Validating Projects Benefits

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9 hours 53 minutes
Video Transcription
Hi, guys. Welcome back. I'm Katherine McKeever, and this is your lean six Sigma green belt.
So in our last module, we talked about having a control plan. So we have wrapped up our domestic project. We have started with our define, so we know what the problem is. We have measured it by creating a data collection plan. We have analyzed it by using our current state tools and root cause analysis.
We have improved it by using our brain storming
and piloting. We have controlled it. And now we're coming up to where we're gonna go to our sponsor and say, Yep, we're done. So in this module, we're going to go over validating projects benefits. So I want you to be able to understand why we validate project benefits a quick refresher on benefit types
and understand how we actually do that validation.
So the first thing off, if you think back to the very, very beginning of Yellow Belt when we talked about team rolls, one of the things that we talked about is your lean six Sigma program functions under the authority of your sponsor.
So what, you want to do
the number one reason you validate your project benefits is your validating the value. You're validating their investment in you and your project team. So remember running lean six Sigma projects are very expensive. You have huge amounts of time invested by your team members having a practitioner,
so you want to make sure that you can show that value. Why did we do this project and why? It's important,
and you want to show that your sponsor made a good choice in investing in performing this project. So the first thing off you want to prove that this was a good idea? You want to validate your value. So think of it from an organization's value stream perspective as faras, whether or not
your project in your investment
is value at or non value, add. So is it something that the organization is willing to pay for? Is it not rework on? Does it transform? So we know the organizations willing to pay for it because you have finished your project. We know that it's transforming because you have a great future state
process with some solutions in place
and that whole non rework thing. That's how you know that you're doing a really great job with your control plan because in one year you're not going to go back and have to do the same project over again.
The other thing is, is that you validate your benefits because you want to avoid that backslide. So we talked about the regression towards the mean and how we have a tendency to go back to the way things always were continuing. To validate your benefits is a way of bringing this to the forefront of your mind and keeping the attention on the improved process.
So we leveraged the Hawthorne effect when we're doing this, but it's because we don't want to go back to the way things always work.
So a really, really quick refresher on our types of benefits. If you have any questions about this, go back up to are defined phase and look for the benefits modules both project benefits and how to calculate. But there are three types of project benefits.
There are hard benefits,
soft benefits and tertiary benefits, hard benefits or benefits that hit your bottom line. So these air going to be things like reduced materials cost soft benefits are going to be capacity, which is where
you have the ability to work on things, so making employees more efficient
in their roles so that they can take on more responsibility or work on different projects and then tertiary or intangible, these are the nebulous benefits that you can't measure. So if we say that if we're working on a five s project where we're going through
and we're five escena workspace, we know anecdotally that five est workspaces tend tohave happier employees or better world outlooks because they're not being
squished in clutter and they're able to find what they need. However, being able to attribute that directly to your five s project is very challenging. So this is going to be something like decreased employee turnover
do to morale for you. No amount of rework or something like that. You're not gonna have a metric associate it with your tertiary.
You're hard benefits you absolutely are. And the metrics gonna be a dollar your soft benefits or your capacity. You will have a metric associated with it. Um,
either you're cycle time in your employees capacity, or you can look at volume so increased volume. So are you be? Are you able to have more outputs with the same amount of time for employees. So your throughput think about that. But you will have a baseline and a re measure and an ongoing re measure for
so when you are validating your project, metrics. Remember how I told you that your define and your measure phases we're gonna be so key to the success of your project? This is another opportunity where it is. You're going to want to be consistent.
So at the beginning of your project, when you were doing your charter and coming up with your benefits,
you had some rough estimates of what your projections were going to be. You said, Yep. If we're successful, we're going to, you know, decrease employees time on this process. So whatever formulas and calculations you used, you need to use the same ones,
so same rules as your data collection plan, where you said, this is how we're going to calculate it.
That's how we did it during our pilot. And that's how we're gonna do it. Moving forward. If you said that your employees capacity was in hours, the new use ours if you converted your employees capacity to a dollar value, then you use the dollar value. You need to be consistent to demonstrate that you were showing apples to apples and there is, in fact
and approved improvement associate ID with your project.
The last thing is, is, I want to remind you that the reason why you re measure benefits is because it looks like an S type curve when you see your project benefits. So you know, at the beginning you're doing your baseline. You know that this is where we function. That's gonna be where we start.
We do the project. There's a flurry of activity. As you can see initial improvements, you can see everybody's
really getting into it. So you see a steep increase in your curve, and then you'll see it plateau. My recommendation for project benefits are you do your baseline. Of course, that's a given. You're going to do your first measurement after you do full implementation.
So in May, you may do a personal measurement when you do your pilot,
but you're going to do your first measurement and flip over to the benefits. So in your pilot, you're measuring cycle time in your benefits, your reporting employees capacity so immediately after implementation one month
and I say one month, because sometimes the processes need time to settle, and there's gonna be readjustments as you go
three months. This is when you start seeing regression towards the mean six months. This is when you are firmly in. If we're going to go back to the way we used to do it, we're going to do it here and then one year. And that's to show your long term, sustained benefits. So
my favorite part about this graph is of course, it shows no benefits, deep benefits and then a plateau. But it says we're doomed. Why we think that Because that's what Because we've learned to behave at this higher level of performance, which means that it's time for us to go back to our project prioritization or a PDC A
and find another area for improvement and continue this culture of kaizen
so your company will get used to functioning at these higher levels of process performance, and then that will be the new norm.
So with that, you know that you want to re measure your project benefits because you want to succeed, secure your success and your sponsors success. You want to show that this was a worthwhile investment for your organization? We did go over the three types of project benefits. Hard has dollars. Capacity is going to be things that are
or soft is going to be things that are capacities. They're not necessarily going to show up in your budget, but definitely has an impact for your organization.
Tertiary are things that are very challenging to measure. But you do want to capture, and you know that we re measure benefits because again, we're showing value. But we also don't want to go back to the way things always work. And we know that we haven't s curve. One more reporting project benefits.
So with that, we're done with our control phase. Our next module is going to switch into wrapping up the course on we're going to talk about the key, take away. So the things you're really good at now that you're a green belt,
So I will see you guys there
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