Copyright © Six Sigma Academy International, LLC All Rights Reserved Project Chartering Support

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 1 Project Selection - What Makes a Good Project Writing a Project Charter Topics

Copyright © Six Sigma Academy International, LLC All Rights Reserved Selecting a Project

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 3 Project Selection Checklist

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 4 Detail For Project Selection Criteria 1.Has the project been done already (or in progress)? We don’t want to “take credit” for a project which has been completed – Additionally, if an improvement effort is underway, we should determine if the LSS methodology would be a better fit 2.Is there a predetermined solution to the project goals? This is referred to as a “just do it” project – If we (truly) know the solution, we don’t need the LSS methodology and resources applied. 3.Does the project conflict with other projects? We want to ensure that by solving one problem, we don’t worsen a related or non-related process – The “law of unintended consequences.” Often times a secondary metric can be used to monitor the “other” project or metric.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 5 Detail For Project Selection Criteria (Cont’d) 4.Is this an “enabling” project as opposed to a project that can be executed NOW? Occasionally, enabling projects are required to obtain data to support a baseline – However, it should be recognized that applying a team to these projects will not provide value to the organization and it is highly recommended that in those cases where metrics are lacking, that the leadership team install metrics and gather data prior to assigning a Belt. 5. Is there “linkage” between the problem statement, objective, project metric and defect definition? Can you understand the problem by reading the charter? The problem statement, objective, project metric and defect definition are to be “linked” (same units). Anyone should be able to read the charter, fully understand the problem, the goal and how the progress will be measured, including the financials.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 6 Detail For Project Selection Criteria (Cont’d) 6.Can you state the defect definition for the project? It is important to create the definition of a defect. What is the measure of our success? What does the customer care about? Think about how the Project Metric graph will be created using the defects/volume. 7.Does the management team care about the project? Is there an executive sponsor for the project that is passionate about the issue being solved for the last time? 8.Is project linked/aligned to the goals of the business? Lean Six Sigma is all about working on projects that are important to the business. If we can’t align the project to the needs of the business, we may not receive the support required to progress the project to closure.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 7 Detail For Project Selection Criteria (Cont’d) 9. Do the benefits of the project meet the goals of the business? $250 K annually for Black Belts, $40 K annually for Green Belts 10.Are resources available and supportive for this project (Process Owner, Team, Champion)? A Black/Green Belt can’t succeed alone; they are the team leader “armed” with the toolset and require a solid, supportive team inclusive of Champion, Process Owner, Team Members, Finance and LSS Deployment Leader. Ensure all require they must complete their actions and provide the required support for the project to be successful.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 8 Detail For Project Selection Criteria (Cont’d) 11. Does the Process Owner control the entire issue being addressed? Functional control by the Process Owner is critical in order to influence and “connect” with impacted personnel. As the functional control is minimized, so is the probability of success. Larger scoped, cross-business unit projects are best led by a certified Black Belt with the assistance of an executive sponsor responsible for all impacted areas. Also use caution with travel and team meeting (phone vs. face to face) logistics. 12. Are metrics available on the Output Data or could they be developed quickly at low cost? Lean Six Sigma methodologies use data to make decisions. If data is not available on the Output data – That element we are trying to improve (Cycle Time, PPM, etc.) – We need to ask... A) How difficult will it be to obtain data? and B) At what cost? If the answer is relatively easy and inexpensive, proceed. If not, we should “park” the project until such data is available. Only those projects with quantified baseline data will be approved by the Steering Committees.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 9 Detail For Project Selection Criteria (Cont’d) 13.Is data collection on the inputs relatively easy? Again, data is required in order to assess our baseline early in the project – Likewise, the inputs to the process may need to be measured. We need not have a systems solution, but is data available in filing cabinets, can it be collected on current jobs, etc? 14.Does the project have leveragability across other areas? Understanding the depth of the problem, the solution, and the applicability to other areas is first reviewed at the start of the project and upon closing.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 10 Good Projects Address a recognized problem or strategic initiative Are supported by the organization Are linked to a Customer CTS (Critical To Satisfaction) Are focused on an ongoing process Target at least a 70% defect reduction Are scoped on a process having a distinct beginning and end Are scoped to be completed in 4-6 months Deliver $250,000 or greater in measurable financial benefits ($40k for Green Belts) Process has a measurable metric that can be used to determine the progress and success of the project Process is actively creating defects The defect is clearly defined and there is an identified reduction goal Project Selection is Key to a Successful Six Sigma Deployment A Good Project is Characterized by a Good Charter

