A Six Sigma Based Risk Management Framework For Handling Undesired Effects Associated With Delays in Project Completion

International Journal of Lean Six Sigma
A Six Sigma based risk management framework for handling undesired effects
associated with delays in project completion
Muhammad Usman Tariq
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A Six Sigma based risk

management framework
for handling undesired effects
associated with delays in
project completion
A risk
management
framework
265
Muhammad Usman Tariq

Training and Consultancy, Quality Lead Global Consultants,
Jeddah, Saudi Arabia
Abstract
Purpose The purpose of this paper is to develop a risk management framework, combined with
Six Sigma tool and techniques, to help handle the undesired effects that can occur during the project
execution. There exist various risk management methodologies but none of them provide an efficient
framework and tools to handle undesired effects. In this paper, the goal is to assist practitioners in
management of risks.
Design/methodology/approach The author defines a new risk management framework on the
basis of critical review of previous research applied in the industry related to different manufacturing,
construction, HR, Marketing, IT and other domains. The strengths and weaknesses of these methods
have been compared through empirical analysis based on real-life case studies.
Findings An enhanced framework is developed for handling, management and analysis of risk
associated with the projects. An extended model is presented by combining the previous risk
management methodologies with Six Sigma methodologies, in order to achieve both improvement and
minimization of risks simultaneously. The risk management framework defined in project
management lacks compatibility and enhancement with the handling in real-time projects. By
combining a number of methodologies, after critical study of related frameworks, it has been possible
to devise a framework which has proved to be beneficial.
Research limitations/implications The model defined in the paper is based on implementation and
approvals from the management and takes time for implementation of Six Sigma. Currently the enhanced
model is implemented in a single process in a real-time industry to validate the model. A through study and
knowledge of processes with data is required in order to implement the model.
Social implications The proposed model achieves higher organizational performance by

motivation and training of its employees handling large-scale projects. This has increased the
knowledge of persons by minimizing the barrier to change management; hence, achieving
organizational excellence and project management with ease.
Originality/value The methodology will help organizations, especially in the manufacturing
industry, to minimize the risks in both pre-execution and post-execution of projects. It enables overall
improvement of organization with total product management, root cause analysis, project
management knowledge areas and combination of Six Sigma tools. It also makes the knowledge
management concept possible within the framework, to maintain the flow of knowledge throughout
the organization. It has decreased dependency on a single person and promotes team management
concepts with shared work values.
Keywords Manufacturing industries, Project management, Risk management, Six Sigma,
Quality control, Process improvement
Paper type Research paper
International Journal of Lean Six

Sigma
Vol. 4 No. 3, 2013
pp. 265-279
q Emerald Group Publishing Limited
2040-4166
DOI 10.1108/IJLSS-05-2013-0028
IJLSS
4,3
266
1. Introduction
Process quality is the important factor in a project that makes it successful. Process
quality improvement is used to improve the quality of processes to minimize the
number of defects in a process.
Six Sigma was initially introduced as a group of methodologies for improving
industrial manufacturing process and minimizing the defects in production by Bill Smith
at Motorola. Six Sigma methodologies expanded its horizon to a number of business
and organizational process. A large number of companies adopted it to maximize
their revenues and improvement of business and manufacturing processes. It basically
involves statistical tools to improve the productivity processes. (De Feo
and Barnard, 2005). It is a customer focused approach aiming at performance gain in
project methodology perspective. Many top most companies implemented Six Sigma
methodologies to gain excellence. Fortune 500 companies have implemented Six Sigma
methodologies to maximize their revenues (De Feo and Barnard, 2005). Six Sigma is
based on two basic methodologies termed as DMAIC and DMADV. Sigma (s) is termed
statistical unit of measure that is used for calculating process capability. It is correlated
with the defects per unit or parts per million or probability of error in the process or
product (Alhawari et al., 2008; De Feo and Barnard, 2005).
The basic DMAIC approach is used for the processes which are already defined and
need improvement in process. Whereas, DMADV is used for the new business
processes which do not exist currently in the company or production scale.
1.1 Research motivation
Six Sigma is the specialized methodology which has tools and techniques which are not
available in other management approaches. That makes it unique but it lacks the proper
risk management framework for handling the risks. It is purely based on one root cause
analysis technique that has very limited scope only to a single business process. Risk
management is the core requirement of industry and projects to avoid the cost overrun
and schedule crashes. Our study attempts to propose a extended risk management
framework embedded with Six Sigma methodologies to provide solution to real-time
risks associated with delays in completion of project. This study is validated
through implementation in real-time environment. The framework is developed with
reference to improve the quality of products and improvement in business processes.
1.2 Organization of the paper
This paper consists or six sections. Section 1 introduces Six Sigma methodologies.
Section 2 provides theory and hypothesis formulation. The proposed framework is
outlined in Section 3. A case study is undertaken and implemented to test the validity
of the framework in Section 4. Section 5 contains the detailed results of implementation.
Some future horizons and conclusion is derived in Section 6.
2. Theory and hypothesis
2.1 Risk management frameworks
We have built a framework based on different models of using the project management
techniques, risk management core values and process quality improvement
methodologies. A comparison is drawn against the core concepts related to tools used
in risk management and techniques particularly. Six Sigma is defined in a numerous
ways in term of improvement program, error probability, and production scale

