0:13

When you're thinking about the infrastructure for

a continuous improvement initiative, the idea of project execution or

the idea of project selection rather is important.

The idea of prioritizing which projects we should pick,

which projects we should do first before we select other projects is important

because it takes the notion of strategy deployment.

The topic that we talked about earlier, and puts it in place.

It executes that, puts it in place.

So it's important for

you to have some kind of guidelines as to how are we going to select projects?

How are we going to score projects in terms of which ones

are more important than others?

And then next, you also have to think about the idea of,

which kind of framework should we use for a certain type of project?

Should we use a DMAIC framework, is it worth it,

is it a project that's large enough for us to have this

idea of doing different phases of define, measure, analyze, and proof control.

And then go ahead and do different toll gate reviews of each of these stages,

and then take that project through.

Or is it a project that's a just do it, that's a project that should be

done very quickly using a quick PDCA, using a quick A3 kind of framework.

So the idea of project execution and

what kind of framework you should use is also important.

So in this session we're going to look at some project selection methods.

As well as look at or get introduced to the idea of different projects execution

frameworks, and then we'll look at some of those frameworks in detail later.

So here you have a really simple way,

of selecting projects, or scoring projects for selection.

So it is what is called the Pareto priority index.

And the idea here is that you're doing a benefit to cost ratio,

so you're saying in the numerator of this ratio, you have project savings,

this could be in dollars, these could be in euros, these could be in pounds.

And then you're multiplying that by the estimated probability of success.

So this is how difficult or how easy it's going to be for

this project to be successful.

What do you expect the chances are that this project will be successful,

will be able to achieve what it's trying to achieve.

So that's in the numerator, the benefits that you're going to get from the project

multiplied by the chance that this project is going to succeed, it's going to work.

And the denominator which you have over here is the total project cost.

The total project cost is the cost of the time that you're putting in,

the cost of the resources that you're putting in into the total project cost.

And then you also have the expected time to completion

which is how long will it be before this project's completely gets done?

And that is something that you're putting in the denominator as a different cost.

So we're getting a benefit to cost ratio.

And just to take a look at a quick example of what something like

this would look like.

It's a quick and dirty way of scoring a project.

But here you have an example, or examples of two different projects.

The first one is reduction of packaging which gives this particular

company a benefit of 1,750,000 pounds, the probability of success of 50%.

The second one is changeover reduction.

So second potential project that this company is considering

is reduction of changeover in some manufacturing process.

The savings of that, excuse me is 2.5 million.

So potential savings from that are 2.5 million,

the probability of success is the same at 50%.

So just on the basis of this you can see that savings for

the change over reduction are much higher.

When you look at the cost, you can see that the cost for

the packaging reduction are only 150,000,

and the project duration is .75 years or 9 months.

So we're talking about a nine month time before this project will get done,

before it can be implemented.

Before the results can be implemented whereas for the changeover reduction,

we're talking about a duration of one year.

So, that's the time that it'll take before the results can be implemented.

Now, based on this you can compute the Pareto priority index for

these two projects.

And what you'll find is that for the first one,

it's much higher at 7.78 than the Second, which is 4.17.

So like I said, quick and dirty way of saying, well, the first one is the one

that, on a benefit cost ratio basis, we should be

considering before we look at the second one, which is a change of a reduction one.

Now what you'll notice about this particular calculation,

these particular calculations, is we used years, 0.75 years and 1 year.

We could have used 9 months and 12 months, right.

That's the calculation that we could have done based on that, and we would have got

a different number for the actual ratio that we're getting for both of them.

We would have got different numbers for each of these calculations.

And that doesn't matter because it would still give you

a relative comparison between the first project of packaging reduction and

the second project of changeover reduction.

So as long as you kept the same units it wouldn't matter because it

would give you the same type of result as far as what you're trying to see,

which is which project to do first.

So this is, like I said, quick and

dirty way of figuring out which product to do first.

Second, let's look at a little more involved method.

So it's a slightly more involved method, in the sense that it's looking at multiple

criteria for each projects, and asking people, asking people who

are informed about these projects to score these projects on those criteria.

So here in this example, what I've given you are five criteria's.

So the first one is importance to the customer,

second one is ease of implementation.

And this is the opposite of cost, so

if the cost is very high, the ease of implementation is very low.

So we're essentially scoring it from, low being not very good to high being very

good so that's the way we were thinking about that scale.

And that's something to keep in mind when you have multiple items in the scale that

they should all be going in the same direction.

They should either be all high numbers being good things or

lower numbers being good things.

And you can choose one or

the other as long as you know what you're trying to calculate.

So going back to the list you have importance to customer,

ease of implementation.

You have the likelihood of success, again low being not very good and

high being very good.

Reduction in costs, low being very good, not very good and

high being very good, and the same for benefits to other processes.

So you essentially have here five different criteria

on which people who know about this project are going to score it.

And you might have multiple people scoring it and getting an average or

something like that if that's how you want to implement this.

The notion of getting a product of these five scores.

Why is it a product and why is it not a sum?

So the index is based on a product of these five scores.

And you can try to compare what would happen when you do

an addition versus a multiplication to see what's going on.

The idea of multiplication is that

not having one of these criteria at all is being penalized much more when you're

doing a multiplication versus when you're doing a simple addition.

And also when you have a lot of these criteria,

you're getting an interaction effect.

You're getting a multiplicative jump on

having multiple of these criteria at high levels.

So that's the idea of the product of five scores.

And, like I said, the scoring of this can be done in different ways.

It might be based on experts, it might be based on a single person.

And as I note over here, it could be also something that gets updated

as you get more information,

as you get closer to making the decision about what projects you might be able to

update some of this data and get a better estimate of what this score would be.

10:04

Now, moving on from what you got from Strategic Objectives.

What you have in the horizontal on top

are the different projects that are being considered.

So, the first project is an emergency department wait time project.

Trying to reduce the wait time in the Emergency Department of a hospital.

The second one is a Payment Cycle TIme Project.

The third one is the Employee Morale Project and

the fourth one is Inventory Management Project.

Now, the way these are being scored in the matrix, you have the key right on top of

that horizontal, are that you are talking about a Relationship Strength of Zero.

When you're saying that doing a particular objective or doing a particular project

will have absolutely no impact on a Strategic Objective.

Next you have a relationship strength number of 1 when

you say that there is going to be little impact

when we do this project on a particular strategic objective.

And next, you have a number 3 which says is moderate impact and

finally 9 which says, there's going to be a very high impact

on a particular Strategic Objective from doing this particular project.

So, you can see the scoring being done, and again,

this might be done by one person or a team that comes to a consensus on the scoring.

Or we take the average of the scores that multiple people will have

provided for this.

But the idea is that they're scoring the relationship

of each project with each Strategic Objective.

Now, once you have all this data, once you have all this information,

what you can do is for each project you can calculate the sum product.

You can take the weight off each of the strategic objectives, and use that to get

a weighted average off the scores that you got on the relationship matrix, right.

So you have, for the first one, it's shown as to how it was calculated, but

it works out to 2.9.

For the second project, it's 1.25, for

the third project 7.8 and a third project 3.9.

So here you get a nice hierarchy of which projects are more

important based on these criteria.

And the way we have done this or the way you've done this,

is you have involved the Strategic Objectives.

You've taken that into the picture directly,

you've codified how each project is going to affect the strategic objective and

then you've taken that into account in coming up with these scores.

So this is a useful matrix when you're thinking about multiple objectives and

multiple objectives that have different weights,

that have different degrees of importance.

Relative to each other.