Copyright © Six Sigma Academy International, LLC All Rights Reserved Project Chartering

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 12 Project Example – “Charter” Tab The “Project Charter” is one of three documents used in the management of Six Sigma Projects. The first tab in the Project Charter workbook is the “Charter” Tab. During the project selection process, Process Owner\Charter Writer will complete this page using available data and information. The Belts are required to have a completed Project Charter prior to attending training. The “Project Charter” is one of three documents used in the management of Six Sigma Projects. The first tab in the Project Charter workbook is the “Charter” Tab. During the project selection process, Process Owner\Charter Writer will complete this page using available data and information. The Belts are required to have a completed Project Charter prior to attending training.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 13 “Charter” Tab Page One – Project Header Information Date the Steering Committee approves the project to precede Info about team members When the project is through the Control Phase, the Date the Steering Committee signed-off on project Number on the Pipeline

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 14 “Charter” Tab Page One – Problem Statement Characteristics Of A Good Problem Statement -It should be a concise but complete description of the issue -It should focus on a specific problem aligned to high-level business objectives -It should be as detailed as possible including quantifiable performance characteristics -It should not include any presumed causes or pre-determined solutions Purpose and Function Of Problem Statements -To provide Black Belts with a well defined issue upon which to apply the DMAIC method -To quantify current performance relative to customer expectations -To identify the financial impact of current performance The Problem Statement is a 2 to 3 sentence. It is a QUANTIFIED description of the problem. First sentence should contain the data source, the data date range and THE BASELINE. The baseline in the problem statement will link to the objective and Primary Metric - same units (i.e. cycle time in days, dpmo, % defective, etc.)

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 15 “Charter” Tab Page One – Project Metric “Y” The Project Metric should be -Measurable -Indicate a source for the measurement data -Same units as Baseline and Objective. The Project Metric “Y” defines the primary metric for the project. This metric should be easily measured, relate to how success is characterized for this project, have a data source associated with it, and relate to the targeted defect. Same units as Baseline and Objective.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 16 “Charter” Tab Page One – Defect Definition The Defect Definition should be -Specific to the issues described in the Problem Statement and Objective -Consistent with the metric. The Defect Definition describes the condition of the process output that is unsatisfactory. e.g. when a call must be transferred because the customer reached the wrong office. The defect is the driver of the project. Identifying the defect will allow the baseline, objective and primary metric to be established.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 17 “Charter” Tab Page One – Project Objective The Project Objective should be based on SMART principles -S = Specific -M= Measurable -A = Attainable -R = Reasonable -T = Time-based An average Six Sigma project will yield a 70% improvement in process performance. Therefore, it is typically appropriate to set the Project Objective for a 70% reduction in defects. Objectives should -Agree with validated measurements of performance -Be based on clear project boundaries -Be attainable by the scheduled project completion date -Be consistent with VOC (Voice Of the Customer) requirements The Objective is as simple as... "Improve" (increase, decrease, reduce, etc.) from the BASELINE to the GOAL (% IMPROVEMENT) by the date of project completion. This section is very simple and is often incorrectly stated in terms of HOW to solve the problem. Same units as BASELINE.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 18 “Charter” Tab Page One – Project Benefits The Project Benefits should -Cite a minimum of $250,000 in hard dollar savings ($40k for Green Belts) -Be achievable in 4 to 6 months -Have P&L Impact Project Benefits are characterized as -Margin improvements that can be directly attributed to the Six Sigma project -A reduction of operating expenses -Operating Income contribution resulting from revenue enhancement projects Briefly Describe the expected project benefits. Include relevant calculations and explanations. Describe both the operational impact and the annual financial impact.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 19 Project Example “Benefits” Tab The “Benefits” Tab is used to characterize the cost savings opportunity represented by the Six Sigma Project. During the Project Selection process, the Process Owner will forecast the project’s potential. As the Belt conducts the project, original benefit forecasts should be validated at the end of each of the DMAIC Phases. If benefits change -20%, revised amounts must be presented to the Steering Committee for approval. The “Benefits” Tab is used to characterize the cost savings opportunity represented by the Six Sigma Project. During the Project Selection process, the Process Owner will forecast the project’s potential. As the Belt conducts the project, original benefit forecasts should be validated at the end of each of the DMAIC Phases. If benefits change -20%, revised amounts must be presented to the Steering Committee for approval.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 20 Project Example “Benefits” Tab Note: All amounts should be stated in thousands of U.S. dollars $(000s) Add “Comments” to cells to clarify sources of data, calculations, assumptions, etc. 1. Enter Baseline Period (preferably a Fiscal Year) 2. Enter Baseline Amounts (in this category, enter the entire amount to be realized during the Baseline Period – doing so ensures that benefits will tie back to an amount on the General Ledger) 3. Enter an estimate (Forecast) of the portion of the benefit to be realized each month – add “Comments” to these cells to explain calculations NOTE: DO NOT ENTER data into white cells – white cells automatically tally information from monthly details to the right

