Risk Management (2) - The FMEA Method

Risk analysis with the FMEA method

The abbreviation FMEA stands for Failure Mode and Effects Analysis. The FMEA method is therefore much more than just a risk management method. It is a much more comprehensive reliability technique and is used, among other things, in the design and development phases of new products. In project management, this tool is mainly used in quality assurance and risk management.

An outstanding feature of this method is the consideration of the probability of detection in addition to the probability of occurrence and the importance from the customer's point of view.

The FMEA goals

The primary goal of FMEA is the timely detection and prevention of potential defects in products or processes. However, other diverse goals can be realized or pursued with the help of the FMEA method:

• Identification of process weaknesses
• Increasing the reliability and effectiveness of processes
• Identification and assessment of risks
• Optimization of adherence to delivery dates
• Optimization of economic efficiency

This list goes on and on, as the FMEA method can be used in many different areas. In this post, we will focus exclusively on the use of this technique in project risk management.

The different types of FMEA

Basically, there are three different types of FMEA.

• System FMEA: Qualitative evaluation of product designs or products, related to the requirements specified in the functional specification.
• Product FMEA: Qualitative evaluation of a product design in relation to fixed features.
• Process FMEA: Qualitative evaluation of a process, e.g. the product creation process.

The application of FMEA in project management can best be assigned to process FMEA, since we primarily consider the project process in risk analysis.

The approach

The FMEA method is primarily based on four important parameters: probability of occurrence (A), significance from the customer's point of view (B), probability of detection and risk priority number ( RPN).

To perform a risk analysis using the FMEA method, use the following steps as a guide:

1. Structural analysis

The first step is to get an overview of the individual steps of the project. The easiest way to do this is to use a Gantt chart to identify important processes, tasks and milestones.

2. Selection of the analysis elements

Next, determine which elements of the project you want to include in the FMEA. Should all elements be considered or only a specific selection (e.g., only milestones)? If the project is very extensive, it may make sense to consider only those elements that are critical to the success of the project. Record the selected elements in your FMEA overview.

3. Failure analysis

In the next step, you analyze the previously selected elements for potential errors. You enter these in your FMEA overview for the corresponding project elements.

4. Risk assessment

The risk assessment within the FMEA is based on three key figures. These key figures are determined for all potential defects. Each key figure is evaluated using a 10-point scale with points from 1 to 10. Subsequently, the key figures per defect are multiplied with each other to determine the risk priority number ("RPN") (possible value range here: 1-1000).

B: Significance of the error from the customer's point of view

The key figure B represents the consequences of the error from the customer's point of view. This can be an internal customer (e.g. change processes) or an external customer (e.g. software development project). The highest value of 10 is assigned if, for example, the completion of the project is seriously endangered or laws would be violated. On the other hand, the lowest value of 1 stands for an error that would have hardly any recognizable effects from the customer's point of view.

A: Probability of occurrence of the error

With the probability of occurrence of the error you try to estimate the probability with which the potential error will occur - regardless of possible preventive measures. Here, the highest value of 10 represents a very probable occurrence of the error, while the lowest value of 1 characterizes the occurrence as very unlikely.

E: Probability of detection

The probability of detection represents the probability with which the cause of the error will be detected. A 1 is used here if the defect is very likely to be detected during production (in product development projects) or during the course of the project. Whereas a 10 is used to indicate that the defect will not be detected because the area where the defect would occur is not normally subject to analysis. 

Below is an example of how the potential defects are evaluated using the metrics:

5. Optimization measures

After you have evaluated all errors according to the procedure described above, you can assess the priority of the errors based on the RPN.The higher the value of the RPN, the more urgently you should intervene with regard to the respective error and develop preventative measures.

Conclusion

The FMEA method is much more than just a risk analysis procedure. However, it provides a high added value especially in risk management, since it allows a very structured procedure on the basis of the RPN. This method is particularly suitable for product development and software development projects.

Download FMEA Template

 

 

 

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Read the other articles of the risk management series: 

• Risk Management in Projects (1) – Introduction
• Risk Management (3) - The Risk Catalog

 

^{(Text by: Kathrin Jungwirth, Translation by: Linh Tran)}