINDINGS FROM INTERVIEWS AND COMPANY DOCUMENTS ..................................................................... 52

5.2.1 Organizational culture and leadership .......................................................................................... 52

5.2.2 Meeting Scrum practices ................................................................................................................ 54

5.2.3 Individual and organizational performance .................................................................................. 59

6 DISCUSSION ............................................................................................................................................... 62

6.1 FIRST RESEARCH QUESTION .................................................................................................................... 62

6.2 SECOND RESEARCH QUESTION ................................................................................................................ 64

6.3 THIRD RESEARCH QUESTION................................................................................................................... 66

6.4 LIMITATIONS OF THE RESEARCH ............................................................................................................. 67

7 RECCOMENDATIONS ............................................................................................................................. 69

7.1 FURTHER TRAINING ON SCRUM AND OTHER AGILE METHODS ................................................................ 69

7.2 MOTIVATE TEAM MEMBERS ................................................................................................................... 70

7.3 CREATE MORE INDEPENDENT TEAMS...................................................................................................... 71

CONCLUSION .................................................................................................................................................... 72

REFERENCES .................................................................................................................................................... 74

LIST OF TABLES .............................................................................................................................................. 83

LIST OF FIGURES ............................................................................................................................................ 83

THE LIST OF ABBREVIATIONS ................................................................................................................... 83

APPENDICES ..................................................................................................................................................... 84

7

INTRODUCTION

By the end of the 20th and at the beginning of the 21st century, the business conditions and the characteristics of the business environment have drastically changed. The globalization, excess supply, increased demand for high-quality personalized goods and service, intense technical progress and strong impact of information technologies are just some of the factors that influenced the business environment in the last couple of decades. Modern business conditions have put the largest number of organizations in the situation that their survival and the future depend, above all, on the possibilities and the speed of adaptation to the new situation and conditions. The characteristic that distinguishes (and will even harder distinguish) the successful from the unsuccessful organizations is their willingness to adapt and redefine its business strategy to the unsteady environment. One of the answers to overcoming modern business challenges was provided by the Japanese company Toyota in the 1950s by developing Toyota Production System (abbreviated as TPS hereafter), which by the 1990s became known worldwide as lean manufacturing. The original ideas of TPS included reducing the cycle of production, eliminating everything that does not add value to the final product and producing only the products that customers want (Womack, Jones & Ross, 1990). The implementation of TPS made Toyota the leader in automotive industry for many years and changed the rules of the game in the automobile industry. Since then, the principles of TPS evolved and have been adopted by other industries as well. Today, the core values of TPS i.e. lean manufacturing can be referred to as lean philosophy, as their implementation transcend the manufacturing industry. The development of TPS influenced the defining standards and approaches in industries outside of automotive too. The numerous benefits from implementing TPS became globally acknowledged and even influenced the creating of the new approach in managing projects within organizations. This new approach has been gradually developing since 1970s and in both practice and literature became known as lean & agile project management (LAPM hereafter). The project management (PM hereafter) in general is a specialized discipline and one of the most important aspects of management in modern enterprises, regardless of their size or activity. By applying the appropriate tools and methods of organizing, planning, implementing and controlling, PM enables achieving all project objectives with the optimal use of available resources, in the fastest and most efficient way. The traditional approach to PM (TPM hereafter) has evolved over the years through the work and contribution of the great number of researchers and practitioners to become globally recognized the standard to be applied in everyday practice by both multinational corporations and small and medium- sized (SMEs hereafter) today. However, by recognizing certain shortcomings of the TPM, in the dynamic and the constantly changing business environment characterized by the Information Technology (IT hereafter) sector, LAPM approach has been defined. The need for a new approach in managing projects showed up as a result of wasting too much resources on IT projects, that often turned out to be a failure. The main reasons why these big IT projects failed was because TPM approach was too rigid and unable to adapt to the changing requirements that the IT industry demands. The TPM works quite well in the situations where everything is well planned, agreed on and known in advance. However, the reality is that, very often, not all elements are known in the beginning and there is a high possibility that there will be some changes in the stakeholders expectations and requirements. 8 The likelihood of changing initial requirements is even higher in the IT industry than in others. For that reason, LAPM, the new approach in managing projects, was originally developed for the IT industry, more specifically, for the software development. The LAPM approach is the use of simple methods and tools for encouraging creative work in small groups with direct communication of team members, eliminating all unnecessary activities and obstacles, monitoring the implementation of project activities on a daily basis, and promptly introducing corrections when necessary. Today, LAPM, also referred to as just agile project management (APM hereafter), is considered to be a mainstream approach in software development industry. LAPM enables software development organizations to become more responsive to changes, more efficient in delivering high-quality products and reduce the time necessary for a product to reach market. However, in non-software development industries, TPM remains the most common approach in managing projects. Although the current trend is expanding LAPM approach to other industries as well, there are only few publications on the research devoted to application of LAPM in hardware development industry. Due to intense technical progress and expansion of information technologies to almost every domain, it can be difficult to identify the application of LAPM in industries outside of IT. The example can be marketing (digital marketing in particular) that is in almost every aspect underpinned by IT and driven by automation. However, it is clear that in manufacturing industry, and especially in manufacturing SMEs, there are very few researches on possibilities of implementing LAPM. For that reason, this research will be dealing with the possibilities, challenges, and benefits of implementing LAPM in a Serbian manufacturing SME, that is considered to be a pioneer in implementing LAPM in its industry and country. The aim of this research is to contribute to the gap found in literature on the applicability of methods developed for the software industry to manufacturing industry. The findings obtained by analyzing and documenting the lessons learned from the case of this manufacturing SME could be beneficial for both further research on this subject and practitioners that are considering implementing LAPM in hardware development industry. 9

