How to unlock the way to an effective cost reduction project pipeline
- Tim Coles
- Jul 20, 2023
- 7 min read
Updated: Feb 26
We need to cut costs further. How can we do it? Where are the opportunities? How can we find innovative ways to save more money?
Over the years, I have worked in many capacities, primarily involving change and transformation. Whilst I realize that there are discretely different skills in project management, programme management, portfolio management, change management and continuous improvement, I believe that they are interchangeable skills and they complement each other within my own skillset, in whatever I am delivering.
One of the skills that I have developed, is the ability to facilitate the development of an ongoing pipeline of improvement projects, particularly for cost reduction. I have adopted a number of tools into an approach that can be deployed to robustly identify a pipeline of cost reduction projects, engaging the input of key senior stakeholders within a business.
The approach that I have developed, uses structured thinking including a technique called Edward de Bono’s Six Thinking Hats. This tool is extremely effective, especially when I (as the facilitator) need to rein in the team to focus on thinking of a particular aspect at a time. More on this later in this article.
To begin the project pipeline development process, I engage with senior stakeholders to confirm the goal and objectives. Once we have confirmed these things, we then determine who needs to be “in the room” to contribute to project idea generation.
The combination and level / grade of people will vary depending on the industry / sector, however, the key thing to remember is that there should be a cross section of senior people present, who have both deep knowledge of their area and sufficient impact and influence to ensure that things can get done. These people will effectively become the Business Leads for each of the projects.
When the team have been agreed and they have all been briefed on their role, I will then plan at least two separate full-day workshops, preferably in off-site venues such as country hotels, which are free from interruptions and are conducive environments to thinking, so a change from the norm. I always try to ensure that the venues have large meeting rooms, with plenty of wall space for flip chart paper to be displayed.
I deliberately plan the workshops at least a month apart, to enable minimal disruption and for allow time for the team to work on ideas between the sessions.
I then plan the day with input from the team. I always develop an outline agenda for each day, as follows:
Day 1: Idea Generation Workshop
Expected outputs:
Documented details of the inputs to the pipeline / portfolio
Prioritized list of potential projects with impact / difficulty assessment
Draft / outline Project Initiation Documents (PID’s) for each project with project name, goal, objectives, benefits, costs, risks / impacts, proposed Business Lead & project team
Clear mutual understanding of individual expectations, roles and responsibilities
Agenda
Introduction & purpose
Goal & objectives
Expectations (capture individual expectations for the event from each of the team)
Strategy & Finance update
Break
Breakout sessions (2 groups):
What do we know about the year(s) ahead (internal and external factors)?
What have we learned from the last year (what went well and less well)?
What are the key changes from last year to the year(s) ahead?
Which existing projects will still be being delivered in the year(s) ahead?
Which other new projects have already been planned for the year ahead?
Lunch
Summary review of above notes (full group)
De Bono’s Six Thinking Hats overview
Idea generation – Six Thinking Hats
Blue Hat (the process for thinking)
White Hat (review the data)
Green Hat (creativity - new project ideas)
Yellow Hat (benefits)
Black Hat (risks / impacts)
Red Hat (feelings / emotions)
Break
Summarize project ideas
Impact difficulty exercise (prioritize project ideas)
Draft / outline for Project Initiation Documents (capture basic details for goal, objectives, benefits, costs, risks / impacts, Business Lead & project team
Next steps
Review of expectations / close
Idea Generation: De Bono’s Six Thinking Hats
Edward de Bono's Six Thinking Hats is a simple, extremely effective parallel thinking process that helps people be more productive, focused, and mindfully involved. It is a powerful tool set, which once learned, can be applied immediately.
This is a fantastic tool, however, I will not go into a huge amount of detail on this because that would not be fair to do so, as the credit for it sits with Edward de Bono and the people that are responsible for cascading this excellent method of focusing peoples’ thinking. There’s lots of information on this both online using the above link and, of course, in books published by Edward de Bono.
I was trained on using the tool by completing a one-day workshop with a company called Indigo. The workshop was facilitated the late, hugely talented, engaging and fantastic Chuck Dymer, who during his career, spent many years of working with this tool. It was only in the writing of this article, that I discovered that Chuck had sadly passed away.
