This document outlines the steps to quantify the value of a project in Deliverable 3D. It defines cost of poor quality (COPQ) and explains how to calculate savings from a project, including hard savings from expense reductions and revenue growth, and soft savings from increased capacity or avoided costs. Benefits should be documented in the project charter, presentation, and final report to complete Deliverable 3D. Quantifying value helps prioritize projects and shows expected returns from improvements.

1. Define Project Value Deliverable 3D

2. Define Module Roadmap Define 1D – Define VOC, VOB, and CTQ’s 2D – Define Project Boundaries 3D – Quantify Project Value 4D – Develop Project Mgmt. Plan Measure 5M – Document Process 6M – Prioritize List of X’s 7M – Create Data Collection Plan 8M – Validate Measurement System 9M – Establish Baseline Process Cap. Analyze 10A – Determine Critical X’s Improve 12I – Prioritized List of Solutions 13I – Pilot Best Solution Control 14C – Create Control System 15C – Finalize Project Documentation Green 11G – Identify Root Cause Relationships

7. COPQ vs. Defect Frequency Number of Defects to be Corrected

8. The Expenses We See Expediting Excess Inventory Lost Loyalty Longer Cycle Times Costs to Customer Overtime Rework Maintenance Productivity

10. Determining the Financial Implications of a Project

15. Potential Analysis: Examples Type of Improvement Reduce errors in processing Increase MW produced at Northside Unit 1 Cut product defects by 25% Benefit of that Improvement Less time spent fixing errors; able to speed up flow of work Decreased fuel costs Reduce scrap, less time needed to rework, lower inventory levels Quantified Estimate of Impact Yearly decrease in processing time * (salary & benefits) = COPQ savings Cost of next cheapest fuel source per MW * yearly MW increase = COPQ savings Cut material costs by 25%; increase capacity by 17% = annual COPQ savings