Feb 222012

I read a blog that claimed use of templates is mandatory to ensure success of a project. It even went to say that a project is not  complete unless the project management documentation is done. I believe it is a gross misstatement. Here are my thoughts on this.

Templates are tools that can be very helpful in bringing a project to success but like any other tool there are so many ifs-and-buts involved. A saw for cutting wood is a great tool but if you have tried your hands on one you probably had the same experience as me. The first time i tried, it was a complete disaster; I could not make it move in the groove. Having the tool was one thing, knowing when to use another and yet having experience using it efficiently was what would make it a great tool. Templates as a tool for project management have the same factors involved to make these a great tool.

Mature project management methodologies usually provide a very comprehensive list of templates for various processes and project types. Yet I have seen again and again that the project manager feel they are overburdened by these templates and hold this strong opinion that filling out templates is a hindrance to their project’s success. I had this discussion with many project managers as to why certain templates need to be filled out. I had asked the project managers to convince me that filling out a template does not add value to the project or the organization and i will agree with them that there is no need to do documentation.

The question that, I think, addresses these arguments is: What are the things that make project management templates a valuable tool?

I believe there are three factors, if present, will make templates a very valuable tool. These are:

  1. Knowing the Template: Comprehensive understanding and knowledge of various sections and topics of the template will ensure that project manager can provide the relevant information succinctly and effectively
  2. Knowing the Culture of the Organization: Culture of the organization derives what is easily acceptable as norm and what will be considered an anomaly. Having a hand on the organization’s pulse, a project manager would know when to stress on which section of the template, how much detail should be provided, how to go through review and approval through the organizational hierarchy
  3. Knowing how to use the template to best achieve the objectives: If an objective can be achieved with a one page memo or even email why fill out template (when there is no legal obligation to do so). Tailoring a template to use only the sections relevant to meet objectives reduces burden and improves effectiveness.

In short, templates are only enablers to achieve project objectives, definitely are not required in most cases but experience has shown that they greatly improve the chances of meeting the objectives.


Feb 142012

During a PMP class discussing PMBoK’s Quality Management knowledge area, a couple of participants, after finding out the allowable defects in six sigma quality, were of the opinion that this level of expectation of quality is unrealistic and too high. 3.4 defects per million does seem hard to achieve but after sharing with them the number of errors under 3, 4 and 5 sigma and explaining with an example, it was clear that hitting six sigma my be the right choice in some areas but not all.

Example 1:(Cost of rework very low)

Let us assume a plant produces bolts at a rate of 10 million per month and is expected to last 10 years. The cost of each bolt is $1. A defective bolt is discarded since fixing cost is too high. So waste for each sigma level is as follows:

6-Sigma: 3.4 def/mil > 34/10mil > $34 waste/month > $408/yr

5-Sigma: 233 def/mil > 466/10mil > $466 waste/month > $5,592/yr

4-Sigma: 6,210 def/mil > 12,420/10mil > $12,420 waste/month > $149,040/yr

3-Sigma: 66,807 def/mil > 133,614/10mil > $133,614 waste/month > $1,603,368/yr

Improving one sigma level requires $1 million initial investment plus maintenance cost of $50,000/year.

From 3-Sigma to 4-Sigma, total cost is $1.5 million and savings are ~$14 million (Difference between 3-Sigma and 4-Sigma over 10 years).

From 4-Sigma to 5-Sigma, total cost is $1.5 million and savings are ~$1.5 million (Difference between 4-Sigma and 5-Sigma over 10 years).

From 5-Sigma to 6-Sigma, total cost is $1.5 million and savings are ~$50,000 (Difference between 5-Sigma and 6-Sigma over 10 years).

So Benefit/Cost Ratio is very high to move from 3-to-4 sigma, and comes as 1 for 4-to-5 sigma but is below 1 for 5-to-6 sigma. So moving to 5 sigma makes business sense but moving to six sigma is not cost effective. The cost of Quality is too high and benefit does not justify the cost.

Example 2:(Cost of failure very high)

Now let us look at another example where cost of failure is very high. Assume that a plant produces dust masks at a rate of 1 million per month.

25% are used in highly hazardous areas where failure will likely result in death,
25% are used in areas where serious health issues are likely requiring lifelong care,
25% used in moderately risk areas with temporary care, and
25% in low risk areas with minor inconvenience and medication.

The costs associated with each failure is $1,000,000 for death related, $2,000,000 for permanent care, $20,000 for temporary care, and $200 for inconvenience. We also assume that 50% of failures are qualified as manufacturers fault and thus is liable for damages given above.

Total cost of failure for various sigma levels is:

6-Sigma: 3.4 def/mil > ~1 def/2.5mil > $1mil+$2mil+$20k+$200 = ~$3 million (minor cost of failure)

5-Sigma: 233 def/mil > ~60def/2.5mil > $3mil(cost of 1def) x 60 = ~$120 million (may not survive for long or profit erodes)

4-Sigma: 6,210 def/mil > ~1050def/2.5mil > $3mil x 1050 = ~3 billion (cannot operate with such cost of failure)

3-Sigma: 66,807 def/mil > ~17,000def/2.5mil > $3mil x 17,000 = ~51 billion (cannot operate with such high cost of failure)


From 3-to-4 Sigma, cost is $20mil and savings are $24 billion

From 4-to-5 Sigma, cost is $40mil and savings are $1.4 billion

From 5-to-6 Sigma, cost is $50mil and savings are $58 million

It makes perfect sense to reach a quality of six sigma in this case as the savings still are higher than cost.



Improving quality to six sigma level may be justified when the cost of failure is very high but may not be cost effective when failure cost is very low. Of course, it depends on investment for improvement of sigma levels and cost per failure.