4/10/10 Copyright © 2002 Project Incentives, Inc. All Rights ...

Saturday, April 8, 2023

Copyright © 2002 Project Incentives, Inc. All Rights Reserved.

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Six Sigma and the PMBoKSix Sigma and the PMBoKSynergy and Best PracticesSynergy and Best Practices

Nadim Baker, CEOProject Incentives, Inc.

http://projectincentives.com



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Our Priorities for TodayOur Priorities for Today

1) Define terms.2) Examine differences between Six

Sigma and Project Management.3) Explore the synergies between same.4) Engage in discussion.

Did I miss anything?



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What I Need From YouWhat I Need From You

Your TimeWe’re here for 1:30, and will end on time.

Involvement If you have a question, please interrupt me. If you think you can offer help with another

attendee’s question, please do so – we’re here together.

RespectWe have limited time here today, please

respect other guests’ timetables. Please turn off pagers and phones.



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My Goals For TodayMy Goals For Today

Establish DifferencesSix SigmaProject Management

Examine SynergiesProcess

ImprovementsOutput Effectiveness

Add Value



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My Goals For TodayMy Goals For Today

1) Have each of you leave with a clear understanding of the benefits and differences of Six Sigma and Formalized Project Management.

2) Have presented this information in a way which brings you value.

3) Have answered as many questions as possible within the allotted time.

4) Have received feedback from each of you.



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Defining Some TermsDefining Some Terms

Preventing Misunderstandings



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Define TermsDefine Terms

Project “A temporary endeavor undertaken to

achieve a particular aim.”

Project Management “The application of knowledge, skills, tools

and techniques to a broad range of activities in order to meet the requirements of the particular project.”



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ProcessA series of steps and activities that take inputs, add

value, and produce an output.

Six SigmaTechnically - a statistical representation of 3.4

defects per million opportunities.Organizationally - a managerial methodology of

continual product improvement identified and measured through the use of process variance statistics.

Successful Six Sigma is an Attitude, not just a Method.



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PMBoKThe Project Management Body of Knowledge.

Compiled, edited, and published by the Project Management Institute (PMI). Recognized as the global standard of Project Management best practices.

CTQ“Critical To Quality” – Each organization has

specific paths and processes which add value for the customer.



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CustomerThe person, place or thing for which a

particular process adds value.• Individuals, Companies, Groups, Teams,

Etc.

Key Performance Indicator (KPI)The summarized measurement of one or

more statistical outputs which represent significant value to a process’ customer.



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SS One-LinerSS One-Liner

“Six Sigma is about creating accurately predictable output processes that are fully aligned with customer demands.”



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Six SigmaSix Sigma

Six Sigma is an organizational initiative or discipline that measures statistical variance and determines what pieces of a process must be improved by:

Measuring the inputs, efficiency, and output.

Mapping it against customer demands.

Identifying improvement areas.

Resetting benchmarks.



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Project ManagementProject Management

Project Management is a practice or methodology that optimizes the way in which an organization goes about the improvements.

Defining the in-, inter-, and dependent steps necessary to achieve a pre-defined worthwhile goal.

Identifying the resources, skills, and timeframe available.

Tracking and measuring progress towards achievement of goal.



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Hmm…Hmm…

“For the Professional Organization which practices Project Management as a deliverable, the Six Sigma process may be applied to the PM Methodology as a quality improvement tool.”

Examples: Software Development, General Contractors, Construction Engineering Firms.



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Synergistic PM/SS BehaviorSynergistic PM/SS Behavior

Suggestion #1: Any effective Six Sigma implementation requires effective Project Management to be successful.

Suggestion #2: Quality Project Management methodologies require constant improvement over time. (The PMBoK is a living document…)



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The DifferenceThe Difference

Six Sigma measures, defines, and statistically supports WHAT must be improved.

Project Management measures, defines, and supports HOW the improvements are made.



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SummarySummary

These two initiatives are:

1. Required for long term success.

2. Conjunctively responsible for success.

3. Synergistic towards effective continual improvement.



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Six Sigma Six Sigma FundamentalsFundamentals



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Why Six Sigma?Why Six Sigma?

“If you have no data, you’re just another person with an opinion.” - George Eckes

“Whatever you measure will change. Measure the right things.”- Dr. Gerry Faust

“What gets measured, gets done.”- W. Edwards Deming



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Eight Steps to Six SigmaEight Steps to Six Sigma1)Identify Strategic

Business Objectives

2)Identify Core, Key Sub, and Enabling processes.

3)Identify Process Owners

4)Identify Dashboards (KPI’s)

5)Collect Data from KPI’s

6)Process Improvement Selection Criteria

7)Prioritize Process Improvement Projects

8)Continual Management of Processes (The Tube)



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What To Measure?What To Measure?

