What is Project Charter in Lean Six Sigma Project?
→ The project charter is a written one-page document that contains all the fundamental details about the project.
→ It is one of the most important documents of the Six Sigma Project.
→ The project charter is a part of the Define Phase of the Lean Six Sigma Project.
→ It defines the project objectives, business case, scope, roles, and responsibilities of the project team, and milestones and target dates, etc.
Example of Project Charter in Six Sigma Project:
→ The key elements of the project charters are as mentioned below:
- Project Title
- Project Leader
- Process Owner
- Project Sponsor
- Business Case
- Problem Statement
- Process & Sub Process
- Goal Statement
- Project Scope
- Project Milestone
- Project Team Members
- Benefits
→ Now we will understand all key elements of Project_Charter with the help of a case study:
Case Study of Project Charter in Lean Six Sigma Project:
→ We will understand the project charter by taking one case study.
→ In this study, we will understand all the project charter's elements with the help of the example that is explained below.
Project Title
→ The project title is very brief details about the project.
→ It is generally a one-line title that represents the project.
➨ Examples:
→ (1) OEE Improvement at Assembly Line A.
→ (2) Cycle Time reduction on assembly line B.
Project Leader
→ Need to mention the name of the person who will be leading the Lean Six Sigma Project.
→ He has a required competency related to project level (Six Sigma Green Belt, Black Belt, Master Black Belt, etc.)
Process Owner
→ Name of the person who is head of the area/process/sub-process.
→ Process Owner is responsible for implementing all the strategies identified during the Project.
→ The Process Owner has to take the handover from the Project Leader once the project is completed and sustain the improvement.
Project Sponsor
→ The project sponsor is a coach, project reviewer, and also representative of the Top Management.
→ A Project Sponsor is responsible for getting approval from all the stakeholders.
Project Champion
→ The Process Owner, Sponsor & Champion can be the same person depending on the organization’s hierarchy.
Business Case
→ The business case is the reason behind why we are doing this project or why this project is important.
→ We can understand how this project is related to our organization’s goal and financial benefits.
→ It shows the impact of the project on the customer and other stakeholders of the organization.
➨ We need to identify below things in the Business Case:
→ Why is the project worth doing?
→ Why is it important to do now?
→ What are the consequences if we are not doing this project?
→ How this project is integrated with the business objectives and goals of the organization?
→ How will this project impact the customer and other stakeholders?
→ What are the expected financial (tangible) benefits?
➨ Example of Business Case
→ (1) The improvement in OEE by 20% will reduce the manufacturing cost per product by 25%, improving our profitability by 25% directly.
→ (2) The rejection rate of product A is 2.3% so the competitors are taking some of our market shares to sustain and improve our market share we need to reduce the rejection % of product A.
Problem Statement
→ The problem statement is a statement that mentions the project's baseline performance and pain area of the organization.
→ In very simple words, we can say that the problem statement is a short description of the pain area of the organization that we want to improve.
→ The problem is the gap between what we want and what we are achieving.
→ The problem statement should be clear and concise. So, anybody can easily understand the objective of the project.
→ The problem statement should not contain any Root Cause or solution to the problem.
➨ Also, refer to this article - Various Problem Solving Methodologies.
➨ Also, refer to this article - Root Cause Analysis.
➨ Example of Problem Statement.
→ (1) The last 4 month's OEE of line A is 45%. So the manufacturing cost of the product is higher.
→ (2) The rejection rate of the Last 4 months of product A is 2.3% so the competitors are taking some of our market shares.
Process & Sub Process
→ We need to mention the main process name and sub-process name in the project_charter.
➨ Example of Process & Sub Process:
→ Manufacturing Process (Sub Process: Assembly Line A)
Goal Statement
→ The project’s goals and objectives can be defined based on the project_scope and problem statement.
→ Goal Statement defines the expected improvement that the project_team is seeking to execute in clear, concise, and measurable terms.
→ The goal statement should start with the verb.
→ Goal statements should be SMART: Specific, Measurable, Achievable, Relevant, and Time-Bound.
→ Refer to SMART Goal Method for goal setting for detailed understanding.
➨ Example of SMART Goal Statement
→ (1) To Improve the OEE of Line A from the current baseline of 45% to 65% in the next six months. It will give the tangible benefits of 10K USD.
→ (2) Reduce the Rejection of product A from 2.32% to 1% in the next three months will give the tangible benefits of 5K USD.
Business Matrix & Primary Matrix
→ We will understand both matrices with one example that is mentioned below.
➨ Example of Business Matrix
→ Goal: "To Improve the OEE of Line A from the current baseline of 45% to 65% in the next six months. It will give the tangible benefits of 10K USD."
→ So in the above case, our business matrix is OEE.
→ To improve our business matrix (i.e. OEE) we need to focus on Availability, Performance, and Quality Rate.
→ So our primary matrix should be the rate of availability (ROA), rate of performance (ROP), and rate of quality(ROQ).
→ We can take any of one, two, or all three primary matrices to improve our business matrix (OEE).
Project Scope
→ The project scope is the boundaries of our project and it will provide us focus areas and clarity about the project. So, we can add value to our customers.
→ The project scope is a mandatory thing that we need to define before the project starting.
→ We need to ensure that all project_team members should be agreed on the project_scope.
→ The boundaries of the Project_scope should be optimum. It should not be too narrow or too broad.
→ The Scope of the project clearly describes the boundaries of the_project.
→ It defines what is included in the project and what is excluded in the project such as product families, geographical areas, departments, types of resources, etc.
➨ Examples of Project Scope:
→ (1) The project's scope is limited to Manufacturing assembly line A.
Project Milestones
→ Project milestone in a project_charter defines timelines of starting and completing all phases of the DMAIC Methodology of Six Sigma_Project phases.
➨ Example of Project Milestones:
→ (1) Define phase - Target Date - 15th June 2021
→ (2) Measure phase - Target Date - 10th July 2021
→ (3) Analyse phase - Target Date - 25th July 2021
→ (4) Improve phase - Target Date - 15th August 2021
→ (5) Control phase - Target Date - 30th August 2021
Project Team Members
→ We need to identify team members and mention their roles and responsibilities as project_team members.
→ The top management team approves the resources required for the_project.
Benefits
→ We need to identify all types of benefits either it is tangible or intangible.
→ The tangible benefits are measured directly; these benefits are like quality, profitability, and performance of the derived products.
→ The intangible benefits cannot be measured in terms of product metrics.
→ Intangible benefits include customer satisfaction, employee satisfaction, employee morale, employees' motivation level, etc.
Tips for Preparing an Effective Project Charter:
→ It should be developed with the help of relevant team members.
→ The charter should be clear and concise.
→ Customer and business-focused and addresses their specific needs and expectations.
→ It should contain realistic and achievable objectives.
→ It should be a live document and updated during the project.
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