process. It is purely an industrial implementation technique based on statistical tools.
It is very hard to find an industry that shares the implementation knowledge publically
on Six Sigma due to policies and cost incurred for improvement (Zhang et al., 2009).
The Six Sigma basic foundations suggest that it can be used for business process
improvement, organizational improvement, multi product companies and many more.
(Wang, 2008). Most of the research conducted focuses on criticizing the current
approaches but none of them provides the solution framework. (Hsieh et al., 2007) used
combination of IT with statistics and merged into detailed framework known as
quality function deployment (QFD). (Wang et al., 2010) elaborates that it increases the
efficiency of project in terms of cost and time that are important factors for completion
of project.
Events are basic part of the project and are divided into three distinct categories.
These categories are reopening, fine tuning and revision (Soderholm, 2008) discusses
the methodology to deal with the uncertain risks that can occur during the project
execution. A detailed comparison shows that PMBOK and TPRM risk management
methodology lacks of response technique (Seyedhoseini and Hatefi, 2009).
The project selection is critical process and it must be ensured that it is successful.
The concept of management commitment is far behind as it alone not ensures the
success of Six Sigma projects without support of good project communication
frameworks (Sharma and Chetiya, 2010). The successful implementation of Six Sigma
projects includes management commitment, project selection and control skills (Ray and
Das, 2010). The next step is identification of tools and techniques required in order to
manage the project. In current critical business environment a single methodology is not
enough to ensure the successful project execution. Some of the embedded tools can be
drawing if SIPOC-R diagram and based on customer requirement, collection of cycle
time, PT, inventory, manpower and rework quota of sub processes (Sarkar et al., 2011).
The ever changing business environments have also forced the organizations to
outsource their business needs as well as departments. A practitioner must spend work
to collect data related to the project before the implementation and improvement of
processes. A sufficient knowledge is required about the process in order to manage the
occurring risks (Duarte et al., 2012). The provision and implementation of tools is only
possible through training the project managers according to the required skills and
knowledge. Practitioners make only an implicit connection between the business
strategy and project selection that leads to failure of projects. Strong analysis is required
before the project initiation to minimize the risks that can occur during the projects
execution (Kornfeld and Kara, 2013; Sharma and Chetiya, 2010).
Software projects are difficult to handle as every product has new set of attributes
and require prior research. It may carry high level unseen risk factors that can crash
the project. 90 percent of the software projects crash due to lack of proper risk analysis.
A number of risks are identified prior to the initiation of project but still the probability
of failure remains at high level (Wang et al., 2010) focus on applying Balance Scorecard
to measure the efficiency of R&D organizations in correlation with business tactics,
policy, vision and mission (Alhawari et al., 2008). Basic purpose of risk analysis is to
identify the risk prior to the start of the project. It focuses on minimizing the effects for
risks to complete the project successfully (Staveren, 2007) used advance methodologies
to expand the concept of risk analysis technique by applying fault tree analysis (FTA)
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and failure mode effect and criticality analysis (FMECA). Both techniques deal with
failure probability and impact of defects on the project:
H1. The negative effect of inflation on project performance is enhanced in absence
of proper risk management framework.
268
Continuous supply of material and services, preferably at the estimated cost,

