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Six Sigma Project Charter: Overview & Examples

Instructor: Harshawardhan Mestri-Balasaheb

Harshawardhan has a Master's degree in Industrial and Systems Engineering and works at a Fortune 500 company on business transformation initiatives.

The Six Sigma project charter is a building block for any successful project. Learn the importance and basic concepts of developing a Six Sigma project charter along with a realistic example that will demonstrate the application of these concepts.

Definition and Purpose of Six Sigma Charter

The Six Sigma project charter is a document that is used as a critical tool during the define phase of the DMAIC process and contains the framework for the implementation of the project. It helps to clearly identify the goals and establish the project boundaries and is a success criteria for the project that is undertaken. It also defines the team members, their roles and responsibilities and eliminates any ambiguity on the project deliverables to be accomplished within an agreed upon timeline. Most importantly, at any given period of time during the project life cycle, it ensures there is alignment of the project with customer requirements and/or stakeholder expectations.

The project charter is usually developed by a Champion and a Six Sigma Black Belt who work with the executive management to formally authorize the project for a particular department or the entire organization.

In a project charter, there are some important or key sections. In the rest of the lesson, we will take a look at the basic requirements of any six sigma charter.

Business Rationale, Problem Statement and Goals

The business rationale section describes the business necessity to implement a six sigma project. It is important for executive leaders and management to know the purpose behind initiating a project that will require an initial investment.

Example: A strategic imperative in the year 2016 for Great National Bank is to identify areas of business operations that can be streamlined to eliminate redundant costs and improve customer satisfaction.

The problem statement section describes the problems faced by the business that support the business rationale.

Example: The duration for the account opening process at Great National Bank exceeds greater than 2 weeks and costs $250,000 annually, which is more than twice the other banks nationally.

The goals section describes the project deliverables that will solve the problem mentioned in the problem statement section. It is important that it is specific because it will help in identifying the expected output accurately .

Example:

  • Improve the overall cycle time for opening new accounts
  • Reduce direct costs for bank and indirect costs for customers for opening new accounts
  • Create a simplified customer friendly process that promotes customer satisfaction

Expected Output and Stakeholders

The expected output section contains indicators or results of the new or improved process that will quantitatively determine what means success or completion of the project. A critical success factor for a Six Sigma project is that goals and expected output are always in alignment with customer and stakeholder requirements or business rationale by solving problems defined in the problem statement.

Example:

  • Reduce the number of days for account opening process
  • Identify cost savings realized due to the improved process
  • Track increase in new accounts opened due to simplified process

The stakeholders section lists the immediate teams, departments, customers or organizations that are directly or significantly impacted due to this project.

Example: Existing and new bank customers, operations managers, account management team, records management team, IT dept., Executive Chairman and Board of Directors

Project Milestones, Timeline and Customer/Stakeholder Benefits

The project milestones section simply lists the Define, Measure, Analyze, Improve and Control phases.

Example:

  • Define - Define the project charter and gain formal authorization of the project
  • Measure - Measure the as-is process and map to-be process
  • Analyze - Analyze the root cause of the problems
  • Improve - Identify solutions to improve or fix the root cause
  • Control - Ensure appropriate controls are in place to prevent errors or prevent returning to original state

The timeline section identifies the start date and estimates the end date based on team member and stakeholder input and consensus.

Example:

PHASE Planned start date Est. End date
Define 07-01-2016 07-30-2016
Measure 07-01-2016 07-30-2016
Analyze 08-01-2016 08-30-2016
Improve 09-01-2016 09-30-2016
Control 10-01-2016 10-30-2016

The customer/stakeholder benefits section describes the benefits obtained by completion of the project. Usually these are categorized into tangible and intangible benefits. Tangible benefits are usually financial benefits or cost savings realized. Intangible benefits are brand image, high customer satisfaction, employee morale, goodwill, etc.

Example:

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