OE21 Guideline: 6.1b 

Processes, Project Management and Improvement

Strategic Objective:

Manage key processes and projects to maximize value to customers

Strategic Objective:

Ensure processes and projects meet internal and customer requirements

Quality Objective:

Approved: DD-MMM-YY

Approved by: (Name) Chair, Leadership Focus Team (LFT)

Responsibility:

Lead: Operations Focus Team (OFT)  Support: Other focus teams

VALUE ADDED 

Implementation of this standard helps the organization measure and improve key processes and support processes. During implementation, the OFT discovers the following value-added information:

 

1. Process Requirements - Planned cycle time, cost and outputs of key and essential support processes.

 

2. Measurement - Daily measurement and management of key and support processes versus requirements.

 

3. Improvement -  Product, service, and process improvement to boost the value of products, services, and capability.​​

 

4. Project Management - planning and management of projects to meet schedule, cost & technical requirements.

POLICY          6.0 COMMENTARY

The organization has adopted the Baldrige Framework Item 6.1b Process Management and Improvement, and 7.1a Customer-Focused Product and Service Results as the internal policy, including the following sub-items:

 

6.1b (1) Process Implementation - The organization manages and operates work processes (including design, production/creation, delivery, and product/service support) to ensure that they meet internal and customer requirements. 

 

6.1b (2) Support Processes - The organization manages and operates support processes including finance, accounting, facilities management, equipment management, legal services, human resources, public relations. The organization ensures these support processes meet internal and customer requirements. Project management is a unique work process intended to produce an outcome: on-schedule; within budget and meeting technical requirements. Unless project management is more important than other processes, it is treated as a support process.

 

6.1b (3) Product and Process Improvement - The organization improves key and support processes to achieve high performance, productivity, quality, and value to customers & stakeholders. 

 

7.1a Customer-Focused Product and Service Results - The organization measures, tracks and improves trends in key measures and indicators (results) of the performance of products and services that are important to and directly serve customers. Results are compared with competitors and other organizations with similar offerings, customer groups, and market segments.

 

PROCESS

Standard 6.1b Flow Diagram (Figure 6.1b-1 Operations)

6.1b Process Chart (Figure 6.1b-2 Process Management and Improvement)

Inputs to 6.1b Process and Project Management and Improvement

List of key processes (design, production, delivery, support and business processes)

Financial Reports of cost of goods sold (COGS) for processes, products or services (if available)

List of key projects (if any are in work or planned)

Measurement and Analysis Tools and Techniques

  • List of key processes (design, production, delivery, support and business processes)

  • Financial Reports of cost of goods sold (COGS) for processes, products or services (if available)

  • List of key projects (if any are in work or planned)

Outputs from 6.1b Process and Project Management and Improvement

  • List of key processes (design, production, delivery, support and business processes)

  • Financial Reports of cost of goods sold (COGS) for processes, products or services (if available)

  • Project files planned in OFT 6.1b Project Manager or similar tool (if any)

 

Case Study

  • Read the 6.1b Case Study

Implementation Instructions

Task 6.1b-1 Apply Process Management - The Operations Focus Team (OFT) manages key processes by planning and measuring process performance and acting rapidly to correct process nonconformances or other problems, during the product or service design, testing, production, creation, and delivery (realization) phases. The outputs of these key processes are products, services or programs delivered to the customer.

 

Step 1: Establish Process Measures or Indicators: The OFT uses Process Charts or similar process documents or flow diagrams to establish process performance measures or indicators, including:

 

  • Cycle time (of the process) - derived from Process Charts calculations

  • Cost (of the process) - derived from Process Charts and financial costs-of- goods-sold methods

  • Availability of resources for process management (e.g., people, equipment, tools, facilities.)

  • Reaction time to start and complete processes based upon internal and customer requests

  • Results of any in-process tests or inspections that may be required

  • Records or other documents required internally or by the customer or regulatory entities

 

Step 2: Estimate Process Costs and Value Contribution -  The Operations Focus Team (OFT) guides the other focus teams in measuring process costs, using the following OE21 tools and other internal methods:

 

CFT_3.2_Product_Service_Value_Contribution (.xlsx) 

OFT_6.1a_Process_Designer (.xlsx) 

 

The Leadership Focus Team (LFT) CFO or Financial Manager is responsible for calculating the cost of goods sold (COGS) for each significant product, service or program. COGS is a complex calculation involving many of the following financial analysis requirements used by businesses. For details see Standard 2.2 (Task 2.2.4.1) CFO Financial Performance Assessment item (6) COST OF GOODS SOLD (COGS).

