Six Sigma Project Charter – Main Elements and Practical Guide
A six sigma project charter is essentially a strategic planning document that serves as a formal contract between executive management and the improvement team. This document is the primary record through which leadership authorizes, accepts, and supports a project. Once the charter is approved, the project team’s authority increases significantly, enabling them to mobilize resources, collect operational data, and execute DMAIC roadmap deliverables.
By formalizing expectations early, a six sigma project charter keeps the team aligned with high-level organizational goals, clarifies expectations, and maintains sharp focus on key operational objectives.
1. Core Purpose and Strategic Alignment
A charter is prepared once the problem has been initially scoped, ensuring clear communication and mutual agreement between the problem-solving team and process sponsors.
┌────────────────────────────────────┐
│ Six Sigma Project Charter Scope │
└─────────────────┬──────────────────┘
│
┌──────────────────┬───────────────────────┼───────────────────────┬──────────────────┐
▼ ▼ ▼ ▼ ▼
【 Business Case 】 【 Problem Stmt 】 【 Goal Stmt 】 【 Scope Boundaries 】 【 Milestones & Roles 】
Justifies ROI Quantifies defect Quantifies target Defines In-Scope vs Assigns timelines,
& COPQ impact symptoms (Y) performance (Y) Out-of-Scope limits Sponsor & Belt lead
A well-crafted charter achieves three strategic objectives:
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Organizational Alignment: Ensures the project directly supports Voice of Business (VOB) and Voice of Customer (VOC) priorities.
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Resource Commitment: Secures formal management sign-off, budget allocation, and dedicated team availability.
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Scope Protection: Establishes explicit boundaries to prevent scope creep during process investigation.
2. Essential Elements of a Six Sigma Project Charter
While project management forms vary across industries, an effective six sigma project charter must capture core details in executive language.
| Core Element | Key Focus & Description | Primary Objective |
| 1. Project Name & Header | Identifies the initiative, process area, primary belt lead, and executive sponsor. | Clear administrative tracking. |
| 2. Business Case | Outlines why the project matters, its strategic alignment, and estimated Cost of Poor Quality (COPQ) savings. | Justifies financial resource investment. |
| 3. Problem Statement | Concise description of what defect is occurring, when, where, and its measurable operational impact—without assuming a root cause. | Defines current baseline gap ($Y$). |
| 4. Goal Statement | Formulates SMART targets (Specific, Measurable, Achievable, Relevant, Time-bound) defining target performance. | Sets clear performance targets. |
| 5. Project Scope | Defines operational boundaries (In-Scope vs. Out-of-Scope process steps, locations, or product lines). | Prevents scope expansion. |
| 6. Milestones & Schedule | Target completion dates for each DMAIC phase (Define, Measure, Analyze, Improve, Control). | Ensures timely phase execution. |
| 7. Team Composition | Lists Champion, Process Owner, Belt Lead, and cross-functional team members. | Clarifies authority and responsibilities. |
| 8. Signatures & Approvals | Formal endorsement from the Executive Sponsor and Process Owner. | Authorizes official project start. |
3. Practical Sample: Six Sigma Project Charter Template
Below is a practical six sigma project charter sample mapping a transactional invoicing initiative:
Project Identification
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Project Name: Billing Invoice Error Rate Reduction
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Executive Sponsor: VP of Finance | Belt Lead: Black Belt (Ravi Prakash)
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Process Owner: Billing Operations Manager
Business Case & Problem Statement
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Business Case: High billing error rates lead to delayed customer payments and increased accounts receivable aging, reducing cash flow efficiency.
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Problem Statement: Over the last 6 months, the Billing Operations department experienced an average invoice defect rate of 8.5%, resulting in $120,000 in annual rework costs and customer payment delays.
Goal Statement & Project Scope
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Goal Statement: Reduce the invoice defect rate from 8.5% to less than 1.5% by Q3, yielding an estimated annual COPQ savings of $95,000.
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Project Scope: In-Scope: North American B2B invoicing pipeline. Out-of-Scope: B2C consumer payments and international entity billing.
Project Milestones
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Define Phase: Complete by Sept 20, 2023
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Measure Phase: Complete by Oct 15, 2023
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Analyze Phase: Complete by Nov 10, 2023
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Improve Phase: Complete by Dec 05, 2023
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Control Phase: Complete by Dec 30, 2023
Frequently Asked Questions (FAQ)
Q1: What is the main purpose of a six sigma project charter?
The main purpose of a six sigma project charter is to serve as an official agreement between management and the project team, establishing authorized scope, business justification, SMART goals, and timelines.
Q2: Can a project charter be modified after initial approval?
Yes, but only through formal change management approval. If data collected during the Measure or Analyze phases reveals that the project scope or financial targets must be adjusted, the charter is revised and re-signed by the Champion.
Q3: Why should a problem statement avoid assigning cause?
Including a pre-determined cause in a problem statement introduces bias before statistical data collection occurs, violating the data-driven methodology of Six Sigma.
CSSC Certification Practice Exam Questions
1. A project team drafts a problem statement: “Customer support tickets take 48 hours to resolve because the staff lacks adequate database training.” What is the primary defect in this statement?
A) It lacks financial impact data.
B) It includes a pre-determined cause (“lacks adequate database training”) before data analysis.
C) It fails to specify the target belt lead.
D) It cannot be mapped on a SIPOC.
- Correct Answer: B) It includes a pre-determined cause (“lacks adequate database training”) before data analysis.
- Explanation: A proper problem statement describes observable symptoms and baseline gaps without assuming a root cause prior to the Analyze phase.
2. Which section of the Six Sigma project charter defines operational boundaries to prevent scope creep?
A) Business Case
B) Team Composition
C) Project Scope (In-Scope / Out-of-Scope)
D) Control Plan
- Correct Answer: C) Project Scope (In-Scope / Out-of-Scope)
- Explanation: Defining explicit In-Scope and Out-of-Scope boundaries ensures the team focuses strictly on agreed process elements.
3. Who holds ultimate authority to approve the Six Sigma project charter and allocate operational resources?
A) Green Belt Lead
B) Executive Sponsor / Champion
C) External Auditor
D) Frontline SME
- Correct Answer: B) Executive Sponsor / Champion
- Explanation: The Executive Sponsor (or Champion) provides strategic oversight, allocates project funding, and approves the formal charter.
Next Post in Series: 1014. Problem Statement, Goal Statement, and Business Case Linkages.
Written by Ravi Prakash—Quality Expert (38+ yrs exp). Connect on LinkedIn or Contact Us.
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