Lean 6 Sigma in project management

A rigorous management control of portfolios aim to control the risk and focus in investing in the most important projects in accordance with the overall strategy of the organization.

On the other hand, the Lean Six Sigma is a methodology that combines the lean philosophy and the Six Sigma methodology in order to increase the value of resulting products at a lower the cost. This combined methodology helps to gain in knowledge in how business processes are developed.

The Lean Six Sigma in portfolio management may help to conduct business processes into more efficient and effective ways. In this article it will be described how the waste reduction and high quality control can be implemented in each business operation of the entire portfolio project in order to maximize the profit.

Background

In today's world, the strategies in companies are commonly seeking competitive advantages while gaining in profitability and quality. Miscalculation in delivery times or budgets can affect this competitiveness and cause sever risk for the ROI (Return Of Investment) of a firm. The main advantage doing a correct portfolio management is to optimize the overall program/project evaluating individual projects. In traditional portfolio management the progress of each project is tracked against tasks and not value created. This may lead to ineffectiveness that Lean Six Sigma may help to avoid.

Introduction

Lean Six Sigma in project portfolio management is a methodology that combines the philosophy and tools from Lean project management and Six Sigma management. In lean portfolio management the main objective is to minimize costs and maximizing the use of the resource available. An entire project/program is decomposed in small projects and resources are distributed through an analysis of priority. Small projects enhance the flexibility of the people who are working in those projects. The prioritization is done after an approach to stakeholders and clients to identify features that can increase the ROI of an organization. The estimation of this priorities is done in small cycles since business conditions may change all time. Thus, the priority of different tasks may change as well.

As a complement to the lean philosophy, Six Sigma offers the possibility to improve the quality of processes and products. In Six Sigma portfolio management, procedures are standardized at the operational level of a company and focus in delimited goals always addressing to the highest ROI. It is a methodology that has to be implemented in the entire organization, from the strategic level to the operational level. A strong point that Six Sigma can offers is its capability to align the projects with the strategies followed by the companies. As in lean methodology, Six Sigma project are commonly for the short term.

Applying both concepts together, lean six sigma is able to:

- Reduce the complexity of business processes.

- Optimize processes.

- Develop culture aiming to enhance the performance of operational teams.

Implementation

In order to develop a Lean Six Sigma methodology in portfolio management, several aspects have to be taken into