Hit the Nail, Not the Thumb
All our total quality management (TQM) and Six Sigma system failures occur because of poor implementation. When a system fails, it's not the technology's fault; it's the way we manage projects that's to blame.
• A project is defined as a temporary endeavor undertaken to create a unique product or service, or to solve a problem. This is what every Six Sigma project is about.
• Project management is defined as the application of knowledge, skills, tools and technology to meet or exceed stakeholder needs and expectations. This is what Black Belts do.
• A program is a group of projects managed in a coordinated way to obtain benefits not available from managing them individually. Many programs also include elements of ongoing operations. This is what a Master Black Belt oversees.
Although they seem straightforward enough, these three concepts can't be that simple or organizations would get better results from the projects that they fund. The Gartner Group reports that as much as 20 percent of the money businesses spend globally on technology is a total waste. "In a four-year period, an application development organization of 100 developers can expect to spend more than $10 million on cancelled contracts," the organization reports.
Let's look at a well-known example, the Hubble telescope, a $1.5 billion quality blunder. During its first six months of operation, project managers had to deal with the following failures:
• Two (out of six) faulty memory banks
• Flopping solar-energy panels
• Velocity-measurement system failure
• Chemistry-of-celestial-objects systems failure
• Three faulty gyroscopes
• Deformed mirror
As a result of these defects, four tons of repair parts were sent into space at a cost of hundreds of millions of dollars.
Is this a one-of-a-kind blunder? Unfortunately, the answer is no. NASA's Space Station Freedom originally was budgeted for $8 billion; it's now up to $32 billion and still climbing. Where was the quality of the estimating?
Projects in most organizations are mission-critical activities, and delivering quality products on time is non-negotiable. Even with information technology projects, the old Microsoft paradigm of "Get it out fast and then fix the bugs as customers find them," no longer applies. The new paradigm is, "Get it out at Web speed and error-free." Benchmark organizations complete 90 percent of their projects within 10 percent of budget and schedule. Organizations that establish standards for project management, including a project office, cut their major project cost overruns, delays and cancellations by 50 percent.
Projects are big business. Project Management Institute estimates show that U.S. public and private sectors spend approximately $2.3 trillion a year on projects. That's equivalent to one-quarter of the nation's gross domestic product. Global estimates are that the world spends nearly $10 trillion (in U.S. dollars) of the world's $40.7 trillion gross product on projects of all kinds.
Process redesign and process reengineering are two of the most important Six Sigma projects that organizations undertake, yet the failure rate of such projects is estimated to be as high as 70 percent. There are two main causes for these high-cost failures: poor project management and poor change management. Companies that address those issues profit from their efforts, and those who don't face huge cash outflows with little in return.
Let's look at why projects fail. To begin with, organizations fail to adhere to their committed schedule cost and quality of output. This is caused by:
• Variances. The project team doesn't execute the project as planned, often because the original plan wasn't properly estimated.
• Exceptions. Items that aren't included in the original plan are identified as the project progresses.
• Poor planning. Individuals who prepare the plan over commit the organization.
• Delays. The status of interdependencies among other projects and suppliers isn't controlled.
• Scope creep. This is usually caused by poorly defined deliverables that are redefined as the project progresses.
• Resistance . People who are affected by the project aren't prepared to accept the outputs (a result of poor change management).
Poor project-management quality is one of the biggest problems facing most organizations today. It's therefore surprising that quality professionals haven't addressed ways to improve the quality of the project-management process. Even ISO 9001 ignores this critical issue. In our knowledge- driven economy, the quality of an organization's project-management process is key to the organization's success.
H. James Harrington is CEO of the Harrington Institute Inc. and chairman of the board of Harrington Group. He has more than 55 years of experience as a quality professional and is the author of 26 books. Visit his Web site at www.harrington-institute.com
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