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 21 Project Example “ROI” Tab The “ROI” Tab is used to analyze the benefits of the project relative to the incremental costs of implementing the solution. The “ROI” Tab should be updated by the Belt and Process Owner during the Improve Phase. The “ROI” Tab is used to analyze the benefits of the project relative to the incremental costs of implementing the solution. The “ROI” Tab should be updated by the Belt and Process Owner during the Improve Phase.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 22 Project Example “ROI” Tab Note: All amounts should be stated in thousands of U.S. dollars $(000s) 1. Header Information will automatically populate from page one of Charter Tab. 2. Benefits information will automatically populate from the benefits tab. Note: Do Not Enter data into white cells – automatically updated.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 23 Project Example “Amendment” Tab During the course of a Six Sigma DMAIC project, some of the initial assumptions might require revision as new details are learned. If aspects of the project change, especially forecasted benefits, the “Amendment” Tab should be used to document the revisions. All changes to the project are subject to review and approval by the Steering Committee. The “Amendment” Tab can be duplicated in the workbook if more than one “Amendment” is required. During the course of a Six Sigma DMAIC project, some of the initial assumptions might require revision as new details are learned. If aspects of the project change, especially forecasted benefits, the “Amendment” Tab should be used to document the revisions. All changes to the project are subject to review and approval by the Steering Committee. The “Amendment” Tab can be duplicated in the workbook if more than one “Amendment” is required.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 24 Project Example “Amendment” Tab 1. Indicate the date this amendment was approved by the Steering Committee 2. Provide an explanation of the reason for this amendment to the Project Charter. Consider and include as appropriate: Changes to Business Conditions Requested Changes to Measurement basis Project Scope Changes Adjustments in Expected Benefits Revisions to Implementation Costs Etc. 3. Indicate any changes to the financial benefits as a result of this amendment. In the “Most Recent” column indicate the expected benefits prior to this amendment request. In the “Amended” column, indicate the expected financial benefit if and after this amendment is approved. NOTE: All amounts are in thousands of U.S. Dollars $(000s) 4. Steering Committee members names, contact information and dates each approves this amendment. Note: Duplicate the ‘Amendment’ worksheet in the workbook if multiple amendments are required.

Copyright © Six Sigma Academy International, LLC All Rights Reserved Pg 25 The following are trademarks and service marks of Six Sigma Academy International, LLC: Breakthrough Lean ®, Breakthrough Strategy ®, Breakthrough Value Services ®, Breakthrough Change Strategy SM, Breakthrough Design SM, Breakthrough Diagnosis SM, Breakthrough Execution SM, Breakthrough Sigma Lean SM, Breakthrough Six Sigma SM, Breakthrough Software Design SM, FASTART SM, Six Sigma Gold Belt TM, SOLVING YOUR BUSINESS PROBLEMS FOR THE LAST TIME SM. Six Sigma is a federally registered trademark of Motorola, Inc. MINITAB is a federally registered trademark of Minitab, Inc. SigmaFlow is a federally registered trademark of Compass Partners, Inc. VarTran is a federally registered trademark of Taylor Enterprises. Six Sigma Academy International, LLC 8876 East Pinnacle Peak Road, Suite 100 Scottsdale, Arizona Tel. (480) Fax (480)