Risk Analysis May Lead to Changes

Many project managers view changing course in the middle of a project as the last thing they want to do, but after performing ongoing risk analysis, it may be the best course of action. Project managers use risk analysis to increase the probability of project success. Experienced project managers know to expect unknowns, good ones prepare for the unknown and are able to adjust when they arise.

Risk analysis steps include identifying the risks, developing responses to each known risk, establishing reserves to deal with unknown risk, and continuously reviewing and communicating risk status to the team.

During a recent project a major unknown risk arose in the middle of the project: a manufacturing plant had some serious, previously unknown constraints to the new product line. The welding operation was the constraint, and the team discovered the manual process required too much manpower and floor space to adjust effectively. In essence, the new product did not fit in the operation's "sweet spot" for manufacturing. As this operation was in China, it was growing fast to support local demand, and this export product was going to use up constraining capacity, causing a problem.

The team analyzed options. Floor space could be allocated, people added, and process flow could be adjusted in the new factory, but the local team did not believe this would effectively resolve the capacity constraint. There was another factory where the product could be made on automated equipment for a slightly higher overall cost, with lower transportation cost to offset much of the higher labor cost. The intangible cost of uncertainty tipped the balance toward factory 2, the more local factory, and we made the recommendation to change plants to the project sponsor.

The sponsor was loathe to change plants in mid-course. He felt the change was a major risk, but after careful consideration, agreed to make the change. The project was reconfigured to manage the new product in plant 2, and the adjustments produced an on-time delivery to customers and a successful overall project.

What would have happened if we had left the product in China? We do not know, but we do know the project launched successfully after making the change. Risk analysis is dealing with probabilities and estimates. We only know the results and can document what worked. Effective risk analysis supported a major project re-alignment supporting a successful launch.

Root Cause Analysis, Part 2

Photos from http://www.csititanic.com/.

In an earlier post, I used the 5-why technique to determine the root cause of the RMS Titanic hitting an iceberg: communication error between the watchman and his officer regarding the availability of binoculars. While this is truly a root cause, it doesn't inform us why the Titanic, billed to be "unsinkable," sank in less than three hours once it hit the iceberg. So the next question is, once it hit the iceberg, why 1, why did it sink so quickly?

The answer to this first why unfolds in a new book called "What really sank the Titanic." In it, the authors present results of submarine recon showing the ship sank so quickly due to rivets popping along the six slits opened in the seams on the bow of the Titanic. So the next question, why 2, is why did the rivets pop?

Research indicates that the rivets used were poorer quality than standard, causing an easy fracture path for failure. The research was conducted on many rivet samples retrieved from the shipwreck site. Photomicrographs show the phosphate and sulphate inclusion level in these iron rivets is excessive, leading to a weaker fastening of the ship. You can see this on the scanning electron micrograph, shown below from www.csititanic.com, which shows a long slag inclusion provided a fracture path for this rivet's failure.

So the next question, why 3, is why the poor quality rivets were used?

These lower quality rivets were used because of a scarce supply of top quality rivets. Research on meeting minutes cites repeated references to shortages of "best best" quality rivets. So the next question, why 4, is why there was a scarce supply?

The shipbuilder, Harland & Wolff, was building three ships the size of Titanic at the same time. The Britannic and the Gigantic were ships in the same series as the Titanic, and all three were under construction at the same time. Which begs the final question, why 5, why were they building three huge ships at once?

This was a policy decision made by managers at Harland and Wolff. The basic motivator is the drive for profits which, in this case, trumped the need for quality. So to avoid the sinking of the Titanic, an executive at Harland and Wolff would have had to say, “no, we cannot meet this schedule and build the three ships safely with materials that are currently available, so we must delay one or two of the ships.” This would have allowed proper materials to be used and would have saved 1520 lives.

