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Risk Management and Process Failure Mode and Effects Analysis

2015 PSU PM conference

Ed Lu

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PSU PM Conference 2015

AbstractTo minimize a project failure probability a project manager must have a process to manage project risks. This process is normally developed in the manager’s head depending on his or her experience in the project. This proposal is to present a formalized risk management process that offers a tool to improve risk management. The result of this improvement is just like having an experienced project manager on the team. FMEA, Failure Mode and Effects Analysis, has been widely used in engineering designs and manufacturing processes. FMEA helps to identify potential failure modes and the consequences of those failures, and formulate improvement solutions. The same principle is applicable in project management. As we all know understanding and minimizing the project risks is one of the key responsibilities for a project manager. One must know how to manage projects by managing their risks. Therefore, this formalized approach for project risk abatement will offer a useful tool during the entire life of the project.

Risk - Uncertainty

Risk /Uncertainty

Schedule

QualityScope

Budget Resources

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Experience BuildingA Learning Process by Traditional Thinking -

Not Exactly?

Mistakes / Risks

Tim

e

Less Mistakes / Risks

More Mistakes / Risks

Why Risk Management?

Project Reality

Risk Management

• Project Failures – Time/Schedule, Resources/Cost, Quality/Scope-failed to deliver required results.

• Mismanagement of Unplanned Events - Major reason for project failures

• Risk Management - deals with uncertainty• Mitigate Risks - do not let them become issues for the Project• Communication Channels – Design an Early Warning System

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Business • Cost Increase, Changing Market/Regulatory Environment, Business Commitment

Planning• Resource Availability, Project/Process Complexity, Development Time, Management

Experience

Organizational• Cross-Functional Involvement, Process Ownership, Multiple Locations for

Implementation, Process Change Issues

Technical• Technology Experience, Design Complexity, Scope Changes, Knowledge of Business

Processes, Quality Methods Skills, Experience and Invention to Schedule.

External• Vendor/Contractor Experience and Support, Multiple Vendors/ Contractors,

Dependence on Vendors, Recruitment Issues

Areas of RiskRisk Management

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Risk - The Impact of a Negative Event Coupled With The Probability of Occurrence

Risk Management - Specific Actions Identified and Implementedto Reduce or Eliminate Risk

How Is Risk Managed?� Basic Process:

Identify Analyze Plan Execute Control

� Tools: PFMEA or others

� Communication Channels to Support Risk Management

Risk Management

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FMEA is a formal analysis tool to evaluate the Risk for a design, DFMEA or a process, PFMEA. In other words we want to Manage Projects by Managing their Risks.

Three basic elements of Risk -

• The effects of the failure mode

• Probability of occurrence that causes the failure m ode

• The detection of the cause of the failure mode befo re effects of the failure are felt - An Early Warning System with our Communication Channels

Failure Mode and Effects Analysis (FMEA)

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Risk Elements

Severity, Probability, Detectability

Rating

• Subjectively, we assign a score to each element but use it objectively.

• The greater the problem, the higher the score.

• Each failure mode has three different scores.

• Multiply three scores together and produce an “aggre gated score”.

• Compare the aggregated scores

• Address the worst failure modes

Failure Mode and Effects Analysis (FMEA)

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Process Failure Mode and Effects Analysis (PFMEA)

1. List theprocess steps

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Process Failure Mode and Effects Analysis (PFMEA)

2. Identify Failure Modes

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Process Failure Mode and Effects Analysis (PFMEA)

3. Describe potential end effect(s) of each failure mode.

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Process Failure Mode and Effects Analysis (PFMEA)

4. Rate the Severity of the failure mode.

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Example of Severity Ratings (PFMEA)

Effect Rank CriteriaMinor 2 Unreasonable to expect that the minor nature of this failure will cause any noticeable

effect – the project team does not notice the failure

Low 4 Due to the nature of this failure, the project team experiences only slight annoyance ..

Moderate 6 Failure causes project team’s dissatisfaction such as rework for poor quality

High 8 High degree of project team’s dissatisfaction due to the nature of the failure, such as missing project milestone date

Very High 10 Failure affects safety/death or incompliance to government regulations .

Use project team experience to define the Severity

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Process Failure Mode and Effects Analysis (PFMEA)

5. Identify the Potential Cause(s) of the failure mode.

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Process Failure Mode and Effects Analysis (PFMEA)

6. Rate the likelihood of the occurences.

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Example of Occurrence Ratings (PFMEA)

Occurrence CriteriaRemote Failure is unlikely.