is imperative for smooth execution of a project. Inflation is termed as change in the cost
of items, resources and services (Chan et al., 2004; Creswell, 2008; Drouin et al., 2009).
Increase in the cost of commodities and services reduces the purchasing power (Olivier,
2000; Baloi and Price, 2003) and it is ordinarily termed as a loss of real-value in
exchange and unit of account in the economy (Olivier, 2000). The inflation rate is
greatly influenced by the interest rate set by the central or reserve bank of state,
foreign reserves, trade deficit and other market forces (Shane et al., 2009; Kuen et al.,
2009). The inflation rate and consumer price index are used as measures to reflect price
hike (Roe and Siegel, 2011; Sadeh et al., 2000). The central bank and the open market
control size of the money supply in the market (Olivier, 2000; Deng and Ma, 2008).
This study ascertains that a proper policy for tackling the inflation effects needs to
be an integral part of the project planning and budget estimates as well as it should
be reviewed at least on quarterly basis to analyze and control the adverse effects
of inflation:
H2. The negative effect on project performance is enhanced in absence of proper
communication framework.
A common problem in project delay is inadequate communication among the key
stakeholders can lead to disputes and high cost issues (Gemunden et al., 2005; Roe and
Siegel, 2011). The management commitment and its active involvement in the project
are mandatory for project success (Kuen et al., 2009; Nitithamyong and Tan, 2007;
Pinto and Slevin, 1988; Sharma and Chetiya, 2010; Sarkar et al., 2011). Inadequate and
irregular communication can crash the whole project timeline (Wang, 2008; Zhang et al.,
2009; Jeffery et al., 2002; Kerzner, 2009). Hence, proper communication planning for a
project is required and channels of communication need to be defined appropriately to
effectively control flow the communication.
There should be periodic project review meetings particularly for the critical
projects and set of best practices and industry standards must be followed to ensure
timely completion of the project. For this purpose, a proper hierarchy for organization
communication flow must be defined (Chan and Chan, 2004; Park et al., 2007;
Shelbourn et al., 2007), so that everyone is aware of the communication model. The
basic defect in any model is caused by an inefficient process (Nitithamyong and Tan,
2007; Dvir, 2005), and it should be improved to provide pertinent communication:
H3. Insufficient resources and limited accessibility have significant relationship
with the delays in project completion.
A project being a temporary endeavor involves specific amount of resources
(Nitithamyong and Tan, 2007; OSullivan and Sheffrin, 2003) to be utilized to complete
the specific project requirements and to ensure that project is executed without
interruption. However, proper utilization of the resources at the required phase and
time is mandatory as improper allocation of resources can lead to budget starvation
(Roe and Siegel, 2011; Toor and Ogunlana, 2008; Van Rijckeghem and Weder, 2009)
and ultimately crashing the project. The next phase after the resource allocation is to
grant access to the resources to the concerned staff for proper utilization (Tarricone
and Luca, 2002; Taylor, 2008), because it has been observed that many projects do
have ample amount of resources but are not properly utilized due to limited access. The
resources can be in any form such as goods, inventory, consultancies and manpower
(Morichi et al., 2005; Nitithamyong and Tan, 2007; Wixom and Watson, 2001;
Sarkar et al., 2011; Duarte et al., 2012). This research on the basis of reviewing several
construction industry projects perceives that timely availability of resources is the
most important factor that makes a project successful within given time frame. But,
management should take efficient measures to remove all types of barriers to ensure
timely access to the resources as well as introducing reserves as backups:
H4. Lack of knowledge and unfamiliarity with project processes has significant
relationship with the delays in the project completion.
The major issues that cause projects to fail or delay to crucial extent is unfamiliarity to
the process and the whole project. This happens by assigning personnels that are not
aware of the project. Lack of expertise, lack of judgment, lack of training, lack of top
management (Kuen et al., 2009; Jeffery et al., 2002; Hoang and Rothaermel, 2010; Sharma
and Chetiya, 2010) and many other factors that are co related with each other. This single
factor can crash the project before the starting of the project. Mostly companies are
bankrupted because of unfamiliarity of what is the project and what is the purpose.
Missing proper vision, mission, goals, and objectives (Isik et al., 2009; Dvir, 2005;
Blackstone et al., 2009) summed up as feasibility study that causes the delay in the
project.
The concept of training is very common in current market (Nitithamyong and Tan,
2007; Sadeh et al., 2000; Morichi et al., 2005), and it can help to lower the risk of
unfamiliarity. The team must be able to understand and covey the project
requirements to all the other team members. Effective communication can be done only
when effective knowledge is available. Mostly the concept float within the organization
is based on experimental assessments of different team members (Naveh, 2007; Pinto
and Pinto, 1991; Park et al., 2007) and combining them to make a expert team. Different
type of expertise (Park et al., 2007; Tarricone and Luca, 2002) is needed for different
kinds of projects and top management must be aware of these issues during the
allocation of team members.
2.2 Equation
Dependent variable:
.
Delay in the completion of the project (DP).
.
Effect on project performance (EP).
Independent variables:
.
Inflation factors (IF).
.
Improper communication with the management (IC).
.
Insufficient resources and limited accessibility (IL).
.
Lack of knowledge and unfamiliarity with project processes (LU).
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3. Proposed framework
As described in our previous sections, risk management is the core requirement of
industrial and business processes. In this study, we have taken initiative to propose
and extended framework for risk management. The proposed framework is designed
with particular steps that can be implemented in IT/software projects. But it has a
greater scope in industrial production and business processes for quality enhancement.
The proposed framework is divided in two phases.
3.1 Pre-execution phase

