Special PresentationSpecial Presentation

Six Sigma Deployment Six Sigma Deployment in the EPC Businessin the EPC Business

CII Annual Conference Orlando, Florida July 29-31, 2003CII Annual Conference Orlando, Florida July 29-31, 2003

Six Sigma Deployment Six Sigma Deployment in the EPC Businessin the EPC Business

Special PresentationSpecial Presentation

CII Annual Conference Orlando, Florida July 29-31, 2003CII Annual Conference Orlando, Florida July 29-31, 2003

Six Sigma uses a rigorous set of tools and Six Sigma uses a rigorous set of tools and

methodologies designed with one purpose in mind — methodologies designed with one purpose in mind —

to produce a dramatic improvement in work quality, to produce a dramatic improvement in work quality,

profitability, customer and employee satisfaction, and profitability, customer and employee satisfaction, and

leadership of business enterprises. leadership of business enterprises. 

““Six Sigma is the new way of lifeSix Sigma is the new way of life

for doing business in our company.”for doing business in our company.”

Adrian ZaccariaAdrian ZaccariaPresident & Chief Operating Officer President & Chief Operating Officer

What is Six Sigma?What is Six Sigma?

Why Six Sigma?Why Six Sigma?

Root cause analysisRoot cause analysis

Ineffective lessons learned programIneffective lessons learned program

Talent shortage Talent shortage

Extensive inspection and reworkExtensive inspection and rework

Positive feedback from GE modelPositive feedback from GE model

Relentless Search for Defects, Rework, and WasteRelentless Search for Defects, Rework, and Waste

Lost OpportunityLost Opportunity

Idle timeIdle timeReworkRework

InspectionInspectionOvertimeOvertime

CostsCosts

Near-miss safety incidentsNear-miss safety incidents

Missed commitmentsMissed commitments

Long cycle timesLong cycle times

Expediting costsExpediting costsInaccurate reportsInaccurate reports

Frustration and poor moraleFrustration and poor morale

Redundant processesRedundant processes

Cost of working capitalCost of working capital

Excessive planningExcessive planning

Measuring Performance Using DataMeasuring Performance Using Data

Could Six Sigma Work in Bechtel?Could Six Sigma Work in Bechtel?

19851985--9292 19931993--9494 19941994--9696 19961996--9797 1997-991997-99 2000 …2000 …

Motorola Motorola

Texas Texas InstrumentsInstruments

ABBABB Allied Signal Allied Signal

General General Electric Electric

HoneywellHoneywell

3M 3M

Bombardier Bombardier

DowDow

Nokia Mobile Nokia Mobile Phones Phones

USPSUSPS

Avery Avery Dennison Dennison

Crane Crane

Lockheed Lockheed MartinMartin

PraxairPraxair

Polaroid Polaroid CorporationCorporation

Shimano Shimano

SonySony

AMEXAMEX

Air ProductsAir Products& Chemicals& Chemicals

CelaneseCelanese

Citigroup Citigroup

DuPont DuPont

Ford Ford

Home Depot Home Depot

Johnson ControlsJohnson Controls

Shell Shell

Wal-MartWal-Mart

Bechtel’s Improvement FrameworkBechtel’s Improvement Framework

Six SigmaSix Sigma Performance-Performance-Based LeadershipBased Leadership

(PBL)(PBL)

A Project ExampleA Project ExampleTransport ProductivityTransport Productivity PIP Team:PIP Team: Channel Tunnel Rail Link (CTRL) project, UK, Channel Tunnel Rail Link (CTRL) project, UK,

CivilCivil

Objective:Objective: Increase spoils transport productivity by 15%Increase spoils transport productivity by 15%

Results:Results: Actual increase in productivity of 100% by Actual increase in productivity of 100% by shifting focus from total quantity of earth moved shifting focus from total quantity of earth moved per day to quantity moved per truck per day per day to quantity moved per truck per day

Improvements:Improvements: Installed additional haul roads; Installed additional haul roads; Segregated other haul routes to avoid conflict Segregated other haul routes to avoid conflict between dump trucks and other site traffic; between dump trucks and other site traffic; Introduced new procedure of removing trucks Introduced new procedure of removing trucks from worksite; from worksite; Introduced new primary metric of productivity Introduced new primary metric of productivity rather than percent progressrather than percent progress

