Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 1
MGT610
Lecture 7
Stakeholder Perspective:
Identifying Needs for Requirement Definition
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 2
Project Value Network
Shareholder
Value
Outcome
Value
Stakeholder
Value Effort
Value
Project
Scorecar
d
Statistical
Project
Control
Stakeholde
r
Deploymen
t What we control in the effort should deploy outcomes that reflect where we expect
to find the project’s value as described in the project’s scorecard.
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 3
The Tree Swing Problem
what marketing
suggested
what management
approved
as designed by
engineers
what was
manufactured
as maintenance
installed it
What customers
wanted
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 4
Topics and Objectives
• Strategic Thinking: Understanding stakeholder
perceptions about the project’s value
• Filters in the PVN: How will we organize the
stakeholders into segments having compatible
views about value?
• Constancy of Purpose: Understanding
comparative advantage as stable needs having
dynamic tolerances
• Stakeholder Schematics: Coordinating
comparative advantage as a horizontal chain
of value
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 5
Session Agenda
Stakeholder Perspective:
Identifying Needs for Requirement Definition
1. Perceptions of value lead to expectations
2. Compatibility of expectations as segmentation basis
3. Stable needs but dynamic expectations
4. Describing expectation as a tolerance
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 6
The Fundamental Challenge in Project Management:
Maximizing Project Value by Managing Satisfaction
“If I had to reduce my message for management to just a few words, I'd say it all
had to do with reducing variation”
—W. Edwards Deming
“The central problem of management in all its aspects...is to understand better the
meaning of variation, and to extract the information contained in variation.”
—Lloyd S. Nelson
Maximize
Project
Value
Prerequisite
Maximize
Inflow
Requirement Objective
Minimize
Outflow Minimum Required-
ALAP
Maximum Desired-
AFAP
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 7
Framework of 7 Basic Questions for the PVS
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 8
Change
of Goals
Stakeholder Satisfaction: Impact of Dissatisfaction
PM barriers:
Conflicts and Goal Changes have Strong negative effects on project success
One major source of variation:
Conflicting and Changing Stakeholder Satisfaction
Strategy:
Avoid changes by identifying stakeholder needs
Conflicts
Success +.41
-.21
-.20
R2= 39%
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 9
Stakeholder Satisfaction and Market Value
1999 Macpherson Publishing, Alexandra, New Zealand
From an article by Steve Hoisington of IBM Rochester.
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 10
Stakeholder Satisfaction: Quality Problems & Repurchase
Decision
87
50
74
45
83
53
83
53
0
20
40
60
80
100
Automotive
Service
Financial
Services
Packaged
Goods
High Tech
Equipment
No Problem Problem
% W
illi
ng
to
Rep
urc
hase
Source: J. Goodman, “Measuring and Quantifying the Market Payoff of Improved Quality and Service,”Quest for Excellence IV Conference, February 4, 1992.
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 11
Stakeholder Satisfaction: Impact of Dissatisfaction Proportion of unhappy customers who will repurchase
(Complaints valued at over $100)
Source: J. A. Goodman and D. S. Ward in Direct Marketing (December, 1993).
Did Not Complain
Complaints Not Resolved
Complaints Resolved
Complaints Resolved Quickly
37%
46%
70%
95%
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 12
Stakeholder Satisfaction: Impact of Dissatisfaction
What is your percentage of dissatisfied customers?
– Only 4 out of 100 dissatisfied customers complain!
– Each dissatisfied customer tells 8 to10 people about
his/her dissatisfaction
Market Impact?
– 1000 reported customer complaints are approximately
25,000 dissatisfied customers!
– 25,000 dissatisfied customers are expected to
communicate their dissatisfaction to approximately
225,000 people!
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 13
Creating Stakeholder Value
• Customers buy on value. Value as an advantage is
determined by comparing quality relative to price.
– Quality includes all the non-price attributes that count in the
purchase decision--both product and service.
– Value (price and quality) is not an absolute expectation. It leads
to expectations which can be expressed as tolerances relative to
stakeholders’ perceptions about what is possible.
Value
Quality
Price
Product
Service
Initial Price
Life Cycle Costs
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 14
Stakeholder Value by Accident
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 15
Traditional QFD: Definition
QFD (Quality Function Deployment):
• Is a detailed system for translating the needs
and wishes of the consumer into design
requirements for products or services.
