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Integrating Project Management into a Six Sigma System

Manufacturers and transactional firms share a drive to lower costs, reduce cycle time and offer a diverse product mix as they pursue higher profits and an increased market share in a growing global environment. Consumers (those paying for the end product) want products or services that are cheaper, readily available and of a quality that meets their expectations.

A variety of systems – such as total quality management (TQM), total quality control and Six Sigma – have been implemented by organizations to help guide the efforts of creating new products, reducing product costs, improving manufacturing or organizational capabilities, realizing new market share or entering new markets. These systems rely on teams of people to identify the voice of the customer (both internal and external), taking into account the organization’s competencies. They also require an ongoing portfolio of projects aimed at creating revenue or reducing costs.

While not all organizations implement these systems or keep them in their original form, many of the core ideas are adopted. Some organizations have integrated two or more systems. One melding of systems that holds significant promise is the integration of the Six Sigma methodology with the tools and processes of project management.

The Six Sigma methodology DMAIC (Define, Measure, Analyze, Improve, Control) offers a structured and disciplined process for solving business problems. Six Sigma uses tools designed to identify root causes for the defects in processes that keep an organization from providing its customers with the consitent quality of products the customers require on time and at the most reasonable cost. The Six Sigma work is normally done through cross-function teams that manage the project. Yet the methodology does not address the management of the project itself.

Project management’s tools and techniques focus on attributes of a project such as development, execution, control and closing. There is an assortment of tools that are used throughout the project to manage the project to completion.

Six Sigma and Project Management

With Six Sigma’s DMAIC process, a problem is first defined and quantified; then measurement data is collected to bound and clarify the problem; analytical tools are deployed to trace the problem to the root cause; a solution for the root cause is identified and implemented; and finally, the improved operations are subjected to ongoing control to prevent recurrence. The Six Sigma toolkit includes a variety of techniques, primarily from statistical data analysis and quality improvement. Design of experiments (DOE), failure mode and effects analysis (FMEA), cause-and-effect diagram (aka fishbone diagram, Ishikawa diagram), process flow diagram and gage repeatability and reproducibility (R&R) studies are among Six Sigma’s many tools.

While the methodology of Six Sigma has proven effective in troubleshooting or improving existing processes using the DMAIC approach, there are challenges to confront when using Six Sigma. A company that relies solely on Six Sigma to run its projects may experience issues with control of the project process. A Master Black Belt was interviewed from a firm that utilized a pure Six Sigma system for its projects. The firm found that the majority of its projects were not being completed as the Six Sigma system would suggest. A lack of management support, insufficient resources and failure to understand the voice of customer (VOC) were some of the reported problems.

The DMAIC approach focuses on controls for the improvements to the process, not the control of the project management process.

“Project management is the application of knowledge, skills, tools, and techniques to project activities to meet project requirements,” according to the Project Management Institute. Work breakdown analysis, schedule development, risk analysis, scope definition, status reporting and cost budgeting are common processes that project managers use to plan, execute, control and close projects. These processes and associated tools work for both transactional projects and manufacturing projects. The project management approach utilizes various tools and processes to complete a process improvement project.

The processes identified above are far from an exhaustive list of the processes available in the project management arsenal, but represent those most useful to a process improvement project. The strengths of project management include formal control of change, scope, time and money. These controls are important to any firm trying to improve its bottom line via process improvements.

The Integration of the Two Approaches

By taking the process control strength of project management and combining it with the troubleshooting strength of Six Sigma, an organization can create a consistent, controlled and predictable process troubleshooting system. The integration can begin with the development of a project life cycle. Implementing the Six Sigma methodology for defining the problem adds statistical knowledge of the problem, reducing the chance of an incorrect assessment of the issue as defined by the customer and scope documents. Using Six Sigma tools will reduce the bias that influences perceptions about a particular problem.

Six Sigma tools used for measurement of the problem – gage R&R, FMEA and control plans – can be useful within project managaement’s validation phase of the life cycle. Adding budgeting, scheduling and resource management from project management – throughout the life cycle, will allow management to make informed decisions to move from phase to phase. The tools of both project management and Six Sigma can be placed in this life cycle to plan, act, do and check for a process improvement project. An example of a project life cycle is shown in the table below. This life cycle shows DMAIC activities (in red) assigned to project management phases and controlled by decision points at the bottom of each column. Six Sigma Improve and Control steps are split between design/testing and implementation.