In our proposed framework, a trained risk management and controlling team is
required to initiate the project. The team is selected on the basis of merit and must have
the required qualification and knowledge to handle the risks and control the project
during the execution. The next process after assigning the team to the project will be
identifying the risks by doing a proper analysis of the requirements and specifications
of the project. The risk identified will be prioritized by developing risk impact matrix
or advance Six Sigma methodology. The classification of risk is also based on the
impact level of the risk. Then the root cause analysis of each identified risk is done to
find the basic solution that can be implemented. The solution is tested by measuring
the process capability of the process to check current level of efficiency. Improvement
methodology is applied in case of lack of required efficiency level. The last process will
be prioritizing and implementing the extracted solutions according to the efficiency
level of the process. The risk management team will monitor and control the process
throughout the life cycle of project. The activities sequence is shown in Figure 1.
3.2 Post-execution phase
In our suggested framework, this phase will be used for the project and processes where
risks have been already identified of occurred. This deals with mechanism for providing
real-time solutions during the execution of the project. The risks will be directly
classified and prioritized and RCA will done with measuring the process capability.
It has fast paced approach and also uses the expert judgment and knowledge base of
organization to provide rapid solutions. The activities to be carried out are shown in
Figure 2.
The trained risk management team needs to have certain specialized training and
certifications to handle the process efficiently which would be the basic requirements to
be a part of the team. Team must be selected on the basis of merit and experience and
Figure 1.
Pre-execution phase
processes
Figure 2.
Post-execution phase
processes
must train the staff before assigning them responsibilities to handle such processes.
There can be other combinations required according to the domain and specific type
of a field, e.g. in case of information technology field, ITIL and CCNA, etc. certifications
are offered. It is dependent on the research of the organization to make an expert and
capable team.
In our extended framework of risk identification, the process will consist of risk
according to the domains that are involved in the process and organization.
Each domain will be having a different set of risks that must be categorized and
divided according to the domain. Also there will be a different solution for every risk
and every domain and it is recommended that previous domain solutions must not
be used for any other domain. There are many different tools available in for risk
identificaiton. It depends on the domain and process to have the best tool selected for
the process. That tool will provide the required solution. The selection of tool is
dependent on the expert judgement of expert trained team. Classification and
prioritization of risks is important for applying the right solution at the right time. The
organizational risks are classified into many factors according to the environment and
structure. The right classification will make the solution effective. After classification
risks will be prioritized to identify the importance of the risks. The implementation of
the solution at right time is very important for making it effective. A risk prioritization
matrix can be created to provide the overview of the solution with respect to the risks
identified. It is also important for the uncertain risks that are not always identifiable
(Figure 3).
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4. Case study and implementation