 

The CFO or Financial Manager is responsible for integrating the financial intake (revenue or sales) with the estimated COGS and providing a usable spreadsheet output to the other focus teams. Examples of acceptable outputs (value contribution for each key product, service or program) are provided in the Product/Service Value Contribution model.

 

The example in Figure 6.1b-3 shows that the organization's product/service portfolio has winners and losers. The highest value contribution (Gross Profit) is from Category 1000 Total Ice Skate Revenue, and the lowest is Category 3000 Total Fitness Center, which is operating at a loss. 

Figure 6.1b-3 Product/Service Value Contribution (example)

  • PROGRESS: You have reached Milestone 1 (good work). Input the status [17%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Step 3: Estimate Key Process Cycle Time and Cost - The Operations Focus Team (OFT) uses the Process Charts for each key or support processes that were created in OE21 Standard 6.1a, using the ACI-Process Designer (OFT-05A) tool. The Process Charts provide steps, actions, performers, process time (Pt), wait time (Wt), non-value added time(NVA) estimates which sum to process cycle time (Ct) and Costs. 

 

  • NOTE: The estimated process cycle time (Ct) and process costs are NOT exact, however, the total Cycle Time (Ct = Pt + Wt + NVA) should be reasonably close to what the experience is (i.e., the time to complete the entire process). The total process cost should also be reasonably close to the actual application of labor costs (hours x rate) and non-labor costs (for material, suppliers and other costs).

 

Step 4: Compare Actual Process Cycle Time and Costs to Estimates To ensure that day-to-day operations of work processes meet their estimated (or target) Ct and Costs, the Operations Focus Team (OFT) maintains process and financial records related to experience. The methods for tracking these measures and financial records are the responsibility of the OFT and are audited and approved by the Leadership Focus Team (LFT) at least annually. 

 

Step 5: Implement Key and Support Process Corrective Action  - The Operations Focus Team (OFT) is responsible for monitoring variances between estimated and actual experienced Process Cycle Times and Costs. When significant deviations are discovered, the OFT meets with those responsible for performing the process steps (as documented on the Process Charts). The meeting may require discussion, analysis, and brainstorming to help discover and implement changes to key and support processes. These changes should be timely and effective and should result in one of the several alternatives below:

 

Alternative A - Implement minor changes to the process steps, performers, and estimates as necessary to remove significant variances between the actual and estimated process cycle and cost estimates.

 

Alternative B - Implement significant changes to the process steps, performers, and estimates as necessary to re-engineer and replan the approach to process accomplishment. 

 

Alternative C - No reasonable alternatives discovered; accept the process performance as is.

 

PROGRESS: The status (Milestone 2 = 39%) is input on the organization's OE21 Intranet Main page alongside the title of this standard.

  • PROGRESS: You have reached Milestone 2 (good work). Input the status [39%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 6.1b-2 Establish Project Management Guidelines and Tools  - The Operations Focus Team (OFT) leads the other focus teams (LFT, CFT, WFT) and Administrative Management Work Units in implementing Project Management, where appropriate. 

 

  • Definition: Project Management - the planning and management of projects. Projects have a start date, a list of activities to be performed, milestones, and end date. Project activities have titles, performing organizations or teams assigned to perform the activities, and typically have resources assigned (e.g., labor hours, material dollars, contractor dollars, other direct cost dollars, etc.). Project tools are used to plan, track and manage projects with the goal of completing the project within budget, on the dates scheduled and ending in the output of the desired results (e.g., a new facility, new product or service).

 

  • Guidelines for Project Management

 

  • Project management is treated as a support process unless project management is the dominant process in the organization and consumes more resources than key processes.   

 

  • If the organization has a robust project management system and process in place, and it is operated by professionals with Project Management Institute Certification (www.pmi.org), then it is recommended that the organization use its existing project management system and tools.

 

  • If the organization does extensive business with the U.S. Government as well as other large project management organizations, the organization may be required to comply with the Earned Value Management (EVM) as governed by industry-standard—ANSI/EIA-748, Earned Value Management Systems. (ANSI/EIA stands for American National Standards Institute /Electronic Industries Alliance). If the EVM standards are required, then it is recommended that the organization use its existing project management system and tools.

 

  • ACI-Project Manager - If the organization does not meet the criteria stated in (a) or (b), it is recommended that the organization implement the ACI-Project Manager tool, and use procedures in this OE21 Guideline.

