ISACA COBIT 5 – Define (BOK IV) Part 5

11. Project Charter – Writing Project Scope (BOK IV.B.3)

So far in project charter we have talked about business case, we have talked about problem statement. Now coming to the project scope, what is the scope of the project? So here we have the project charter, we have already already talked about business case, we have already talked about the problem statement. Now here we are on the project scope. So if you look here it’s looking at the start point, end point, what is the starting and the end point of the process and it is looking at what is in scope and what is out of scope. So these elements go as a part of project scope.

Let’s look at these in more details on next few slides. So coming to project scope, the scope of the project need to be of just the right size. And when I say just the right size, what does that mean? That means is the scope of the project shouldn’t be too big, neither it should be too small. And when I say too big you don’t want a project of solving word hunger problem, word hunger issue. You don’t want to have that sort of a big project which you can never solve, neither you want to have a project which is too small, too small, that which doesn’t require the effort for Six Sigma methodology.

Smaller projects you could have just done using seven basic quality tools or any other simple technique rather than going through the full methodology of Six Sigma process. So get the right size of the project and what is the right size of the project? Right size of the project is something which you can complete in two to three months. That’s the optimum size of a Six Sigma project. And when I talk about the scope there is depth and there is width of the scope.

So coming to the depth of the scope so depth of the scope is, let’s say you have a process which has step number one, step number two, step number three, step number four in plain thing step number one could be placing an order for subsuppliers, getting the material. Step number two checking the material. Step number three production is step number four. Assembly is step number five and dispatch is step number six.

So this is vertical. So here you need to make sure that what is the vertical scope of your project? Are you looking at the full chain from placing the order to subcontractor to dispatch or you are just limiting your project to the production group only or to the receipt inspection only. So that’s a vertical scope when it comes to the horizontal or the width of the scope, that means what is the width of the scope means, how much wide it is, is it related to one particular location or is it global covering all the countries? Let’s say a company has ten different production units in ten countries. Is the scope limited to one specific country or one specific location or is it related to all the ten locations. So that is the width of the project. So you need to check that what is the width and what is the depth of the scope which you want to take in your six sigma. And again, going back to the same thing, you don’t want a project which is too big. Probably you might want to do this project only on the one facility, on a one production unit. And once you have done that, then probably you might want to convey the result of that to other units. And same thing with the vertical as well.

You might not want to do the project starting from placing order with the subsplier, then starting with the receipt inspection and starting with the manufacturing assembly, you don’t want to have all these steps included into the project, you might just want to limit yourself to the production. So this is how you look at the scope of the project and once you see that your scope is too big and you want to cut down on the scope, then probably you might want to do pareto analysis. So if you are taking an example of weld defects, rather than going through ten different location, ten different facilities, you might just want to take one facility or you might want to take one or two facilities which leads to the most of defects, 80% of the defects. So places where there are more problem, you might just want to include those facilities only in your project. And as we have seen on the template for the project charter, you need to have the starting point and the ending point.

So starting point and the ending point could be anything like starting from the receipt in the production shop to the completion of the piece production. So something like that you need to put what is the starting point in the process and what is the ending point in the process which is included in the scope and you need to define what is in the scope and what is not in the scope or what is out of the scope. So in our example of welding, you might want to say that welding at the weld shop is only included in the scope of this project. Any welding done outside this shop which might be in the assembly or somewhere else that is not included. This is just an example to say that which area is included and which area is not included. When we talk of project scope, there is a particular item in project management terminology which is scope creep.

So scope creep is something which means that your scope, if it is not fixed, if it is not finalized, will go on increasing because people will be putting more and more ideas and thoughts and your scope could never finish. In the project management, this is a common term which is scope creep. You might want to avoid scope creep. In your six sigma project, where your scope keeps on increasing, you started with one unit, and then you end up doing this project in ten units. You don’t want to do that because that way your project will never finish. So you might want to note down this term, which is scope creep. So with this, we finish our discussion on project scope definition. And this was the third item in the project.

12. Project Charter – SMART Goals and Objectives (BOK IV.B.4)

So in the project charter so far we have talked about business case, problem statement and scope. So these are the elements which we have talked so far. Now, coming to goals and objectives, let’s look at that. So, as you see here on Project charter, we have talked about number one, we have talked about number two, which is problem statement number three, which is project scope. And here we want to put our goals and objectives for the Six Sigma project. So let’s understand what does this mean and how do we write that and what do we write here in goal statement? So the goal statement basically tells what is the goal of this Six Sigma project? One thing that need to be very clear, that this goal of the Six Sigma project need to be aligned with the problem statement, because the problem which you are solving is your goal. So your goal and the problem statement should align.

