Choosing an improvement project
Key takeaways
- An improvement project starts from understanding how a process currently works, its inputs, outputs and sequence, and where its performance data shows it falling short.
- A project carries four types of risk: financial (budget overrun or the expected return not delivered), strategic (the organisation's actual objectives not advanced), project (schedule slippage, resource shortfalls, scope creep) and performance (the improved process not performing as intended).
- Risks are weighed against the opportunity before the project is committed to, so it is chosen with its eyes open rather than on optimism alone.
- Improvement opportunities come from recurring audit non-conformities, processes out of statistical control on control charts, customer complaints and satisfaction trends, and Pareto analysis of the most frequent or costly quality issues.
Every unit before this one, quality control data, audit findings, risk assessments, ultimately points toward the same question: what should actually be improved. This final unit turns that question into a properly scoped, planned and delivered project.
Analysing processes
Improvement starts with understanding how a process currently works, its inputs, outputs and sequence (see Quality Management System, on processes), and where its performance data (see Quality Assurance, on evaluating quality control) suggests it is falling short.
Project risks
Weighing risks and opportunities
Before committing to a project, its risks are weighed against the opportunity it represents, using the same tools and framework as any organisational risk assessment (see Organizational Risks and Opportunities, in the chapter on assessing risks), so the project is chosen with its eyes open rather than on optimism alone.
Finding improvement opportunities
- Recurring non-conformities flagged by quality audits (see Quality Audit, on recording audit findings)
- Processes shown out of statistical control by control charts (see Statistical Quality Control, on control status)
- Customer complaints and satisfaction trends (see Customer Relationship Management, on satisfaction and complaint handling)
- Pareto analysis of the most frequent or costly quality issues (see Statistical Quality Control, on Pareto analysis)
Self-check
(a) Name the four types of project risk, with one example of each. (4 marks)
(b) Explain why a project's risks are weighed against its opportunity before it is committed to. (2 marks)
(c) State four sources of improvement opportunities named in this chapter. (4 marks)
(d) A project is delivered on time and on budget, but the new process it introduced does not actually reduce the defect rate it was meant to fix. Which type of project risk occurred? (2 marks)
(e) Explain how a Pareto analysis of quality issues could be used to identify an improvement opportunity. (3 marks)
Show worked answer
(a) Financial risk: the project overruns its budget. Strategic risk: the project fails to advance the organisation's actual objectives. Project risk: schedule slippage or scope creep. Performance risk: the improved process fails to perform as intended once implemented.
(b) Weighing risks against opportunity ensures the project is chosen with its eyes open, rather than being pursued on optimism alone, using the same tools and framework as any organisational risk assessment.
(c) Recurring non-conformities flagged by quality audits; processes shown out of statistical control by control charts; customer complaints and satisfaction trends; Pareto analysis of the most frequent or costly quality issues.
(d) Performance risk, since the project was delivered but the improved process failed to perform as intended once implemented.
(e) Pareto analysis ranks causes of defects by frequency, applying the 80/20 principle, so it identifies the small number of causes responsible for most quality problems, directing improvement effort at those few high-impact causes rather than spreading it evenly.
Exam tip
The four project risk types are commonly tested by matching a described project problem to its type, a budget overrun is financial, a late delivery is project risk, a completed project that does not fix the underlying issue is performance risk.