Reconfirm your “Assumptions” to reduce Cost of Non-Quality.

Yesterday in a project closeout meeting attended by PMs and regional Corporate team, It was highlighted that project has achieved remarkable profit margin of 20% much higher that expected 15% (33% higher). The Project team became excited and cheered. But very next slide was on lost opportunity which forced team member to think if the project was really a success. The data in subsequent slides highlighted the opportunity lost and the dollar value for each opportunity. The project could have easily made 25% overall margin in form of  VOs, saving Contingency fund and Reducing Wastage. Reflecting back on previous projects that suffered losses or struggled to make break-even, similar figures were confirmed (5-7%) that could have been saved from going into drain. It was decided to conduct root cause analysis.

So, what is the underlying cause that is reducing the margin for each project and sometimes killing it. Here are my views and ideas.

One English word that represent the root cause is “Assumptions”. You may recognize many phrases in daily routine related to Feeling & Thinking, like “I thought”, “Last time it was ok”, “we have done this many times”, “Our way of doing”, “its was not in my scope” and lot more. Assumptions allow progress but results in surprises. Sometime really big enough to make significant financial impact. Only way to make it work is to generalize the assumption to fit any size or totally eliminate it.

Two very simple tools shall be used to avoid further loss to project due to assumptions. First one is all about changing mindset – “If in doubt-ASK”. Second one is Log the Assumptions and track it. This gives an idea about changes and value the assumptions if not followed or implemented.

It is all about Finding & Connecting the Right Dots to ensure success with flying colors. Break the Assumptions.

PS: In personal life, same principle shall be applied without logging the assumptions formally. 🙂 Any personal differences can be shorted out by asking for the reasons and reconfirming the assumptions we make for other persons.