So earlier when we talked about problem statement, our problem statement was that in our welding shop, the average weld repair rate for last three months has been 4. 5% as against the maximum target of 1%. And this is adding to the cost and delay in production. So that was our problem, that was our problem statement. But then what is our goal? Our goal is to reduce that weld repair rate from 4. 5% where it is currently since last three months, to 0. 5% maybe as against 1%, which was the norm earlier. Since we are doing Six Sigma project, we want to reduce that rate even further.

And we have put here the date of end of December 2016. So we have put a target date here also. So our goal for this Six Sigma project is to reduce the well repair rate from 4. 5 to 0. 5% by end of December 2016. Let’s look at a few things here. When you are writing goal statement, first thing is that this needs to have focus on numbers, where you are and where you want to be. That should be the focus of the goal statement.

And goal statement generally starts with a verb, with the action. So action is to reduce. So that’s what you will be doing. You are putting a goal statement in the form of an action, in the form of a verb. And then your goal statement should have a target date as well, because if there is no target date, then this goal doesn’t mean anything. So few things in regards to goal statement, put emphasis on number, start with a verb and put a completion date. And another thing is this goal needs to be a smart goal. And what is that smart goal? Let’s see that on the next slide. So when we say that goals or objectives need to be smart, so here smart means S for specific, m for measurable, a for Achievable, R for relevant and T for time bound. So your goal should fulfill these five factors smart, specific, measurable, Achievable, relevant and time bound.

So if we look at our goal statement, which we produced here for our sample project, is to reduce the weld repair rate from 4. 5% to 0. 5% by end of December 2016. So this is a very concise, precise statement of the goal. It is very specific where we are, where we want to go. It is measurable because you can measure the weld repair rate. It is Achievable because your earlier target was 1%. So it is not unachievable goal. You can still achieve that. It is tough goal, but still it is Achievable. And that’s what the whole purpose of Six Sigma is.

You don’t want something very easy goal to achieve doing Six Sigma project. And then this is irrelevant because earlier we said that this is losing the organization $300,000 every year. So that’s relevant to the organization purpose here. And it is time bound because we have put a deadline of December 2016 to complete this project. So that’s a smart goal. So that completes our discussion on goals and objectives or the goal statement in the project charter.

13. Project Charter – Project Performance Measurements (BOK IV.B.5)

So in our discussion of project charter, we have talked about business case, we have talked about problem statement, project scope, goals and objectives. And now we are looking at project performance measures. How do we measure the performance of the project? So, looking at the project charter here, we have completed step number one, two, three and four. So here we are on project performance measures, and we are looking at expected savings and benefits. What is the saving, what’s the benefit of doing this project? What sort of benefits you can have from a Six Sigma project? Let’s look at those on the next slide. When you are doing Six Sigma project, you can have monetary benefits out of that, or you might have non monetary benefits out of that.

Whatever you have, end of the day, it is always better to convert everything into monetary terms because that is what is going to convince management to go ahead with this project. Let’s look at some of the examples of monetary benefits which you can achieve from a Six Sigma project. One could be increasing sale and revenue. If there’s a way to increase sale, if there’s a way to increase revenue that makes a good Six Sigma project, reducing cost is another way. And in the example of this, weld repair rate. That is what we were talking of, reducing cost by reducing defects, by reducing rework. Another benefit could be avoiding cost. You can avoid cost by not buying a machine, managing with the existing resources, managing with the less people, existing people, rather than hiring new people for the new shop.

That way you can avoid cost. So your Six Sigma project could be focused on avoiding additional cost for doing something, avoiding investment, doing something with the existing machinery, not buying another one. So that’s similar to avoiding cost cycle time reduction, making something faster. Because if you make something faster, then you can make more units per day. So if you make more units per day, you will be increasing your sale. You will be increasing your revenue, in fact, which will lead to increase in profits. Reducing inventory. Inventory is your money logged. So some of your money is locked in inventory. So if you reduce inventory, your money gets freed.

So you have more cash to work on, more cash to produce more items. So that could be another way to work on a Six Sigma project for reducing inventory. Non monetary benefits could be having better customer satisfaction, client satisfaction, or reputation. So these are some of the examples where you can have performance of your Six Sigma project measured on these terms. So these are some of the terms on which you can have your Six Sigma project measured on. And that’s what you put in the performance measures. So in our project sample project, we could say that by doing this project, we will be saving $300,000 per year by not repairing, by not retesting those weld joints which are creating problem which are creating additional cost which are creating delay in the work process.

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