LITERATURE REVIEW

Before research methodology and findings obtained from this thesis are presented, the literature will be reviewed. The theoretical framework will deal with the literature on TPM, LAPM and the differences between these two approaches in managing projects. Finally, the drivers, barriers and benefits of implementing LAPM methods in both software and hardware development industry will be presented. The literature review presents the knowledge gathered from the previously conducted studies on the subject of this research in order to understand and best support the case study of this thesis.

1 TRADITIONAL PROJECT MANAGEMENT

In order to better understand LAPM approach, the basic terminology of PM and the roots of PM must be firstly defined. By elaborating what TPM is, the essence of lean & agile approach and the differences between these two approaches will be more comprehensible.

1.1 Project

In everyday business and social life, the term project is widely used. Whether it is winning a new market, introducing a new informational system or a new organization, developing a new product, reconstructing a manufacturing facility, building a new factory, dam, hospital or a school, it is always about the realization of a particular project. The project is most often defined as a complex and inimitable endeavor that is undertaken to achieve the goals in the forecasted time and cost (Jovanovi 2012). Project Management Institute (PMI), the very respected and worldwide known institution for PM, defines project as a temporary effort undertaken for creating a one of a kind (unique) result, product, or service (de, 2017). Every project has a specific goal, time limitation and a framework for drawing resources for project realization. Each project is to a certain degree risky and vague. Furthermore, in every project there is the concept that in literature can be find by the name PM Triangle, Iron Triangle, Triple Constraints or Golden Triangle that consist from three constrains that are mutually conditioned: scope (or quality), time and cost. This model is used to describe the fact that changing one component has an impact on other two. Every project has a different priority considering the three constrains, thus it is important to seek for the balanced solution (Atkinson, 1999).

1.2 Project management

The concept that is used for the effective managing of projects is called project management. To ensure project success and on-time-delivery PM methods are to be applied. The PM was used long before it became a scientific branch and a profession, but only in the mid-20th century was developed as a distinct discipline. The main influence on developing PM as a method had WW2 and the cosmic projects in the 1950/60s. During this period, the Gannt charts, PERT, CPM, PDM, WBS as well as other significant tools and methods were discovered that are parts of PM to this day (Seymour & Hussein, 2014). PMI provides very general definition of PM as the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements ,

2017, p. 47).

10 Wysocki (2013, p. 29) further elaborates this definition and introduces PM as an organized common-sense approach that utilizes the appropriate client involvement in order to meet sponsor needs and deliver expected incremental business value Kerzner (2003) defines PM as planning, organizing, leading, and monitoring of an organizations resources in purpose of achieving goals for a specific project. Todays most accepted classification of PM methodologies is traditional and agile PM. Sometimes, additional PM methodology referred to as extreme PM (XPM) is also considered an inseparable approach to PM. XPM is used for a very complex and uncertain projects, where neither the scope nor the tools are completely known (Wysocki, 2013). For the purpose of this thesis, the categorization to traditional and agile PM, their individual principles and also differences will be sufficient.

1.3 Traditional project management principles

The main idea behind TPM is that projects are rather predictable and uncomplicated with definite and clear boundaries which enables the possibility of making a detailed upfront plan of a projects execution and sticking to it. The primary goal of TPM is efficiency andquotesdbs_dbs27.pdfusesText_33

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