How to Write a Project Charter

In a previous article, we stated that DMAIC is a structured, rigorous methodology that can be applied repeatedly to ANY process to achieve Six Sigma. We also stated that DMAIC is a methodology that covers the 5 phases of a project.

1. Define
2. Measure
3. Analyze
4. Improve
5. Control

Given that the DMAIC methodology is project-based, we must take the necessary steps to define and initiate a project; hence the need for a project charter.

The purpose of a project charter is to provide vital information about a project in a quick, easy-to-understand manner. Project charters are used to get approval and "buy-in" for projects and initiatives. They are also useful in declaring specific characteristics of a project:

• Business Case
• Problem
• Project Objective
• Project Scope
• Project Team
• Decision authorities
• Project Leader
• Success Measures

In professional Six Sigma practice, the project charter functions as the formal initiation document for DMAIC work. It is used to align stakeholders, define success criteria, and establish the baseline context that project reviews and tollgates reference throughout execution.

 

Project Charter: Key Elements

 

Title

Projects should have a name, title, or some reference that identifies the project. Branding can be an important factor in a project's success, so be sure your project has a reference name or title.

Leader

All projects need a designated leader or someone responsible for their execution and success. You may hear references to RACI throughout your Six Sigma journey. RACI stands for Responsible, Accountable, Consulted, and Informed, and identifies what people play those roles in a project. Every project must have declared leaders indicating who's responsible and who’s accountable.

Business Case

A Business Case is the quantifiable reason why the project is important. Business Cases help shed light on problems. They explain why a business should care. Business Cases must be quantified and stated succinctly. COPQ is a key method for quantifying any business case.

Problem Statement & Objective

A properly written problem statement has an objective statement woven into it. There should be no question about the project's current state or goal. A gap should be declared (the gap is the difference between the present state and the goal state). The project objective should be to close all or part of the gap. Valuation or COPQ is the monetary value assigned to the gap. Lastly, a well-written problem statement includes an expected timeline for project completion.

·       Problem Statement Examples

• Process defect rates are currently 17%, with a goal of 2%. This represents an unwarranted defect rate of 15%, with a COPQ of $7.4 million. The goal of this project is to reduce this gap by 50% before Nov 2010, putting process defect rates at 9.5% and saving $3.7MM.
• Process cycle time has averaged 64 minutes since Q1 2009. However, production requirements put the cycle time goals at 48 min. This 16 min gap is estimated to cost the business $296,000. The goal of this project is to reduce cycle time by 16 min. by the end of the 4th quarter of 2010, and capture all $296,000 cost savings.

Primary & Secondary Metrics

All projects must have a measure of success. There is no reason for a project with an expected outcome. Most preferably, a measurable one. Primary and secondary metrics are mandatory for any Six Sigma project. Metrics clarify the purpose of the work; they establish the baseline and how the initiative will be judged as it progresses.

Other Elements of a Good Project Charters

• Scope Statement – defined by high level process map
• Stakeholders Identified – who’s affected by the project
• Approval Authorities Identified – who makes the final call
• Review Committees Defined – who’s on the review team
• Risks & Dependencies Highlighted – identify risks & critical path items
• Project Team Declared – declare team members
• Project Timeline Estimated – set high-level timeline expectations