Statistical Sampling

Statistical Sampling is picking up a few samples out of the lot to see if the requirements are meeting are not. For example, if there are millions of water bottles that are coming out of production, one can’t test all the pieces. Only a few pieces out of every batch can be inspected. If those pieces are meeting the specifications then we can all is well otherwise we can take the decision of rejecting the entire lot. The sampling size and the frequency should be determined during the planning itself so that one can determine the cost of quality required for testing and rework or expected wastages.

Statistical Sampling technique is used under the process Plan Quality Management and Control Quality.

Design of Experiments

Design of Experiments (DoE) helps in determining which combination is the best to produce an apt output. It is like a trial and error method by varying or experimenting with different inputs so that one can get the best quality product or the process output. For example in the construction or manufacturing industry which combination of material or proportion or design can produce an optimal output can be determined.

Design of Experiments is used under the process Plan Quality Management.

Seven Basic Quality tools

Seven Basic Quality tools are Cause and effect diagrams, Flowchart, Checksheets, Pareto diagrams, Histograms, Control Charts and Scatter diagrams. Seven Basic Quality tool is popularly known as 7QC tools in the industry. This uses the famous Edward Deming cycle Plan-Do-Check-Act also known as (PDCA) model to solve the quality related issues. Let us consider one by one.

Cause and effect diagrams: This tool is used to find the cause for a particular defect/effect. The defect or the problem statement is defined and causes for this defect is identified. Then one can use the concept “5 Why’s” to find out the root causes which can be converted to actionable items. When you represent the problem statement and the causes in the form of visual representation, it looks like a fish skeletal hence the name fish bone diagram and is also called as Ishikawa diagram.

Flowcharts: Flow charts depict the flow of the work or the process which is sequence of steps to be carried out. Flowcharts show the activities, decision points, branching loops, parallel paths, inputs, outputs… It uses a model called SIPOC, Supplier-Input-Process-Output-Customer, or the COPIS, Customer-Output-Process-Input-Supplier, model. For example, in the car manufacturing industry, the supplier provides the raw materials as the input, the process manufactures the car which is the output and is used by the customer. The customer provides the feedback which helps in improving the process and in turn the raw materials quality from the suppliers. The workflow logic and the frequency helps in expected monetary value for conformance and nonconformance work to deliver the desired output which in turn helps in estimating the cost of quality.

Checksheets: This is also called as tallysheet used to gather data. Checksheets ensures that all the data has been gathered which helps in identifying potential problems. This helps in inspection to identify the defects. For example there is a product which about 10 cm length which is the expected value. The other possible values which we can get are >10cm or <10cm. Measure all the output and see how many are meeting the expected value and how many or not.

Pareto diagrams: This is also called as 80/20 rule used to find most potential issues or to distinguish between critical vs non-critical. 80/20 rule means 80% of the problems are due to 20% of the causes.

Histograms: It is a bar chart and used to find the central tendency, dispersion and shape of statistical distribution. Also histogram can be used to represent data in no particular order and is not related to time. The bar which is higher can be the reason for the defect or effect.

Control charts: This tool is used to see if the process is stable or not and also to find the measurements are coming within the expected limits. Control charts uses four parameters apart from mean, upper specification limit (USL), lower specification limit (LSL), upper control limit (UCL) and lower control limits (LCL). The mid line will be mean, the line immediately above mean is UCL and the still above that is USL and the line immediately below mean is LCL and the one which still below is LSL. If the measurements are within the UCL and LCL then there is no problem. If the measurements are above the UCL and or below the LCL then it calls for corrective action. There is one more principle called rule of seven. Rule of seven says if the 7 consecutive points are above the mean level or seven consecutive points are below mean level and even though they are within the control limits still it calls for corrective action. USL and LSL can be customer committed values above which the measurements are not acceptable. UCL and LCL are defined within the project level in agreement with stakeholders. UCL and LCL helps in tightening the situation so that we are not touching or deviating the specification limits.

Scatter diagrams: This is also called as correlation charts used to find is there any relation between two variables. The correlation can be positive or negative or zero. Based on positive and or negative it helps in taking further action.

