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case studies

Predicting the Unpredictable with Six Sigma

Housing Association

This housing association a social enterprise, spun out from the local council, and a mix of type and condition of housing stock has been transferred from council ownership, resulting in a £14m operation.

Business Situation:

  • Need to budget the spend to refurbish the whole housing stock on a annual rota, covering approximately 800 units
  • Historically always overspent, despite trying to use control charts to predict engineering spend
  • Used “average unit cost” in the past, although housing units varied widely in size and refurbishment needs

Business Solution:

  • Split the type of engineering work done on the housing stock into 3 sections
  • Model each section, category a, b, and c, including process capabilities studies
  • Build control charts not on means and SD, but on percentiles linked to capability studies, and the appropriate non normal distribution, for each section
  • Identify and model properties/units which will liable to have a higher than expected cost, and treat separately
  • Bring all costs together for a final control chart and scorecard approach to managing engineering spend

Results:

  • Improved budgeting tool, more accurate than historical average approach
  • Better understanding of variation within the process, allowing tighter control of contractors

Monthly spend versus budget is closer than ever before

Categories: case studies, consultancy, private sector, reduce costs, six sigma

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