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When you're thinking about the infrastructure for

Â a continuous improvement initiative, the idea of project execution or

Â the idea of project selection rather is important.

Â The idea of prioritizing which projects we should pick,

Â which projects we should do first before we select other projects is important

Â because it takes the notion of strategy deployment.

Â The topic that we talked about earlier, and puts it in place.

Â It executes that, puts it in place.

Â So it's important for

Â you to have some kind of guidelines as to how are we going to select projects?

Â How are we going to score projects in terms of which ones

Â are more important than others?

Â And then next, you also have to think about the idea of,

Â which kind of framework should we use for a certain type of project?

Â Should we use a DMAIC framework, is it worth it,

Â is it a project that's large enough for us to have this

Â idea of doing different phases of define, measure, analyze, and proof control.

Â And then go ahead and do different toll gate reviews of each of these stages,

Â and then take that project through.

Â Or is it a project that's a just do it, that's a project that should be

Â done very quickly using a quick PDCA, using a quick A3 kind of framework.

Â So the idea of project execution and

Â what kind of framework you should use is also important.

Â So in this session we're going to look at some project selection methods.

Â As well as look at or get introduced to the idea of different projects execution

Â frameworks, and then we'll look at some of those frameworks in detail later.

Â So here you have a really simple way,

Â of selecting projects, or scoring projects for selection.

Â So it is what is called the Pareto priority index.

Â And the idea here is that you're doing a benefit to cost ratio,

Â so you're saying in the numerator of this ratio, you have project savings,

Â this could be in dollars, these could be in euros, these could be in pounds.

Â And then you're multiplying that by the estimated probability of success.

Â So this is how difficult or how easy it's going to be for

Â this project to be successful.

Â What do you expect the chances are that this project will be successful,

Â will be able to achieve what it's trying to achieve.

Â So that's in the numerator, the benefits that you're going to get from the project

Â multiplied by the chance that this project is going to succeed, it's going to work.

Â And the denominator which you have over here is the total project cost.

Â The total project cost is the cost of the time that you're putting in,

Â the cost of the resources that you're putting in into the total project cost.

Â And then you also have the expected time to completion

Â which is how long will it be before this project's completely gets done?

Â And that is something that you're putting in the denominator as a different cost.

Â So we're getting a benefit to cost ratio.

Â And just to take a look at a quick example of what something like

Â this would look like.

Â It's a quick and dirty way of scoring a project.

Â But here you have an example, or examples of two different projects.

Â The first one is reduction of packaging which gives this particular

Â company a benefit of 1,750,000 pounds, the probability of success of 50%.

Â The second one is changeover reduction.

Â So second potential project that this company is considering

Â is reduction of changeover in some manufacturing process.

Â The savings of that, excuse me is 2.5 million.

Â So potential savings from that are 2.5 million,

Â the probability of success is the same at 50%.

Â So just on the basis of this you can see that savings for

Â the change over reduction are much higher.

Â When you look at the cost, you can see that the cost for

Â the packaging reduction are only 150,000,

Â and the project duration is .75 years or 9 months.

Â So we're talking about a nine month time before this project will get done,

Â before it can be implemented.

Â Before the results can be implemented whereas for the changeover reduction,

Â we're talking about a duration of one year.

Â So, that's the time that it'll take before the results can be implemented.

Â Now, based on this you can compute the Pareto priority index for

Â these two projects.

Â And what you'll find is that for the first one,

Â it's much higher at 7.78 than the Second, which is 4.17.

Â So like I said, quick and dirty way of saying, well, the first one is the one

Â that, on a benefit cost ratio basis, we should be

Â considering before we look at the second one, which is a change of a reduction one.

Â Now what you'll notice about this particular calculation,

Â these particular calculations, is we used years, 0.75 years and 1 year.

Â We could have used 9 months and 12 months, right.

Â That's the calculation that we could have done based on that, and we would have got

Â a different number for the actual ratio that we're getting for both of them.

Â We would have got different numbers for each of these calculations.

Â And that doesn't matter because it would still give you

Â a relative comparison between the first project of packaging reduction and

Â the second project of changeover reduction.

Â So as long as you kept the same units it wouldn't matter because it

Â would give you the same type of result as far as what you're trying to see,

Â which is which project to do first.

