The Define Phase represents the critical foundation of any Lean Six Sigma project. At the heart of this phase lies the project charter, a comprehensive document that serves as the roadmap for your entire improvement initiative. Understanding how to develop a thorough and effective project charter can mean the difference between project success and costly failure. This guide will walk you through every essential component of creating a project charter that aligns stakeholders, clarifies objectives, and sets your team up for measurable success.
Understanding the Define Phase in Lean Six Sigma
The Define Phase is the first stage in the DMAIC (Define, Measure, Analyze, Improve, Control) methodology that forms the backbone of Lean Six Sigma projects. During this crucial phase, project teams establish the foundation for their improvement efforts by clearly articulating the problem, defining project scope, identifying stakeholders, and documenting expected outcomes. The project charter emerges as the primary deliverable from this phase, serving as a contract between the project team and organizational leadership. You might also enjoy reading about Common Define Phase Terminology: Essential Glossary of Key Terms and Concepts for Six Sigma Success.
Without a well-constructed project charter, teams often experience scope creep, misaligned expectations, resource conflicts, and ultimately project failure. Research indicates that projects with clearly defined charters are 2.5 times more likely to succeed than those without formal documentation. The charter provides the governance structure that keeps projects focused and accountable throughout their lifecycle. You might also enjoy reading about Cross-Functional Team Formation: Building the Right Six Sigma Project Team for Maximum Success.
What is a Project Charter?
A project charter is a formal document that authorizes the existence of a project and provides the project manager with the authority to allocate organizational resources to project activities. In the Lean Six Sigma context, the charter goes beyond simple authorization to become a strategic planning tool that captures critical project information in a standardized format. You might also enjoy reading about How to Get Executive Buy-In for Your Six Sigma Project During Define Phase.
The charter typically ranges from one to three pages and should be concise yet comprehensive enough to answer fundamental questions about the project. It serves multiple purposes simultaneously: it communicates project goals to stakeholders, establishes boundaries for the project scope, defines success metrics, and creates accountability through clear roles and responsibilities.
Essential Components of a Comprehensive Project Charter
1. Business Case and Problem Statement
The business case articulates why the project matters to the organization. It connects the improvement initiative to broader strategic objectives and quantifies the cost of inaction. A compelling business case demonstrates that the project deserves organizational resources and leadership attention.
The problem statement describes the specific issue the project will address. It should be factual, measurable, and free from assumptions about causes or solutions. A well-crafted problem statement answers four key questions: What is wrong? Where is it occurring? When does it happen? How big is the impact?
Example Problem Statement: The customer service department at Regional Healthcare Systems experiences an average call abandonment rate of 18% during peak hours (8 AM to 11 AM, Monday through Friday), resulting in approximately 450 lost calls per week. This abandonment rate is 13 percentage points higher than the industry benchmark of 5%, potentially impacting patient satisfaction and revenue generation. The elevated abandonment rate has persisted for the past six months despite increased staffing levels.
2. Project Goals and Objectives
Goals describe the desired end state of the project in specific, measurable terms. Objectives break down these goals into concrete targets that can be tracked and validated. Both should follow the SMART framework: Specific, Measurable, Achievable, Relevant, and Time-bound.
Example Goals and Objectives:
- Primary Goal: Reduce call abandonment rate from 18% to 6% or lower within six months
- Secondary Goal: Improve average call answer time from 4.2 minutes to under 2 minutes
- Financial Objective: Recover potential revenue loss of $85,000 per quarter through improved call handling
- Customer Satisfaction Objective: Increase customer satisfaction scores from 3.2 to 4.0 or higher on a 5-point scale
3. Project Scope Definition
Scope definition establishes clear boundaries for what the project will and will not address. This section prevents scope creep by creating explicit guardrails that keep the team focused on achievable objectives. Both in-scope and out-of-scope items should be documented to avoid confusion later.
Example Scope Statement:
In Scope:
- Analysis of call volume patterns and staffing allocation during peak hours
- Evaluation of current Interactive Voice Response (IVR) system effectiveness
- Assessment of call routing protocols and queue management
- Training effectiveness for customer service representatives
- Technology infrastructure supporting call center operations
Out of Scope:
- Complete replacement of existing phone system hardware
- Expansion of customer service department physical space
- Changes to after-hours call handling procedures
- Integration with third-party call center outsourcing
4. Stakeholder Identification and Analysis
Stakeholders are individuals or groups who have an interest in or influence over the project outcome. Identifying stakeholders early ensures appropriate communication channels are established and potential resistance is anticipated and managed. The charter should identify both primary and secondary stakeholders along with their specific interests and influence levels.
