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Project Charter Development Steps

A. Before Beginning a Project Charter:


1. Convert Your Business Problem Into a Process Problem Most projects begin with a business problem (e.g. inventory levels or departmental costs are too high, etc.). This is a natural starting point. But before a Lean Six Sigma (LSS) project can be properly defined, the business problem must be converted into a process problem (i.e. identifying which poor performing process is driving our business problem. It is the broken process on which we want to focus our charter development efforts. There may in fact be several processes contributing to our single business problem. These processes must be prioritized in order of their contribution to the problem, with each of them potentially becoming unique projects. 2. Draft a SIPOC for the Process Focus less on detail focus more on identifying primary Suppliers, Inputs, Outputs and Customers. Further, be very explicit about defining the exact starting and ending points of the Process. 3. Complete a Process Map for the P of SIPOC Stay at a level of detail at which everyone can agree on the process 10-20 activities or tasks. This is in fact the beginning of whats called Vertical Scoping (reference the Project Chartering module of Leadership & Project Sponsor training). 4. Develop Initial Process Metrics Focus on the IPO of SIPOC (see below), identify relevant metrics pertaining to Quality, Speed, and Cost. Reference the Project Chartering module of Leadership & Project Sponsor training if there is confusion regarding the difference between Process Metrics and Business Metrics.

Developing Process Metrics


Suppliers Inputs
Billing Dept. staff Customer database Shipping information Order information Input Metrics (X)

An Example SIPOC and Metric Development


Process
Billing Process

Outputs
Delivered invoice

Customers

Process Metrics (X)

Output Metrics (Y) Quality

Accuracy of order info. Rework % at each step Invoice accuracy Accuracy of shipping info. Internal scrap % Accuracy of customer info. Staff expertise Other Input System up-time Time to receive order info. Invoice cycle time Metrics Time to complete invoice System responsiveness Invoices Time to deliver invoice processed/ month Delay time between steps and variability # of billing staff Cost/invoice Cost/hr for billing staff

Speed Cost

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Project Charter Development Steps


B. Develop Project Charter (in the following sequence):
1. Draft the Problem/Opportunity Statement Theres no need to write a paragraph. Simply define the problem or opportunity, as succinctly as possible, in terms of Who, What, When, Where, and Extent. a. Who/Where Who is experiencing the pain, and where is it being felt? This is the beginning of whats called Horizontal Scoping, which assists in creating a manageably sized, focused project (see Project Sponsor training for definition of Horizontal Scoping. b. What How is the pain being recognized or felt effectively the Process Metrics defined earlier in the SIPOC output metrics(Ys) area. c. When When did the pain begin? This could be as simple as as long as we know. This should be as specific as possible. How long has the problem been around? d. Extent How badly are we hurting in terms of the Process Metrics defined earlier and some baseline level of performance on those Process Metrics As with all quantifiably measurable components of a charter, you may initially leave blanks or placeholders until data can be collected and processed. All placeholders must be filled in before the charter is complete. 2. Draft the Goal Statement Simply articulate improvement expectations in terms of the Process Metrics defined in the Problem Statement. A well developed Goal Statement is realistically achievable and properly coordinated between Sponsor and Project Team. Ask yourself the following questions:
When is this project successfully done and how will you know? How does this tie back to the problem statement (Process Y) and the SIPOC output metric? What are the specifications for the process Y (Customer Requirement)?

3. Complete the Project Scope The beginning and ending steps of the process identified in the P of SIPOC and the Process Map accomplished prior represent the Vertical Scope. With regard to Horizontal Scope of the project, continue the work begun in defining the Who/Where of the Problem Statement. The objective is to ensure that the project team focuses improvement efforts in the areas where pain is greatest (as well as leverages any possible opportunities to transfer or share benefits). 4. Draft the Business Impact This is when we actually describe the projects financial impact ($) to the business. Classify project benefits as Cost Reduction, Asset Utilization or Revenue Improvement (the vast majority of projects will be Cost Reduction). Attempt to categorize benefits as Type 1, Type 2, or Type 3 (i.e. those intangible, non-financial benefits). Reference the Project Chartering module of Leadership & Project Sponsor training for assistance. Also add your list of financial assumptions to support your business impact dollars. Ask yourself the following questions.
Why are you doing this project (What is the pain at the high level)? What happens if you do not do this project? What strategic lever does this project address?

