Learning Objectives

• Explain the purpose of a Six Sigma Project Charter.
• Understand the key components of a Project Charter.
• Develop a clear Problem Statement.
• Develop a meaningful Business Case.
• Define project goals using measurable terms.
• Establish appropriate project scope.
• Identify project stakeholders and roles.
• Understand project timelines and milestones.
• Establish accountability within the project team.
• Recognize and prevent scope creep.
• Understand how the Project Charter supports DMAIC execution.
• Develop a practical Project Charter for a Green Belt project.

1. Introduction

Once a suitable Six Sigma project has been selected, the next step is to formally define the project.

A Project Charter is the document that establishes the basic direction and boundaries of the Six Sigma project.

It provides a common understanding of:

• Why the project is being undertaken.
• What problem is being addressed.
• What the project is expected to achieve.
• What is included in the project.
• What is outside the project.
• Who is responsible for the project.
• Who needs to be involved.
• When the project is expected to be completed.

The Project Charter creates alignment between the Green Belt, project team, process owner, sponsor, and other important stakeholders.

A useful principle is:

A project that is not clearly defined is difficult to control.

2. Concept / Theory

2.1 What Is a Project Charter?

A Project Charter is a formal document that defines the fundamental elements of a Six Sigma improvement project.

It acts as a reference throughout the project.

The Charter does not need to contain every detail of the eventual analysis. Instead, it establishes the foundation from which the project can proceed.

A typical Project Charter includes:

1. Project Title.
2. Problem Statement.
3. Business Case.
4. Project Goal.
5. Project Scope.
6. Project Timeline.
7. Project Team and Roles.
8. Key Stakeholders.
9. Preliminary Measures.
10. Assumptions and Constraints, where appropriate.

The exact format may vary between organizations.

2.2 Purpose of the Project Charter

The Project Charter serves several purposes.

Direction

It provides a clear statement of what the project is intended to accomplish.

Alignment

It helps stakeholders develop a common understanding of the project.

Accountability

It establishes responsibilities for the sponsor, Green Belt, team members, and process owner.

Scope Control

It establishes boundaries and helps prevent uncontrolled expansion of the project.

Communication

It provides a concise reference that can be communicated to stakeholders.

Project Authorization

In many organizations, approval of the Charter provides formal authorization to begin the project.

3. Key Topics

3.1 Project Title

The project title should clearly communicate the subject of the improvement project.

For example:

Reducing Loan Approval Cycle Time

or

Reducing Customer Complaint Response Time

The title should be specific enough to identify the project without becoming excessively detailed.

3.2 Problem Statement

The Problem Statement describes the current performance problem.

A good Problem Statement should be:

• Clear.
• Specific.
• Fact-based.
• Measurable where possible.
• Free from assumed causes.
• Free from predetermined solutions.

A useful structure is:

What is happening + Where it is happening + When it is happening + Magnitude of the problem

For example:

The average loan approval cycle time has increased from the established historical level to 8.5 days during the current measurement period, resulting in increased customer complaints and delayed service completion.

The exact values used in an actual project should come from verified organizational data.

3.3 Avoiding a Solution in the Problem Statement

A Problem Statement should describe the problem rather than prescribe the solution.

For example:

Problem-focused:

Loan approval cycle time is longer than the required service level.

Solution-focused:

The loan approval process needs an additional approval automation system.

The second statement assumes the solution before the causes have been analyzed.

Six Sigma encourages the team to understand the problem and its causes before selecting the improvement.

3.4 Business Case

The Business Case explains why the project matters.

It connects the performance problem to organizational consequences.

A Business Case may describe:

• Customer impact.
• Financial impact.
• Operational impact.
• Quality impact.
• Strategic importance.
• Risk associated with not improving.

For example:

Excessive loan approval cycle time creates customer dissatisfaction, increases follow-up activity, and consumes additional administrative resources.

Where financial information is available, the Business Case can include estimated financial consequences.

3.5 Project Goal

The Project Goal defines what the project intends to accomplish.

A useful goal should be:

• Specific.
• Measurable.
• Relevant.
• Time-bound.
• Realistic.

For example:

Reduce loan approval cycle time by 30% from the verified baseline within the defined project period.

The target should be based on appropriate analysis and stakeholder agreement.

The Project Goal should not simply state:

Improve the process.

That statement is too vague to provide an effective measure of success.

3.6 Scope

Scope defines the boundaries of the project.

It answers:

What is included?

and

What is excluded?