Edward de Bono’s Six Thinking Hats
There are many different ways in which you can use the Six Thinking Hats to assist structured thinking, including using them in different orders, repeating them and using only some of them.
The way in which I use Six Thinking Hats for cost reduction project pipeline development is as follows:
The Blue Hat is used for the process of thinking, I explain this to the team and gave them an overview of the Six Thinking Hats. I explain that we need to focus on one particular hat at a time, so we must think only in this way. So, when using the Blue Hat, we are to talk about how we will need to think.
We then use the White Hat, which is for information. We therefore review the information collated in the morning, about what we know from the last year and the potential events and project ideas for the year ahead.
We then switch to the Green Hat, which is used for creativity, possibilities and alternatives. We therefore only focus on what we can potentially do to reduce costs and deliver other improvements – project ideas! I ensure that the team know that this part of the session is purely for idea generation, so there is to be no criticism of the ideas of each team member.
Once we have a long list of ideas, we then use the Yellow Hat to think of the benefits associated with each project idea.
Once we have detailed the benefits, we move onto the Black Hat to focus on the risks and drawbacks of each project idea.
Once we have completed the list of project ideas, benefits, risks and drawbacks, we then summarize each of the projects. We then move onto the Red Hat to run through each line of the project ideas and ask for each of the team to express their feelings / emotions towards each one? This is our “gut feel”, either positive or negative towards the viability each idea.
When we have completed the assessment using De Bono’s Six Thinking Hats, we then move onto an impact / difficulty matrix, as below:
Impact Difficulty Matrix
Each project idea is placed onto the above chart based on how much impact or benefit it could have and how difficult it could be to deliver.
The projects are then listed in priority order with the highest impact but least difficult:
Ideas in quadrant 1 (top-left) are chosen first because they have high impact but lower difficulty.
Ideas from quadrant 2 (bottom-left) are then selected because whilst they have lower impact, they are easier to complete, so seen as quick wins.
Ideas from quadrant 3 (top-right) are then selected because these are potentially projects that could deliver high benefit but will need higher investment, resources and time.
Ideas from quadrant 4 (bottom-right) are the last priority and some of them will not potentially be seen as a viable project, as the benefit from doing them is much lower and they would potentially require much resource, time and money to complete them.
Day 2: Project Initiation Documents & Programme Plan
Expected outputs:
Draft Project Initiation Documents (PID’s) for each project with detail on each area of the project (all fields of PID populated)
Draft programme plan showing aligned milestones for all projects
Draft list of project / portfolio risks
Clear mutual understanding of individual expectations, roles and responsibilities
Agenda
Introduction / purpose
Goal & objectives
Expectations
Strategy & finance update
Breakout sessions (2 groups) to further populate the Project Initiation Documents (PID’s)
Break
Breakout sessions (2 groups rotate to further populate the PID’s
Lunch
Summary review of PID's
Programme Plan (map out existing project milestones, key events & new project milestones)
Break
Risks
Next steps
Review of expectations / close
On the second day of the workshops, the key focus is to further shape the projects, first populating far more detail into the project initiation documents for fields such as goal, objectives, deliverables, milestones, scope, exclusions from scope, assumptions, dependencies, interfaces, risks, issues, benefits, costs, project team and steering group organization, meeting cadence and reporting.
There is also a key focus on ensuring that the programme plan is aligned. This is done as a group exercise, ensuring that the right priorities are applied and resource conflicts resolved, especially with existing projects and other strategic projects and programmes.
Once the 2 days of workshops are complete and the outputs are circulated, the next steps will be to:
Work with the Business Leads on further developing the PID’s
Run project definition workshops for each of the new projects, where the project team and Business Lead will meet to finalize the PID, start developing the project plan and other project controls such as a RAID Log (for risks, issues, assumptions, actions and dependencies).
Deliver the portfolio of new cost reduction projects, alongside other existing and strategic projects and programmes.
You have now learned how to unlock the way to an effective cost reduction project pipeline.
I hope that this has been an interesting and useful read. Please feel free to contact me to see how I can help you approach change.
