Halliburton Tax

Project Chartering

June 2011

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Project Chartering

Define the components of a project charter Develop a project idea into an effective project charter Learn how to review a project charter

Module Objectives:

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Project Selection

Project is aligned with business objectives Process has a measurable “Y”; an indication of whether or not the

process is successful (may or may not be currently measured) Project is focused on an ongoing process within your control Process is creating defects Project Objective should be significant (e.g. 70% improvement) Process will continue to be used

What Makes A Good Project?

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Finding Projects

Where to Look

“Hidden factories”:– Low RTY– Significant re-work in processes

Customer complaints/feedback– Poor quality, – Missed deadlines, – High costs

Management objectives Long cycle times

– Multiple Hand-Offs – Long wait times

Processes with significant variability Capacity constrained processes

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Examples of Project Ideas

Automate Transfer of Data Between Compliance Software and Excel

Pool SME Expertise Begin to mitigate Fin 48 issues arising from lack of

documentation Develop a Protocol for Privileged Information –

Estimated Completion Date: 7/31/11 Incorporate use of provision reporting checklists to

ensure appropriate inter- and intra-period classification of balances

What is the current performance (baseline)?

How do I measure this?

(Cost, Quality, Time)

What should our performance level

be?

Questions that would need to be answered to make these project ideas actionable projects:

Not All Project Ideas Make Good Process Improvement Projects

Random examples of process improvement opportunities from June 14th Tax Department meeting:

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What Good Project Definition Looks Like

During 2009 HAL processed 1,000 Inter/Intra period balances. For Tax to properly process that may balances requires allocation of 1,000 man-hours of effort.

Problem Statement:

Identify & implement a solution that will reduce the amount of effort required by Tax from 1,000 man-hours of effort to approximately 200 man-hours of effort – without compromising the quality of the results produced by Tax. This goal should be achieved by 12/31/11.

Project Objective:

Hours of effort to process an Inter/Intra period balance.

Primary Metric:

1) Any Inter/Intra period balance that requires more than 15 minutes to properly categorize,

2) Any inter/intra period balance that was categorized incorrectly.

Defect Definition:

1) Get clear on the problem• Do we have errors (defects) in how we categorize

Inter/Intra period balances, OR• Are we trying to save time & get more efficient?

2) What is the Objective of the project?• How will the Project leader know when they

are done? Successful?• Are expectations reasonable (entitlement)?

3) How do you measure this process?

4) What is considered a defect for this process?

Example: “Incorporate use of provision reporting checklists to ensure appropriate inter- and intra-period classification of balances “

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Project Charter

During 2009 HAL processed 1,000 Inter/Intra period balances. For Tax to properly process that may balances requires allocation of 1,000 man-hours of effort.

Problem Statement:

Identify & implement a solution that will reduce the amount of effort required by Tax from 1,000 man-hours of effort to approximately 200 man-hours of effort – without compromising the quality of the results produced by Tax. This goal should be achieved by 12/31/11.

Project Objective:

1) Any Inter/Intra period balance that requires more than 15 minutes to properly categorize,2) Any inter/intra period balance that was categorized incorrectly.

Defect Definition:

Improve Processing of Inter/Intra Balances

Project Title: Alex Johnson – SponsorJo Kidd – LeadPat Hartman – Tax ComplianceTerry Smith – AuditBobbi Melencalf- State

Team:

Approximately reduction of 800 hours of effort per year.

(currently spend about 1,000 hours per year processing Inter/Intra balances – goal is 200 hours/year)

Project Benefit:

Hours of effort to process an Inter/Intra period balance.Primary Metric:

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Problem Statement

Characteristics Of A Good Problem Statement: Concise, complete description of the problem Focus on a specific problem aligned to high-level business objectives Detailed as possible including quantified baseline Must not include any presumed causes or pre-determined solutions

Purpose and Function Of Problem Statements: Provides Project Leader with a well defined issue upon which to apply the Problem Solving

Methodology Quantifies the current performance relative to customer expectations Identify the implications (e.g. financial impact) of current performance

The Problem Statement is a 2 to 3 sentence, quantified description of the problem. First sentence should contain the data source, the data date range and the baseline performance. The baseline in the problem statement will link to the Objective and Primary Metric

Reader Should “Feel the Pain.”

During 2009 HAL processed 1,000 Inter/Intra period balances. For Tax to properly process that may balances requires allocation of 1,000 man-hours of effort.