Project Plan Black Belt projects: Unless you know when the project is going to start and the projected toll gate review dates, dont use actual dates. Write in exactly the following: Define Tollgate: Project start + 1 month Measure Tollgate: Project start + 2 months Analyze Tollgate: Project start + 3 months Improve Tollgate: Project start + 4 months Control Tollgate: Project start + 5 months GB projects Again, unless you know when the project is going to start and the projected toll gate review dates, dont use actual dates. Write in exactly the following: Define/Measure Tollgate Project start + 1 month Analyze/Improve Tollgate Project start + 2 months Control Tollgate Project start + 3 month Kaizen events: When will the Kiazen Event take place? 5. Team Selection At this point, only identify roles, functional or competency participants, not actual names, unless you are sure that you know who they are. The names should be in place by the time of Team Launch Identify the Core Team, and the Extended Team. Extended Team should include resource names only. The Core Team should represent the key Stakeholders in the process For a Black Belt project, if more than 4-5 Core team members, then scope is likely too large. For a Green Belt project, if more than 2-3 Core team members, then scope is likely too large 6. Signatures After completion of the project charter, signatures are required which confirm the commitment of the LSS Deployment team and the official start of the LSS Black Belt project. This is an optional step though strongly suggested -----------------------------------------------------------------------------------------------------------------------------------

C. Next steps
The Next step is to complete your charter: 1. Obtain the proper signatures from the Sponsor, Deployment Champion, and Master Black Belt.. 2. Obtain Financial Representative to sign off of the project financial impact savings plan (including background assumptions and financial calculations.) After you have completed your charter, it can reviewed and refined by others within the Lean Six Sigma deployment and the signed document is handed- off to the Black Belt for project execution and when applicable entrance into LSS Black Belt / Green Belt training. When doing final charter preparation, please follow the Project Charter Example below and develop the final charter replicating the example format as much as possible; even if you are only estimating at this point or are only able to put in place holders Remember two key points to successful project chartering: 1. Be brief 2. Be quantifiable

PROJECT CHARTER EXAMPLE (p. 1)


Project Title: Improve the effectiveness and efficiency of the Black Belt computer acquisition process Author (Project Sponsor): John Doe Deployment Champion: Joe Schmoe Competency/PEO: CIO Date of Last Update: 1/21/2010

Business Impact
This project will address the computer acquisition process for LSS Black Belt training courses. The first two classes of training have experienced delays and customer dissatisfaction due to late delivery of computers and class disruptions to load required software. Due to exceptional work by Tom Morrow, the first two classes were able to receive their computers during week 1 of training, but since pre-work is required before attending week 1 of training, it is ideal for the BBs to receive properly loaded computers during Team Leadership training. The impact of late computers in worker non-productivity costs, expediting costs, possible higher computer costs, and customer dissatisfaction estimated at: $12K of Type 1 o Assumptions - 6 classes of BB training over the next 12 months following completion of project, $2000/class of additional computer costs for expediting, etc. $48K of Type 2 o Assumptions - 6 classes of BB training over the next 12 months following completion of project, 40 hours of extra expediting and handling per class, $75 per hour of labor Other Benefits (Type 3) o Increased student learning and ultimately better project success

Problem Statement
Who/Where: The problem has been noticed at San Antonio, Texas Training Center, the only training location to-date What (Process Metrics): st Quality 1: %of properly loaded laptop computers with Minitab as measured by (% computers loaded properly 1 time) Quality 2: % Computers delivered by day 1 of Team training as measured by: (% of total computers delivered late) Cost Efficiency: Costs should not include expediting, temporary computer costs, or excessive labor costs. Actual costs to be determined later as measured by: (Total costs of computer readiness divided by total computers delivered) Cycle time: % of computers properly preloaded by the first week of training When: The problem has been noticed since October 2009 to date covering first two classes of LSS Black Belt training. Extent: Baseline Quality #1: To-date, xx% of computers are loaded correctly first time Baseline Quality #2: To-date, 0% of computers are delivered by day 1 of Team Training Baseline Cost Efficiency: Current cost per computer is $XX,1000 per computer.