This analysis shows that most problems are the cause of policy decisions and ineffective management, not workers like watchmen or riveters. It was an officer who didn’t supply the binoculars, it was an executive who specified the wrong rivets rather than changing the schedule.
The root cause of the Titanic's sinking so quickly was an executive decision far removed from the sinking, both in space and time; As Deming said, “The problem is at the top, management is the problem.”

Lean @ Home

We use lean manufacturing principles at work, and they provide huge benefits. Why don't we have a "Lean @ Home" program? What would that look like?

According to the National Bestseller, The Machine that Changed the World, lean principles include

• Teamwork


• Communication


• Efficient use of resources and elimination of waste


• Continuous improvement

Teamwork

A team can take a huge leap forward in performance by simply clearly committing to work toward the common goal. Understanding others’ points of view is sometimes required before moving forward. Sometimes roles must be clarified. At home, teamwork is very important. Working together with the family toward common goals is an important concept. The goals can include financial, educational, spiritual, social, physical fitness, organizing the home, and many others. By agreeing and setting goals, groups living at home move toward success.

Communication

Many problems find their root cause in poor communication. In today's world of high technology, there is no excuse for poor communication. At home, we can use e-mail, voice mail, notes on the fridge, and best but maybe least used: talking face to face. Communication is key to achieving a lean home.

Efficient use of resources and elimination of waste

The objective of a lean system is to identify and eliminate waste. There are seven areas of waste identified in the Toyota Production System:

1. overproduction,


2. waiting,


3. transporting,


4. inappropriate processing,


5. excessive inventory,


6. motion,


7. defects.

Translating this into the home, the wastes become

1. bad habits occupying time,


2. non-useful idle time,


3. commute time,


4. inefficient methods, including wasted energy


5. hoarding,


6. extra steps,


7. errors.

Continuous Improvement

A key hallmark of continuous improvement is having a system in place to root out problems, discovering and solving them before they impose themselves on you. These systems function well in good companies, and they can save your home life from excessive waste.

Tools used in creating lean enterprises can be adjusted to develop lean homes. The effort is underway at our house and I will update this blog with lessons on the journey.

Root Cause Analysis

The RMS Titanic steamed out of Southampton England en route to New York on April 10th of 1912. This luxury liner was billed to be practically unsinkable. It struck an iceberg at 11:40 PM April 14th and sank 2:40 later. 1,520 lives were lost. This wasn’t the largest loss of life in a maritime disaster, but the Titanic still captures our imagination to this day. In fact, a recent book is out discussing the cause of the sinking. The book, called “What really sank the titanic,” is based on research conducted on samples taken from the shipwreck. I provided an earlier look at this issue, discussing how initial problems evolved into a catastrophic loss of life.

In a different angle, I looked at the root cause of the sinking, and found that Dr. W. Edwards Deming was right, yet again, when he said, "The problem is at the top. Management is the problem."

I performed a root cause analysis on the Titanic's sinking. Using the 5-Why approach, here is what I found. There are two branches to explore, first, why did the Titanic strike an iceberg at all, and second, why did it sink from the collision? This Blog entry is about the first question.

· Why 1: Why did the Titanic hit an iceberg?
o Standard operating procedures at that time for ice fields: post watchman and carry on.

· Why 2: Why did the watchman see the iceberg too late? Conditions:
o “Flat calm,” cloudless sky, 31 F. Watchmen looked for the white foam of waves crashing on icebergs' bases. That night, there were no waves.
o Moonless night: difficult to see anything.
o Not ideal conditions to see icebergs, but was the Titanic not to travel in these flat seas?
o Yes, it should be able to steam in these conditions. Since we can’t control the conditions, let’s step back up and ask why the watchmen failed to see the berg until it was too late. Did the watchman have standard tools, like binoculars?

· Why 2/B No. Why didn’t the watchman have binoculars to see in poor conditions?
o He was told they didn’t have them by an officer, even though there were two pair in the bridge.

· Why 3: Why denied?
o The officer didn't know or didn't care enough to find out. In essence, this is poor communication.

