Project Selection Guidelines

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1 Selecting Projects Project Selection Guidelines Nominations can come from various sources, including associates and customers. To avoid sub-optimization, management has to evaluate and select the projects. While the evaluation criteria for project selection are many, the primary basis is the COPQ at the company or division level. Of equal importance is the calculation of Return on Investment (ROI). There is a simple method for project selection. Categorize and/or prioritize and then prepare a draft charter including a suggested leader and team members. Impact on the business and impact on team development are often used in prioritizing projects. Best Practice: Select and run projects in waves! Who Identifies the Project? A project may be identified by upper management, a department s management, a group of associates, Black Belts, Green Belts, or a customer. Upper management may select a project on the basis of the project s impact on the entire organization. Projects of this significance may require the participation of several departments. The word department refers to any component within the organization. A department s management may identify a project on the basis of its impact on the department s ability to meet its organizational goals and objectives. A work group may identify a project to enhance its ability to meet customer needs in its daily work. Lean Experts and Black Belts often identify potential projects based on their involvement on a previous project. Aligning Projects to Plans Turning the vision of an enterprise into action is a deployment process. Deploying the vision of an enterprise requires specifics to clearly communicate, provide guidance in terms of milestones, and to demonstrate management commitment. The deployment process typically includes: 1. Subdividing broad goals from the vision 2. Establishing responsibility for projects 3. Identifying actions needed to monitor performance 4. Identifying resources to support the plan 5. Regularly reviewing progress through scorecards All Rights Reserved, Juran Institute, Inc. 1

2 Obtaining Data to Clarify the Problem Collect specific, objective data on each problem, or process identified as a potential project. The data should answer these questions: What dissatisfaction and complaints are most likely to drive away existing or new customers? What level of performance does the competition deliver and how does it compare with yours? What are your most costly deficiencies? Which deficiencies in your internal processes have the most adverse effect on associates? What are the COPQ related to the problem? Evaluating and Selecting Projects The purpose of a charter is to choose an appropriate project that Champions work on with other leaders and Belts to create project charters. A project charter is a one-page document that describes what the project team is to do. To select effective projects the champion must follow the criteria below. Must Criteria The BEST PROJECTS follow MUST and WANT criteria. Must criteria are yes/no considerations. For example, either the project meets the threshold of the dollar opportunity ($100,000 of cost takeout may be set as a minimum) or it doesn t. Only those projects that get a yes on all of the must criteria are considered further. Evaluate each project to ensure it has the following must criteria. a. Measurable: Many times Executives or Champions do not have a lot of data to determine how bad a problem really is. However, they know enough about the problem to determine if it is measurable or not. Measurability refers to whether the defect is identified and can be measured. Some problems that are not measurable are not solvable! b. Observable: The project should correct a continuing problem, not a recent specific episode. c. Of Manageable Size: Most projects should take no more than six months to a year to complete. Projects that would probably take longer should be divided into smaller projects likely to yield results more quickly. d. Significant: When a project is completed, results should indicate the effort was worthwhile. A good Lean Six Sigma Black Belt project should save, on average, $250,000 after costs to solve the problem are taken into account. A great project is one that gains the dollar savings and improves customer satisfaction at the same time! Want Criteria All Rights Reserved, Juran Institute, Inc. 2

3 e. Greatest impact on focal points: This is a measure of impact on Dashboard. Measures should indicate the project s potential impact to: a. Retain and attract new customers and reduce the costs of poor quality b. Provide return on investment and enhance customer satisfaction c. Enhance associate satisfaction f. Urgency: Typically, urgent projects address performance problems in core services, problems that make the organization highly vulnerable to the competition, or issues that are crucial to key customers. g. Risks: If there are known or suspected risks, the problem is likely to take a long time to complete or have an uncertain outcome. However, if the expected pay-off is high, the project may be worthwhile despite the risks. h. Potential resistance to change: Among potential projects which are equal in other criteria, the project likely to meet the least resistance is usually the best choice. First projects are designed to be a likely winner: If the organization is new to improvement, it is important to look for a project certain to produce a successful outcome. Potential impact and urgency are of secondary importance. Charter Purpose A charter is a document that establishes the purpose, scope, and plan for the project. The charter is an agreement between the Champion and the team. In this step, you will complete your charter for the project by documenting the: 1. Y, the measurement of the problem you are trying to solve 2. Goal for the project 3. Expected benefit for the project and its expected financial benefits 4. Process focus, or scope, of the project 5. Plan and schedule for completion of major milestones 6. Team members and their roles The charter is a document that provides purpose and goals for the team. It tells your team where you are going and how you are going to get there. It will be updated throughout the 5 steps of DMAIC. Note: If a charter was not created for your project by your Champion or Executive Management, you must create one and have it approved by management. Do not move forward with your project until the charter has been approved. Problem Statements A well-written problem statement should contain four major elements: 1. A description of the concern, problem, or opportunity; the problem described should be a known, verifiable, or measurable fact, a defect, not a guess or an assumption 2. Background on when and where the problem occurs or is observed 3. One or more measures indicating the magnitude or extent of the problem; these measures should relate to the project Y(s) All Rights Reserved, Juran Institute, Inc. 3

