CTQC Background Information

Cost Data Integrity Project

Some basic definitions:

Critical to Quality (CTQ) or Critical to Quality Characteristics (CTQC): Specific factors or attributes that are associated with
your products, processes, and services that customers consider extremely important. This is often identified by listening to
your customers through surveys, interviews, complaints, and other ways for fully understanding the requirements of your
customers. Six Sigma professionals refer to this as Voice of the Customer or VOC. Once you have captured VOC, you can
then translate this information into CTQ's.

Translation of CTQ to Operational Definitions:

This project did not rely heavily on "Voice of the Customer" through surveys, focus groups, and other techniques
since the customer audience (project personnel) did not provide much insights into the sources of the problems.
Therefore, it was considered necessary to create a CTQ Diagram that drilled down to the CTQ related sources. A
total of fourteen sources were identified as listed on the next tab.

Once each CTQ was identified per the CTQ Diagram, operational definitions were established to help indicate what
is acceptable performance. Operating definitions (acceptable performance) has been expressed in terms of three
dimensions:

1. Performance Standard - Set a threshold or benchmark for measuring if performance is acceptable or not.
2. Measurement Test - Describe a procedure or task that can be performed to determine if the actual
transactional data is actually meeting the Performance Standard.
3. Measurement Results - What is the output of the measurement test?

Once you have completed the CTQ Diagram, define the operational definitions for each CTQ. You may want to focus on the major CTQ's as opposed to all.
< - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Operational Definition - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - >
No CTQ per Diagram
1 Timely Base Rates
2 Accurate Base Rates
3 Timely Fringe Benefits Rates
4 Accurate Fringe Benefits Rates
5 Manager Approval of Labor Hours
6 Correct Coding of Labor Hours
7 Completeness of Labor Hours
8 Officer Approval of Vendor Invoices
9 Correct Coding of Vendor Invoices
10 Manager Approval of Employee Expenses
11 Correct Coding of Employee Expenses
12 Completeness of Employee Expenses
13 Manager Approval of Credit Card Expenses
14 Correct Coding of Credit Card Expenses
Cost Data Integrity Project
Critical to Quality Characteristics (CTQC)
Cost Data Integrity Project
Continuous
Performance Standard Measurement Test Measurement Results or Discrete Preliminary Testing Results
All System Administrators confirm that updates Refer to Sample Procedures and Attribute
Updated Listing provided every 6 months received after 6 months Measurement System Analysis Discrete Working
Actual Base Rate of Pay for Employee is Comparison of sample data between source Refer to Sample Procedures and Attribute
within 1% accurate of the source system system and Project Management System Measurement System Analysis Discrete UTD
All System Administrators confirm that updates Refer to Sample Procedures and Attribute
Updated Listing provided every 6 months received after 6 months Measurement System Analysis Discrete Working
Actual Fringe Benefits Rate of Pay is within Comparison of sample data between source Refer to Sample Procedures and Attribute
2% accurate of the source system system and Project Management System Measurement System Analysis Discrete Broken
All weekly timesheets approved - 99% Comparison of sample timesheets at selected cut- Refer to Sample Procedures and Attribute
approval processing rate off dates within Project Management System Measurement System Analysis Continuous Broken
All weekly timesheets coded and entered Analyze sample timesheets for accuracy within Refer to Sample Procedures and Attribute
correctly - 99% accuracy rate the Project Management System Measurement System Analysis Continuous Broken
All weekly hours have been accounted for and Analyze sample timesheets for accuracy within Refer to Sample Procedures and Attribute
entered - 99% accuracy rate the Project Management System Measurement System Analysis Continuous Broken
All monthly vendor invoices have been Analyze sample vendor invoices and test for Refer to Sample Procedures and Attribute
approved - 95% approval rate approval in processing Measurement System Analysis Continuous Broken
All monthly vendor invoices have been coded Analyze sample vendor invoices and compare to Refer to Sample Procedures and Attribute
and entered correctly - 99% accuracy rate expense entries in Project Management System Measurement System Analysis Continuous Broken
All monthly employee expense statements Analyze sample expense statements and test for Do Not Measure - not material to costs per
approved - 95% approval rate approval in processing Pareto Continuous
All monthly employee expense statements
coded and entered correctly - 99% accuracy Analyze sample expense statements and test Do Not Measure - not material to costs per
rate accuracy in the Project Management System Pareto Continuous
All monthly employee expense statements Analyze sample expense statements and test Do Not Measure - not material to costs per
accounted for - 99% accuracy rate accuracy in the Project Management System Pareto Continuous
All procurement credit card purchases Analyze sample credit card purchases and test for Do Not Measure - not material to costs per
approved and authorized - 99% approval rate approval in processing Pareto Continuous
All procurement credit card purchases coded Analyze sample credit card purchases and test for Do Not Measure - not material to costs per
and entered correctly - 99% accuracy rate accuracy in the Project Management System Pareto Continuous
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Preliminary Testing and Reviews for each CTQ listed above:
1. Compare the Financial Reporting System Cost Runs for a sample of IT projects and compare these to the Expense Print Outs
from the Project Management System. Determine the extent to which vendor invoices, employee expenses, and credit card payments
are not entered correctly into the Project Management System.

2. Compare the active personnel assigned to a sample of projects and determine if the weekly timesheets are entered and approved.

3. Contact the System Administrators over the Project Management System and determine how often actual labor rates get updated.

4. Contact the System Administrators over the Project Management System and determine how often actual fringe benefits rates get updated.

Based on the four tests above, one of three grades was assigned to the CTQ:

Working - The process related to CTQ appears to meet the performance standard defined.
Broken - The process related to the CTQ appears to be broken and needs improvement.
U T D - Unable to Determine; need to sample and test the population data.

This preliminary review helped determine the scope and downstream work required for this project.

Cost Data Integrity Project 3