Lean Six Sigma Fundamentals

Project
Management

CQAS

Participants will learn how to

Manage a project during its various phases

Prepare a Work Breakdown Structure
Determine the Critical Path for activity
sequencing
Identify resource and cost requirements
Track the project teams performance
Close out a team project

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 What is Project Management?

Project Management is the application of

knowledge, skills, tools, and techniques to
project activities in order to meet or exceed
stakeholder needs and expectations from a
project.

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How is modern day project management

different from the way we traditionally
managed projects?

Traditional Approach Project Management

A piece of the project
Day to day operations take
precedence
Bureaucratic and often slow to
react
Project work done in sequence
Some use of project
management tools
There is a given chain of
command
Responsibility is fixed
Projects are given more
attention and support
Less bureaucratic and clearly
more responsive
A multi-disciplined team works
concurrently
Full utilization of proven tools
and techniques
Most projects utilize a project
matrix

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 Key Project Success Factors

Commitment A respected A capable, Planning Tracking

& Executive + & capable + motivated + tools & + & control
Support team leader team techniques

Communications, Communications and more Communications

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Do You Need Project

Management?

Will the projects you are working on have a significant

impact on your organizations future?
Are competitive pressures forcing your organization to
be more cost effective? Are there more cost reduction
projects?
Do your projects involve personnel from more than one
discipline, department or professional group?
Do your project schedules continually slip? Do you more
often than not miss scheduled completion dates?
Do you often under estimate the cost of you projects,
miss your cost targets, or over spend project budgets?

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 Do You Need Project
Management?

Do your project teams feel they are spread too thin? Are
they frustrated with interruptions? Are they poorly
motivated?
Do your various departments, disciplines or professional
groups have problems working together?
Is communications a problem? Does it take forever to
get answers? Do phone calls, e-mails etc. go
unanswered?
Are your customers, your competitors and or your
suppliers utilizing project teams?

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Project Management
Knowledge Areas and Processes

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 Project Phases

Each project phase is marked by completion of

one or more deliverables
The conclusion of a phase is an opportunity to
review the deliverables and project performance
to determine continuation and to correct errors
cost effectively
Called milestones

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Sample Generic Life Cycle

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Representative Project Life Cycle

Phase 0 Phase 1 Phase 2 Phase 3 Phase 4

Determination
of Mission Initiation Planning Execution Monitoring Closing
and Need

Milestone 0 Milestone 1 Milestone 2 Milestone 3 Milestone 4

Concept Objectives & Plan Progress Final
Studies resource approval monitoring review
Approval approval

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Lean Six Sigma Project Life Cycle

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Determination
Define Measure Analyze Improve Control
of Project
Opportunity

Milestone 0 Milestone 1 Milestone 2 Milestone 3 Milestone 4 Milestone 5

Prioritize Approve Review Root Cause Review Final Project
Opportunities Project Measurements review and Improvements review and
and assign Charter and approve approve and approve Financial
Belts Analysis Plans Improve Control Plans Analysis
Strategy

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 Project Management Processes

Initiating processes Determining that a project

should begin and committing to it
Planning processes Developing and
maintaining a workable scheme
Executing processes Coordinating people
and other resources
Monitoring processes Monitoring progress
and taking corrective action
Closing processes Formalizing acceptance

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Inputs to Initiation

Project description
Document the characteristics of the project
Document the relationship with business need
Strategic plan of organization
Project selection criteria
Financial, market share, public perception, etc.
Historical information
Results of previous project decisions

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 Project Selection

Strategic Issues
Does it fit with our core competencies?
Can we afford the initial investment?
Which projects get turned away?
Is this project customer driven? (VOC)
Will it give us a market/technical advantage
Is it needed in order to maintain our image?

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Balanced Scorecard for Project

Identification
Ultimately strategy is the filter through
which all activities must pass

Strategy

Strategy shines light on the

Voice of the key processes that will shape Financial
enterprise performance and
Customer competitiveness

Process
Customer-derived CTQs Financial P&L line item
provide vision and focus Under Lean Six Sigma, Pareto analysis drives
on critical customer value- business process tactical business processes.
added processes that must performance will be
operate optimally. aligned to support the
other three value-driving
levers.