On the basis of above given hypothesis and proposed framework we have implemented
the framework in the iodine development industry and have observed significant
improvements in the project performance.
4.1 Introduction
Iodine is one of the necessary elements that is required for natural growth in both
animals and human beings. It is essential for the mixture of thyroid hormones. These
hormones derive the large types of essential and strong physiological processes. It is
also essential for the early growth, development of body, brain in human beings.
A healthy thyroid gland ranges from 8 to 12 mg of iodine in an adult human being.
For risk management team, we have defined a proper department for quality
assurance and selection of internal qualified team has been completed to monitor
the processes of organization on daily basis. The staff in controlling, monitoring
Figure 3.
Extended framework
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department is given an initial training about the process and also further trainings are
scheduled to meet the requirements for execution of the process. Extended root cause
analysis technique has been introduced with real-time implementation, controlling
and monitoring of processes. Trials have been completed which are satisfactory and
will be in production scale in August 2012.
This case study provides a detailed explanation of the steps we followed
using the proposed framework problem-solving strategy with embedded Six Sigma
DMAIC methodology to determine how we reduce our process variation of iodine
contents in crystallized iodized salt and improve the current internal processes of
organization.
4.2 The define phase

4.2.1 Project charter.
.
Problem statement. The standard value of iodine contents in salt is 40 ^ 10 ppm,
but there is huge variation in mixing process, and daily quality reports are also
showing that the iodine contents are varying from 0.0 ppm to more than
100 ppm. The same types of complaints are also coming from market. It is a
product quality issue and sales team is constantly complaining of low sale of
product because of inconsistent salt quality and lack of proper identification and
risk management techniques
.
Goal. Make process more reliable and ensuring iodine contents always meets
defined limits 40 ppm and to improve the internal processes of organization by
motivating the staff for training and research.
4.3 Baseline determination
To identify the severity of problem and for setting of base line Sigma value, last
five months lab testing data from daily salt analysis test report was gathered.
4.3.1 Graphical presentation. The data was also presented in different graphs to
highlight the variation in iodine contents in crystallized salt, the pie chart graph
showing that only 23.6 percent salt being produced is within specification limit where
as 76.4 percent salt is out of specification both in lower side (27.6 percent) and higher
side (48.8 percent). By seeing the time series plot of iodine contents, we can say that the
process of iodization mixing is totally uncontrolled and need some concrete action to
bring the process under control (Figures 4 and 5).
4.3.2 DPMO and Sigma value before the implementation
No. of test with in specifications: 29.
No. of test with low iodine value: 34.
No. of test with high iodine value: 60.
No. of opportunity: 3.
Figure 4.
Dot plot of iodine contents
25
50
75
100
125
Iodine contents
150
175
Pie Chart showing iodine variation % age
Category
High Iodine
Low Iodine ontent
OK
23.6%
A risk
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48.8%
27.6%
DPMO using the number of defects:

Total number of units: 123.
Number of defects: 94.
Opportunities for error in one unit: 3.
DPMO 254,742.5.
The base line Sigma value calculated 2.15.
5. Results discussion
Keeping in view the results of DOE, i.e. the all three factors; mixing method, mixing
speed and time have no significant effect in reducing the iodine contents variation,
so the forth factor salt particle size may have the direct effect on the uniform
distribution of potassium iodate in refined crystal salt. So, we come out of box and start
thinking of other methods of iodine mixing in salt. Scientific literature was studied to
know the best possible method of mixing the potassium iodate in our salt.
5.1 Salt iodization techniques
In our study, it has been shown that by iodine mixture can be made by addition of
potassium iodate to the salt. This method is termed as wet method. Also dry potassium
iodate can be mixed with salt. In wet method, potassium iodate is dissolved in water to
make a concentrated solution. The solution then further can be sprayed or dripped on
the salt with uniform rate. One other method used is dry method, in which dry
potassium iodate is mixed with the salt. Then it is mixed with the anti caking agent.
The anti caking agent consists of four more salts that are mixed together in ratio of
1:9 salt. The powder solution is then sprinkled over the dry salt. Potassium iodate is the
essential element in both methods. The ratio must of mixing must be carefully
managed in order to achieve the uniform amount of iodine particles.
5.2 Selection of method
According to our salt specifications, the particle size is approximately 6 mm, and study
shows that with this particle size dry mixing method is not suitable, so we must
Figure 5.
Iodine variation
percentage
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think about some other suitable method. As the potassium iodate has very fine particle
size less than 0.15 mm which means that after some time of mixing the Potassium
iodate having finer particle size and is heavy than salt, will settle and move down at the
bottom of the container, causing variation in iodine contents in salt.
5.3 Results interpretation
As the p-value is 0.002 which is less than 0.05, so the results are significant and reject
the null hypothesis. Further we can get the best results at after centrifuge or at after
drier point. Whereas the box plot and individual value plot show the minimum variation
at centrifuge point. So, we can say that the best results can be achieved of feeding the
solution at after centrifuge point.
5.4 DPMO and Sigma value after implementation