Â So this is, like I said, quick and

Â dirty way of figuring out which product to do first.

Â Second, let's look at a little more involved method.

Â So it's a slightly more involved method, in the sense that it's looking at multiple

Â criteria for each projects, and asking people, asking people who

Â are informed about these projects to score these projects on those criteria.

Â So here in this example, what I've given you are five criteria's.

Â So the first one is importance to the customer,

Â second one is ease of implementation.

Â And this is the opposite of cost, so

Â if the cost is very high, the ease of implementation is very low.

Â So we're essentially scoring it from, low being not very good to high being very

Â good so that's the way we were thinking about that scale.

Â And that's something to keep in mind when you have multiple items in the scale that

Â they should all be going in the same direction.

Â They should either be all high numbers being good things or

Â lower numbers being good things.

Â And you can choose one or

Â the other as long as you know what you're trying to calculate.

Â So going back to the list you have importance to customer,

Â ease of implementation.

Â You have the likelihood of success, again low being not very good and

Â high being very good.

Â Reduction in costs, low being very good, not very good and

Â high being very good, and the same for benefits to other processes.

Â So you essentially have here five different criteria

Â on which people who know about this project are going to score it.

Â And you might have multiple people scoring it and getting an average or

Â something like that if that's how you want to implement this.

Â The notion of getting a product of these five scores.

Â Why is it a product and why is it not a sum?

Â So the index is based on a product of these five scores.

Â And you can try to compare what would happen when you do

Â an addition versus a multiplication to see what's going on.

Â The idea of multiplication is that

Â not having one of these criteria at all is being penalized much more when you're

Â doing a multiplication versus when you're doing a simple addition.

Â And also when you have a lot of these criteria,

Â you're getting an interaction effect.

Â You're getting a multiplicative jump on

Â having multiple of these criteria at high levels.

Â So that's the idea of the product of five scores.

Â And, like I said, the scoring of this can be done in different ways.

Â It might be based on experts, it might be based on a single person.

Â And as I note over here, it could be also something that gets updated

Â as you get more information,

Â as you get closer to making the decision about what projects you might be able to

Â update some of this data and get a better estimate of what this score would be.

Â 10:04

Now, moving on from what you got from Strategic Objectives.

Â What you have in the horizontal on top

Â are the different projects that are being considered.

Â So, the first project is an emergency department wait time project.

Â Trying to reduce the wait time in the Emergency Department of a hospital.

Â The second one is a Payment Cycle TIme Project.

Â The third one is the Employee Morale Project and

Â the fourth one is Inventory Management Project.

Â Now, the way these are being scored in the matrix, you have the key right on top of

Â that horizontal, are that you are talking about a Relationship Strength of Zero.

Â When you're saying that doing a particular objective or doing a particular project

Â will have absolutely no impact on a Strategic Objective.

Â Next you have a relationship strength number of 1 when

Â you say that there is going to be little impact

Â when we do this project on a particular strategic objective.

Â And next, you have a number 3 which says is moderate impact and

Â finally 9 which says, there's going to be a very high impact

Â on a particular Strategic Objective from doing this particular project.

Â So, you can see the scoring being done, and again,

Â this might be done by one person or a team that comes to a consensus on the scoring.

Â Or we take the average of the scores that multiple people will have

Â provided for this.

Â But the idea is that they're scoring the relationship

Â of each project with each Strategic Objective.

Â Now, once you have all this data, once you have all this information,

Â what you can do is for each project you can calculate the sum product.

Â You can take the weight off each of the strategic objectives, and use that to get

Â a weighted average off the scores that you got on the relationship matrix, right.

Â So you have, for the first one, it's shown as to how it was calculated, but

Â it works out to 2.9.

Â For the second project, it's 1.25, for

Â the third project 7.8 and a third project 3.9.

Â So here you get a nice hierarchy of which projects are more

Â important based on these criteria.

Â And the way we have done this or the way you've done this,

Â is you have involved the Strategic Objectives.

Â You've taken that into the picture directly,

Â you've codified how each project is going to affect the strategic objective and

Â then you've taken that into account in coming up with these scores.

Â So this is a useful matrix when you're thinking about multiple objectives and

Â multiple objectives that have different weights,

Â that have different degrees of importance.

Â Relative to each other.

Â