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The project selection process

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The project selection process

Abstract

A lot of discussion about project selection is happening in companies deploying Six Sigma. Indeed, many believe project selection is the most difficult element of Six Sigma deployment. There are four key phases to the maturation of the project selection process: 1. Identify Black Belt (BB) projects to be worked on in the early stages of Six Sigma. This can be a major undertaking for many organizations. 2. Create a project hopper. Successful organizations move quickly to this phase. The project hopper contains a collection of projects ready for BBs to work on after they complete one project and are ready to take on another. 3. Examine the project portfolio to make sure the projects meet the strategic improvement needs of the organization. 4. Create an improvement system that manages all the improvement efforts of the organization. Include the Six Sigma projects as well as the other improvement projects. The first two phases were discussed in the March 2001 “Frontiers of Quality.”1 This article will discuss how to manage your project portfolio and create an overall organizational improvement system.
Quality Progress
March 2001
Dealing With the Achilles' Heel Of Six Sigma Initiatives
Project selection is key to success
by Ronald D. Snee
What makes a good Six Sigma project? This question is commonly asked by
people engaged in Six Sigma initiatives. Some feel that project selection is
the Achilles' heel of Six Sigma. One quickly learns that if projects are not
selected properly the Six Sigma initiative can be at risk: Projects don't
deliver the expected bottom-line results, the organization becomes frustrated
with the effort, and, slowly but surely, attention and resources are focused
on other initiatives.
There are many dimensions to successful Six Sigma projects. Good selection
is critical, but other important considerations include assignment of the right
Champion and Black Belt or Green Belt, completion in a timely fashion (three
to six months), support and involvement in the project by a variety of
functions and management review to keep the projects focused and on
schedule.
Stephen A. Zinkgraf has noted that, among other things, "right projects" and
"right people" are two essential ingredients for a Six Sigma initiative to be
successful.
1
Each of the aspects of a successful project will be discussed in
this article.
What is a Six Sigma project?
Six Sigma is about improving processes by solving problems. Typically,
problems fall into two categories: solution known and solution unknown. Six
Sigma is aimed at the problem in which the solution is not known. In order to
use Six Sigma, we also need one or more measurements that quantify the
magnitude of the problem and can be used to set project goals and monitor
progress.
Such problems include the need to decrease invoice errors, increase the yield
for process XX, decrease the defect rate for product P and decrease the days
sales outstanding for accounts receivables. In 1989, J. M. Juran pointed out
that "a project is a problem scheduled for solution."
2
I thus define a Six
Sigma project as a problem scheduled for solution that has a set of metrics
that can be used to set project goals and monitor progress. It is also
essential that we identify the process that contains the problem. The process
provides the focus and context for the Six Sigma improvement work.
_ _
The second category of problems we frequently encounter is the one in which
we know the solution at the outset. Capital projects typically fall into this
category. A problem with a known solution might have an objective of
installing a pump, converting to a new computer system, fixing the roof or
introducing a more effective product to the market. In each of these
situations, we know what we are going to do.
The project is completed by assigning a project manager to the project,
providing the needed resources and using good project management
techniques. Six Sigma techniques are usually not needed here, although I
believe that project management can benefit from the process thinking,
measurement and monitoring techniques used by Six Sigma.
I hasten to add that an organization's improvement plan typically includes
projects of both types: solution known and solution unknown. Both types of
projects are important and are needed to improve the performance of an
organization. Solution unknown projects are led by Black Belts or Green
Belts. Solution known projects are led by project managers.
Selecting a Six Sigma project
The characteristics of good Six Sigma projects are summarized
in Table 1
. First, the projects should be linked clearly to
business priorities as reflected by the strategic and annual
operating plans. It is also appropriate to include projects that
address critical problems that must be solved in order for the organization to
be successful in the next year.
Next, a project should represent a breakthrough in terms of major
improvements in both process performance ("greater than 50%," for
example) and significant bottom-line results (such as "greater than
$175,000"). The determination of project impact is the responsibility of the
financial organization working in cooperation with the Black Belt and
Champion.
This sets Six Sigma apart from most improvement approaches as the
financial impact is identified for each Six Sigma project by the finance
department. We know what the project is worth to the bottom line before
work begins. This makes finance an active participant in the improvement
program of the organization. This role for finance is new in most
organizations.
The projects should be doable in three to six months. As pointed out by Bill
Gates, it is critical that projects be completed in this time frame in order to
keep the organization and resources focused on the project.
3
Organizations typically lose interest in projects running longer than six
months (for example, people get transferred to other jobs and priorities
change). Projects lasting longer than eight to 12 months can be divided into
subprojects of shorter duration, with the subprojects being conducted
sequentially or simultaneously.
There should also be clear quantitative measures of success, the importance
of the project to the organization should be clear and the project should have
_ _
the support and approval of management. These latter three requirements
ensure that the organization sees the importance of the project, provides the
needed support and resources, and removes barriers to the success of the
project. People will support a project that they can see is clearly important to
the organization.
The project selection criteria used by one company are
summarized in Table 2
. These criteria define areas that are
important to improve and will, in turn, produce significant
