Okay? What's the Return?

  The last slide clicked, with jitters in his arms the young man set his clicker down.  He knew something had gone desperately wrong.  A loud voice soon called out " Okay, So what's the return?"  For a moment the freshly trained black belt sank back into his suit.  After a deep breath he replied "we have a faster process and everyone on the floor is much happier."

  If this sounds familiar then you may have experienced or felt the financial evaluation and benefits pressure before.  As we all are aware six sigma is a results orientated strategy.  We use quantitative data to help us make decisions and we use quantitative data to help prove our results.  Ultimately, that is what we are all interested in "the results" and yet it is also the first thing most of us will forget about until the very end of a project's life cycle.  So here are five tips that will help ensure you document benefits and show the financial results everyone wants to see.

Lesson one: The first lesson is always the most important!

  We don't advocate batching of materials, so why would we support batching of data?  The truth is data is a build up that is best defined right at the kickoff and collected all throughout the project.  Just watch the face of everyone when you're headed back to your office and the data is complete already.  While this is the most important lesson, it can also be one of the hardest to accomplish.  So why not invest in a specialist?  Grab somebody from payroll, grab somebody from HR or grab the CFO them self.  Okay don't grab the CFO, but do fill one of your team slots with a financial specialist.  Consider these reasons why:

• In the early stages of project definition a financial expert can help your team quantify the possible benefits of a project.  They will also be able to calculate a more accurate cost analysis of what the current constraint, issues or pains are causing.  Put those two skills together and you've got a cost-to-benefit analysis performed by a financial professional.
• Once the project is up and running a financial expert will be excited to gather measurements and keep them up to date throughout the project lifecycle.  They will also gain a much deeper understanding of value and nonvalue.
• When it comes time to improve, the financial wizard will be able to gauge the impact of your improvements.  They can easily compare the soon to be results with the initial cost to benefit analysis and keep the project on track.
• We can't leave out control or sustainment.  Financial professionals have a much deeper insight of rising labor prices, outside effects on the economy and changes in unit costing than most of us see on a daily basis.  Because they have such an intimate view of these important measurements they are the perfect candidate to develop a dashboard for continued monitoring of results.

Number Two: Establish it from the start

  Almost every project charter requires us to establish baseline measurements or some type of starting point that improvements can be measured against. 

For those of you who have downloaded our project charter template, you probably noticed the section that establishes a baseline a future state and an actual measurement.  The reasoning behind this section is to establish, agree and align your measurements with those key performance indicators.   By clearly defining these measures right from the start everyone knows what they are being "graded" on.  If leadership wants to see "hard savings" you should know from the start.

Click here to download a free charter template.

Likewise, if "soft savings" will do the trick, everyone will know and agree from the beginning.  Whether it is hard or soft savings the metrics you establish will be key drivers of the team's behavior and the project's success.  Aside from using a Pareto Priority index another very helpful tool to help teams understand how to consider project benefits is the decision tree or cause map.  Essentially the tree is just a flow chart which shows a process for consideration of costs and benefits.  Organizations should establish their own but a general one is available for download to help you get started.  After you have developed your decision tree teams can then have a standardized process they can follow when capturing and evaluating benefits.  Of course there will be exceptions but whether you cover 20% of decisions or 80% of decisions it will be less information that you need to remember for the next time around.

  Be sure that when you establish your chart that you have as many subject matter experts available as possible.  They will provide helpful insight and details with regards to benefits that should be considered and they most likely have tacit knowledge of how benefits and costs are evaluated.

Lesson 3: Once a day keeps the doctor away!

   We mentioned earlier how important collecting and comparing costs and benefits throughout a project is to keeping results aligned.

  Another way of doing this is by instituting daily huddles within your organization.  The huddle can be a great opportunity to provide the entire team with updates and have a scribe capture the benefits as the project drives down the highway.  Here is a standard format you can use for a daily team huddle:

1. What were your wins yesterday?
2. What will you be doing today?
3. Is there any way we can support you in doing that?
4. Assign Actions at the end of the huddle.

  As you can tell the huddle is a 10-15 minute stand-up.  It is not a time to dig into root causes or analyze possible improvement options.  It is just a time to provide updates and know when team mates might need help with a possible roadblock.  It is the perfect time to review and update a dashboard, scorecard or project charter.
  Another great technique to use during a project's life-cycle are tollgates.  Tollgates like driving on the freeway prevent or grant individuals and teams the authority to move onto the next stage of their project.  One way to ensure that financial benefits and associated costs are captured is to establish a criterion for your "pass."  The criterion will act as an assessment that teams can check their projects too and be granted "the go ahead" by one with authority.  Tollgates are a great opportunity to ensure that each phase of the project is completed and up to date too.  You can download a sample format for assessing projects at the "tollgate" below.

Lesson Four:  Communication is essential

  Huddles, Tollgates and decision trees are all tools that assist us in making decisions.  Visual Management is another essential method of communicating information that plays a critical role in project management.

Click here to download your Tollgate template.

  With so many different means of communication a team could end up updating each other all day long.  You need to make the method of communication effective and efficient.  One way to consolidate information throughout a project is by using dashboards and scorecards.    As you create these efficient means of communication project benefits can be captured much easier.  

Lesson Five: Compare the Actuals with Reality and Improve

  We can capture all the benefits in the world, but if nothing is done with those benefits they are in fact waste.  The transformation comes in the doing and the acting.  The PDCA model can be applied to capturing project benefits as we learn to:

• Plan - What we will capture.
• Do - Capture what we planned.
• Check/Study - The information and data in relation to the target or objectives
• Act - Adjust and close any gaps based on what we learned in our checking and studying.  

  Every project is important in some way.  But we must make our benefits and the improvements, changes and transformations known somehow.  Incorporating these five evaluation and benefits techniques into your next project may have your presentation ending with a "That was a fantastic presentation!  We were aware of the amazing changes all throughout the project and hearing the hard savings today really helped us understand your results."