4 4. A description of the impact, consequences, or threat presented by the problem The following questions can help a team evaluate its problem statement: Is the problem based on observation (fact) or assumption (guess)? Does the problem statement presume a root cause? Can data be collected by the team to verify and analyze the problem? Is the problem statement too narrowly or broadly defined? Is a solution included in the statement? Would customers be happy if they knew you were working on this? Does it deliver financial returns if it were solved? Goal Statements The goal statement defines the level of improvement the team is seeking to accomplish. For an effective goal statement: Start with a verb (e.g., reduce, eliminate, control, increase) to clearly describe the change. Answer the questions: What do you want to achieve with your project? What level of performance do you expect to achieve with your project? What is the time frame needed to achieve the goal? Use the same variable and unit of measure as the problem statement. If the variable and unit of measure are not the same, then the goal doesn t match the problem. Effective Problem and Goal Statements Effective problem and goal statements do not: Assign blame Imply cause Suggest a solution If your statements attribute blame to a person or department, it will most likely generate defensive behavior, hurting the team s ability to collect and analyze data objectively. Blame also assumes or implies cause. Implying the cause may prevent the team from uncovering the root cause(s). The goal statement should not suggest a solution, e.g., we need a new database. This solution may be wrong and sends a team down a dead-end road on their journey. The problem statement must be a concise statement of the concern, issue, or opportunity the team is addressing. In essence, it is the pain that needs to be removed. Project Scope During the project chartering process it is useful to determine project boundaries for the problem a project team is to address. Chartering helps avoid what is known as project scope creep which can be lethal, rapidly driving the length of the project. All Rights Reserved, Juran Institute, Inc. 4

5 Determining project scope becomes a compass in determining the direction for a project. In-scope items are those which will be included within the project. Depending on the data and statistical information collected later by the project team, in-scope items may or may not turn out to be root causes. However, in-scope items serve to keep both the project Champion and team focused. Out-of-scope items become a way of narrowing the project to a manageable size for addressing a problem within a short time period. Out-of-scope items are not necessarily less important than those placed in scope, but have been determined as outside the project. These may be items for follow-on projects and future focus, areas that already have a substantial number of projects currently underway, or areas where major implementation is already occurring. Similar to the in-scope items, out-of-scope items are agreed upon by the project team and Champion early in the project during the chartering process. Project Plans Early on, your team should establish target dates for completing key tasks in the DMAIC process. Milestones provide a sense of urgency, a feeling of accomplishment during the project, and help ensure the achievement of timely results. At a minimum, your team should set dates for tollgate reviews, end-of-phase reviews with your owners to review what you ve found, your next steps, and any issues you anticipate. Team Membership Your team will be comprised of core team members who are process participants with a strong interest in the process being improved. Core team members get involved in dayto-day work on the project, and typically commit a significant amount of time to it. In addition to core team members, you will identify Subject Matter Experts who will be called upon as resources from time-to-time because of their specialized knowledge (e.g., compliance officer, financial analyst, human resources manager). Provide these ad hoc team resources with a clear definition of their responsibilities and a realistic expectation of their time commitment. Team membership is defined by the Champion. Team members may change over the life of the project, however, the core of the team will be in place for the entire project. Select Method Use DMAIC if you: Are trying to reach a new level of performance for an existing process or service Have measured (or at least measurable) specific deficiencies or opportunities for performance improvements Are trying to find and eliminate root cause(s) of a defect or problem Use DMADV if you: Are attempting to discover customer needs Want to develop a new product Want to develop a brand new process (technology, environment, regulation) Use Lean VSM if you: All Rights Reserved, Juran Institute, Inc. 5

6 Are trying to improve speed, cycle time, or throughput not related to a defect Implement (Just Do Its): Why hasn t this been solved already if the answer is known resistance to change? Measure current performance and demonstrate gain Killing Projects There are many problems encountered everyday in the workplace. Not all of them are worthy of upper management time and attention. If you cannot agree on a project it is probably because it is not that important. Kill a nomination when: 1. You cannot measure Ys 2. The financial benefits cannot be determined 3. You cannot prove the Xs 4. It is no longer important to the business 5. It is taking too long Summary 1. Strategic project selection involves identification of projects that are aligned with an organization s vision, strategic goals, and annual goals. 2. Steps include: Identify potential problems, obtain COPQ data, evaluate against must criteria, select project, categorize, and charter. 3. The Project Charter is a key document and communication tool that describes the customers, problem, goal, scope, business case, milestones, and team composition. All Rights Reserved, Juran Institute, Inc. 6

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