· Why 4: Why poor communication?
o If we answer this, we know why the Titanic hit the iceberg: root cause was poor communication between the watchman and the officer.

It could have been that the officer didn't know or didn't care. Either way, we are getting to the root cause. Let's say the officer didn't know...

• Why 5: why didn't the officer know about binoculars on the bridge?



• Poor training, new ship, lack of leadership and awareness... these are the problems, as Deming said, "at the top."

So we see, it wasn't that the watchman did a poor job, it was that he was not supported by the management system. This failure led to the Titanic striking an iceberg on its maiden voyage. Next we'll ask why the ship, described as "practically unsinkable," sank so quickly once it hit.

Profitable Ideas

People wonder if ideas can make money -- yes, there are profits in ideas. Take personal investing, for example. Investing in the right security yields profits. Essentially, we have the equation


Good Idea + Investment = Profit.


There are millions of "good ideas" on how to invest money, and often people hire experts to provide them with investment ideas (stock broker, financial planner, etc.). One problem with this arrangement is that often the expert "hired" really works for a firm who sells investments. Clients wonder, "Who holds sway over this expert, me the client -- or the firm, his employer?" Conflicts of interest occur. For those like me who are self-reliant and don't mind simple online research, I developed a system that generates good investment ideas using free online tools. The method solves the conflict, removing it from clients' worries.


First, I advocate the value investment philosophy proven effective by such icons as Warren Buffett and Benjamin Graham. I recommend reading Graham's book, The Intelligent Investor.

Grounded in the knowledge of how value investing works, you can begin searching for profitable ideas. In Graham's day, people pored over printed materials. One beautiful thing about investing today is that there are so many new tools to get results. I use an advanced, free stock screening tool. I use screening parameters I developed based on the value philosophy and generate lists of potential investments. I take those results to information boards, such as Yahoo's finance page for more detailed analysis of companies I like. Once I gain the knowledge of the business and confirm that it is worth the investment, I place the trade myself. I monitor the results and have a target sales price on the up and down side.


This method generates profits from ideas, true idea power. The key is establishing optimal parameters and maximizing your profit. I will share my stock screening parameters soon, a quick "how to" for today's value investor, but am also interested in other views, so comments are encouraged!

Check back soon for links to my course on value investing, how to pick winning investments, which is under revision temporarily.

Effective Meeting Course

Learn to run meetings effectively -- guaranteed. Follow the methods and make your meeting time more productive and be a star. Based on my research and over 20 years experience, this course will provide you with the tools you need to:

• decide if a meeting is necessary and elminate bad ones


• plan effectively for a meeting


• execute an effective meeting


• write an effective report
• effectively run a virtual meeting

In this four-part class you will learn how to shine as a star in meeting effectiveness.

I use Digital Chalk to present my course. Click here to create a new account and register for the course. Complete four sessions, pass the exam with at least 70%, and receive a certificate of completion. Upon completion, you will also receive a .pdf checklist to use for future reference as you plan for effective meetings.

Use your new skills immediately to improve your results, get noticed: a great investment at $59.00. Guarantee: if you pass the class, implement the methods, and are not satisfied with your results, you will receive a full refund.

How to get better ideas... and more of them!

Here is advice from Wired Magazine on how to improve your brainpower.

Takeaways:
- Have a learning plan. Think about what you need to know and focus your efforts on the highest value information that is easiest to learn.

- When memorizing facts, mix them up and set timers to randomly distract you during your memorizing.
- Regular aerobic exercise is vital... even walking works, and practice good breathing.
- Limit caffeine but keep a pretty steady stream of it in small amounts throughout the day
- Figure out and use your learning style, whether it be visual, kinesthetic, listening, or tactile.

