Continuous innovation and improvement in processes are the two mantras of survival for organizations in the highly competitive world that we live in. It is not for nothing that companies come out with new products every other day. Customer is always looking for innovative products that can catch their imagination. Process improvements lead to two-fold gains. One is a sure improvement in the quality of the product and the second is the cost-saving. And both are very important factors for any organization to remain not only in business but in competition too. And to achieve these goals, companies turn to Six Sigma. Now, what is Six Sigma? Well, Six Sigma is a combination of techniques that helps in mitigating the probability of occurrence of errors in the processes or defects in the products thus improving the processes. Since Six Sigma works toward reducing defects, the obvious result is a process and quality improvement, and cost reduction.

Six Sigma projects usually work by the DMAIC method. In effect, it is a set of steps in which the Six Sigma project moves. Here, D stands for 'Define', M stands for 'Measure', A stands for 'Analyze', I stands for 'Improve', and C stands for 'Control'. So you can easily see this is a series of steps to complete a Six Sigma project. And the first step in this series is 'Define'. It means defining the project. And the first step in defining a project is making a project charter. 

Project Charter

The project charter is a very important document in the initial stage of the Six Sigma project. It is basically a contract or an agreement between the project team and the project sponsor or initiator. It is a document that provides the contours of the Six Sigma project. Besides, it helps the project team in understanding the focus of the project. They become aware of the priorities in the project. The project charter must be written considering the answers to questions such as what outcome is expected out of the project, how can this be measured, and what resources are available for the project. Further, the project charter should include the project budget, the expected time needed to complete it, and the risks involved in the project.

While preparing a project charter, basic information about the project comes first. Information like the title of the project, who is the project leader, what is the objective of the project should be provided at the outset. It should also describe the scope of the project. The time period for every Six Sigma project is fixed i.e. when does it start and when does it end. The important thing is that the project charter should be prepared even before starting the actual work. 

Project Charter Elements - Six Sigma

There are a few important elements that make a Six Sigma project charter. These elements are usually common to all Six Sigma project charters although organizations have their own standardized formats. There are seven such project charter elements in Six Sigma as follows:

• Business Case
• Problem Statement
• Setting the Goal
• Scope of the Project
• Project Plan
• Success Metrics
• Structure of the Team

1. Business Case

The first thing that should be clear in all stakeholders' minds is the reason for doing a particular project. They ought to clearly understand the objective of doing a project and what is expected out of it. There has to be some rationale for doing the project so an explanation has to be provided why the project is needed to be carried out. The benefits of doing the project have to be clearly stated and should be in quantifiable terms. Another question to be answered in the business case is how is the project in tune with the strategy of the company. The quantifiable benefits have to be those in which the company is interested like cost or quality or speed or productivity. Another important aspect that should be added to the business case is the ramifications for the company if the problem is not addressed.  In short, the business case should provide a justification for the need to do a particular project and how it will be advantageous for the company.

2. Problem Statement

This is where you provide a description of the problem to be solved. Here, a precise explanation of the problem is given. It generally includes three things. First is the location of the problem like a department or an operation or a process. The second thing is describing the problem i.e. what the problem actually is. And the third thing is how serious the problem is. Like its intensity and criticality. How it is affecting the company in terms of cost. A vague or short problem statement will not do. It has to be clear and detailed containing as much information about the problem as possible. Just writing about the problem and not describing how it impacts the business does not serve the purpose. So write a comprehensive problem statement.

3. Setting The Goal

You can't reach anywhere unless you have a goal in sight. So, the third of the charter elements in Six Sigma assumes added significance. The goal is the result you want to achieve from the project. Here, milestones are set to monitor the progress of the project. These goals should be practical and measurable. In fact, the goals are expected to be SMART where S stands for Specific meaning you have to be specific about the goals, M stands for Measurable meaning goals can be measured in some unit, A stands for Achievable, or as said earlier they should be practical. You can't set unreasonable goals. R stands for Relevant meaning goals have to be relevant to the problem at hand, and T stands for Time-Bound. Obviously, you can't stretch a project for unlimited time. So here start and the end dates of the project as well as the start and the end dates of each phase of the project are mentioned. 

4. Scope of the Project

The fourth element in the project charter is the project scope. The scope of the project describes where the project starts and where it ends. It defines the limits of the project. The ambit of the project is given in specific terms. It is a critical element of the project charter because it provides an outline of where you are going to reach. Again, the project scope should be of reasonable proportions. Neither too big nor too small. If it is too big, it may take a whole lot of time and in the ultimate analysis, may not prove beneficial for the organization. And if it is too small, it may not be worthwhile to create a team for this purpose. It also describes what critical parameters are coming under the scope of the project.

5. Project Plan

This is the fifth of the project charter elements in Six Sigma. A project plan contains information about how the project would progress. What would be the different phases in which the project would be completed and what would be the milestones for each phase? It is usually displayed as a graphic. Here again, DMAIC is used. The project plan should clearly define the roles and responsibilities of every team member. Questions like who will do what task, where and when it will be done should be answered along with the method and how much will be done. The project plan also includes the schedule of all the activities involved in the project, detailing when each activity will be carried out. Overall, the project plan includes all the resources required to complete the project including human, mechanical, and material resources.

6. Success Metrics

Success is the ultimate goal of any project and if it is quantified, it is all the better. This is the next element of the project charter in Six Sigma. Measuring the success of the project and creating project metrics for this purpose. This includes primary as well as secondary metrics. How the success metrics are designed depends on which parameters you want to measure the success. They could be related to money or not related to it. Examples of money-related parameters are cost saved or reduced, the quantum of increase in sales, percentage of inventory reduced, etc. Non-money-related parameters could be the customer or employee happiness index. These kinds of metrics give a clear idea to all the stakeholders, of how the performance would be judged.

7. Structure of the Team

Members of a team are indisputably a very crucial organ of any project. Human resources are one of the most valuable assets a project can have. So, it is imperative that there is absolute clarity on the structure of the team that is going to work on a particular project. This is the last element of the project charter in Six Sigma. It is necessary to indicate in the project charter what level of people are going to work on the project like the project manager, project engineers, or other team members. It is equally important to clearly state the role of each member of the team to avoid any ambiguity. Every project team member has to be fully committed to the project and work wholeheartedly towards its success. And this can happen only when their roles and responsibilities are explicitly defined.

To summarize, a project charter in Six Sigma should contain as much information about the project as possible. So make sure that you have a properly made project charter that encompasses all the elements mentioned above and it will be effortless for you to get approval for it. 

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