Strategic Plan for DeploymentStrategic Plan for DeploymentY = Y = ff (x) (x)

XX22 = Focus on a = Focus on a pipeline of ‘A’ pipeline of ‘A’

PIPs*PIPs*

XX11 = Perform as a = Perform as a seamless team seamless team

XX33 = = Institutionalize Institutionalize improvement improvement

benefitsbenefits

XX44 = Be self- = Be self- sufficientsufficient

Y = Y = SustainedSustained

‘A’ ‘A’ ResultsResults

* PIP = process improvement project* PIP = process improvement project

Core PrinciplesCore Principles

Customer focusedCustomer focused

Prioritize according to targeted impactsPrioritize according to targeted impacts

Build on knowledge and experience of Build on knowledge and experience of resourcesresources

Critical Success Factors at BechtelCritical Success Factors at Bechtel

Deployment managed like a projectDeployment managed like a project

Use of Performance-Based LeadershipUse of Performance-Based Leadership

Focus on projects Focus on projects

Dedicated resourcesDedicated resources

Strong executive supportStrong executive support

Six Sigma Roles Six Sigma Roles

Black BeltBlack Belt Team Member

Yellow Belt (process owner)

StakeholderStakeholder

ChampionChampion

How Bechtel’s Deployment Is OrganizedHow Bechtel’s Deployment Is Organized

Master Black Belt Deployment Coordinator

Operations ManagerDeployment Champion

President of Business LineDeployment Sponsor

Deputy COOExecutive Sponsor

Functional/Project Managers

Champions

Functional/Project Managers

Champions

Process OwnersYellow Belts

Process OwnersYellow Belts

Black BeltsBlack BeltsAll EmployeesTeam Members

All EmployeesTeam Members

OtherManagers

Stakeholders

OtherManagers

Stakeholders

Yellow Belt

Stake-holders

Champion

Black Belt

Team Members

Rebar OptimizationRebar OptimizationPIP Team:PIP Team: Croatian Motorway Project,Croatian Motorway Project, CivilCivil

Objective:Objective: To improve the labor efficiency for installing To improve the labor efficiency for installing rebar at direct hire structure sites from 38 hours rebar at direct hire structure sites from 38 hours per tonne to 25 hours per tonneper tonne to 25 hours per tonne

Results:Results: Improved efficiency resulted in 15% reduced Improved efficiency resulted in 15% reduced costs over an eight-month periodcosts over an eight-month period

Improvements:Improvements: More transparent reporting process; More transparent reporting process; Structural engineers accountable for own Structural engineers accountable for own structures; structures; Maintaining rebar crew consistency; Maintaining rebar crew consistency; Prevent downtime through increased rebar stock Prevent downtime through increased rebar stock at sites, trained super crane operators, working at sites, trained super crane operators, working multi-sitesmulti-sites

Another Success StoryAnother Success StoryAnother Success StoryAnother Success Story

Business CultureBusiness Culture

Think Process … Ask for DataThink Process … Ask for Data

Managers focused on data – variation, not averagesManagers focused on data – variation, not averages

Project teams focused on process – inputs and Project teams focused on process – inputs and customerscustomers

Functional organizations (Engineering and Functional organizations (Engineering and Construction) using data to validate best practices, Construction) using data to validate best practices, asking for business casesasking for business cases

Relentless Focus on Self SufficiencyRelentless Focus on Self Sufficiency

““The single most important The single most important decision that I’ve participated decision that I’ve participated in, in the last 10 years…”in, in the last 10 years…”

Riley P. BechtelRiley P. BechtelChairman & Chief Executive Officer Chairman & Chief Executive Officer

Leadership CommitmentLeadership Commitment

Six Sigma Deployment Six Sigma Deployment in the EPC Businessin the EPC Business

Special PresentationSpecial Presentation

CII Annual Conference Orlando, Florida July 29-31, 2003CII Annual Conference Orlando, Florida July 29-31, 2003