Revenue Growth Economic Profit Operating Profit Rev: 2/17/05 CQAS

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 Rank Projects
Rating of Importance for Filters 9 8 7 7 7 6

Increase
Employee
Financial Improve Increase Time & Total Score
Value
Impact (Profit Decrease Reworks Information and Customer Value Resources to
Projects Filters (Retention &
or Cost / Errors Data (Willing to Pay Complete
Morale) for
Savings) Management For It) Project
Top
Performers

Reduce time from needs analysis to proposal 9 6 9 1 6 6 277

Increase field tech load capacity 6 6 6 6 6 6 264

Ineffective product installation and customer
6 9 1 3 6 9 250
support policy

Reduce administrative rework (paperwork,

3 9 9 1 9 3 250
data entry)

Customer satisfaction measure 9 1 1 9 6 6 237

New employee orientation program (improve

1 9 6 1 9 6 229
employee up to speed)

Improve internal communication 226

1 6 9 1 9 6

Improve recruiting 220

3 6 1 6 6 9

Reduce technical rework (billing trouble tickets,

3 9 6 1 6 1 196
work orders, and contracts)

Product portfolio offerings 6 1 1 6 6 6 189

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Project Selection

Technical Issues
Do we have the technical knowledge? Risk?
Do we have the required technical staff?
Are there environmental, health or safety issues?
Do we have or do we need patents/permits?
Marketing Issues
What is the size of the potential market?
What is our probable market share?
What is the expected product life cycle?
How will it impact our current product lines?
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 Planning Processes
Core Processes
Scope Activity Schedule
Planning Activity Sequencing Development
Definition
Activity Dura- Cost
Resource tion Estimating Budgeting
Scope Planning
Cost Project Plan
Definition
Estimating Development

Facilitating Processes
Quality Communications Risk Risk Risk Response
Planning Planning Identification Qualification Development

Organizational Staff Procurement Solicitation

Planning Acquisition Planning Planning

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Scope Planning

Identify process where there are opportunities

SIPOC (Suppliers. Inputs, Process, Outputs, Customers)
Value Stream Map
Flow Charts
Problem Statement

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 Scope Planning

Determine objectives
Include indicator(s) to monitor potential risks
(impact on quality, cost, etc.)
Improvement
Indicators Baseline Goal Entitlement Units

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Scope Planning

Clarify project scope, including what is not in

scope
Verify problem statement, objectives and scope
with Sponsor
Control Scope

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 Project Charter

CQAS

Planning Processes
Core Processes
Scope Activity Schedule
Planning Activity Sequencing Development
Definition
Activity Dura- Cost
Resource tion Estimating Budgeting
Scope Planning
Cost Project Plan
Definition
Estimating Development

Facilitating Processes
Quality Communications Risk Risk Risk Response
Planning Planning Identification Qualification Development

Organizational Staff Procurement Solicitation

Planning Acquisition Planning Planning

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 Activity Sequencing

Activity list
Mandatory dependencies
Impossible to erect the superstructure until the
foundation has been built
Discretionary dependencies
External dependencies
Software development
Constraints and assumptions

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Activity Sequencing

Work Breakdown Structure

Decomposition
Subdividing the project deliverables into smaller,
more manageable components
Decide if adequate cost and duration estimates
can be developed at the level of detail

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 Sample Work Breakdown Structure

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Activity Network Diagram

Activity Network Diagram helps schedule

sequential and simultaneous tasks

Pre-test Post-test

Benchmark

Draft Mgmt Update Final Final Train the Deploy

Material Review Class Update Trainers

Needs
Assessment

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 Arrow Diagramming Method

Activity C
2 4
Start
1 6
Finish

3 5
Activity D

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Precedence Diagramming Method

Activity A Activity B Activity C

Start Finish

Activity D Activity E Activity F

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Tools and Techniques for Activity
Duration Estimating

Expert judgment
Analogous estimating
Uses the actual duration of a previous, similar
activity
Simulation
Involves calculating multiple durations with different
sets of assumptions

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CQAS

Tools and Techniques for Schedule

Development

Mathematical Analysis
Critical Path Method (CPM): calculates a single
early and late finish date for each activity
Graphical Evaluation and Review Technique
(GERT): allows for some activities to not be
performed, some in part and others more than
once
Program Evaluation and Review Technique
(PERT): like CPM, but uses distributions mean
rather than most likely estimate
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 Schedule Logic and Duration

Fixture
Build
3 wk

Engineering Engineering Fixture Process Production Debug First

Design Prototype Design Development Prototype Production Production
1wk 4 wk 4 wk 4 wk 4 wk Line 1 wk Parts 1 wk

Tool Design
and Build
10 wk

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Schedule Logic and Duration

Forward Pass

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Fixture
Build
3 wk

0 1 1 5 5 9 11 15 15 19 19 20 20 21
Engineering Engineering Fixture Process Production Debug First
Design Prototype Design Development Prototype Production Production
1wk 4 wk 4 wk 4 wk 4 wk Line 1 wk Parts 1 wk