Scope may be defined by:

• Process.
• Product.
• Service.
• Location.
• Department.
• Customer segment.
• Time period.
• Process stages.

For example:

In Scope:

Loan applications processed by the retail-loan department from application receipt through customer notification.

Out of Scope:

Commercial loans, mortgage products, and activities performed after customer notification.

Clear scope protects the team from unnecessary expansion.

3.7 Scope Creep

Scope creep occurs when additional activities, processes, products, locations, or objectives are gradually added to the project without appropriate review.

For example, a project initially intended to reduce retail-loan approval time may gradually expand to include:

• Mortgage processing.
• Commercial loans.
• Credit-card applications.
• Customer-service response time.
• Branch staffing.

The project can then become too large to manage effectively.

A Project Charter provides a reference point for deciding whether proposed additions are within the agreed project scope.

3.8 Project Timeline

The Charter should establish the expected project period.

A timeline may identify major milestones such as:

• Charter approval.
• Define completion.
• Measure completion.
• Analyze completion.
• Improve implementation.
• Control implementation.
• Project closure.

The exact duration depends on project complexity and organizational requirements.

3.9 Project Team and Roles

A Six Sigma project requires clearly defined responsibilities.

Typical roles may include:

Project Sponsor

Provides organizational support, removes barriers, and ensures alignment with business priorities.

Process Owner

Owns the process and is responsible for operational adoption and sustainment.

Green Belt

Leads or facilitates the improvement project and applies the appropriate Six Sigma methodology and tools.

Project Team Members

Provide process knowledge, data, technical expertise, and support for analysis and implementation.

Subject Matter Experts

Provide specialized knowledge when required.

Clear roles reduce confusion and improve accountability.

3.10 Stakeholder Identification

Stakeholders are individuals or groups who:

• Are affected by the project.
• Have influence over the process.
• Provide resources.
• Own process decisions.
• Use the process outputs.
• Are responsible for implementing or sustaining changes.

Examples include:

• Senior management.
• Process owners.
• Employees.
• Customers.
• Quality personnel.
• Finance personnel.
• Information technology personnel.
• Suppliers.

Stakeholder identification should begin early rather than after improvement solutions have already been developed.

3.11 Preliminary Project Measures

The Charter may identify preliminary performance measures.

Examples include:

• Cycle time.
• Defect rate.
• First-pass yield.
• Customer complaints.
• Cost.
• Process capability.
• On-time delivery.
• Response time.

The detailed operational definition and measurement-system assessment can be developed during the Measure phase.

3.12 Assumptions and Constraints

Projects may operate under assumptions and constraints.

Examples include:

Assumptions

• Required process data will be available.
• Key personnel will participate.
• The process will remain sufficiently stable during the study period.

Constraints

• Limited project resources.
• Regulatory requirements.
• Technology limitations.
• Fixed project deadlines.
• Limited access to certain data.

Documenting important assumptions and constraints improves project transparency.

4. Tools / Methodology

4.1 Project Charter Development Process

A practical Charter-development process can follow these steps.

Step 1 — Confirm the selected project

Verify that the project addresses the previously identified business or customer problem.

Step 2 — Develop the Problem Statement

Describe the current performance problem using factual information.

Step 3 — Develop the Business Case

Explain why solving the problem matters.

Step 4 — Establish the Project Goal

Define the desired measurable improvement.

Step 5 — Define the Scope

Specify what is included and excluded.

Step 6 — Identify Stakeholders

Identify people who influence, support, perform, receive, or are affected by the process.

Step 7 — Establish Roles

Assign appropriate responsibilities to the Sponsor, Green Belt, Process Owner, and team members.

Step 8 — Establish the Timeline

Define major project milestones.

Step 9 — Identify Preliminary Measures

Identify the key performance indicators that will be used to understand the problem.

Step 10 — Review and Approve the Charter

Review the Charter with relevant stakeholders and obtain appropriate approval.

4.2 Project Charter Template

A Green Belt Project Charter can be structured as follows:

Charter Element	Description
Project Title	Concise name of the project
Problem Statement	Current measurable performance problem
Business Case	Why the problem matters
Project Goal	Desired measurable improvement
Scope	Boundaries of the project
Out of Scope	Explicit exclusions
Sponsor	Executive/project sponsor
Process Owner	Owner of the affected process
Green Belt	Project leader/facilitator
Team Members	Supporting project members
Stakeholders	Important affected or influencing parties
Timeline	Project period and milestones
Preliminary Measures	Key performance indicators
Assumptions	Important conditions assumed
Constraints	Important limitations

The organization can adapt this template to its own governance requirements.