 

  • OFT_6.1b_Project_Manager (.xlsx)

 

  • Project Task Size Thresholds - The following are guidelines for decisions about the level of project management that is warranted:

 

  • Micro size, non-significant projects with little or no risk may be managed with a simple "to-do" task list and a calendar to remind users of tasks due dates.

 

  • Small to 100 Tasks, projects with higher risk, including Strategy Action Plan projects and large Administrative Projects may be managed using the OFT_6.1b_Project_Manager.

 

  • More extensive projects with more than 100 Tasks, and medium to high risk should be managed with more formal project management processes (e.g., PMI or EVMS standards) as well as more robust project management software systems (e.g., Microsoft Project®, Primavera®, other project management vendors).

 

Summary: The ACI-Project Manager tool is suitable for planning and managing small projects with no more than 100 tasks (also called activities), and with no formal requirements to comply with PMI or EVMS standards.

 

The Strategy Action Plans (Leadership, Customer, Operations and Workforce Excellence Action Plans) are good examples of projects that normally use the OFT_6.1b_Project_Manager tool (see Tools page).

VALUE ADDED: The implementation of Project Management helps plan, track and successfully complete projects on schedule, within budget, and meeting requirements for deliverables. Value-added includes:

 

  1. Planning, scheduling, and budgeting of projects

  2. Tracking of progress (e.g. % task completed vs. % planned)

  3. Forecasts of future/final costs at completion and schedule completion dates

  4. Reduces the risk of project cost overruns, late deliveries, and output problems

  5. Helps manage resources of the organization (people, material, other costs)

 

  • PROGRESS: You have reached Milestone 3 (good work). Input the status [43%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 6.1b-3 PLAN THE PROJECT - The Operations Focus Team (OFT) leads the project management implementation (planning, tracking, and management of projects). On projects with up to 100 Tasks, including Strategy Action Plan projects and large Administrative Projects.

 

The OFT uses the OFT_6.1b_Project_Manager to plan, track and control projects, using these steps:

 

Step 1: Create the Project Goals - The OFT coordinates with other teams when project management is used to plan and control the tasks, resources, budgets, schedules, and deliverables of a project. The OFT creates a brief statement of the Project Goals.

 

  • Example Project Goal Statement: The project goal is to design an XYZ Power Facility for community street light systems, including a security alarm and storm warning system that complies with Dept. of Homeland Security requirements.

 

Step 2: Define Project Tasks (also referred to as activities in project management systems) - The OFT coordinates with other teams to create a set of labor and non labor tasks to complete the project. Labor tasks require hours expended by people to do the work. Non-labor tasks include material, software, services, or other purchased items that do not expend labor hours. The following is an example of a sequential list of project tasks for the Example Project Goal Statement:

 

  1. Purchase Items for Power Facility construction

  2. File and receive permits

  3. Prepare foundation

  4. Pour cement for foundation

  5. Construct building frame, including doors and windows

  6. Construct building roof

  7. Install electric wiring, lights and panels

  8. Install water and plumbing

  9. Install Drywall

  10. Install floor and ceilings

  11. Paint and finish

  12. Install fixtures for power equipment

  13. Building ready for power equipment installation

 

Step 3: Define Task Responsibilities - The OFT coordinates with other teams to determine who will be responsible for accomplishing each of the project tasks.

 

Figure 6.1b-4 is an example of a list of responsible people, work units, or teams responsible for completing each of the project tasks.

Figure 6.1b-4 Example Project Task List with Responsibilities

NOTE: Labor tasks have durations typically measured in days or hours, while non-labor tasks may be planned at the point when the item is received or when it is put into the project.

 

Example: Task1 (Purchase Items for Power Facility construction) - This task is planned in total dollars (say $25,000), and might be scheduled for the date (1 day) that the items are received.

 

Example: Task 2 (File and receive permits) is estimated to take 16 hours (e.g., preparing paperwork, paying fees, filing).

 

Figure 6.1b-5 - Example of labor and nonlabor planning in the OFT 6.1b Project Manager tool.

Figure 6.1b-5 - Example of labor and nonlabor planning in OFT 6.1b Project Manager tool

As shown in Figure 6.1b-5, column H is where you input planned labor hours or non-labor dollars (e.g., material, subcontracts, other costs). The formulas work like this:

 

  • If you are planning non-labor you must input a zero (0) in column H; then the calculation in column I requires that you input the dollar amount of that non-labor item. This same amount of non-labor dollars is carried over to column K (BAC - budget at completion)

 

  • If you are planning labor you must input a non-zero number of hours in column H; then the calculation in column I requires that you input the labor rate.  The calculation labor hours x labor rate/hour is carried over to column K to indicate labor costs (BAC - budget at completion)

 

  • In the Figure 6.1b-5 example, task 1 (purchase items) is $25,000 for material ($25,000 BAC)

 

  • In the Figure 6.1b-5 example, task 2 (permits) has 16 labor hours at $100/hour = $1,600 BAC

 

Step 4: Schedule the Tasks - The OFT coordinates with those responsible for completing tasks, to estimate the task planned start dates and completion dates as shown in Figure 6.1b-5 columns F & G.

