Finance Process

22 May 2006

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 Agenda
What Duration
Objectives 5 Minutes

The Role of the Finance Rep. 5 Minutes

Valuation Guidelines 5 Minutes

Classifications of Benefits 10 Minutes

Validating Results 10 Minutes

Finance Timeline 5 Minutes

Case Studies 5 Minutes

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 Objectives
Finances Contribution to a Successful Deployment
Second only to Senior Management commitment
Allows project prioritization through estimates of benefits opportunities
Provides validation of all claims relating to financial improvement
Allows administration of accountability toward the Process Excellence effort
Supports a rewards and recognition program for project teams

Finance Core Team Deliverables

Define Finances role and responsibility in supporting the Deployment
Define the project support timeline and valuation guidelines
Provide Q&A to topics supporting Lean Six Sigma financial analysis
Define rules for validation of savings and examples through Case Study
Create a universal Financial Worksheet for conducting project analysis
Utilize the power of ProjX for tracking financial benefits

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 The Role of the Finance Rep

Provide the project team support by:

Establish the forecast value of a project with Project Champion
Serve as project team consultant
Validate the forecast of a project throughout the all project phases
Track and report the financial results of a project
Principle Responsibilities:
Act as a resource to Project Champions in support of their efforts to define
and prioritize projects
Work with the Project Leaders (Project Mgr., Black Belt, Green Belt) to:
Identify financial metrics and project impact
Validate financial results
Track benefits after project complete
Not a full-time position, but a key role within each project
Anticipated to be 8-12 hours per project over 3-4 months
Finance Reps maintain current positions / reporting relationships

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 Valuation Guidelines
Measurement
Project Leader defines process metric that will be used to determine that
defects have been eliminated and documents method used to track
Finance Rep defines associated financial metric(s) and uses them to
quantify costs of defect and validate benefits from eliminating defects
Finance Rep Meeting Guidelines
Meet with Project Champion to create a high level original forecast
Meet with Project Leader as necessary to discuss project updates
Meet with Project Team, Project Champion or Project Leader as requested
Project reviews, brainstorming, control plan
Reporting and Documentation Tools
Financial Worksheet
Financial Tracker within Project Tracking Tool

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 Classification of Benefits
Each project must classify its benefits into one of the
following categories:

Hard Benefits:
Realizable and quantifiable savings that can be attributed directly to the project

Soft Benefits:
Intangible benefits that could not be measured and tracked directly to the project
Project can be successful without realizing any soft savings

Unrealized Hard Benefits:

Benefits that will require an action on the part of management to be realized.
Will remain Unrealized until appropriate action is taken
Example 1 A capital improvement will increase sales, but is deferred until a later time
Example 2 An improvement creates available capacity (labor, equipment, etc), but no
action is taken to remove the resource.

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 Validating Results
Revised
Validations
Original Initial
Including Realization
Forecast Validation
Final
Validation

Begin during scoping Review with Project Revises as many For 1st 3 months of
and complete when Leader early in project times as necessary. Realization, review
project is loaded with Project Leader
Obtain Supporting Review with Project
Obtain supporting Documentation from Leader prior to Next 9 months of
documentation from Project Leader implementation Realization, review
Project Champion, Sub with Sub-Process
Enter in Project Revisit supporting
Process Owners and Owner
Tracking Tool Documentation
SMEs
Enter in
Explain issues to Enter in Project
Enter in Project Project Tracking Tool
Project Champion and Tracking Tool
Tracking Tool
Project Leader Audit that process
Explain issues to
Explain issues to changes remain
Project Champion and
Project Champion and controlled after 18
Project Leader
Project Leader months into
Realization

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