5. Worked Example / Case Study

Case Study — Reducing Late Deliveries by 30%

A logistics organization has identified a recurring problem with late customer deliveries.

Management has selected the issue as a potential Green Belt project because:

• Customer complaints have increased.
• Delivery performance has deteriorated.
• The problem is measurable.
• Delivery records are available.
• The process has an identifiable owner.
• The problem has business significance.

Project Title

Reducing Late Customer Deliveries

Problem Statement

A review of recent delivery-performance data indicates that the percentage of customer orders delivered after the promised date is above the organization’s required performance level.

Business Case

Late deliveries can result in:

• Customer dissatisfaction.
• Additional customer-service contacts.
• Expediting costs.
• Additional administrative effort.
• Potential loss of customer confidence.

Improving delivery performance can therefore provide customer and operational benefits.

Project Goal

Reduce the percentage of late customer deliveries by 30% from the verified baseline within the agreed project period.

Scope

In Scope:

The order-fulfillment process from confirmed customer order through delivery for the defined distribution operation.

Out of Scope:

Activities outside the agreed distribution operation and product categories not included in the project.

Project Team

Sponsor: Senior operations manager

Process Owner: Logistics manager

Green Belt: Assigned improvement practitioner

Team Members: Representatives from order processing, warehouse operations, transportation, and customer service.

Preliminary Measures

The project may initially consider:

• On-time delivery percentage.
• Delivery cycle time.
• Number of late deliveries.
• Customer complaints related to delivery.

The final operational definitions will be established during the Measure phase.

Timeline

The project timeline can include:

Charter Approval → Define → Measure → Analyze → Improve → Control → Closure

The specific dates should be established according to organizational requirements.

Result

The Charter establishes a common understanding of the project before detailed data analysis begins.

It provides the Green Belt and stakeholders with a clear reference for project direction, scope, responsibilities, and expected results.

6. Practical Application

Exercise — Develop a Project Charter

Consider the following situation:

A customer-service department has experienced an increase in response time for customer email requests.

Customers expect responses within the organization’s defined service standard.

The department has historical response-time records and receives regular customer complaints related to delayed responses.

Develop the major elements of a Project Charter.

6.1 Project Title

Create a concise title describing the improvement opportunity.

6.2 Problem Statement

Describe:

• What is happening?
• Where is it happening?
• When is it happening?
• What evidence demonstrates the problem?

Avoid identifying the cause before analysis.

6.3 Business Case

Consider:

• Customer impact.
• Operational impact.
• Financial implications.
• Strategic importance.

6.4 Project Goal

Develop a measurable improvement goal.

The goal should include an appropriate performance measure, baseline or reference point, improvement target, and timeframe where these are available.

6.5 Scope

Define:

In Scope

and

Out of Scope

This prevents the project from gradually expanding into unrelated customer-service issues.

6.6 Stakeholders

Identify:

• Sponsor.
• Process Owner.
• Green Belt.
• Team Members.
• Customer-service representatives.
• Customers or customer representatives where appropriate.
• Supporting functions.

6.7 Preliminary Measures

Potential measures might include:

• Average response time.
• Median response time.
• Percentage of responses meeting the service standard.
• Number of customer complaints.

The Green Belt should avoid assuming which measure is most appropriate before understanding the process and data.

7. Lesson Summary

The Project Charter establishes the foundation for a Six Sigma project.

A well-developed Charter should clearly communicate:

• The problem.
• The business reason.
• The project goal.
• The project scope.
• The stakeholders.
• The roles and responsibilities.
• The timeline.
• The preliminary performance measures.
• Important assumptions and constraints.

The Problem Statement should describe the problem rather than prescribe a solution.

The Business Case explains why the problem matters.

The Project Goal establishes the intended measurable improvement.

The Scope defines project boundaries and helps prevent scope creep.

Clear roles and stakeholder identification establish accountability and improve alignment.

The Charter should be reviewed with appropriate stakeholders before the project proceeds into detailed DMAIC execution.

8. Lesson Learnt / Conclusion

A Project Charter converts an improvement opportunity into a clearly defined project.

It creates focus, accountability, stakeholder alignment, and protection against scope creep.

A strong Charter does not attempt to solve the problem before the team has investigated it. Instead, it establishes the conditions under which the problem will be studied and improved systematically.

Green Belt Takeaway:

A clear Project Charter creates focus, accountability, and alignment before the improvement work begins.