Example Integration of Project Management System and Six Sigma System

The Project Life Cycle

Phase I
Concept

Define

Phase II Requirements

Define

Phase III
Validation

Measure/Analyze
Improve/Control

Phase IV
Implementation
Planning

Improve/Control

Phase V
Implementation

Improve/Control

Phase VI
Post
Implementation

Control

> VOC – statement of work
> Pareto diagrams
> Fishbone diagram
> FMEA
> Process flow
> Control plan
> Scope definition, objectives
> Assumptions
> Risk process
> Project deliverable checklist
> Requirements writing
> Criteria for project completion
> Communication plan
> Responsibility assignment matrix
> Risk process
> Change management
> Lessons learned
> Weekly team meeting
> Cost estimating
> Work breakdown structure
– Cost budget
– Schedule
> Gage R&R
> Pareto analysis
> FMEA
> DOE
> Risk process
> Change management
> Earned value analysis
> Lessons learned
> Weekly team meeting
> Recommend solutions
> Recommend controls of solutions
> Design recommended solution
> Design controls
> Risk process
> Change management
> Earned value analysis
> Lessons learned
> Weekly team meeting
> Implement process improvements
> Project process monitoring with countermeasures
and controls
> Purchase capital
> Test solution
> Risk process
> Change management
> Earned value analysis
> Lessons learned
> Weekly team meeting
> Measure for completion of objectives
> Repeat at 3 months then again at 6 months
> Controls review
> Close project
> Project book archive
> Risk process
> Change management
> Lessons learned
> Weekly team meeting
Senior management approval to continue the projectStakeholder approval to continue the projectProject Sponsor approval to continue the projectStakeholder approval to continue the projectProject Sponsor approval to continue the projectProject success or failure

Using Six Sigma tools throughout the project life cycle adds a series of troubleshooting tools and methodology to the project management system. Project management contributes tools to monitor and track the progress of the project and also adds controls to the problem.

Examples of problems that might benefit from this integrated approach include a low yield of a production line, a long time to market for a new mutual fund, or a high defect rate for a new software release.

A tool integration problem serves to illustrate the integration of Six Sigma tools and project management. Assume a company operates a website that generates numerous user complaints about the ease of navigation. The consequence is that this site is underutilized. For this problem Six Sigma’s Pareto analysis, fishbone diagrams and FMEA can be used to identify the root cause for the issue. Recommended solutions can be generated and the cost can be evaluated. A project management scope, charter and work breakdown structure can be developed and the project can be executed accordingly. Ultimately, this integration yields a robust troubleshooting methodology with project process management and control.

Conclusion: Refinement of Project Systems

As organizations continue to look for ways to improve their systems, cut costs and develop new products for the benefit of profit, project systems will be continually refined. The integration of project management and Six Sigma is a natural fit. This integrated approach will better define ways to accomplish cost reduction, process enhancement, faster implementation and new product development. The integration of the Six Sigma methodology and project management yields an approach that can be used for both transactional and manufacturing organizations to better understand the problems and opportunities that lie ahead.

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Comments 3

  1. Adriana - Six Sigma - Green Belt survivor

    Very interesting article

  2. Manisha Parbhoo

    Excellent Article relating to the type of environment we are in, after reading your article there is a realisation that we are already practising this to drive and bed down our projects. This article just highlights clearly. Thx

  3. Don Turnblade

    Thank you for this the project flow of a Six Sigma Effort itself is essential and should be included in the training of each Black Belt. I have a few items that re-occur in Project Management and improve the quality of Project Risk Management itself.

    Using M/N/1 queue theory to evaluate the risk that a project will not complete on time. This uses a Poisson statistical approach to model project milestones waiting in line to be resolved by a project assigned resources inside an expected time. The assumed signal to noise ratio of both work to do and worker availability is 1 to 1.

    Terms:
    Ra = Rate of Arrival, Milestones per Time Unit
    Re = Rate of Execution, Milestones per Time Unit
    U = Utilization of workers
    Ct = Total Cycle time. Average time to complete for each milestone in turn, waiting plus resolution. It generally makes better sense to consider this the lead time between each milestone followed by the work to complete each milestone.
    P0 = Odds that staff will be 100% free from work and their will be no waiting for work on a milestone to begin.
    P1+ = Odds that a milestone will wait before work begins for 1 or more milestones to complete first.
    T = Actual completion time of the project, all milestones.

    U = Ra/Re
    Ct = 1/(Re – Ra)

    P1+ = 1 – exp(-T/Ct)
    Assuming each milestone represents equal amounts of known work, P1+ amounts to the odds that the project itself will complete in the expected time, Ct. With use of a simple metric, it is possible to consider the impact of milestone work load changes, waiting periods between milestones, staff work load planning to deal with variation in work load and more.

    The cost of delaying a milestone:
    This uses Net Present Value techniques. The amount of money placed at interest right now to earn/cost the value of an item in the future.

    The original milestone has a target date and value. The Project is given a budget that needs to earn enough value for the firm to be worth the either literal or figurative loan of cash to pay for the project work. This will use continuously compounding interest to allow for easy estimation and Excel spreadsheet mathematical functions and notation.

    Terms:
    R = Return On Invested Capital %/yr required for loaned budget cash.
    Tm = The expected completion time of the milestone from the start of the project.
    Vm = The cash value of the milestone work for the project
    T = The actual completion time of the milestone from the start of the project.
    NPV0 = Original Net Present Value of the milestone
    NPV1 = Changed Net Present Value of the milestone

    Value of the milestone before a change in the expected completion time.
    NPV0 = Vm*exp(-R*Tm)

    Value of the milestone after a change in the expected completion time.
    NPV1 = Vm*exp(-R*T)

    Percent valuation change of the milestone by moving its completion time.
    (NPV1 – NPV0) / NPV0 = Vm* (exp(-R*T) – exp(-R*Tm))/(Vm*exp(-R*Tm)) = exp(-R*(T-Tm)) – 1

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