Other comments follow the article links below:

Get Smarter: 12 Hacks That Will Amp Up Your Brainpower
1: Distract Yourself -- this is possibly a good approach for memorizing but seems hard to do.
2: Caffeinate With Care -- good advice; one cup of coffee a day followed by small, regular doses
3: Choose Impressive Information -- interesting idea... memorize useful and easy facts
4: Think Positive -- great advice for learners: a virtuous cycle!
5: Do the Right Drugs -- huh?
6: Juice Your IQ Score -- good advice that ties with 3 and 4
7: Know Your Brain -- exactly how does this help?
8: Don't Panic -- right on... how do we not panic? If you do, know your IQ plummets.
9: Embrace Chaos -- mix up things to make them somehow easier to remember.. counter intuitive.
10: Get Visual -- for visual learners, a big YES
11: Exercise Wisely -- breathing and aerobics... the brain uses a disproportionate amount (20%) of the oxygen in your blood, so improving your cardio-vascular system will help your brain.
12: Slow Down -- good advice for improving reading comprehension, but practice at reading quickly does work, so aim for the optimal: 500 wpm according to the article.

Titanic Mistake

This photo of the Titanic under construction comes from the NY Times article describing a recent discovery concerning the sinking of the great ship. The Titanic was designed to be unsinkable, yet it sunk on its maiden voyage. The discovery shows why the Titanic sunk from striking an iceberg, and why it sunk so quickly, taking so many with her.



In the article, reported by William J. Broad, research by Jennifer Hooper McCarty and others shows the cause of the disastrous sinking was faulty rivets located in the bow. A transition from iron rivets to steel rivets was underway in shipbuilding of the times, and steel was the newly preferred, stronger material. Steel rivets were used in the areas designers felt it was most needed, in the main hull, but not in the bow nor stern. Iron rivets were specified, and there were shortages. A lower grade iron rivet was used in the Titanic, as demonstrated in samples recovered from the ship. When compared to standard wrought iron, there is up to three times the inclusions, or trapped slag, in the iron. Inclusions make the steel weaker, providing fracture paths for failure propagation.



How could this be? This was a premium luxury liner of the time and there were cheap rivets? It is a story of a crisis with seeds in decisions far removed from the chilly arctic where the Titanic lays today. In an earlier post, I described a model for a crisis with an adverse outcome:

- An initial problem, often minor in isolation, that goes uncorrected
-A subsequent problem that compounds the effect of the initial problem
- An inept corrective effect
- Disbelief at the accelerating seriousness of the situation
- Generally, an attempt to hide the truth about what is going on while an attempt is made at remediation
- Sudden recognition that the situation is out of control or “in extremis”
- Finally, the ultimate disaster scenario involving significant loss of life, financial resources, or both, and ultimately, the recriminations.

* Initial problem: material shortages. There were three huge ships being built at the same time and materials and labor were in short supply. Iron rivets were substituted for steel and used in the bow.

* Subsequent problem compounding the initial one: the proper iron rivets were not ordered (due to a shortage?) and the ones received had inclusions, weakening them. They came from smaller forge shops not normally used by the shipbuilder.

* Corrective Effect: There was none that we know because the iron rivets were not tested and found to be weaker than required. The Board of Trade stopped inspecting iron rivets at the time, deciding they were a mature technology and the focus went to steel.

* Disbelief at the accelerating seriousness: this had to occur the night the Titanic hit an iceberg. Due to the weaker rivets, the Titanic literally fell apart at the seams in the bow, allowing water to rush in and sinking the ship faster than anyone could respond.

* The final disaster scenario: the sinking of the Titanic with all the loss of life and property associated with it.

Interestingly, denial and recriminations persist to this day. When asked about the research findings, the shipbuilder, "Harland and Wolff, after its long silence, now rejects the charge. 'There was nothing wrong with the materials,' Joris Minne, a company spokesman, said last week. Mr. Minne noted that one of the sister ships, the Olympic, sailed without incident for 24 years, until retirement. (The Britannic sank in 1916 after hitting a mine.)"

