Components of a DMAIC Project Charter: Part 1 of 2

Components of a DMAIC Project Charter: Part 1 of 2
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What Is a DMAIC Project Charter?

A project charter is a short document, usually one page in length that lists out the summary scope, objectives, and stakeholders of a project. The project charter is the first deliverable of a project and finds use to secure project approval and authorize the powers for the project manager. It is the foundation of the project and serves as a reference point during the planning and implementation stage.

DMAIC (Define-Measure-Analyze-Improve-Control) is the most popular methodology to implement Six Sigma, and aims to improve processes or reduce deviations from the desired state in existing processes.

The DMAIC project charter is a key deliverable of the “Define” phase of DMAIC. A good DMAIC project charter seeks to make clear the reason for the Six Sigma intervention. It could detail customer expectations, the deviance of the existing state from such an optimal state, the cost, effort, and resources required to achieve the optimal state, consequences of not taking action, potential benefits, cost benefit trade off, and the like. The Define phase of Six Sigma needs to incorporate such information.

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Problem Statement

The DMAIC project charter problem statement provides detailed information on the issue that requires fixing. Possible information in the problem statement includes type of error, extent of error, location of error, all in quantitative terms that makes it possible for the application of statistical tools in the Measure and Analyze stages of DMAIC.

The project charter problem statement treats the problem as it exists in an objective manner, and does not assign cause, blame or offer solutions.

An example of a problem statement reads “Lack of a coordinated approach may lead to a prospective customer receiving an average of four introductory marketing calls, creating potential customer annoyance.”

Each problem or issue needs a separate problem statement.

Goal Statement

The DMAIC project charter goal statement defines the expected results of the DMAIC intervention in detailed terms, including information such as the quantitative description of the target stage, the project execution time line, the influence on Critical to Quality (CTQ) elements, and the costs involved.

Like all well crafted goals, the project charter goal statement should be specific, measurable, achievable, result oriented, and time-based.

The goal for the problem statement listed above could read “Implementation of marketing data coordination system within two weeks to ensure one prospective customer receives only one introductory marketing call.”

The DMAIC project charter, while fixing goal statements, also needs to define the success criteria in quantitative terms. In the above quoted example, the measurement of success is limiting introductory calls to a customer to one call. This means that the DMAIC intervention would remain a success if it achieves this success criteria, even if the other guidelines such as time-frame mentioned in the goal statement remains unfulfilled.

Project Scope

The project scope defines project boundaries or the area or processes in the organization and assigns who will work on certain elements. It also defines the major components of the project.

The inclusion of project scope in the DMAIC project charter helps:

  • Retain the focus of the Six Sigma team toward achieving the goal
  • Prevent scope-creep

Constraints and Risk Factors

Side-by -side with project scope comes constraints and risk factors. A major role of the project team is to analyze, quantify, and rank such constraints and risk factors, for inclusion in the DMAIC project charter.

The constraints relate to availability of resources, time, technology, and budget. The risk factors include any external or internal factor that could impede attainment of the goals listed in the goal statement. The project charter also includes contingency plans for such risks, or ways to circumvent such risks.

Cost-Benefit Analysis

DMAIC Project Charter

One important inclusion in the DMAIC project charter is the budget for the project, and the cost benefit analysis. Although quality ultimately results in low costs for everyone, implementation of Six Sigma quality initiative entails costs, and the higher the quality aspired, the higher the cost. The cost-benefit analysis attempts a trade off between cost and benefit by determining whether the higher investment to reduce deviance from ideal state would translate into better profits or growth, or whether reconciling to a lower level of quality would also result in the same benefits.

For instance, in the example quoted above, reducing introductory marketing calls to one per customer would result in preempting potential customer annoyance. Fixing the target to limit introductory marketing calls to two per customer, which though a lesser quality standard, will entail lesser costs and might also negate potential customer annoyance.

Another financial analysis is the Cost of Poor Quality (COPQ) metric that reveals the cost incurred by the company due to the stated problem, over a period. This indicates the potential financial upside resultant from the implementation of the quality measure.

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The DMAIC project charter list all stakeholders and their roles and responsibilities. An important part of this component is identification of the project manager, usually a Green Belt, and fixing his or her powers. The project charter also lists the roles and responsibilities of other team members.

The completion of the Define phase of DMAIC results in a well-crafted and approved project charter that not only forms the basis for data collection in the Measure phase, but also provides a good understanding about the relevance and impact of the project to all the stakeholders.