Project Charter Template Note: Multiple “Tabs” in Project Charter Template

Project Charter Tab Project Benefits – should be clear, simple explanation of specific financial benefits that will be realized by Albertsons from the successful completion of this project, and the elimination of defects. Benefits must show calculations. Store shrink from damaged product not authorized by the supplier for return credit is $1.7M annually. By reducing this by 80% the So. Cal. Division will save $1.36M ($1.7M X 80% = 1.36M) Note: You do NOT need to fill out this of the “Charter” Tab. This information will automatically carry forward (link) from the “Benefits” and “ROI” Tabs.

“Benefits” Tab Note: 3 sections to the Benefits Tab” Cost Benefits Revenue Benefits Cash Flow Benefits

1. Enter the “baseline” period – what period was used to establish the baseline performance (before the Six Sigma project) In this case, it was the first 4 months of FY 04 (Feb-May 2004) 2. Enter the “baseline” performance – In this case, the So. Cal. Division lost $1.7M in shrink from damaged product not authorized by the supplier for return credit. Note: All amounts in thousands of U.S. dollars. Also, as explained in comment in Baseline Period cell, the baseline period was 4 months, the shrink for that period was $569K. Annualized it is approximately $1.7M 3. Enter the amount of expected benefit realized by this project after successful completion. If results will be impacted by seasonality, represent accordingly in months. Note: This template has 2 years (24 months) of forecast and 24 months of actuals. “Year 2 Forecast” is to the right (not shown on this slide). Make sure you complete Year 2 Forecast as well. This example shows benefits on one line. Some projects may have impacts on several lines. Only enter amounts in shaded cells. Non-shaded cells contain formulas. Benefits Tab – Cost Benefits

Benefits Tab - Continued Special consideration for Revenue & Cash Flow Project Benefits 1. You must apply a Location-Gross % to increased sales $$ to properly calculate the project benefits. If you do not know the Location-Gross % for this store, category or project, use 30% as a default. Increases sales Location-Gross Project Benefit 2. Cash Flow projects require a Weighted-Average-Cost of Capital factor (WACC). Albertsons is using 6 ½ % WACC to calculate project benefits. Reduced inventory amount 6.5% WACC Project Benefit

ROI Tab Report “incremental” project cost on the ROI Tab. “Incremental” means cost that you will need to incur if you go ahead with the Six Sigma project. Do NOT include Six Sigma “program” costs such as Black Belt or Team Member salaries, training costs, etc. Often there are no known costs at the beginning of a project. If you expect to incur costs to complete this project, enter the amounts in the appropriate months for Year 1 Forecast and Year 2 Forecast. Amounts shown must be on a “P&L” basis – so any Capital cost should be depreciated or amortized accordingly.