1. Project Chartering Define Kaizen Facilitation

2. Objectives Identify and document project opportunities: Formulate Problem Statement Learn to develop “S.M.A.R.T.” Objectives Objectively identify project Benefits (financial and non-financial) Determine Team (Full-time and Support) Be aware of chartering pitfalls 2

3. Chartering the Project Using a simplified form of the Charter that your project is based on: Describe ideas in terms of: Current Situation - What is the problem/ opportunity? Objective - How do we measure success? Benefits - What value does it provide? Team Members - Who should be involved? 3

4. Project Idea Form 4 Objective: Benefits: Team Members: Reduce/optimize/increase __________________________________________________________ (project y) from _________________________________________________________________________(current level) to ____________________________________________________________________________ (target level) for __________________________________________________________________________ (specific area) while reducing/increasing/holding constant______________________________________( constraining Y’s) Current Situation: Problem Statement

5. Opportunity / Problem Statement What is the current situation? In a few brief sentences explain: What the opportunity is How long it’s been occurring Any specifics that help narrow the scope Specific service Specific shift etc… 5

6. Project Idea Form 6 Objective: Benefits: Team Members: Reduce/optimize/increase __________________________________________________________ (project y) from _________________________________________________________________________(current level) to ____________________________________________________________________________ (target level) for __________________________________________________________________________ (specific area) while reducing/increasing/holding constant______________________________________( constraining Y’s) Current Situation: Problem Statement ‘S.M.A.R.T.’

7. Objective Statement Objective – How do we measure success? Gain insight into our current processes How good is it (Baseline)? How good could it be if perfect (Entitlement)? What is limiting it from getting better? How can it be improved (Closing the Gap)? How much of the gap do we want to close during this project (Goal)? 7 Reduce/optimize/increase: (project Y) from (current value) to (goal level) for (specific area) while holding constant (constraints)

8. Project Metrics What are the Right Metrics (Key Process Indicators)? Leverage SMART principles when identifying statements S=Specific M= Measurable A = Actionable R=Realistic T=Time-bound 8 Reduce/optimize/increase: (project Y) from (current value) to (goal level) for (specific area) while holding constant (constraints)

9. Objective Statement - Pitfalls Boiling the Ocean Example: Reduce labor hours by 15% Micro-Focused Example: Reduce ink used by 2% at the two scaled in-gate pedestals for trouble tickets Solution in Mind Example: Reduce days to bill a vessel by implementing an automated system Too Many Metrics Example: Increase net moves per hour, reduce labor cost, and improve crane cycle time in vessel operations 9

10. Objective Statement - Examples Would you accept these objective statements? Reduce maintenance response time from 10 hrs to 1 hr Increase market share & reduce costs through increased customer satisfaction and improved efficiencies Fix the AFE process Decrease overtime hours from 100 hours to 50 hours Revamp the approved vendor list by placing controls and procedures for introduction of new vendors, and assurances of supplier qualifications Create a parts inventory system for the power shop to save 20% with auto- reordering min’s and max’s 10

11. Project Idea Form 11 Objective: Benefits: Team Members: Reduce/optimize/increase __________________________________________________________ (project y) from _________________________________________________________________________(current level) to ____________________________________________________________________________ (target level) for __________________________________________________________________________ (specific area) while reducing/increasing/holding constant______________________________________( constraining Y’s) Current Situation: Problem Statement ‘S.M.A.R.T.’ What Value Does It Provide?

12. Document Benefits / Financial Assessment This needs to be objectively defined, mathematical description (if possible) of how to calculate the business impact ($$$$) This must be accepted and supported by the Controller / CFO If this is not defined well in the beginning of the project, you will struggling at the end to determine the financial impact 12

13. Two Types of Savings 13 $ Spent “Hard” Savings: Savings that can be measured by a change in the bottom-line (EBITDA) “Soft” Savings (Cost Avoidance): Savings that reduce or eliminate future spending of money without a change to the bottom-line $ Spent Costs that were avoided

14. Project Idea Form 14 Objective: Benefits: Team Members: Reduce/optimize/increase __________________________________________________________ (project y) from _________________________________________________________________________(current level) to ____________________________________________________________________________ (target level) for __________________________________________________________________________ (specific area) while reducing/increasing/holding constant______________________________________( constraining Y’s) Current Situation: Problem Statement ‘S.M.A.R.T.’ What Value Does It Provide? Who Should Be Involved?

15. Team Members Carefully consider the Makeup of the Team and Who should be involved in this improvement effort Core team members are those who will stick with the project from start to finish [full-time] An ideal team size is 3-5 people Identify experts or other specialized people you’ll need for the project as extended team members (S.M.E.) Call on them for assistance as needed Do not forget the Process Owner and any other Key Stakeholders! 15

16. Project Idea Form 16 Objective: Benefits: Team Members: Reduce/optimize/increase __________________________________________________________ (project y) from _________________________________________________________________________(current level) to ____________________________________________________________________________ (target level) for __________________________________________________________________________ (specific area) while reducing/increasing/holding constant______________________________________( constraining Y’s) Current Situation: Problem Statement ‘S.M.A.R.T.’ What Value Does It Provide? Who Should Be Involved?

17. Project Review Questions Does charter state what the project is trying to accomplish, in measurable terms? Is the project worth doing? What’s probability of success? What happens if the project fails? Does it fit within the business initiatives? Is this a customer-oriented project? Is it properly scoped? (Boiling the ocean or right sized?) What are the specific goals of the project? Who owns the process? Can we get benchmark information? If so, where? What resources are available in the team? What is the actual process we are working to improve? 17

18. Review Complete project definition is critical to success Clearly document the problem and project objectives Objectively measure project benefits and results Ensure the right people are on the team Review and understand chartering pitfalls and how they can affect the success of your project 18

19. Notes 19

20. Notes 20