Low Relatively few failures

Moderate Occasional failures

High Repeated failures

Very High Failure is almost inevitable

Failure Prob. 0.01%>

0.1%

1%

10%

>50%failure

Rank2

4

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8

10

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Process Failure Mode and Effects Analysis (PFMEA)

7. The current process to Detect or Prevent the failure mode. Any early warning system in place?

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Process Failure Mode and Effects Analysis (PFMEA)

8. How likely that we are able to detect the failure mode?

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Example of Detection Ratings (PFMEA)

Detection Rank CriteriaVery High 2 Almost certain to detect the failure mode.

Process automatically prevents further processing.

High 4 Have a good chance of detecting failure mode. Process has a good chance to automatically detect failure.

Moderate 6 May detect the existence of a failure mode.

Low 8 Have a poor chance of detecting the existence of failure mode.

None 10 Can not detect the existence of a failure mode. No known process available to detect failure mode.

Detect or Eliminate the failure mode -

• Avoid or Eliminate Failure Cause(s)• Identify or Detect Failure Earlier• Reduce Impacts/Consequences of Failure

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Process Failure Mode and Effects Analysis (PFMEA)

9. Multiply three ratings to calculate Risk PriorityNumber. (RPN)

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Example of RPN Criteria1. Severity = 8 2. RPN > 100

depending on the project

• Improvement in the process -reduce RPN or Severity to an acceptable level

RPN = Severity x Occurrence x Detection

Calculating the Risk Priority Number (RPN)

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Process Failure Mode and Effects Analysis (PFMEA)

Goal: Reduce the overall project risk

10. Use the RPN to identify failure modes for improvement.

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PFMEA Example

Drink water from a water bottle

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STEP 1 drink water from a water bottle

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1

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STEP 1 …how to drink from a water bottle

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STEP 2

PFMEA Analysis WorksheetTeam :

Process Step Potential Failure Mode Potential Effects of Failure SEV

Potential Mechanism of Failure OCCUR

Current Detection/ Preventive Approaches DETECT RPN Recommended Actions

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STEP 3

PFMEA Analysis WorksheetTeam : A1

Process Step Potential Failure Mode Potential Effects of Failure SEV Potential Mechanism of

Failure OCCUR Current Detection/

Preventive Approaches

Pick up Bottle Cannot pick up bottle Cannot drink waterBottle too slick from Condensation Refrigeration

Unscrew capCannot remove cap from bottle Cannot drink water

Cap on bottle too tightly with damaged threads

Operator error during previous use

Lift bottle to your mouthOpen mouthRaise base of bottle to release waterDrink water

Close mouthLower base of bottleLower bottle from your mouth

Screw on capCap does not stay attached to bottle Cannot close bottle

Cap on bottle too lose with damaged threads

Operator error during previous use

Set bottle down

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STEP 4

PFMEA Analysis WorksheetTeam : A1

Process Step Potential Failure Mode Potential Effects of Failure SEV Potential Mechanism of

Failure OCCUR Current Detection/

Preventive Approaches DETECT RPN

Pick up Bottle Cannot pick up bottle Cannot drink water 6Bottle too slick from Condensation 2 Refrigeration 4 48

Unscrew capCannot remove cap from bottle Cannot drink water 8

Cap on bottle too tightly with damaged threads 4

Operator error during previous use 6 192

Lift bottle to your mouthOpen mouthRaise base of bottle to release waterDrink water

Close mouthLower base of bottleLower bottle from your mouth

Screw on capCap does not stay attached to bottle Cannot close bottle 8

Cap on bottle too lose with damaged threads 4

Operator error during previous use 6 192

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STEP 5

PFMEA Analysis WorksheetTeam : A1

Process StepPotential Failure

Mode Potential Effects of

Failure SEV Potential Mechanism of

Failure OCCUR Current Detection/

Preventive ApproachesDETE

CT RPN Recommended Actions

Pick up Bottle Cannot pick up bottle Cannot drink water 6Bottle too slick from Condensation 2 Refrigeration 4 48 Wipe bottle before use

Unscrew capCannot remove cap from bottle Cannot drink water 8

Cap on bottle too tightly with damaged threads 4

Operator error during previous use 6 192

Ensure screw on cap correctly after each use

Lift bottle to your mouthOpen mouthRaise base of bottle to release waterDrink water

Close mouthLower base of bottleLower bottle from your mouth

Screw on capCap does not stay attached to bottle Cannot close bottle 8

Cap on bottle too lose with damaged threads 4

Operator error during previous use 6 192

Ensure screw on cap correctly after each use

Set bottle down