Overview of Six Sigma Project Charter
‘Project Charter’ is the basic step in Six Sigma methodology. It gives an overview of the project in a convenient format, which is easy to understand, review and approve for the stakeholders. Project Charter can be defined as an official document containing information on all the aspects of the project, including basic details to comprehensive information. A well-structured project charter addresses the 5W’s of the project:
- ‘What’ is the objective of the project?
- ‘Who’ will take up the project?
- ‘When’ is the project due to be finished?
- ‘Why’ should the company encourage the project?
- ‘Where’ will the project team get its resources from?
Why ‘Project Charter’ is Essential?
Creating a project charter is an essential step of any Six Sigma project and forms the basis to its success. The charter helps the project team in staying focused on the forecasted aims and objectives. As the structuring of charter contains many different sections, it acts as a guide map for the team during the course of the project. It helps to address challenging issues on paper to avoid expensive errors during the actual execution of the project.
The Six Sigma project charter directs the project team towards pre-defined aims and objectives. It helps to identify the symptoms of ongoing challenges/issues in the organization. It is a blueprint that enables the management to address queries such as:
- Whether or not the benefits of the project exceed the project cost?
- How the execution of the project can impact other departments in the organization?
- How project success can be quantified?
The project charter not only helps in omitting redundant tasks but also, vaguely defined project scope. It enables in reducing and managing risks. Thus, a well-defined project charter facilitates faster and accurate decision-making for the stakeholders.
Project Charter Template – Formal ‘Six Sigma Project Charter’ Structure
Components and Structuring
Here, are the essential elements that a ‘Project Charter’ contains:
1) Project Title: The title represents the project and it is important to name a project with a clearly defined title, as it enables others to easily view and select the project based on keywords or phrases. For example, if a pizza chain wants to strengthen its logistics, a possible title could be, ‘Improvement in order process time’.
2) Project Objective: This includes, what is anticipated out of the project. Therefore, the objective should correspond to the issues/challenges that are to be solved. The objectives should be well-defined, quantifiable, realistic and time-bound. For example, Reduce the order process time by 20%.
3) Business Case: The business case outlines, how the six-sigma project aligns with the objectives and strategic goals of the company. It describes ‘why’ should the organization support the project. Therefore, it identifies how the stakeholders, both, internal and external customers, could benefit from the project.
4) Process Problem Statement: This statement gives a clear indication and information on the challenges being faced and where the improvement is to be suggested. It provides a historical record summary on how the process has been operating and what are the effects of problem elements. For example, increased customer complaints due to the long wait in the delivery time of placed orders.
5) Project Scope (In-Scope and Out-of-Scope): As the name indicates, Project Scope determines the physical limitations of the project. In-Scope identifies what processes and sub-processes are to be included in the project. Out-of-scope includes the processes and steps that are to be excluded to avoid any vagueness and over-lapping during the succession of the project.
6) Project Timeline (Start date and End date): The project start date is recorded on paper when the project lead officially resumes with the project. The duration of the project is determined based on many factors such as business conditions, work-load, and day-offs. Thus, the estimated end date is decided by the Project Mentor/Master Black Belt.
7) Project Deliverables/Measures: It includes the tools that will be used to quantify the effectiveness of the project. For example, the percent increase in profit margins after reduction in order process time. These measures are required to be within the project time-frame.
8) Project team: This includes the team members who would be working on the project. These are:
- Project Sponsors: The person who reviews, mentors and gets approval from all the stakeholders.
- Project Leaders: The person who owns the process and is responsible for the outcomes of the project.
- Subject Matter Expert (SME): These include project members with deep knowledge and understanding of the business processes and six sigma methodologies.
9) Resources: Resources include people, materials, equipment’s/machinery and funding for the same, which would be required to execute the project.
10) Cost Analysis: It gives an estimation of the project cost and the benefits that would be attained upon completion of the project. The differences in the project cost and profit would be paid as an interest to the stakeholders and top management so as to get the project approved.
11) Stakeholder Signatures: The stakeholders, inclusive of Project Mentor, Project Sponsor and Project Champion are required to sign the project charter to officially approve it for implementation.
The highlighted points above give a good idea of what a Six Sigma project charter is comprised of and how it is important for every organization to develop a well-defined charter before proceeding with a project. The charter not only serves as a roadmap for project execution but also highlights the challenges and scope of the project. Thus, it is a great tool to plan, execute and close the project effectively!
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