How to create good Project Charters?

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How to create good Project Charters?

It is often said that "Well begun is half done!" Why is the project charter so important and why is that so many times we find that it is so difficult to write a good project charter? How do we create a good project charter? What makes a good Lean Six Sigma project? If you are responsible for reviewing and approving project charters – what do you look for? Is there a checklist to see if a project charter is good? This article looks at how to create a good project charter.

Introduction

What is a project charter? A project charter is a written document (usually on a single page) that describes what is the project all about, why we are working on this project, what is the timeline and who are team members working on this project. A project charter contains six main elements (and you can add more to this list if required by your company):

Business Case:The business case describes why this project is important to the company. Why should the management support this project? Problem Statement: The problem statement contains a brief description of what is the “pain” being experienced by the company. You need to relate the problem statement to the voice of the customer (whether internal or external). You also need to quantify the problem statement, where is the problem occurring, when does it occur, how much etc.
Goal Statement:What is the goal of the project? How much improvement are we targeting? The goal of the project should be specific, measurable and time bound. The project goal should be related to the problem you are trying to solve.
Scope Statement:The scope of the project clearly describes what is included in the project and what is excluded in the project. Scope can include product families, geographical areas, departments etc.
Timeline:The timeline describes the key milestones and when they will be completed. Typically for a DMAIC Six Sigma project, the times for the completion of each of the five phases (Define, Measure, Analyze, Improve, and Control).
Team Members:Team members section includes all the resources that are required to work on this project. Typically, mentioned in this section are the project sponsor, key stakeholders, team members, subject matter experts.

Application

A project charter is usually created at the beginning of a project. This document is usually created by the sponsor in discussion with other management team members and/or the project leader. In some cases, the project leader may be tasked to create the project charter. Create a project charter, have a discussion with your sponsor. If any changes are required, work with the sponsor to make the changes and get it signed by the sponsor. An approved project charter is now created for the project. Note that the project charter has to be one of the first things you would create on a project (in the planning phase of the project). An example project charter template is shown below.

Typical Problems with Charters

Here are some typical problems we have observed on project charters.

The project title is not very clear. The project title should be a clear one line description of what the project is all about. You should be able to just read the project title and get a good idea what the project is all about. If the project title is very vague then it will not be clear to a senior management person who may be reviewing several projects. Do not include specific targets into the project title as the targets may change or may not be relevant a year down the road. Do not also include the solutions as identifying a solution is a task in your Lean Six Sigma project. Use a verb in the title to describe what the project is all about – like Reduce the inventory costs … etc. A project charter should also be specific so the management knows which area this project is targeting. For example, Reduce the inventory cost for product XYZ. Some project leaders also give a fancy title to make the project stand out and it may be a good idea to do that if you are creative enough to come up with an interesting acronym. For example, project RAINBOW.
No appropriate project leader. There should be a good match between the project and the project leader. The project leader should be capable of delivering the project on-time and on-budget. He or she should be available to work on the project and not be overbooked. The project leader should be interested and motivated to make the project a success. If these conditions are not met, then the project may not be suitable for the selected project leader. Not linked to company strategy. It is important that the selected project be important to the company. Projects that are not very important to the company will not get sufficient management attention and focus and it will be difficult to get support to implement the recommendations of the project. In addition, the project may not provide sufficient recognition for the project leader for having completed the project. Some of the items that ensure good linkage is by selecting a project that is linked to one of the company high level strategies or which eliminates a problem area in the business balanced scorecard. Management always loves to hear about money or improving customer satisfaction, so if a project is addressing these issues, they should be clearly highlighted in the project charter business case.
Problem statement has not been quantified. A lot of project charters are written where the problem has not been clearly quantified. If the “pain” is not understood then it is not clear if data exists to support the project in the first place. Before you create a project charter, you need to collect data to show where the problem exists, how much is the magnitude of the problem, and when the problem occurs. For example, the fill rate for customer orders for 2011 was 75% for North America.
Goal statement is not SMART. A good project charter needs to have clear goals. We should know when the project is complete if it was successful project or not. In this regard, the goal should be specific. For example, we will improve the fill rate is not a good goal statement. A better statement is we will increase the fill rate to 85% is a better statement. It should be measurable otherwise it would be hard for us to determine if the project is successful. The goal should be attainable. The goal should not be out of reach of the project team – we should have some benchmark data to show how to goal was set for a given project. Unrealistic goals only setup the project team for failure. The goal should be relevant, it should support organization needs. If the goal is not relevant, then it will be difficult to implement recommendations. Finally, the goal should be time-bound. There should be a target date when the goal will be achieved so we know if we are delivering the project on schedule or if we are behind schedule.
Scope of the project is not clear. The scope is very important because if the scope has not clearly been defined, then projects are subject to scope creep and can take forever to complete. Scope section should contain both things that are in scope and things that are out-of-scope. Scope can include things like geographies that are not covered, products that are not covered, departments that are not covered, customers that are not covered, start and stop points of the process etc.
Team members are not correctly chosen. We need to make sure that there is a cross-functional team that is capable of supporting the project and is available to help the project succeed. If there are too few team members are too many team members that could be a red-flag for the reviewers. Timeline for the project is not okay. It is important to have a realistic time frame for the project. If the project is to be successful the timeframe should be realistic. There is no point promising stuff that cannot be delivered and on the other hand, the project timeline should be realistic and be completed in a reasonable time frame. If a project takes more than a few years to complete, then it is probably not suitable because things change and the project recommendations may no longer be appropriate 2 years from now. Similarly, if the project timeline is very short, it may be too aggressive and there is no way the team could deliver at such short time frames. The reviewer needs to check all the activities that are to be done by the team to judge if the timeline for the project is realistic and appropriate for the company.
Project charter is not signed. The last thing to check is to ensure that there is agreement with the project sponsor of the entire project charter. If the project charter has not been signed, it may be a flag that the project leader has not fully discussed the project and got approval from the sponsor. Verbal agreements are not acceptable because people forget what was agreed to and in addition during the course of the project, people may also change. Hence, it is best that the project leader get a signed and approved project charter – if not a signature at least an email approval is required.

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