 

  • NOTE: Task scheduling should include estimates of duration of the tasks. Durations are the key to estimating dates between task start and task completion. More advanced project management systems use networking applications that allow multiple tasks to be connected, then uses estimated task durations to calculate start and finish dates automatically.  

 

At this point in this procedure, the following project management steps have been completed:

 

  • Tasks have been identified and input into Column B of ACI Project Manager

  • Task responsibilities have been input into Column C

  • Task schedule start dates have been input into Column F

  • Task schedule completion dates have been input into Column G

  • Task labor hours have been input into Column H

  • Task non-labor dollars have been input into Column I

  • Task budget at completion (total cost of task) has been calculated in Column K

 

  • NOTE: The information in Columns B, C, F, G, H, I and K are the most used columns and capability provided with the ACI-Project Manager, and may be sufficient for most projects. For more advanced projects where tracking of project costs, estimates of progress (percent complete) and forecasts of final costs and completion dates are required, the additional capabilities of the ACI-Project Manager, or other project management systems may be required.

 

Step 5: (Optional) Decision to Track Project Costs - Planning, tracking and reporting project costs is generally required for larger, more critical projects. In cases where the OFT determines that project costs will be in the project plan, and if the OFT 6.1b Project Manager tool is used, the process used is as follows:

 

Step 5a: Establish Charge Numbers - Establish an accounting charge number system for the project. This could be a single charge number for the total project or charge numbers for each responsible work unit or team.

 

Step 5b: Input Project Costs - At the end of each project week (or month) obtain from accounting, the cumulative actual labor hours and costs, as well as the non-labor costs for the project charge number(s). Input these costs in column J of the OFT 6.1b Project Manager tool. Be sure that column J also shows the most recent cumulative costs for each task (if collected).

 

Step 5c: Calculate Budget at Completion (BAC).  The ACI-Project Manager tool uses data in columns H (labor), and column I (non-labor) to calculate the total project Budget at Completion (BAC) in column K. The BAC (budget) is then directly comparable to Actual Costs in column J.

 

Step 5d: (Optional) Decision to Use Earned Value. Earned Value is Task percent (%) of completion. - The OFT determines if the project tasks will be tracked by percent of completion, on a weekly or monthly basis. If approved, the OFT coordinates with those responsible for each task and obtains their task percent (%) of completion.

 

  • NOTE: The percent of completion is referred to by project professionals as "earned value."

 

  • EXAMPLE: The OFT 6.1b Project Manager (example tab) shows EV Percent of Completion.

 

When EV percent of completion is input, the OFT 6.1b Project Manager tool calculates Cumulative Work Performed and compares it to calculated Cumulative Work Scheduled. 

 

Step 5e: (Optional) Decision to Input Costs and Analyze Variances - The OFT determines if Costs should be input into the project management tool, for comparison to the cumulative Budgets for planned costs in the same time-period that costs are incurred. In the example calculations below the rest of the fields are explained.

 

  • OFT 6.1b Project Manager Cost and Schedule Calculations:

 

The ACI-Project Manager Cost and Schedule Calculations in the spreadsheet tool will exist if all other columns of the OFT 6.1b Project Manager tool are populated with data. All columns with formulas are shown on the right side of the ACI-Project Manager model as shown in Figure 6.1b-​​​​6.

Figure 6.1b-6 OFT 6.1b Project Manager columns with formulas

Step 5f: Gain Commitments to Execute Project Plan - The OFT reviews the final Project Plan and makes sure people, work units or focus teams who have responsibilities are willing to commit to the execution of the tasks as well as dates scheduled and the budgets for the tasks. If necessary, the OFT will ask those responsible to state their concurrence with the Plan in writing via an email or other communication. Issues are resolved before the Plan is sent to the LFT for approval.

 

Step 5g: Approve the Project Plan - After completion of Task 6.1b-6, the OFT submits the Project Plan to the LFT for approval. If the LFT approves, then they must allocate the resources necessary for the execution of the Project Plan.

Task 6.1b-4: START EXECUTING THE PROJECT- After receiving approval, the Project Plan is executed. The OFT normally leads in project execution and acts as the Project Manager.

