Braindump

Quality Management

Who said what


Dr.W. Edwards Deming - 14 steps to Total Quality Management, and defined Quality as “fitness for use”. 4 Step cycle for improvement  Plan – Do – Check – Act

Dr. Joseph M Juran Developed 80 / 20 principle. Advocated the top management involvement and defined quality as “Fitness for use”.

Pareto’s Law 80% of the problems are due to 20% of cause.

Philip B Crosby popularized the concept of cost of poor quality, advocated prevention over inspection, and “Zero Defects”. He believed that quality is “Conformance to requirements”.

Kaizen continuous improvement

Just In Time Inventory should be Zero.

Control Chart – Upper and Lower control limit (UCL-LCL)

Rule of 7 – 7 continuous measurements fall on the same side of the mean, then intiate RCA

Cause and effect- also called fishbone, Ishikawa

Pareto-Chart: Helps on focusing which problems needs attention right away, based on 80/20 rule

Histogram- does break down of data (e.g. for the data related with issues, breaking down the issues in Critical, High, medium, low)

Run-Charts: tell you about the trends.

Scatter Diagrams: show how two different types of data relate to each other.

Grade refers to the value of a product, but not its quality.

HR Management

McGregor : Theory of X and theory of Y

Maslow’s Hierarchy of needs: Physiological, Safety, Social, Esteem, Self Actualization

Herzberg’ Theory: Motivation –Hyg: You need Hygiene factors like good working conditions, good personal life, good relationship with boss and coworkers, salary but they don’t motivate you, however absence of these would de-motivate you. Only after you have the ‘hygiene’ factors, you would care about achievement, recognition, personal
growth, or career advancement

Expectancy Theory: You need to give people an expectation of a reward in order to motivate them and the award should be achievable. If everyone knows the award is either worthless or impossible to achieve, it may actually demotivate them !

McClelland’s Achievement Theory: People need achievement, power and affiliation to be motivated.

Stages of team development (by Bruce Tuckman) – Forming, Storming, Norming, Performing, Adjourning



Cost Management - Earned Value Management
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Some tips to remember the cost formulas:

• In case of Variance, we always substract something from EV
• In case of Schedule, we use PV, In case of Cost, we use the Actual Value (AC)

CV = EV – AC  CPI = EV / AC  CV% = CV / EV
SV = EV – PV  SPI = EV/ PV  SV% = SV / PV

% Complete = EV/ BAC
% Spent = AC / BAC
EV = BAC x % Complete

VAC = BAC – EAC

SPI = EV / PV
CPI = EV / AC
Tip to memorize -in case of performance index, always EV is divided by something.

ETC = EAC – AC
ETC = BAC – EV
ETC = (BAC – EV) / CPI

EAC = AC + ETC [Original Estimates Flawn]
EAC = AC + (BAC – EV) [Atypical]
EAC = AC + (BAC – EV) / CPI [ Typical ]

EAC = BAC / CPI --- typical , this is the most important formula for EAC for the exam

For either variance or for performance index, LOWER = LOSER
i.e. if Variance is negative, then it is bad, if Performance Index is < 1, then it is bad.

TCPI = (BAC – EV) / (BAC – AC)
Tip to memorize: TCPI = Value Remaining / Budget remaining

TCPI indicates as what should be our Cost performance Index (CPI) in order to complete the work as per our budget. If we are over budget, then certainly the value remaining or work remaining would be more then the budget remaining and we need to work harder and so for the remaining duration of the project we need to keep a tight control on the cost and our CPI should be > 1.

Another point for the concept- If you follow cricket, TCPI is required run rate in cricket. For example, suppose in the case of a India –Engliand One day cricket match, England has scored 299 runs in 50 overs and India need to score 300 to win the match while batting second. After 30 overs, India have made 130 runs, now India need 170 runs in remaining 20 overs, so the required run rate is 8.5. So here the required run rate is TCPI !

BCR = PV of Revenue / PV of Cost

BCR = 1.0 -> Breakeven  BCR < 1.0 -> Not attractive
BCR > 1.0 -> Attractive

CPI < 1.0  -> Budget Overrun
CPI > 1.0  -> Budget Under run

SPI < 1.0 -> Behind Schedule
SPI < 1.0 -> Ahead of Schedule

Point of Total Assumption (PTA)

PTA = [(Ceiling Price – Target Price) / (BSR) + Target Cost]

Target Price = (Target Cost + Target Profit)

PTA is the Project Cost (or Actual Cost or Target Cost) beyond which buyer will not share the additional cost with the seller.

It means that when actual cost reaches PTA, buyer pays the Ceiling price.

At PTA, Buyer’s share of the cost-overrun = (PTA – Target Cost) x BSR -- BSR: buyer to Seller ratio

Buyer’s price at PTA = Target Price + Buyer’s share of the cost overrun
= Target Price + (PTA – Target Cost) x BSR
Since Buyer’s price at PTA = Ceiling Price
So, Ceiling Price = Target Price + (PTA – Target Cost) x BSR
Or (Ceiling Price – Target Price) / BSR = (PTA – Target Cost)
Or PTA = (Ceiling Price – Target Price) / BSR + Target Cost
(So, this is how the formula of PTA has come! )

15 to 20% of project Cumulative CPI  Stable

Estimates Message Impact:
======= ============
Order of Magnitude  -25% to + 50% Words  7%
Budget  - 10% to + 25% Vocal Tone (Para lingual)  38%
Definite  - 5% to + 10% Facial Expressions  55%
Message lost in upward communication 23to27%
PERT  O + 4M + P / 6 PM spend 90% time in
Communication.
Task Std. Deviation  (P – O) / 6 spends 50% in meetings
Variance  [ (P – O ) / 6) ]^2 45% Listening 30% - Speaking
Standard Deviation  SQRT ( P – O / 6) 10% Reading 10% - Writing 5% Others
1 Sigma  68.46% Communication Project Selection Formulae
2 Sigma  95.46% Channel = ----------------------------------
3 Sigma  99.73% N (N-1)/2 PV = FV / (1 + R) ^ N
6 Sigma  99.99% N  no. of Commn. PV  Present Value, FV  Future
Channels Value
R  Rate of Interest, N  No.of Years
FV = PV ( 1 + R) ^ N
Pay Back Period = Net Interim / Average FV  Future Value
Annual Cash Flow Hurdle Rate  Discounted Cash Flow


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