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6Sigma Tools: Determing the Value of a Project

published on June 25, 2012

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6Sigma is only as good as the practitioner and one of the greatest assets that practitioner brings to your project is the ability to determine the value of the project. There are 3 components to determining the value of your improvement project:

  • Impact- your belt should be able to tell you if these impacts (negative and positive) will affect your bottom line as a one-time event or if the impact will be long-term. Ideally they will work in conjunction with your CFO or your accounting department. If the two are not talking, the result is a less informed project manager and CEO.
  • Allocations-these will vary from organization to organization, but basically they should cover the budget, time and resources set aside for the project.
  • Forecast- this document often times serves as the birthplace of the project and rightfully so. Your forecast tells you anticipated cash flow and when that money is scheduled to happen. If you are not using your forecast in the creation of your project, you have issues bigger than 6Sigma can help you with.

The last but certainly most important thing for a belt to convey to the executive leadership is the Benefits Capture. Benefits Capture illustrates to your leadership how the project impacts the business in different categories.  Generally there are four categories:

  • Cost/ Revenue Impact-this is where those numbers become meaningful to people outside of the project. It tells them how the project will impact the income statements, cash flow and balance sheet.
  • Cost Avoidance Impact-this is where those all important metrics come into play and this is where the organization gets to see how 6Sigma will save you money with the improvements.
  • Risk Management Impact- this impact shows you where the organization is able to save the company from unnecessarily risky behavior by creating a concrete process designed to continually avoid unnecessary risk.
  • Leadership impact- this impact is a bit on the softer side but no less important. By creating concrete goals and steps, leadership is more focused. The more focused leadership, the more sustainable your growth.

As with all of my blogs, the best way to find your improvement success is with the utilization of a great belt. This blog will put you on the right road, but your belt will drive the bus home.

published on June 25, 2012

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