 

The project execution process for each task is as follows:

 

  • Step 1 - Input Status Date in column D of the ACI Project Manager spreadsheet

 

  • Step 2 - Input % complete in column E

 

  • Step 3 - Input estimated Actual Costs for the task in column J (IF costs are tracked in the project)

 

  • Step 4 - Repeat steps 1 to 3 for all tasks in the project that have started

 

  • Step 5 - Observe all calculations in Columns K through R, including:

 

  • Column O (schedule variance)

  • Column P (cost variance)

  • Column R (actual cost; cumulative)

 

  • Step 6 - Based on project knowledge and Column O (schedule variance) the Project Manager inputs the estimated finish date for the project in cell C7

 

  • Step 7 - Based on project knowledge, Column P (cost variance) and cell E8 (computed an estimate of final project cost), the Project Manager inputs the PM estimated the final cost in cell E9.

 

  • Step 8 - After completing Steps 1 to 7, the Project Manager meets with the people, work units or focus teams who have responsibilities for tasks, reviews progress and uses the inputs and calculations in the ACI Project Manager to determine timely and appropriate corrective actions aimed at keeping the project as close as possible to its approved completion date and approved total project budget. If necessary, the OFT will ask those responsible to state their concurrence with the corrective actions in writing via an email or other communication.

 

  • Step 9 - The OFT and the LFT review Project Plan progress monthly. The OFT and LFT guide the project toward its approved completion date and approved total project budget. If necessary, the LFT may approve additional budget and resources to complete the Project Plan.

  • PROGRESS: You have reached Milestone 4 (good work). Input the status [84%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 6.1b-5 Implement Product, Service, and Process Improvement - The Operations Focus Team (OFT) is responsible for improving products, services, and the processes that are used to design, create, produce, deliver and support these. The OFT uses a variety of process improvement tools and methods with the goal of improving processes and reducing process variability, including:

 

  • Seeking process improvement ideas during monthly organization performance reviews (OE21 4.1);

  • Using web collaboration tools to seek and share process success stories and strategies;

  • Periodic review and analysis of Process Charts (steps, resources, Pt, Wt, NVA, Ct and costs);

  • Applying OFT-8A ACI Process Improvement tools (six-sigma lite approach); see OE21 6.2a;

  • Benchmarking of a competitor or comparative organization processes (as appropriate); 

  • Seeking process improvement ideas from customers and key stakeholders or thought leaders

  • Applying re-engineering of poorly performing fundamental processes 

 

The OFT works closely with the Workforce Focus Team (WFT) to monitor current and forecast workforce capability and capacity (see OE21 5.1 Workforce Environment) and to enhance core competencies as required for new or improved products, services or programs.

  • PROGRESS: You have reached Milestone 5 (good work). Input the status [97%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 6.1b-6 Update Operations Excellence Action Plan - The Operations Excellence Action Plan includes tasks aimed at improving a customer-focused product, service and program results. The Operations Focus Team (OFT) adds tasks, responsibilities and other information necessary to implement new initiatives as a result of this Product and process design Standard.

 

  • OFT_6.1a_Operations_Excellence_Action_Plan (.xlsx)

 

Task 6.1b-7 Input Process and Project Metrics into PMS - Unless the organization has a Performance Management System; the OFT uses the Excel Workbook named:

 

  • OFT_7.1_PMS_Operations_Excellence_Metrics (.xlsx)

 

As a minimum, the OFT selects, input and tracks key measures for Process Management, including:

  • Process Cycle Time - The % of key processes meeting their Cycle time (Ct) targets

  • Process Cost - The % of key processes meeting their process cost ($) targets

  • Project Management - The % of projects meeting their schedule, cost, and technical requirements

 

Task 6.1b-8 Use PMS to Review Process and Project Performance - On a quarterly basis, the OFT with support from all focus teams uses the Performance Measurement System to monitor trends of process management initiatives versus goals. Usually, these are updated quarterly, or when changes in conditions require updates. The OFT appropriate action to drive measures towards their goals. When goals are met, the OFT may raise the goals higher, as appropriate. See OE21 4.1 Task 4.1.5 for guidance.

 

Figure 6.1b-6 is an example Trend Chart and Action Plan for the % of Key Processes Charted.  

  • PROGRESS: You have reached Milestone 6 (congratulations). Input the status [100%] on the organization's OE21 Intranet Main page alongside the title of this standard.

 

Figure 6.1b-7 Example Trend Chart for Standard 6.1b Project Results