AAF Case Study: Creating a Project Charter

Create a Project Charter

We’ve been covering a fictional Six Sigma case study for AAF. If you’re joining us, here’s a quick recap:

• We’ve set the context for the Case Study.
• I had a Six Sigma project kick-off.
• We’ve secured executive support.
• Now, we are crafting a Project charter.

We are not that far off from completing a charter. Items that have been suggested throughout the conversation occurring in this case study so far are:

• Problem Statement
• Measurable Goals and Objectives
• Business Case

Some items that haven’t been discussed so far are:

• Project Scope
• Roles & Resources
• Schedules & Deliverables

“Begin documenting information stated in a project charter, hone in on the problem statement and business case and once completed, get sign on by leadership.”

Antonia

” We need to create a problem statement and then a goal statement. We then need to determine what is in scope and out of scope. Lastly we need to state our primary and secondary metrics; primary to determine how we will track our progress and secondary what we want to prevent from going wrong.”

-LJ

Let’s dive in.

Problem Statement

• Joshua suggested an organizing statement: “Leadership has identified improving bottom-line results for their vacation business as a strategic imperative.”
• Nicole suggested, “The AAF is involved in various travel-related business and offerings and has spent hundreds of thousands of dollars adding marketing into their business.
• Executives are upset that their 2018 addition of voice marketing has yielded poor results.

For a Problem Statement, I like something along the lines of clearly stating what problem the team is addressing. I also like including a baseline performance number.

Two good references for creating problem statements are:

• How to Write a Problem Statement (ProProject Manager).
• How to Write a Problem Statement (Dummies).

In this case, let’s try a problem statement of:

Problem: AAF: Travel is only converting 0.3% of Voice Marketing exposures, well short of the industry standard of 3%, and incurring licensing costs well in excess of returns. Additionally, AAF: Travel’s revenue is down 66% over the same period from $12M to $4M. This is both a revenue and expense issue, resulting in decreased sales and missed revenue targets over the past three months. AAF is committed to returning AAF: Travel to previous levels of revenue.

Business Case

We had some great direction on expanding our business case and setting specific goals and objectives.

• ” Define the primary, secondary & tertiary business measures and derive the business case components. ” – Nicole Greyling
• Christopher suggested, “Voice marketing has been yielding poor results in a market that strategically yields X” and stated, “Project charter should set a target to achieve from the baseline by identifying a key goal.”

When setting the goals, we need to keep finances in mind; they should also follow the SMART format. How could we write the target of this project so that it is, at minimum, self-funding?

We could make assumptions on how much it will cost to fund a Six Sigma team for the period we think the engagement will last. Then, we could make assumptions about the costs of whatever materials or activities we will need to use or complete over the course of the project, including common control activities of deploying new processes and training staff.

In short, a projected ROI.

For this Case Study, let’s make the blanket statement that we need $1 Million US to cover the project’s cost.

That means that we need the program to return at least that much in savings. This particular case study involves lessening the impact of a previous process change, so, in a practical sense, perhaps our first course of action would be to revert to the original process in the hopes of reversing the 40% decline.

Without such a reversal, we would have to account for the ongoing depression of revenue. For the sake of simplicity, let’s assume we can revert to the old process seamlessly.

Let’s state that the old, non-voice Marketing process yielded a conversion rate of 1%, hence why the VM process of 3% was so enticing.

The new goal would be then to leverage the information on the Voice Marketing process to see if we can raise the conversion rate non-VM process baseline of 1% ($12M revenue) to 3% ($36M revenue).

An anticipated change of $24 Million is far in excess of our anticipated $1M spend, and our sponsors are willing to make that spend in pursuit of the goal.

Adding this information into our business case in the form of SMART goals will complete half of our project charter.

Next time, we will focus on defining our process and refining our stakeholder list. This will inform scope and help us outline our schedules and deliverables, completing the project charter step.

From there, we will focus on completing the Define Phase by:

• Building the team, assigning roles and responsibilities, and defining our stakeholder management process.
• Obtaining the Voice of the Customer
• Completing formal project selection.

Active Participation Questions

How would you write business goals for this scenario?

If the business case was defined as the intersection of the problem statement and the process goals, how would you summarize what this project will do for the business?

What steps would you take to define the process and establish boundaries?

Let us know in the comments.