Why Project Management is Essential to Successful Six Sigma Project Implementation
It is common knowledge that most organizations run at a three-sigma quality level and that they lose between 20 and 40 cents of every operating dollar to poor quality. The same statistics apply to projects.
The Standish Group has been surveying IT projects for over a decade and continues to find high failure rates—as much as 30 percent of them canceled and 50 percent needing to be revised. And Alan Mulally, CEO of Ford Motor Company, said that when he was program manager of the development of the Boeing 777 airplane, 30 percent of the cost to develop an airplane was rework, which means that nearly one of every three people working on the program is spending full time re-doing what two other individuals did wrong in the first place. We even find high losses in construction, even though the processes there are fairly well defined. One of my clients implemented my project management methodology and estimated that they will save over $5 million over the next five years in reduced change orders alone!
The Good News
That was the bad news. The good news is that if your project management is effective, you can cut your losses significantly. But what does this have to do with Six Sigma?
Plenty. You can’t achieve Six Sigma performance improvements in your organization with inadequate project processes. So if you apply Define, Measure, Analyze, Improve and Control (DMAIC) to a Six Sigma project, my guess is that, unless you are practicing effective project management, you will find that your waste is high.
Project Processes and Project Planning
The Project Management Institute (PMI®) has identified five processes that apply to all projects. These are Initiation, Planning, Executing, Monitoring and Controlling, and Closeout. In my experience, the Initiation and Planning processes are the most critical.
During Initiation, you must define the problem to be solved by your project, and this is where we often fail. In U.S. culture especially, we find people adopting a "ready-aim-fire" approach to project management. We just want to get on with it. And besides, we all already know what the problem is, so the net result is that we incorrectly define the problem to be solved by the project and waste considerable time and money trying to solve the wrong problem. I truly believe that as much as 80 percent of project failures are caused by this tendency. In fact, NASA has found that projects are perfectly planned to fail from the very beginning.
The Standish Group has found that the top two causes of IT project failures are inadequate planning and poor understanding of client requirements. In fact, one of the missing elements in DMAIC is Plan (P). The process really should be PDMAPIC. You should plan how to proceed in a project in the beginning. Then once you have defined the problem you’re solving, measured and analyzed, you should plan your project improvement steps.
How Are Your Six Sigma Projects Performing?
There is a simple fact of business that the benefit gained from an activity must be greater than the cost of that activity, or else it isn’t worth doing. Put simply, if it costs you a dollar to save a dime, you haven’t achieved a suitable return on your investment.
So the first question is, how much are your Six Sigma projects costing, and what returns are you getting? That is the big question. The second question is, how much money do you waste in your projects? If it is at a three-sigma level then I would admonish you, "Oh physician, heal yourself first." If you can’t achieve better than three-sigma results with your process improvement projects, then you can’t really expect the entire organization to perform better than three sigma.