Hanford Performance Indicator Forum Life Cycle of a Trend Hanford Performance Indicator Forum October 31, 2007 Steven S Prevette 373-9371 Fluor Hanford ESH&Q

Establishing baselines What to do following a Trend Life Cycle of a Trend Establishing baselines Detecting a Trend What to do following a Trend How to re-baseline Setting Goals

Introduction This presentation provides detailed information on Establishing baselines Detecting a Trend What to do following a Trend How to rebaseline Hanford PI Forum

Trending Cycle Take action to correct, reinforce, or stabilize 0. Gestation: Choose a Measure 4. Maturity: Data stabilizes Take action to correct, reinforce, or stabilize Establish Expectations, Goals, Routine Monitoring 1. Establish Baseline 3. Youth: Determine special cause(s) 2. Birth: A trend is detected Hanford PI Forum

Similarity to PDSA Cycle Act on large scale or abandon Plan a change or test Stable Baseline, Review Pareto, Histograms Stabilize on improved baseline PDSA from The New Economics, Deming Detect Improving Trend Study results, what did we learn Do – carry out on small scale Hanford PI Forum

Gestation Decide what to measure Develop Operational Definition http://www.hanford.gov/rl/uploadfiles/VPP_PerformanceM.pdf Develop Operational Definition Independent data, and do not cumulate Determine data source(s) Gather initial data, hopefully at least 25 data points of history Hanford PI Forum

Gathering Data Check existing reporting systems. Many organizations are awash in data, but the data have never been analyzed or put to use. There is an advantage to using existing data, as it has already been paid for, and historic data for establishing the baseline should be available. Hanford PI Forum

Choosing Reporting Intervals If a trend developed, how long could you go without needing to know it? Longer intervals imply more risk Need sufficient volume of points (25) Costs increase as reporting interval decreases What is current reporting interval? Hanford PI Forum

Creating The Control Chart Hanford PI Forum

The Baseline The Baseline on a control chart consists of the average (center) line, a three-standard deviation Upper Control Limit (UCL) and a three-standard deviation Lower Control Limit (LCL). The Baseline allows us to predict the future, and evaluate for trends. A procedure for choosing the proper form of control chart, and calculating the baseline and control limits is available at http://www.hanford.gov/rl/?page=1148&parent=1144. Hanford PI Forum

Establishing a Baseline The goal is to establish one or more baseline time intervals with no trends within each interval. The “MW Rule” helps to show if a baseline is likely to be “good”. A “good” baseline detects future trends with a minimum of false alarms. If a trend is detected, we don’t want it to be due to too few data points in the baseline, causing the baseline to have been inaccurate. Hanford PI Forum

“MW” Rule 3 changes of Direction Hanford PI Forum

Initial Strategy Use the first 25 points for a trial baseline If less than 25, use all points, assuming MW rule is met Evaluate for trends within this trial baseline NOTE: Do not change a baseline unless it is “proven guilty” by a Trend Hanford PI Forum

This is a Trend! One point outside the control limits Two out of Three points two standard deviations above/below average Four out of Five points one standard deviation above/below average Seven points in a row all above/below average Ten out of Eleven points in a row all above/below average Seven points in a row all increasing/decreasing. Hanford PI Forum

Remove any Trends from the Trial Baseline Do show all data, but change the average and control limit calculations by: Dropping data off of the beginning Dropping data off of the end Dropping individual datum point(s) and circling them Split into two or more baselines Hanford PI Forum

Initial Baseline In all cases, trends should be investigated to determine the special cause(s) A circle or a shift in the baseline is a trend Generally, short term shifts are left circled, long term shifts have a new baseline Remember – the goal is Prediction of Future Performance Hanford PI Forum

Three data points removed from the beginning of the data set, leaving a stable baseline from the fourth point onwards: Hanford PI Forum

Three data points removed from the end of the data. Hanford PI Forum

Two data points within the data have been removed, and the remaining data used to construct the baseline. Hanford PI Forum