Goal Statement
Quality 1: Increase the percentage of Black Belt computers which are fully loaded with Minitab to 75% for class 3, and 100% for all classes 4 and after Quality 2: Deliver 100% of the computers by day 1 Team training for each class, beginning with Class 3 Cost Efficiency: Reduce the cost per acquired computer to $YY, 1000 per computer

PROJECT CHARTER EXAMPLE (p. 2) Project Scope


In Scope: This project will address the laptop computer acquisition process for LSS BB classes 1-10. The process will begin with the scheduled training date and end when a BB receives the computer the first day of Team training. Out of scope: This project will not address network log-in logistics, Green Belt courses or any other course requiring computers.

Project Plan
Define Tollgate: Measure Tollgate: Analyze Tollgate: Improve Tollgate: Control Tollgate: Project start + 1 month Project start + 2 months Project start + 3 months Project start + 4 months Project start + 5 months

Project Team
Project Sponsor: John Doe Black Belt: Joe Blackbelt Team Members: IT person 1 IT person 2 Procurement Contracts Subject Matter Expert (SME) Expert

Lean Six Sigma Project Charter Template


Project Name: Dept.: Project Sponsor: Rev No: Deployment Champion: Black/Green Belt: Date:

Business Impact ($ = Business Metric)


Why are you doing this project (What is the pain at the high level) (The primary business reasons)? What happens if you do not do this project? What strategic lever does this project address? (Which Products/Services are being improved?) $__________ of Type 1 (Hard/Direct Dollars) o Assumptions $__________ of Type 2 (Soft/Indirect Dollars) o Assumptions $__________ of Type 3 (All other Benefits) o Assumptions

Opportunity or Problem Statement (Process Metrics)


When: What: Who: Where: Extent: When did this process problem first occur and how far back are you going to collect data? What are the process problem metrics (Quality, Speed, Cost) Choose your Project Y Who is the customer that benefits from this process Where is this process problem occurring (SIPOC) Quantify the extent of each process metric (Quality, Speed, Cost) SIPOC output metric

Goal Statement (Process Metrics)


a. Big Y metric: State the one primary measurable, operationally-based performance gap to be closed by this project (e.g. reduce cycle time from 60 to 10 days). b. Little Y metrics: State the secondary performance goals to be achieved by this project. c. List potential input variables that may influence the Big Y metrics (i.e. Y= f(x))

Project Scope (Horizontal and Vertical Scoping)


a. b. What organizations, locations, outputs, funding sources, etc. are specifically included in this project? What are the start/stop boundaries of the project? What organizations, locations, outputs, funding sources, etc. are specifically excluded from this project? What are the project constraints? DFSS Kaizen

Project Methodology:
DMAIC

Project Planlist planned dates for each DMAIC phase (Kaizen list start and end dates)
Define: ____/____/____ Measure: ____/____/____ Analyze: ____/____/____ Improve: ____/____/____ Control: ____/____/____ Team Selection; Cite names of core team members, including their commands, areas of expertise, and % of weekly contribution expected on this project:
Name: Command: Project Role (Expertise): % Contribution:

Signoff:

____________________ Master Black Belt

_____________________ Project Sponsor

_______________________ Deployment Champion

_____________________ Financial Rep

Business Impact Details Type 1: Describe the chain of causality that shows how you determined the Type 1 savings. (tell the story with causeeffect relationships, on how the proposed change should create the desired financial result (savings) in your project ) Show the financial calculation savings and assumptions used. Assumption #1 (i.e. source of data, clear Operational Definitions?) Assumption #2 (i.e. hourly rate + incremental benefit cost + travel) Type 2: Describe the chain of causality that shows how you determined the Type 2 savings. (tell the story with causeeffect relationships, on how the proposed change should create the desired financial result (savings) in your project ) Show the financial calculation savings and assumptions used. Assumption #1 (i.e. Labor rate used, period of time, etc) Assumption #2 (i.e. contractor hrs or FTE, source of data, etc) Describe the Type 3 Business Impact(s) areas and how these were measured Assumption #1 (i.e. project is driven by the Business strategy?) Assumption #2 (i.e. Customer service rating, employee morale, etc) Other Questions Stakeholders agree on the projects impact and how it will be measured in financial terms? What steps were taken to ensure the integrity & accuracy of the data? Has the project tracking worksheet been updated?

SIPOC Map
Suppliers
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Inputs
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Start Step1

Process
Step 2 Step 3 Step 4

Outputs
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Customers
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Stop Step 8

Step 7

Step 6

Step 5

Input Metrics
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Process Metrics
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Output Metrics Quality

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Speed Cost

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