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Tool Design
and Build
10 wk

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 Schedule Logic and Duration
Backward Pass

Fixture
Build
3 wk
17 20

Engineering Engineering Fixture Process Production Debug First

Design Prototype Design Development Prototype Production Production
1wk 4 wk 4 wk 4 wk 4 wk Line 1 wk Parts 1 wk
0 1 3 7 7 11 11 15 15 19 19 20 20 21

Tool Design
and Build
10 wk
1 11

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Schedule Logic and Duration

Critical Path

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Fixture
Build
3 wk
17 20
0 1 1 5 5 9 11 15 15 19 19 20 20 21
Engineering Engineering Fixture Process Production Debug First
Design Prototype Design Development Prototype Production Production
1wk 4 wk 4 wk 4 wk 4 wk Line 1 wk Parts 1 wk
0 1 3 7 7 11 11 15 15 19 19 20 20 21
1 11
Tool Design
and Build
10 wk
1 11

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 Tools and Techniques for Schedule
Development

Duration compression
Looks for ways to shorten schedule without
changing scope
Crashing: Cost and schedule trade-offs are
analyzed in order to compress as many of the
critical tasks as practical
Identify and eliminate bottlenecks:
Insufficient resources, hand-offs, sign-offs
Fast tracking: Doing activities in parallel that
would normally be done in sequence
Resource leveling heuristics: e.g.. allocate
scarce resources to critical path activities first
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PERT Duration Calculation

Most Likely
Higher (Used in original PERT Weighted Average
CPM calculations) Optimistic + 4 X Most Likely + Pessimistic
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Relative
Probability of
Occurrence
Beta Distribution

Pessimistic
Optimistic
Lower
Shorter Longer
Possible Durations
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 Planning Processes
Core Processes
Scope Activity Schedule
Planning Activity Sequencing Development
Definition
Activity Dura- Cost
Resource tion Estimating Budgeting
Scope Planning
Cost Project Plan
Definition
Estimating Development

Facilitating Processes
Quality Communications Risk Risk Risk Response
Planning Planning Identification Qualification Development

Organizational Staff Procurement Solicitation

Planning Acquisition Planning Planning

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CQAS

Inputs to Organization Planning

Project interfaces
Organizational interfaces
Technical interfaces
Interpersonal interfaces
Staffing requirements
Constraints
Organizational structure
Collective bargaining agreements
Expected staff assignments

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 Tools and Techniques for
Organizational Planning

Responsibility Assignment Matrix

Defines roles and responsibilities
Staffing management plan
Resource histogram
Identify training needs
Use appropriate reassignment procedures
Reduce tendency to make work between
assignments
Improve morale by reducing uncertainty about future
employment
Organization chart
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Responsibility Assignment Matrix

RACI Chart

R=Responsibility A=Accountability C=Consultation I-Inform

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 Stakeholder Analysis

A stakeholder is anybody who can affect or is

affected by an organization, strategy or project.
Can be internal or external
Senior or junior levels.
Those who have the power to impact an organization
or project in some way.
Crucial to the success of your project.
Neglect them and they will actively work against you.
Manage them well and they will actively promote you
and your project.
CQAS

Power vs. Interest Matrix

Meet their needs Key Players

High Engage & consult on interest areas
Involve in decision making
Try to increase level of interest B Engage & consult regularly

A H
I F
E
Power /
Influence Least important C Show consideration
Inform via general communication Make use of interest in low risk areas
Aim to move to right box J Keep informed
G Potential goodwill supporter
D
Low

Low High
Interest
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 Activity vs. Attitude Matrix

Adversarial Supportive
Active 2

5
7
1
9 6
Activity
Informed 8 Assisting

4 10 3
Passive

Against For
Attitude
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Stakeholder Analysis Plan

Power

Interest

Attitude

Activity

Stakeholder Rationale for Action Plan Date

Rating Last
Revised

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 Example

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Resource Histogram

Jan Feb Mar Apr May

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 Planning Processes
Core Processes
Scope Activity Schedule
Planning Activity Sequencing Development
Definition
Activity Dura- Cost
Resource tion Estimating Budgeting
Scope Planning
Cost Project Plan
Definition
Estimating Development

Facilitating Processes
Quality Communications Risk Risk Risk Response
Planning Planning Identification Qualification Development

Organizational Staff Procurement Solicitation

Planning Acquisition Planning Planning

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Risk What can go wrong?