Example Stakeholder Analysis:
- Project Sponsor: Vice President of Operations (High influence, high interest)
- Primary Stakeholders: Customer Service Manager, IT Director, Quality Improvement Director (High influence, high interest)
- Secondary Stakeholders: Customer Service Representatives (15 team members), Patients/Customers, Finance Director (Medium to high interest, varying influence)
- Peripheral Stakeholders: Marketing Department, Human Resources (Low to medium interest, low influence)
5. Project Team and Roles
This section identifies who will work on the project and clarifies their specific responsibilities. Clear role definition prevents confusion and ensures accountability throughout the project lifecycle. The typical Lean Six Sigma team structure includes several key roles.
Example Team Structure:
- Executive Sponsor: Michael Chen, VP Operations (Provides resources and removes organizational barriers)
- Process Owner: Sarah Johnson, Customer Service Manager (Accountable for long-term process sustainability)
- Project Champion: David Martinez, Quality Improvement Director (Liaison between team and leadership)
- Green Belt/Project Leader: Jennifer Williams (Day-to-day project management and analysis)
- Team Members: Two customer service representatives, one IT specialist, one data analyst (Subject matter expertise and implementation support)
6. Timeline and Milestones
A realistic timeline with clearly defined milestones creates accountability and allows for progress tracking. The timeline should account for data collection periods, analysis time, solution implementation, and validation. Major milestones should align with the DMAIC phases.
Example Project Timeline:
- Week 1-2: Define Phase completion and charter approval
- Week 3-5: Measure Phase (data collection and baseline establishment)
- Week 6-9: Analyze Phase (root cause identification and validation)
- Week 10-14: Improve Phase (solution selection and implementation)
- Week 15-20: Control Phase (monitoring system establishment and documentation)
- Week 21-24: Final validation and project closure
7. Success Metrics and Benefits
Success metrics define how the team will measure project achievement. These should include both leading indicators (process measures) and lagging indicators (outcome measures). The benefits section quantifies expected improvements in financial, operational, and qualitative terms.
Example Metrics and Benefits:
Primary Metrics:
- Call abandonment rate (Target: 6% or lower)
- Average speed to answer (Target: 120 seconds or less)
- First call resolution rate (Target: 75% or higher)
Financial Benefits:
- Recovered revenue: $340,000 annually
- Reduced overtime costs: $45,000 annually
- Improved efficiency savings: $28,000 annually
- Total financial impact: $413,000 annually
Operational Benefits:
- Enhanced customer satisfaction and loyalty
- Improved employee morale and reduced turnover
- Better capacity utilization
- Scalable process improvements
8. Preliminary Risk Assessment
Identifying potential risks during the Define Phase allows teams to develop mitigation strategies proactively. Risks should be categorized by probability and impact, with specific mitigation approaches documented for high-priority risks.
Example Risk Assessment:
- High Risk: Resistance from customer service staff to new procedures (Mitigation: Early involvement in solution design, comprehensive training program)
- Medium Risk: Technology limitations may constrain solution options (Mitigation: Early IT assessment, budget contingency for upgrades)
- Medium Risk: Seasonal volume variations may affect data analysis (Mitigation: Extended data collection period covering multiple cycles)
- Low Risk: Competing organizational priorities may divert resources (Mitigation: Strong executive sponsorship, regular communication with leadership)
Best Practices for Developing Your Project Charter
Engage Stakeholders Early and Often
The project charter should not be created in isolation. Engaging key stakeholders during charter development builds buy-in, surfaces potential concerns early, and improves the quality of the final document. Schedule working sessions with process owners, team members, and the project sponsor to gather input and validate assumptions.
Use Data to Support Your Case
Whenever possible, include preliminary data that demonstrates the problem’s magnitude and validates the need for intervention. Historical performance data, benchmark comparisons, customer feedback, and financial impact analyses strengthen the charter and make it more compelling to decision makers.
For the call center example, preliminary data might include six months of abandonment rate trends, competitor benchmarking data, customer complaint logs, and revenue impact calculations based on average transaction values and conversion rates.
Keep It Concise But Complete
While the charter must be comprehensive, it should remain accessible and readable. Use clear language, avoid unnecessary jargon, and organize information logically. Visual elements like simple charts, tables, or process maps can communicate complex information more effectively than lengthy paragraphs.