Problem Statement:

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Project Objective

Objective should describe the targeted performance shift of the Project Metric.

To establish the target performance (Objective) for project use:– Benchmark data, – “perfect day” performance, – Rule-of-thumb 70% or – Expert opinion

The Objective should have an expected completion date.

The Objective is as simple as . . . "Improve" (increase, decrease, reduce, etc.) from the baseline to the goal (% improvement) by the date of project completion. This section is very simple and is often incorrectly stated in terms of how to solve the problem. Same units as baseline.

The Reader Should Be Clear Of What Determines Success For This Project

Identify & implement a solution that will reduce the amount of effort required by Tax from 1,000 man-hours of effort to approximately 200 man-hours of effort – without compromising the quality of the results produced by Tax. This goal should be achieved by 12/31/11.

Project Objective:

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Project Benefit

Project Benefits:– Are directly derived from improvements to the process at the level outlined in the

Project Objective. – Are calculated using the Primary Metric for this project.– Include Operational Improvements:

• Reduction in defects• Cycle Time Improvements• Risk mitigation• Etc.

Financial Benefits are characterized as:– Tax benefits that can be directly attributed to the project– A reduction of operating expenses

The Project Benefit section describes the expected project benefits. Include relevant calculations and explanations. Consider and describe both operational and financial benefits.

Approximately reduction of 800 hours of effort per year.

(currently spend about 1,000 hours per year processing Inter/Intra balances – goal is 200 hours/year)

Project Benefit:

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Primary Metric

The Project Metric should be:– Measurable– Indicate a source for the measurement data– Same units as Baseline and Objective

Think about the creation of the Primary Metric Chart. How will the data on the chart be calculated (daily?, weekly?, monthly?, other?)

The Project Metric “Y” defines the primary metric for the project. This metric should be easily measured, relate to how success is characterized in the Project Objective, have a data source associated with it, and relate to the targeted defect. Same units as Baseline and Objective.

Hours of effort to process an Inter/Intra period balance.

Primary Metric:

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Primary Metric Chart

1. Baseline performance– Historical Average– 12 months if possible

2. Actual performance– Identify any known special causes

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

102030405060708090

100

Hours Of Effort to Process Inter/Intra Balances

Ho

urs

3. Targeted performance– What you expect during and after your project.

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The Defect Definition is:– Specific to the issues described in the Problem Statement and Objective– Consistent with the Project Metric (Y)

The defect definition enables you to calculate the data points on your primary metric chart.

The Defect Definition describes the condition of the process output that is unsatisfactory to the Customer.

1) Any Inter/Intra period balance that requires more than 15 minutes to properly categorize,2) Any inter/intra period balance that was categorized incorrectly.

Defect Definition:

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Next Steps

Make a first pass at defining your project as a project charter

Assemble your team – – General discussion about your project– Share high-level information about Project Chartering– Solicit input from your team to improve your charter

Schedule a coaching session Review with your Project Sponsor

Before our next Training Session:

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Project Charter

Problem Statement:

Project Objective:

Defect Definition:

Project Title:

Team:

Project Benefit:

Primary Metric:

Project Number

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Charter Review Checklist Problem Statement:

Does the Problem Statement contain a date range of baseline data, a baseline and source of data and the timeframe it was gathered?

Confirm the Problem Statement does not include a “solution” Project Objective:

Does the Objective state an “increase” or “decrease” from the baseline to the goal by a specific project target end date?

Does the Objective represent a significant improvement (e.g. 70%) Do the Problem Statement, Primary Metric and Objective support one another?

Project Benefits: Is the benefit supported by computations? Any assumptions should be documented?

Primary Metric: Is the Primary Metric documented and normalized for volume (i.e. if volume increases or decreases will the

way the metric is used still make sense?) Is there a Secondary Metric that ensures no undesired results occur due to a change in the Primary Metric?

If not, is there a good reason there is no secondary metric? Do metrics contain units (i.e. % defective, cycle time in mins, daily, weekly, monthly, etc.)? Does the Defect Definition tie to the Primary metric and will it aid in establishing the Primary Metric chart?

Process Owner Buy-in: Has the Process Owner agreed to the Charter, proposed benefits and has resources available to go forward

with the project? Is this a process within the control of the project team? Can this project be completed in a reasonable time (6-9 months)? Is this a process that will continue to operate for the foreseeable future? Is this project aligned with the organization’s strategy?