– Developed in Japan by Dr. Yoji Akao and Dr. Shigeru
Mizuno
– Purpose: assure customer satisfaction
– Primary concept: value
– Tools: 7 management & planning tools
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 16
QFD Advantages
QFD has fewer engineering changes and adjustments!
Nu
mb
er
of
Ch
an
ges
Time
Traditional
Development
QDF
Development
1st Day of
Production Adapted from Sullivan, 1996
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 17
Applying QFD: The Strategic Decision
Allocation of Resources
QFD requires substantial initial investments
vs.
Traditional management requires increasing
investments
Reso
urc
es
Time
Traditional QDF
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 18
QFD Advantages
• Shorter development time (30% - 50%)
• Fewer engineering changes (25% - 50%)
• Reduced introduction costs
• Satisfaction of consumer needs and desires
• Improved product manufacturability
• Commonality of language
• Development of a ready reference for the future
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 19
QFD Goals
• Increase market share
• Design value into the product
• Translate subjective statements into objective
requirements
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 20
QFD Development Process Steps
Identify the Market
Select a Product Concept
Design Product
Design Manufacturing
Prioritize Customer Segments
Understand Customer Needs
And Context, Translate into
Engineering Language
Select the Best Concept
Generate New Concepts
Target Cost
Prioritize Development Projects
Establish Targets
Establish Relationships between
Manufacturing Conditions and
Product Performance
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 21
Decomposition of
Needs into
Tolerances and
Operating Limits
Quantifies the
Acceptable
Comparative
Advantage. text
Product
Planning
Ne
ed
s
Design
Targets
Feature
Deployment
De
sig
n
Ta
rge
ts
Feature
Specs
Workflow
Planning
Fe
atu
re
Sp
ecs
Process
Tolerances
Work
Package
PlanningPro
ce
ss
To
lera
nce
s
Operating
Limits
If
New, Important, or Difficult,
Then
Define
Else
Defer Effort Until Required
Focusing Criteria
Needs
Design Targets
Feature Specs
Process Tolerances
Operating Limits
Need Hierarchy
Outputs are caused by tasks.
Value-added tasks should:
• Change the output
• Solve a need by meeting
design targets.
design for
deployment
of best
comparative
advantage
Using a modified QFD
framework,
• Plan the product.
• Plan the workflow.
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 22
Stakeholder Management
To avoid goal changes and dissatisfied customers?
1. Plan and implement customer value by creating
output value
2. Apply QFD concepts at the project level
3. Manage customer satisfaction during the project
4. Manage the customer relationships
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 23
Simplified Need Identification: Definitions
Needs:
Necessity, a condition in which something necessary or desirable is required or wanted; a requirement.
Expectations:
The condition of looking forward to something
Specifications:
A detailed description of design criteria for a piece of work
Requirements:
Something that is required; a necessity; A requirement is a singular documented need of what a particular product or service should be or do.
Functional requirements - Describe system features or things the system must do.
Non-functional requirements - Describe properties the system must have (e.g. performance, availability, accessibility).
Constraints - Limits the development in some way.
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 24
Simplified Need Identification: Need Definition
A need is:
• a condition requiring relief;
• anything that is necessary but lacking;
• necessitate: require as useful, just, or proper;
• a want: have need of …
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 25
Simplified Need Identification: Categories of Need
Customer satisfaction is influenced by a variety of needs .
Undocumented
Needs
Documented
Needs
Necessary Satisfiers
Desirable Satisfiers
Customs &
Hidden
Motivators
Exciters
Regulations , Specs , &
Standards
Negotiating
Positions
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 26
Simplified Need Identification: Customer Voice
Satisfiers Moments of Truth Expectations
Broad aspect of need.
When experience
is compared with
expectation, opinion of
satisfaction is formed.
The tolerance expressed as
central tendency and
dispersion.
One-word label. How
customer talks about
satisfaction.
Names comparison
opportunity as an event.
Tolerance sets the
acceptable uncertainty for
outcomes and effort.
I want … When I …, I expect …
convenience. go shopping, to drive 5 to 15 minutes to
find a shopping center.