Secure Formal Approval
The charter requires formal approval from the project sponsor and key stakeholders. This approval signifies organizational commitment to the project and authorizes resource allocation. Schedule a formal charter review meeting where stakeholders can ask questions, provide feedback, and ultimately approve the document through signatures or documented consent.
Treat It as a Living Document
While the charter provides project structure, it should not be rigidly inflexible. As teams gather data and deepen their understanding during subsequent DMAIC phases, minor adjustments to scope, timelines, or metrics may be necessary. However, any significant changes should be formally documented and approved through a change management process.
Common Pitfalls to Avoid
Jumping to Solutions Too Quickly
One of the most common mistakes in charter development is including predetermined solutions rather than focusing on problem definition. The Define Phase should establish what needs improvement and why, not how to fix it. Solution identification comes later in the DMAIC process after thorough analysis.
Setting Unrealistic Goals
While ambitious goals can motivate teams, unrealistic targets undermine credibility and set projects up for failure. Goals should stretch the organization’s capabilities while remaining achievable given available resources, time constraints, and organizational realities. Use historical data and industry benchmarks to validate goal feasibility.
Neglecting the Financial Impact
Lean Six Sigma projects should deliver measurable financial benefits. Charters that fail to quantify expected financial returns struggle to maintain leadership support, especially when competing for limited resources. Work with finance partners to develop credible benefit calculations that can withstand scrutiny.
Creating Vague Problem Statements
Problem statements filled with subjective language, vague descriptions, or assumed causes fail to provide clear direction. Compare these examples:
Weak Problem Statement: “Our call center has problems with too many dropped calls because we do not have enough staff and customers get frustrated.”
Strong Problem Statement: “The customer service department experiences an 18% call abandonment rate during peak hours, which is 13 percentage points above the industry benchmark of 5%, resulting in approximately 450 lost calls weekly and an estimated quarterly revenue impact of $85,000.”
Sample Project Charter Template
Below is a consolidated example demonstrating how all charter components come together into a cohesive document:
Project Title: Call Center Abandonment Rate Reduction Initiative
Project Leader: Jennifer Williams, Green Belt
Project Sponsor: Michael Chen, VP Operations
Date: January 15, 2024
Business Case: Regional Healthcare Systems’ customer service department experiences higher than acceptable call abandonment rates, negatively impacting patient satisfaction, revenue capture, and competitive positioning. The current 18% abandonment rate during peak hours significantly exceeds industry standards and represents both immediate financial loss and long-term reputation damage. Addressing this issue aligns with organizational strategic priorities for patient-centered care and operational excellence.
Problem Statement: The customer service department at Regional Healthcare Systems experiences an average call abandonment rate of 18% during peak hours (8 AM to 11 AM, Monday through Friday), resulting in approximately 450 lost calls per week. This abandonment rate is 13 percentage points higher than the industry benchmark of 5%, potentially impacting patient satisfaction and revenue generation. The elevated abandonment rate has persisted for the past six months despite increased staffing levels.
Goal Statement: Reduce the call abandonment rate from 18% to 6% or lower within six months while improving average speed to answer from 4.2 minutes to under 2 minutes, resulting in recovered revenue of approximately $85,000 per quarter and improved patient satisfaction scores.
Project Scope: This project will analyze call patterns, staffing allocation, IVR effectiveness, call routing protocols, and technology infrastructure during peak hours. It will not include complete phone system replacement, physical space expansion, after-hours procedures, or third-party outsourcing.
Project Team: Executive Sponsor (Michael Chen), Process Owner (Sarah Johnson), Champion (David Martinez), Project Leader (Jennifer Williams), Team Members (2 CSRs, 1 IT specialist, 1 data analyst)
Timeline: 24 weeks (January 15 through July 5, 2024)
Key Milestones: Charter approval (Week 2), Baseline data collection complete (Week 5), Root cause analysis complete (Week 9), Solutions implemented (Week 14), Control plan deployed (Week 20), Project closure (Week 24)
Success Metrics: Call abandonment rate ≤ 6%, Average speed to answer ≤ 120 seconds, First call resolution ≥ 75%, Customer satisfaction ≥ 4.0/5.0
Expected Benefits: Annual financial impact of $413,000 (recovered revenue, reduced overtime, efficiency gains), improved customer satisfaction and loyalty, enhanced employee engagement, scalable process improvements
The Role of Training in Charter Development
Developing effective project charters requires both theoretical knowledge and practical experience. While this guide provides a comprehensive overview, hands-on training with experienced practitioners accelerates learning and builds confidence in applying these concepts to real-world situations.
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