The Titanic rests at the bottom of the Atlantic, with six slits in its bow. The slits replace seams once held closed by iron rivets, and the slits stop where the steel rivets hold the seams together still.

Total Productive Maintenance

Many companies implementing lean manufacturing work on improving their equipment uptime. When equipment breaks down or stops, it injects variation into the process causing downstream inventory fluctuations and quality problems. When eliminating variation, eliminating machine downtime is a key step. One way to address equipment down time is through implementing Total Productive Maintenance, or TPM. TPM is a systemic approach to maintenance with the goal of maximizing overall equipment effectiveness, OEE. OEE is the product of availability, quality, and performance. Availability is defined as operating time divided by planned production time. Quality is defined as good pieces divided by total pieces. Performance is defined as the number of total pieces per unit operating time divided by the ideal run rate. OEE is the product of these figures, availability x quality x performance. One of TPM’s objectives is to increase OEE, thus reducing systemic variation in the process.

There are three phases to implementing TPM: the first phase is training people and gathering data, the second phase is to cure breakdowns and micro-stops (equipment stops less than 5 minutes), and the third phase is prevention of future breakdowns. Phase 1 involves collecting data on the current status of equipment uptime or OEE. It also involves training maintenance professionals and equipment operators in TPM philosophy and actions required. The best training results in a change in mindsets among the team. The team comes to realize the importance of the goal of increasing OEE and knows their part in doing so.

Next, the team works to implement curative actions. Here, equipment is brought up to par with new equipment, or better. All major systems are reviewed and upgraded, new or rebuilt components are installed to cure breakdowns. Data is collected on micro stops, and systems are put in place to minimize these small disruptions. This is where TPM makes the most impact, by measuring and addressing micro stops, capacity is uncovered and the manufacturing system performs closer to ideal.

Once downtime is reduced and equipment is running stably, a prevention phase begins. Here 5S activities (workplace organization) are key to maintaining the improvements set in phase 2 of TPM. Maintenance schedules should be established and reviewed periodically to ensure preventive measures are effectively supporting the new OEE. Here, too, effective teams review and revise their maintenance activities to ensure continued improvement.

Implementing the three phases of TPM sounds like a lot of work... or it should. TPM is an investment; it takes time, money, and expertise to implement. It pays dividends in improved quality, better delivery, lower inventory, and reduced need for capital. For the lean enterprise, TPM is a necessity.

Happy E-Day!

Today is E-Day, short for Engineer's-Day, a day of celebration at my Alma mater, the Colorado School of Mines. The fireworks shown are from the 1984 version of E-day, when I was a senior. E-Day goes back to 1927 when Mines held it's first E-Day. The celebration is steeped in tradition and pride, as shown from this quote from the Mines site, referring to the 2000 E-Day brochure: "One thing that has remained the same through E-Days of past, present, and the future, is the weekend starts with the most spectacular fireworks show in the state and ends with seniors graduating a month later to become the best engineers the world has to offer." There were only 65 graduates that year of the first E-Day, and they studied mineral engineering: Metal Mining, Metallurgy, Geology, and Petroleum Engineering.

Mines grew a lot over the years, and now is the leading engineering school for a wide variety of mineral engineering and related disciplines. I have always respected the intellectual rigor of Mines and its students. The depth and breadth of curriculum is impressive by any standard. There has always been a very conservative, traditional air about the school. Now I hear about a new program that was recently announced, a Minor in Humanitarian Engineering. This is surely a new Mines... one that is taking on new challenges this generation feels passionately about. Here, engineering students take design and humanities courses to prepare them to implement improvements or alleviate vulnerabilities in under served communities in the developing world. What a great way to get the best and brightest out there making a true difference.




I proudly graduated in 1984, and to commemorate, I pulled this photo off the Mines website: http://www.mines.edu/. This year, to celebrate E-Day, we're hosting a get-together for any other alumni and their guests here in Western North Carolina. Click here for details. I hope to see many Miners!