Technical Problems
New processes/ technologies

Is the process capable?

Quality issues

Start up problems

Equipment/software

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 Risk What can go wrong?

Miss the Schedule

Have we accounted for all activities?

Will we get the support we need?

Tracking and control procedures

Is the supply chain reliable?

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Risk What can go wrong?

Financial Problems
Have we missed something on the bid?

How accurate are the cost estimates?

Is there a change in the project scope?

Market Problems
Is customer demand changing?

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 Risk What can go wrong?

Non Technical Issues

Human resources

Legal problems (patents, contracts,

insurance)
Labor problems

Acts of God

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Tools for Risk Assessment and

Mitigation

Cause and Effect Diagram

Determines root causes of risks
Failure Modes and Effects Analysis
Evaluates the level of risk based on likelihood, severity,
and ability to control
Interrelationship Diagraph
Shows how the various risks might be interrelated
Risk Mitigation Plan
Identifies strategies to overcome the key risks identified

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 Planning Processes
Core Processes
Scope Activity Schedule
Planning Activity Sequencing Development
Definition
Activity Dura- Cost
Resource tion Estimating Budgeting
Scope Planning
Cost Project Plan
Definition
Estimating Development

Facilitating Processes
Quality Communications Risk Risk Risk Response
Planning Planning Identification Qualification Development

Organizational Staff Procurement Solicitation

Planning Acquisition Planning Planning

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CQAS

Tools and Techniques for Cost

Estimating

Bottom-up estimating
Estimate cost of individual work items and summarize
into project total
Analogous estimating (top -down estimating)
Uses cost of previous, similar project as basis
Parametric modeling
Uses project characteristics in a mathematical model to
predict project costs

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 Executing Processes

Project Plan
Execution

Facilitating Processes
Quality
Information Team Assurance
Distribution Development
Scope
Verification
Source
Solicitation
Selection Contract
Administration

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Checklist For Sustaining

Effective Teamwork

Are members clear about their purpose as a group?

Does the purpose serve the goals of the organization?
Does the task require members to work together
Can members get feedback so they can adjust?
Do members feel that the group can decide on the
strategy they will use to accomplish the task?
Has the group agreed on how decisions will be made?
Do all members participate freely?
Have the ground rules for the team been established?

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 Communications

The importance of project communications

Difficult given the mix and number of organizations
involved
Opportunity for miss-communication grows exponentially
as the number of organizations and players increase
Projects are almost always time constrained, and missed
communications mean lost time
What happens when communications fail?
Tempers flair, tensions rise and morale slips

There is a lot of finger pointing, walls build up

More reports are required

More and longer meetings with more people

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Communications

How can communications be improved?

Communicate up - Sponsor and champion
Communicate down to those impacted by the
project
Communicate horizontally to supervisors
Make sure the timing is appropriate
Use more than one means of communicating
Follow up and reinforce important communications

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 Controlling Processes

Performance Overall
Reporting Change Control

Facilitating Processes
Scope Change Schedule Cost
Control Control Control

Quality Risk Response

Control Control

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Cost/Schedule Control System

PV Planned Value of Work Scheduled

Resources expected to be consumed to complete
a piece of work
AC - Actual Cost of Work Performed
Resources expended to accomplish a piece of
work
EV Earned Value of Work Performed
Measure of amount of work accomplished stated
in percent of budget assigned

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 Variances

Schedule Variance (SV) = EV PV

Cost Variance (CV) = EV AC

EV
Cost Performance index (CPI) = AC

EV
Schedule Performance Index (SPI) = PV

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Performance Indices

BAC is the Budget at Completion

Estimate at Completion (EAC) = BAC/CPI
Variance at Completion = BAC LRE

Cost Variance (%) = EV AC x 100

EV
Schedule Variance (%) = EV PV x 100
PV

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 Earned Value Illustration

Contract Budget Base

LRE (Latest revised estimate)
AC
BAC (Budget at Completion)
PV

}Schedule
Variance
} Cost Variance

$
EV

Now

Time

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Closing Processes

Contract Administrative
Close-out Closure

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 How to End the Project

Be sensitive to team members concerns

Keep the team informed. Make sure they are recognized

Be sensitive to the customers concerns

Keep the customer informed

Make sure ongoing responsibility and support have been assigned

Disable the charge authorization Pull the plug

Debrief with the project team
Review lessons learned, the outcome, and next steps

Complete the individual team member performance appraisals

Complete the project documentation and file for future reference
Thank everyone in person and in writing

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