The above 7QC tools can be used as combination.

Seven Basic Quality Tools is used under the process Plan Quality Management, Control Quality. This is also used along with seven quality management and control tools, which is used under the Perform Quality Assurance process.

Cost Benefit Analysis

Cost Benefit Analysis technique is used to see the benefit we can get after investing the money. This technique can be used during initialization to check is it worth to invest by calculating the return as part of business case and or can be for improving the quality while considering the cost of quality.

For example what can be the reduction in the defect, how much of network downtime can be reduced, how much of wastage or scrapping of the raw materials can reduced etc… We know that as the quality increases the cost also increases. But in the end we need to see is it worth for the investment so as to get the benefit.

Cost Benefit Analysis technique is used under the process Plan Quality Management.

To Complete Performance Index (TCPI)

TCPI is to calculate the cost performance to be achieved in order to meet the project goals. The ratio of remaining work to be completed with remaining budget provides the TCPI.

To calculate TCPI first we need to calculate the EVM and then based on AC, EV, we can calculate TCPI. TCPI is calculated under two conditions one with original budget and the second with new budget.

TCPI=(BAC-EV)/(BAC-AC)—With planned budget

TCPI=(BAC-EV)/(EAC-AC)—With new budget

The ratio should be ideally 1. If it greater than 1, then difficult to complete and if less than 1 easier to complete.

TCPI is used as a technique under the process Control Costs.

Forecasting

Forecasting is to predict the future condition of the project by comparing the progress of the project and with what we planned. By using Forecasting technique one can arrive at three parameters namely Estimate At Completion (EAC), Estimate To Complete (ETC) and Variance At Completion (VAC).

EAC is nothing but how much money required to complete the entire project. This is as good as new BAC which is Budget At Completion.

ETC is how much more money required to complete the remaining work.

VAC is what is difference between or the variance between original budget and the new budget. This can be surplus or deficit.

Here are different formulas used to calculate EAC, ETC and VAC

.

ETC=EAC-AC

VAC=BAC-EAC

There are four different variants to calculate EAC

1. EAC=BAC/CPI—This is used if the current variances or the rate of spending of money remains same

2. EAC=AC+BAC-EV—This is used if the estimation has become abnormal for the work so far it is carried out and the remaining work will continue at the same budgeted rate.

3. EAC=AC+ETC— This is used when the estimation for the remaining work no longer exists and the new estimation to be carried out for the remaining work. ETC is nothing but remaining work which can be derived using bottom up estimation.

4. EAC=AC+((BAC-EV)/SPI*CPI)—This is used considering both the schedule and cost which can influence the remaining work.

To calculate the forecasting first we need to complete the Earned Value Management where we can obtain the parameters AC, PV, EV, SV, CV, SPI and CPI.

Forecasting technique is used under the process Control Costs.

Earned Value Management

Earned Value Management is a technique used to compare the progress of the project with respect to cost and or schedule baseline. This technique is used to measure the progress at any convenient point during the project. The key parameters that are measured are Planned Value, Actual Cost and Earned Value.

Planned Value (PV) is the amount of work that should be done as on day

Earned Value (EV) is the amount of work that has been accomplished as on day

Actual Cost (AC) is the cost which is incurred as on day to accomplish the work.

Using these parameters one can calculate the variances namely schedule variance (SV) and cost variance (CV) and the performance indices Schedule Performance Index (SPI) and Cost Performance Index (CPI).

SV= EV-PV, CV=EV-AC, SPI=EV/PV and CPI=EV/AC.

Ideally SV & CV should be zero and SPI & CPI should be 1.

If SV is negative then the project behind the schedule and if SV is positive then the project is ahead of the schedule. Similarly, if SPI is less than 1, then the project behind the schedule and if SPI is greater than 1, then the project is ahead of the schedule.

If CV is negative then the project over budget and if CV is positive then the project is under the budget. Similarly, if CPI is less than 1, then the project over budget and if CPI is greater than 1, then the project is under the budget.

Earned Value Management technique is used under the process Control Costs.