Metrics: Extracting Numbers from the Process

Once you have developed a description of your project, it will be time to attach numbers to it. As early as when the team completed the Project Charter, you thought about ways to measure the process in meaningful ways. A metric is any measurable variable that helps the team to track errors, inefficiency or improvement.

There are two broad categories of metrics: process metrics and organizational metrics. Process metrics specify qualities like time, cost, or quality.

Some Process Metrics Time Cost Quality Output Value-added time Cost savings Customer satisfaction Backlog Non-value-added time Opportunity cost Percent complete Work in process Processing time Decreased waste Percent accurate Cycle time

Organizational metric measure issues like employee satisfaction, career development, or turn- over. Both categories may not be appropriate to your particular process. Choose the metrics that accurately describe process efficiency. Once you have identified your metrics, establish a baseline in order to demonstrate improvement as the team moves through the project. The Lean Office can help you execute this if necessary.

When you measure, you can quantify in two different ways: by counting or by taking actual measurements. For example, how many vendors were paid on time (a yes/no count) versus how many days early were vendor paid (one, two, etc. day measurement). Counting is easiest and least costly, but it also provides a broad answer. More precise measurement can be better, but more difficult and resource-intensive to obtain. You will need to decide which metric are important enough for the project to justify measurement.

Some common measurement tools are: check sheets, histograms, and run charts. A check sheet gathers data on various effects and how often they occur. This is important for separating the “vital few” from the “trivial many.” A check sheet could look like this:

Causes of late payment X X X X X X X X X X

1 Lost bill Waiting for approval Late arrival Waiting for check to be cut

To construct a check sheet, list some likely causes of your problem, and track how often that cause is the reason for the problem. Add more causes as necessary. The chart immediately visualizes which causes are dominant.

A histogram is a bar chart that shows the frequency of an event, and it is easily constructed from a check sheet. Histograms are important because they help formulate hypotheses regarding root causes of problems. A histogram can look like this:

Causes of late payment

Lost bill Waiting for approval Late arrival Waiting for check to be cut

Finally, a run chart is a line graph that shows variation in the process over time. They help identifying when problems are happening and allow the team to focus on the particular circumstances in which the problem occurs.

Bills paid late

Monday Tuesday Wednesday Thursday Friday

Once you have gathered the data, the team should understand the process thoroughly. Then the team is ready to identify which vital elements and indicators promote or even ensure process success. These are key performance indicators. Compare your process’ performance to relevant benchmarks and find where the greatest gap exists. These gaps indicate to room for improvement. From this information, the team can establish meaningful goals and targets in the Analyze Phase.