2 FOR INTERNAL USE ONLY Project Chartering  Define the components of a project charter  Develop a project idea into an effective project charter  Review a project charter for adequacy Module Objectives:

3 FOR INTERNAL USE ONLY Project Selection  Project is aligned with business objectives  Process has a measurable “Y”; an indication of whether or not the process is successful (may or may not be currently measured)  Project is focused on an ongoing process within your control  Process is creating defects  Project Objective should be significant (e.g. 70% improvement)  Process will continue to be used What Makes A Good Project?

4 FOR INTERNAL USE ONLY Finding Projects Where to Look  “Hidden factories”: –Low RTY –Lots of re-work in processes  Customer complaints, feedback, and surveys –Poor quality, –Missed deadlines, –High costs  Management objectives  Long cycle times –Multiple Hand-Offs –Long wait times  Processes with significant variability  Capacity constrained processes

5 FOR INTERNAL USE ONLY Problem Statement Characteristics Of A Good Problem Statement:  Concise, complete description of the problem  Focus on a specific problem aligned to high-level business objectives  Detailed as possible including quantified baseline  Must not include any presumed causes or pre-determined solutions Purpose and Function Of Problem Statements:  Provides Project Leader with a well defined issue upon which to apply the Problem Solving Methodology  Quantifies the current performance relative to customer expectations  Identify the financial impact of current performance The Problem Statement is a 2 to 3 sentence, quantified description of the problem. First sentence should contain the data source, the data date range and the baseline performance. The baseline in the problem statement will link to the Objective and Primary Metric Reader Should “Feel the Pain.”

6 FOR INTERNAL USE ONLY The "4 Whats" Problem Statement: Customer Satisfaction score for the XY bank is 11 percentage points lower than Best in Class Benchmark, resulting in a potential lost revenue of $5.5MM! 1% Customer Satisfaction gap = $500,000 of lost revenue from customer attrition. What is the total lost potential? 11% relative Customer Satisfaction gap represents lost revenue and earnings potential. What is the correlation between % Customer Satisfaction and revenue? Compared to Best in Class Benchmark (which is at 94%), Customer Satisfaction is at 83%. What is the impact of this gap? Customer Satisfaction scores for the XY bank are too low. What is “too low”?

7 FOR INTERNAL USE ONLY  Objective should describe the targeted performance shift of the Project Metric.  To establish the target performance (Objective) for project use: –Benchmark data, –“perfect day” performance, –Rule-of-thumb 70% or –Expert opinion  The Objective should have an expected completion date. 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. The Reader Should Be Clear Of What Determines Success For This Project

8 FOR INTERNAL USE ONLY  Project Benefits: –Are directly derived from improvements to the process at the level outlined in the Project Objective. –Are calculated using the Primary Metric for this project. –Include Operational Improvements: Reduction in defects Cycle Time Improvements Risk mitigation, Etc.  Financial Benefits are characterized as: –Tax benefits that can be directly attributed to the project –A reduction of operating expenses The Project Benefit section describes the expected project benefits. Include relevant calculations and explanations. Consider and describe both operational and financial benefits.

9 FOR INTERNAL USE ONLY  The Project Metric should be: –Measurable –Indicate a source for the measurement data –Same units as Baseline and Objective  Think about the creation of the Primary Metric Chart. How will the data on the chart be calculated (daily?, weekly?, monthly?, other?) The Project Metric “Y” defines the primary metric for the project. This metric should be easily measured, relate to how success is characterized in the Project Objective, have a data source associated with it, and relate to the targeted defect. Same units as Baseline and Objective.

10 FOR INTERNAL USE ONLY Primary Metric Chart  1. Baseline performance –Historical Average –12 months if possible  2. Actual performance –Identify any known special causes  3. Targeted performance –What you expect during and after your project.

11 FOR INTERNAL USE ONLY  The Defect Definition is: –Specific to the issues described in the Problem Statement and Objective –Consistent with the Project Metric (Y)  The defect definition enables you to calculate the data points on your primary metric chart. The Defect Definition describes the condition of the process output that is unsatisfactory to the Customer.

12 FOR INTERNAL USE ONLY Charter Review Checklist  Problem Statement: Does the Problem Statement contain a date range of baseline data, a baseline and source of data and the timeframe it was gathered? Confirm the Problem Statement does not include a “solution”  Project Objective: Does the Objective state an “increase” or “decrease” from the baseline to the goal by a specific project target end date? Do the Problem Statement, Primary Metric and Objective support one another?  Project Benefits: Is the financial value supported by computations? What assumptions are in the financial value?  Primary Metric: Is the Primary Metric documented and normalized for volume (i.e. if volume increases or decreases will the way the metric is used still make sense?) Is there a Secondary Metric that ensures no undesired results occur due to a change in the Primary Metric? If not, is there a good reason there is no secondary metric? Do metrics contain units (i.e. % defective, cycle time in mins, daily, weekly, monthly, etc.)? Does the Defect Definition tie to the Primary metric and will it aid in establishing the Primary Metric chart?  Process Owner Buy-in: Has the Process Owner agreed to the Charter, proposed benefits and has resources available to go forward with the project?