The Basic Stuff:Input Measures (Suppliers’

Effectiveness)Process Measures (Your

Efficiency)Output Measures (Your

Effectiveness)

Measure Output First!



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Why Output First?Why Output First?

1. Your company makes money in direct proportion to its ability to create value for your customer.

2. Output Measures will quickly define which Processes serve, or enable service to, the customer. (CTQ’s)



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Pareto’s RulePareto’s Rule

The 80/20 Principle“80% of something is caused by

20% of something else.”Focus on your 80% problem, and

life is good. Your Output Measures will

almost always contain the key indicators of your 80% problems.



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Operational DefinitionsOperational Definitions

Important Note!Make sure you are using lowest common

denominator language – it must be clearly understood across the entire enterprise…

Examples of misnomers:FAA’s “Departure Time” vs. realityThe “Customer Service Representative”9,999 meanings of “Quality”



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Sidebar On Company FocusSidebar On Company Focus

Operational Operational ExcellenceExcellence

Operational Operational ExcellenceExcellence

Customer IntimacyCustomer IntimacyCustomer IntimacyCustomer Intimacy

Product LeadershipProduct LeadershipProduct LeadershipProduct Leadership

“The Best Product”

“The Best Total Cost” “The Best Total Solution”

Product Differentiation

Customer ResponsiveOperational Competence

Market LeadersMarket Leaders are the best are the best at only one of these, and at at only one of these, and at (or near) benchmark for the (or near) benchmark for the others.others.

Consider These:Consider These:

- Wal-Mart – Inventory Control- Wal-Mart – Inventory Control

- Motorola – Product Innovation- Motorola – Product Innovation

- Starwood Hotels – Personal Service- Starwood Hotels – Personal Service



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SummarySummary

Six Sigma is a methodology, not a destination or goal.

Choose your processes along the “Critical To Quality” path.

Choose your Operational Definitions well

Always remember Pareto’s Rule

Invite Clint Eastwood to the game



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Optional 5 Minute BreakOptional 5 Minute Break



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Project Management MethodologyProject Management Methodology

Why is it important to Six Sigma?



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Project Management MethodologyProject Management Methodology

Because 50 years of experience and 43,000 PMP’s have already

written the answer to this question:

“How do we accomplish this?”



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Justifying PM MethodologiesJustifying PM Methodologies

Formalized Project Management:1. Reduces Financial Loss2. Increases Resource Productivity3. Increases Quality of Output4. Preserves and Promotes Organizational

Best Practices5. Identifies Limits



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Prevalence of Project FailurePrevalence of Project Failure

Standish Group Study (1994) ~8,400 IT projects Total value greater than $25,000,000,000

• 16% successful – on time, within budget, met the specs, and led to used deliverables

• 50% in “recovery”• 34% outright failures



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J.D. Frame’s StudyJ.D. Frame’s StudyIn December 1997, Frame conducted a survey of In December 1997, Frame conducted a survey of 438 project workers. 438 project workers.

The results summary:The results summary:On your last project, did you meet your budget target?

• 55% over budget

• 27% on budget

• 18% under budget

On your last project, did you achieve the desired specifications?

• 29% short of specs

• 51% met the specs

• 20% better than specs

On your last project, did you achieve your schedule target?

• 69% slipped schedule

• 22% right on schedule

• 9% beat schedule

J. Davidson Frame, Ph.D., PMPJ. Davidson Frame, Ph.D., PMP

University of Management and TechnologyUniversity of Management and Technology



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Survey Says…Survey Says…

Three universal sources Three universal sources of project problems:of project problems:

The organization – e.g., problems of matrix managementPoor management of needs and requirements – e.g., scope creepPoor planning and control – project workers are ignorant of good practice; the organization doesn’t provide data needed to sustain planning and control efforts

Frame’s study indicated Frame’s study indicated poor estimates as a poor estimates as a prime source of project prime source of project failure:failure:

Perhaps half of project failure is tied to poor estimatesWhen you estimate that a ten month job can be done in six months, cost overruns and schedule slippages are hardwired into the project

FrameFrame also concluded the also concluded the following:following:

Did you ask the implementers?Did you ask the implementers?



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The Key Source of Project FailureThe Key Source of Project Failure

My Personal Belief:My Personal Belief:

The #1 reason for project failure is:A Breakdown In COMMUNICATION



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The Professional Project ManagerThe Professional Project Manager

The Evolution of Project Managers’ Roles



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Project ManagersProject Managers

1950s through the 1980s – Strictly Implementers Narrow orientation. Mostly focused on technical implementations. Narrow skillset - budgeting, scheduling and spec

interpretation.

Mid-1980s to Now – Tactical Business Decision Makers Projects management equivalent to business management. Broadened skillsets, increased pressure for performance Greater authority and responsibility. Increased compensation, often tied directly to results rather

than efforts.