Both baselines satisfy the MW Rule The data have been split into two baselines. A permanent decrease in the level appears to have occurred. Both baselines satisfy the MW Rule Hanford PI Forum

Real Example Hanford PI Forum

Standard Deviation Traditionally, the average range has been used to calculate standard deviation I have found that the statistical standard deviation works well and is easier to calculate in Excel Watch out for outliers inflating the standard deviation, however Hanford PI Forum

Outlier Example Hanford PI Forum

Low Rate Trending If zeroes are causing problems: Leave runs of 7 or more zeroes out (they will always be below average) Lengthen the data interval (i.e. from monthly to quarterly) Try “Low Rate Trending” (http://www.hanford.gov/rl/uploadfiles/VPP_TrendLow-Rate.pdf) Hanford PI Forum

Low Rate Trending Description Order the data by date of occurrence Determine the number of days between events Divide the number of days between events into 365 Plot the resulting rate per year in the date sequence on an x-chart control chart Hanford PI Forum

Low Rate Example Ref: Understanding Variation The Key to Managing Chaos, Wheeler Hanford PI Forum

Establish Expectations “Stable” performance is not necessarily good Management needs to determine if the current stable baseline is “acceptable” or “unacceptable” May use benchmarks, customer opinion, risk analysis, or management philosophy to make this decision Hanford PI Forum

Monitoring Update charts on the required time interval Check for trends against the trending rules Circle any trends, inform owning management and look for special cause(s) Do not shift a baseline unless there is a trend (baseline proven guilty) The following slides show an example trend’s life cycle Hanford PI Forum

Initial, Stable Baseline Hanford PI Forum

Birth of the Trend Hanford PI Forum

Initial Actions Report the trend Search for Special Causes Compare Pareto chart of detailed data during the trend to previous stable time interval Consider Corrective Action Management necessary steps Hanford PI Forum

Maturity Hanford PI Forum

New Baseline Established Hanford PI Forum

Goal Setting Remember the hazards of numerical targets and the negative behaviors that result (Red Bead Experiment) We can use the SPC charts to establish directional goals If we must, we can establish numerical criteria based upon SPC Hanford PI Forum

Directional Goal Setting If there is currently an improving trend, the goal is to continue the improvement as long as feasible. If there is currently an adverse trend, then we want to end the trend and stabilize performance Consider Corrective Action Management, Lessons Learned communications Hanford PI Forum

Directional Goal Setting If the chart is currently stable, the following question must be answered: Is Performance Stable at an Acceptable Level? Benchmarks, customer interviews, surveys, and internal improvement philosophy can help to answer this question Consider both the baseline average, and the control limits Hanford PI Forum

Maintain Current Performance If current performance is acceptable, the goal is: Maintain current performance without any adverse statistically significant trends Hanford PI Forum

Generate a statistically significant improving trend Improvement is Needed If current performance is NOT acceptable, the goal is: Generate a statistically significant improving trend Hanford PI Forum

But I must have a number! If you must have a numerical target, say for the next fiscal year, then try this approach Look at the baseline average and standard deviation of the monthly chart The standard deviation for 12 months is the monthly standard deviation divided by the square root of 12 Set the fiscal year goal as the baseline average, plus or minus 3 times the 12 month standard deviation Hanford PI Forum

Example You are stable at an average of 10 per month with a standard deviation of 3 The annual standard deviation is 3 divided by the square root of 12 = 0.866 3 x 0.866 = 2.60 I expect to finish the year with a monthly average between 12.60 and 7.40, or between 151 and 89 for the year. Hanford PI Forum

Improvement Example If you must improve, chose the boundary in the improving direction. If you must raise the number, the target is more than 151 for the year If you must decrease the number, the target is less than 89 for the year These targets represent significant change Hanford PI Forum

Conclusion We will continue to practice with real data and charts in future PI Forums These strategies fit well with the Control Chart Dashboard process Proper trending and actions taken will lead to significantly improved performance SPC can be tied to goal setting Hanford PI Forum