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 27
Simplified Need Identification: Customer Voice
Satisfiers Moments of Truth Expectations
I want … When I hear about …, I expect …
Accuracy. the construction process used
to build the house,
USL = 150 days,
LSL = 30 days,
Target = 90 days to
complete construction.
Reliability. the process used for curing the
concrete foundation,
USL = 12 days,
LSL = 2 days,
Target = 7 days to cure.
When the house is built in under 3 hours,
• I perceive the accuracy of construction to be …?
When the concrete is pronounced cured in 20 minutes,
• I perceive its reliability to be …?
I perceive … • Fear,
• Uncertainty,
• Doubt …
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 28
Exercise: Simplified QFD for the 4-Hour House
I expect … When I …, I want …
Expectations Moments of Truth Satisfiers
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 29
Understand Need: Simplified QFD Information
Satisfiers Moments of Truth Expectations
Broad aspect of
need.
When experience
is compared with
expectation, opinion of
satisfaction is formed.
Tolerance for variation
expressed as central
tendency and dispersion.
One-word label.
How customer talks
about satisfaction.
Names comparison
opportunity as an
event.
Tolerance sets the
acceptable uncertainty for
outcomes and effort.
I want … When I …, I expect …
maintainability. redecorate the house, to spend $0 to $1,000 for
repair problems.
Example: The 4-Hour House should be easy to maintain.
Ambiguous attribute of satisfier;
must translate into hard expectation.
Soft Expectation
Measurable attribute of a satisfier;
a performance benchmark. If met,
should lead to satisfaction.
Hard Expectation
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 30
Simplified QFD Information
Satisfiers Moments of Truth Expectations
Broad aspect of
need.
When experience
is compared with
expectation, opinion of
satisfaction is formed.
The tolerance expressed
as central tendency and
dispersion.
One-word label.
How customer talks
about satisfaction.
Names comparison
opportunity as an
event.
Tolerance sets the
acceptable uncertainty for
outcomes and effort.
I want … When I …, I expect …
size. learn about the
available living space,
to find 2,400 sq. ft. +/-
200 sq. ft. of useable
living space in the house.
Example: The house should be of sufficient size.
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 31
Project QFD: Essential Chain
critical chain essential path
QFD is the theoretical foundation for project QFD:
– critical chain — best basis for managing schedule
– essential path — best basis for managing value
Delivering value to customers is the prime directive for project managers of product development projects
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 32
Appendix
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 33
Appendix
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 34
Appendix: Analyzing Stakeholder Data
7 TQM Management & Planning Tools
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 35
Appendix: Quantifying Acceptable Variation using SPC Concepts
LQL: Limiting Quality Level for rate of nonconformances which can be
tolerated by the stakeholder’s workflow.
AQL: Level of nonconformances expected out of the effort’s workflow.
Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved. For academic use only. 36
Cp and Cpk Describe the Balance in Acceptable Uncertainty
LCL UCL
µ-1σ-2σ-3σ +1σ +2σ +3σ
Inherent Capability if Cp = 1.0 = Cpk
LSL USL
Tolerance
{x|x = LSL ≤ x ≤ USL}
{x|x = LCL ≤ x ≤ UCL}
Inherent Capability = Tolerance Tolerance = 2 * Inherent Capability
LCL UCL
Inherent Capability if Cp = 2.0 = Cpk
Tolerance
{x|x = LSL ≤ x ≤ USL}
{x|x = LCL ≤ x ≤ UCL}
LSL USL
µ +1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ-5σ-6σ +5σ +6σ
Tolerance = 1.33 * Inherent Capability
LCL UCL
Inherent Capability if Cp = 1.33 = Cpk
Tolerance
{x|x = LSL ≤ x ≤ USL}
{x|x = LCL ≤ x ≤ UCL}
LSL USL
µ +1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ
Minimum for 6-sigma Quality
Inherent Capability if Cp = 2.0; Cpk ≥ 1.5
Tolerance
{x|x = LSL ≤ x ≤ USL}LSL USL
+1σ +2σ +3σ-1σ-2σ-3σ +4σ-4σ-5σ-6σ +5σ +6σ
µ
LCL UCL
{x|x = LCL ≤ x ≤ UCL}