No. of test with in specifications: 46.
No. of test with low iodine value: 5.
No. of test with high iodine value: 1.
No. of opportunity: 3.
Total number of units: 46.
Number of defects: 6.
Opportunities for error in one unit: 3.
DPMO 43,478.26.
The Sigma value after improvement calculated 3.2.
5.5 Results conclusions
Final results comparison shown in Table I.
6. Future work and conclusion
The future extension work to this research is deriving a more robust model with advance
embedded tools and techniques of Six Sigma and various other mythologies that are
required for core functionality of industrial and organizational business processes.
There are a number of processes that are directly affected by the cost, time and quality of
the product. The model will be extended with further improvement of risk management
framework for handling uncertain risks. More tools and methodologies will be added to
minimize the impact of risks in real-time environment and to provide the best possible
solution.
The basic concept about Six Sigma as a management methodology limits the research
in this area. A data-driven process improvement undertakes the Six Sigma methodologies
Improvement indicators
Table I.
Final results comparison
DPMO
Sigma value
Pp value
Ppk value
Value at start of project
Value after improvement
254,742
2.1
0.14
0.06
43,478
3.2
0.53
0.37
to manage the risks internal and external to the organization. Also the primary focus of
this study is to provide real-time solutions to the risks and also sort out the solutions for
the uncertain risks. The framework is based on extensive critical study of previous
methodologies in different industries and organizations. The literature review also shows
that the current research conducted in this area lacks proper risk management framework
and the existing methodologies are insufficient to deal with the risks in fast paced industrial
environment. Although the process improvement and quality management concept of
Six Sigma correlates it with the project management mythologies. It is also termed as
customer driven approach with core focus on reduction in variance of processes. This study
used advance tools to analyze the efficiency of project processes and derived solutions
for the defects that caused the efficiency level to increase at sufficient level. A set of
hypotheses are formulated and dully verified and tested with correlation to errors, defects,
process capability, continual improvement and other essential components projects. The
proposed framework also provides methodology for dealing with risks in real-time
environment. By embedding the process with Six Sigma tools, the process is improved itself
to provide the required quality level for production of quality products. It also achieves the
continual improvement factor by monitoring and controlling the processes throughout
the life cycle of project, hence minimizing the defects to lowest levels. The study can be
beneficial to the industrial business whether technical or non-technical to improve their
processes and manage the risks in order to provide the continual improvement in the whole
organization with a major reduction in cost and increase in revenues of organization.
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About the author

Muhammad Usman Tariq is a Management Professional with extensive experience in providing
consulting, training, business consultancy, and project management expertise to client projects
representing a wide range of industries and corporations. Currently he is responsible for a
top-rated consulting and training firm department, that includes consulting, training, product
development, testing, and quality assurance. He is a Certified Six Sigma Master Black Belt with
more than five years experience of implementing DMAIC methodology to achieve business
goals and improving the processes. He is also a certified Six Sigma Master Implementer, with
experience of providing training to Green Belts and supervising Six Sigma projects in various
organizations. He is a Trainer/Tutor for Management, Computer Science, Software Engineering
BS/MS courses for classroom and online sessions provided globally, as per the university
requirements with updated modules. He also has practical experience in establishing,
implementing and auditing the Information Security Management System in different
organizations. Muhammad Usman Tariq can be contacted at: usmankazi100@gmail.com
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