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Changes Reflected in the Changes Reflected in the PMBOKPMBOK

Scope management Time management Cost management Human Resource

Management

Risk management Quality management Procurement management Communication

management Integration management

Traditional Competencies

New Competencies



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Traits of Effective Project ManagersTraits of Effective Project Managers

Detail Oriented.

Diplomacy and Interpersonal Skills.

Success Oriented.

Self Motivated.

Effective Problem Solver.

Readily copes with ambiguity, setbacks, disappointments.

Open and Effective Communicator.

Results Focused.

Politically Savvy.

Good Negotiator.

Comprehensive Business Knowledge.

Competent.



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The Competency FactorThe Competency Factor

Searching for Excellencerather than Perfection



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What is Competence?What is Competence?

“Competence is the capacity to employ knowledge and skills to achieve defined results in an effective fashion.”



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What is Competence?What is Competence?Knowledge -- in Project Management, the PMBOK

Guide identifies nine knowledge areas that competent project professionals should have some mastery of:

Scope, Time, and Cost Management. Human Resource Management. Risk Management. Quality Management. Procurement Management. Communication Management. Integration Management



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What is Competence?What is Competence?

Skills -- competent project workers should possess skills in a range of areas, including:Project-related skills. Sociopolitical skills. Interpersonal skills.Business skills.



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Is Competence Important?Is Competence Important?

The cost of The cost of incompetenceincompetence:: Each day of delay in government approval of a drug

may cost a pharmaceutical company $1,000,000 in lost revenue

One month’s slippage on a 100 million pound telecommunications project in the UK might incur a one million pound penalty

The collapse of a poorly constructed building, where life is lost, may cost a builder millions of dollars in damages and a loss of reputation

A data entry error by a bank clerk may lead to thousands of dollars of losses



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The Competence DilemmaThe Competence Dilemma

The Common Wisdom:Given the right support, people will rise to a

challenge and behave competently.

Reality:Successful competence development of

individuals is varied at best. A small number of people can be classified as high performers. In the realm of competence, Pareto’s Rule vastly applies.

A guy named Tim once said: “Just because someone can, doesn’t mean they will.”



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Three Levels of CompetenceThree Levels of Competence



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Competence of IndividualsCompetence of Individuals

The project management competence of individuals has three dimensions:Mastery of project management

knowledge and techniquesMastery of soft skillsMastery of business competencies



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Competence of TeamsCompetence of Teams

Define clear and realistic goals.

Clearly define deliverables.

Produce a proper mix of skills.

Produce proper level of knowledge.

Identify and acquire adequate tools.

Practice discipline: Communication. Regular meetings. Well-defined

documentation.

Cohesion and the capacity to reach consensus readily.

Boldness.

Dynamic and appropriate team structure.

Effective diversity integration.

Focus on goal attainment.

The ability to act in the best interest of the customer, the company and the team.

Successful Project Teams Must:Successful Project Teams Must: And Exhibit These Traits:And Exhibit These Traits:



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Competence of OrganizationsCompetence of OrganizationsIn the name of “Quality”, there are many ways

to grade certain degrees of an Organization’s process management competence: Deming Prize ISO 9000 Baldridge Award Capability Maturity Model (CMM)

For some organizations, pursuit of awards such as these can be irreversibly destructive.



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Competence of OrganizationsCompetence of Organizations

Organizational Competence = Enablement

Most Quality Models Exhibit:Focus on the organizational environment as

an enabler.Permit individuals and teams to do the best

job possible.A myopic focus on increasing customer

value.



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Traits of Competent Traits of Competent OrganizationsOrganizations

Clearly defined procedures. Open access to appropriate information. Adequate quantities of proper resources. Easy access to appropriate training and

education. Clearly defined organizational vision and

values. Distinct culture of open communication. A commitment to ongoing improvement. Institutionalization of project management.



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SummarySummary

Key Points to Remember



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Key PointsKey Points

Six Sigma and Project Management are synergistic in nature

Six Sigma defines WHAT needs improvement; the BREADTH of a quality project.

Project Management defines HOW to accomplish the improvement; the DEPTH of the quality project.



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Both SS and PM require competence to succeed.Six Sigma requires competence in

business strategy, market alignment, and process engineering.

Project Management requires competence of the individual, the team, and the organization



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Remember Pareto, Eastwood and Tim - They can be your best friends!

Pareto:The 80/20 Principle

Eastwood:Gotta know the limits

Tim:Just because someone can, doesn’t

mean they will



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Thank YouThank You

[email protected]



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Book RecommendationsBook Recommendations

J. Davidson Frame, Project Management Competence (San Francisco: Jossey-Bass, 2000).

Michael Treacy & Fred Wiersema, The Discipline of Market Leaders (Perseus Books)

George Eckes, The Six Sigma Revolution, (John Wiley & Sons, Inc.)

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