measuring and evaluating the roi from six sigma

1Copyright BCBSF™ 2005

Measuring and Evaluating the ROI from Six Sigma

WCBF

Six Sigma in Healthcare

March 4, 2005


Presentation Outline

• Six Sigma at Blue Cross Blue Shield of Florida

• Calculating the costs and savings from Six Sigma projects

• Building an effective tracking system for CI/Six Sigma

• Integrating Six Sigma as part of your general Continuous Improvement toolkit


Six Sigma at BCBSF

WCBF


March 4, 2005


Six Sigma at BCBSF

• Deployment initiated in July, 2003– First “wave” of Black Belt training in September, 2003

– Infrastructure launched in October, 2003

– First “wave” of Green Belt training in March, 2004

• Results to date– $6.8 million in savings during 2004, $8 million forecasted for 2005

– Over 2,000 Yellow Belts

– 43 Black Belts, 20 more scheduled for April

– 38 Green Belts

– “DNA” Index• Project Pipeline Ratio

• Project Leadership

• E-Learning/Training

• Certification


Six Sigma at BCBSF

Infrastructure Highlights– Leadership/Governance

• CEO

• Office of the COO

• Continuous Improvement Enablement Office (CIEO)

• Continuous Improvement Council

– Black Belts• Two year assignment/full-time

• Decentralized matrix reporting structure

– Green Belts• Short term assignment/training project

– Enabling Area Integration• Finance

• Human Services

• Information Technology

• Decision Support


Calculating the Costs and Savings from Six Sigma Projects

WCBF


March 4, 2005


Valuation Deliverables

1. Project Opportunity Assessment

2. Unvalidated Forecast

3. Initial Validated Forecast

4. Final Validated Forecast

5. Realization/Reforecast


Project Opportunity Assessment

• Required for the project to be submitted into the pipeline

• Owned and delivered by the sponsoring champion

• Based on high level assumptions

• Benefit rangesSix Sigma Project Candidate For assistance, please see document instructions on the next tabProject Opportunity Assessment (P.O.A.)

Project PipelineProject NameChartering BeltChampionBusiness Area Finance Lead

Benefit 1Benefitting AreaBenefit TypeBenefit Value

Describe calculation details and sources of data





Total Estimated Benefit $0

Approval of Initial EstimateApproval = belief that the P.O.A utilizes available data to estimate project benefits in a fair manner while understanding that the estimate may evolve as more information is gathered.

Champion Name, 1/15/05Chartering Belt Name, 1/15/05

Business Area Finance Lead Name, 1/15/05


Financial Valuation Timeline


Unvalidated Forecast


Validated Forecasts


Keys to Valuation

• Engage Champion, Implementation Lead and Finance Rep early and often

• Don’t spend too much time trying to get perfect numbers at the beginning of your project

• Be careful in managing expectations

• Document delays in benefit realization

• Get the organization to own the financial results


Building an Effective Tracking System for CI/Six Sigma

WCBF


March 4, 2005


Project Tracking Infrastructure


Roles and Responsibilities

3.1.1 - May request Ad-hoc changes to plan

through BB

1.2 -PA w/BB reviews and baselines the project plan

1.3 – PA publishes plan to Project Server

2.2 - See Weekly Update Cycle

2.5 - Accepts wkly updates in PWA by

COB Monday

4.1 - Approves Forecastsand maintains Financials

(Actuals)

At the start of Define Phase Ad-hoc changes to plan available in 1

business day

Wkly Updates (Avail. Tuesday AM) Monthly updates to Financials avail. day

after closing

2.6 - Project plan updated and published to server

2.1 - Log into PWA to view new tasks

2.3 - Log into PWA and view new tasks

2.7 - Func. Admin. locks down prior time period by

Wed noon of following week

2.4 - See Weekly Update Cycle

End of Control Phase

5.4 – Change project resources (except

Financial resources) from “Committed” to

“Proposed”

Lockdown project after all tasks are 100% complete (except benefit realization)

Ch

amp

ion

/ IL

BB

/GB

Fina

nce

SM

E/T

M

Pro

ject

Web

Acc

ess

(PW

A)

2-3 Days 1 Day 1 hr

4.2 - OLAP cube auto-refreshed the night of month-end closing.

Financial views updated.

Financials updated by COB of month-end closing

Mondays - Fridays

Weekly updates to be completed in PWA by

COB Friday

3.5 - Publish updated plan

3.4 - Performs changes to project plan, and Re-

baselines if requested.

3.2 - Approve/Reject Ad-hoc Project changes in PWA

3.1 - Request Ad-hoc changes to project plan(See Ad-hoc updates)

Ad-hoc update requests to be sent by 3pm

WE

WE

R1 - IDEAs/Potential projects input to pipeline

R2 - Pipeline project

submitted

R3 – Pipeline project gets

approved by CIEO, belt is assigned,

project plan created from pipeline

Recognize Phase

1A 2A, 2B 3A, 3B 4A 5A 6A

During Realization

Phase

CIE

O

Pro

ject

Pro

& P

WA

Version: 2.0 Last updated on: January 21st, 2005 Last updated by: Neil Johnson (Pcubed) Project Plan Management High Level Process Flow

6.1 - Tracks Financial Benefits (Actuals) & signs-

off

6.4 - End of Phase – Close

out project.

6.2 - At end of realization-

requests project closure.

5.2 – Champion sends request to PA to lockdown

project

1.1- PA customizes the project plan using Project Pro with input

from Belt

wf

3.3 – Views change requests to project plan in PWA – Action Items page.

5.1 - Sends request to Champion to lockdown

project after all tasks are 100% complete

5.3 – Views lockdown request to project plan in

PWA – Action Items page.

Pro

ject

Ana

lyst

6.3 - Views Project closeout request in PWA

Monthly basis (for 12 months)


Pipeline – General Information Screen

Project Tracking System


Pipeline – Criteria Selection Screen



Pipeline – Criteria Selection Screen (cont.)



Pipeline - Project Charter Screen



Pipeline – Initiate Project Screen



Project Health Indicators

1. Project Level View



Project Health Indicators

1. Task Level View



Integrating Six Sigma as part of your General Continuous

Improvement Toolkit

WCBF


March 4, 2005


High

Low

Medium

Medium High

Lean DFSS“InvestingProjects”

Go Do NA

Scope / Complexity

Financi

al Im

pact

DMAIC(Sweet Spot)

Project Identification


Basic Continuous Improvement

Low Complexity

High Project Volume

Green Belt ProjectsMedium Complexity

Moderate Project Volume

Black Belt ProjectsHigh Complexity

Low Project Volume

Overarching Framework

Balance!


Although this focus has produced substantial results, we have identified several gaps:

– Opportunities for both Black and Green belt projects are slow to develop

– Projects have not been yielding financial returns consistent with our assumptions

– Projects often lack data or commissioned to solve problems that have not been substantiated

– Incorporating CI/Six Sigma into our DNA has taken hold in pockets, but is inconsistent

Gap Analysis


CI/Six Sigma Training Structure

MBB

Black Belt

Green Belt

Blue Belt

Yellow Belt

All Employees


Six Sigma Integration

• Go Do Projects

• “Individual” Process Improvement Techniques

• Process Management

• Rapid Process Improvement/Workout

• Lean

• DMAIC

• DFSS

Pro

ject V

olu

mes

Pro

ject C

om

ple

xity


Questions and Answers

WCBF


March 4, 2005

measuring and evaluating the roi from six sigma

Documents

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project health

project opportunity

healthcare

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