bottom-line results. Note that the areas to improve directly
affect customer satisfaction measurements. Project selection
criteria also communicate what types of improvements are
important to the organization.
Project ideas can come from any source such as process
assessments, customer and employee surveys and
suggestions, benchmarking studies and extensions of existing
projects. Some organizations struggle with how to find high
impact projects. Some sources are summarized in Table 3
.
Collectively these ideas are focused on major sources of waste (such as the
"hidden factory" where reworking and scrapping take place), major problems
(customer and environmental), major opportunities (capacity limitations in
sold-out markets) and places where the money is going. Budget statements
and cost of quality studies are good sources for identifying opportunities.
4, 5
Characteristics of projects to avoid, or at least to further refine,
are summarized in Table 4
. To be successful the objectives
need to be very clear. Such clarity is usually reflected in the
process performance metrics associated with the project.
These metrics should have operational definitions and have
baseline and entitlement (the best performance the process can be expected
to produce)
6
values identified. In the case of nonmanufacturing projects, the
most useful process performance metrics are quality (accuracy,
completeness, error rate), cycle time and cost.
The project must be tied to the bottom line in some way. The project scope
should be for improvements that are attainable in the three- to six-month
time frame. An unrealistic scope (such as boiling the ocean) is probably the
most commonly encountered cause of project failure. Projects that are not
connected to business priorities or that have too many objectives also need
further refinement.
Projects with the solution identified should be handled by a project manager,
as mentioned earlier, or redefined to omit the specified solution in favor of
letting the Six Sigma methodology identify the best solution.
Setting up a project for success
A project can be the right project for the organization to work on and still be
a failure because the wrong people were assigned to the project. The right
people include the Black Belt or Green Belt, Champion, team members and
functional group support. In short, the Black Belt must be respected by the
organization, able to use the Six Sigma methodology to improve the process
and have the leadership skills needed to lead the team in its work.
The Champion must be able to help the Black Belt get the needed resources,
break down barriers to the success of the project and review the project
weekly to keep it focused.
It is also important that the management team that leads the organization
review projects monthly--at least those projects that are behind schedule for
whatever reason.
Black Belts and Green Belts must also be given the time to work on the
project. For Black Belts, fulltime is best, but they should be able to spend at
least 80% of their time on a project. Green Belts should be able to spend at
least 25% of their time on a project.
The team that works with the Black Belt should be small, not more than four
to six members. Larger teams are not recommended. As the size of the team
increases, it becomes increasingly difficult to find mutually agreeable meeting
times and to reach consensus. The team members have the knowledge and
experience of the process being studied and meet as needed with the Black
Belt. The Black Belt and team call on other experts and specialists as needed.
It is best if the team is selected jointly by the Black Belt and Champion in
consultation with the line management of the prospective team members.
What is often overlooked is that functional groups, such as finance,
information technology, human resources, engineering, research and
development and purchasing, provide the resources, data and expertise
needed for the Black Belt to be successful. Many projects have failed because
this support was lacking due to personnel shortages.
In addition, it is critical that the control plan is implemented properly so that
the gains of the process improvement will be held over time.
Barriers to project success are summarized in Table 5
. The
common theme of these barriers is that they are all
management related. So once again, we see that active
involvement and support of management are the key to
successful Six Sigma improvement.
7
REFERENCES
1. Stephen A. Zinkgraf, "An Overview of Operational Excellence and Six
Sigma at Allied Signal" in Transactions of the 52nd Annual Quality Congress
Proceedings of the American Society for Quality (Milwaukee: ASQ, 1998), pp.
173-175.
2. J. M. Juran, Leadership for Quality--An Executive Handbook (New York:
Free Press, 1989), p. 35.
3. William H. Gates III, Business @ The Speed of Thought (New York: Warner
Books, 1999), pp. 311-314
4. W.E. Conway, The Quality Secret: The Right Way To Manage (Nashua, NH:
Conway Quality Inc., 1992).
5. W.E. Conway, Winning the War on Waste (Nashua, NH: Conway Quality
Inc., 1994).
6. Mikel Harry and Richard Schroeder, Six Sigma--The Breakthrough
Management Strategy Revolutionizing the World's Top Corporations (New
York: Currency Doubleday, 2000).
7. Ronald D. Snee, Kevin H. Kelleher, J. Gordon Myers and Sue Reynard,
"Improving Team Effectiveness," Quality Progress, May 1998, pp. 43-48.
BIBLIOGRAPHY
Breyfogle III, Forrest W., James M. Cupello and Becki Meadows, Managing
Six Sigma (New York: John Wiley & Sons, 2001).
Pyzdek, Thomas, The Complete Guide to Six Sigma (Tucson, AZ: Quality
Publishing, 1999).
© 2001, Snee Associates
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An Overview of Operational Excellence and Six Sigma at Allied Signal
  • A Stephen
  • Zinkgraf
Stephen A. Zinkgraf, "An Overview of Operational Excellence and Six Sigma at Allied Signal" in Transactions of the 52nd Annual Quality Congress Proceedings of the American Society for Quality (Milwaukee: ASQ, 1998), pp. 173-175.
The Quality Secret: The Right Way To Manage
  • W E Conway
W.E. Conway, The Quality Secret: The Right Way To Manage (Nashua, NH: Conway Quality Inc., 1992).
The Complete Guide to Six Sigma
  • Thomas Pyzdek
Pyzdek, Thomas, The Complete Guide to Six Sigma (Tucson, AZ: Quality Publishing, 1999).
  • Iii Breyfogle
  • Forrest W James
  • M Cupello
  • Becki Meadows
Breyfogle III, Forrest W., James M. Cupello and Becki Meadows, Managing Six Sigma (New York: John Wiley & Sons, 2001).
Winning the War on Waste
  • W E Conway
W.E. Conway, Winning the War on Waste (Nashua, NH: Conway Quality Inc., 1994).
Six Sigma--The Breakthrough Management Strategy Revolutionizing the World's Top Corporations
  • Mikel Harry
  • Richard Schroeder
Mikel Harry and Richard Schroeder, Six Sigma--The Breakthrough Management Strategy Revolutionizing the World's Top Corporations (New York: Currency Doubleday, 2000).