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Practical guide · Kaizen and continuous improvement

Project charter: what it is and how to write one for an improvement project

Short answer

A project charter is a short document that the sponsor signs to authorise a project, fixing its problem, goal, scope, team and timeline before the work starts. The PMBOK Guide describes it as the document that formally authorises a project and gives the project manager authority to use the organisation's resources.

For an improvement project the charter fits on one page. It says what is wrong, in numbers and where; what the team will achieve and by when; what is in and out of scope; who is on the team and who is the sponsor; the milestones; and what the project is worth. The project leader and the sponsor both sign it before the Measure phase starts. If the scope or the goal changes later, the charter is changed and signed again, so everyone is working to the same page.

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What is a project charter? Charter vs plan, business case and team charter

The charter answers one question: should we do this, and who agrees. The project leader writes it with the sponsor. In a DMAIC project it is the main output of the Define phase. In a kaizen event it is a shorter page. In an A3 the first boxes do the same job.

People mix the charter up with four other documents. The table separates them.

Project charter against the documents it is confused with
DocumentQuestion it answersLength and timing
Project charterWhat are we doing, why, to what goal, who agrees?One page, before the project starts, signed by the sponsor
Project planWhat are the tasks, who does each, by when?Several pages or a Gantt chart, written after the charter is signed
Business caseIs this worth the money and time compared with other options?A section of the charter for an improvement project, a document in its own right for a large capital one
Team charterHow will this group work together: roles, meetings, decisions?One page, written by the team once it is formed; see the team charter template
Kaizen event charterWhat will this one event, usually a few days, change?One page, signed before the event; see the kaizen event charter template

What goes in a project charter

Ten fields are enough for an improvement project. Each one has a test that tells you if it is done.

The ten fields of an improvement project charter
FieldWhat to writeTest
TitleThe process and the problem in a few wordsSomeone outside the plant knows what it is about
Problem statementWhat is wrong, where, since when and how big, in numbers. No cause, no solutionIt has a baseline number and a place
Business caseWhy it matters: cost, safety, customer, deliveryA finance partner can check the figure
Goal statementWhat improves, from what to what, by when, measured howIt is specific, measurable and has a date
MetricThe one measure, how it is calculated and where the data comes fromThe data exists today
ScopeThe process steps, lines or products in, and the ones explicitly outThere is an out list
Team and rolesSponsor, project leader, members, and the finance and process owner contactsEvery name has agreed to the time
MilestonesThe end date of each phaseThe final date matches the goal date
Constraints and risksWhat could stop the project: access to the line, people, budget, a launchEach has an owner or an action
ApprovalsSponsor and leader names, datesBoth have signed

How to write a project charter in seven steps

  1. 1

    Go and see the problem first

    Stand at the line and look at the data for the last few months. Write the problem in numbers.

  2. 2

    Write the problem statement without a cause

    Say what is wrong, where, since when and how big. Leave out the cause and the fix: they come out of the Measure and Analyze phases, and writing them now sends the team to the answer it already believes.

  3. 3

    Set a goal with a baseline and a date

    Write it as: reduce X from this to that, measured this way, by this date. A goal with no baseline cannot be missed or met.

  4. 4

    Draw the scope and write what is out

    Name the line, the product and the steps the team may change. Write what is out too. Without an out list, the project grows until it cannot finish.

  5. 5

    Choose the team

    A sponsor who can remove obstacles, a leader with time set aside, and people from the process: an operator, maintenance, quality, and someone from finance for the savings. A RACI matrix helps if the roles are unclear.

  6. 6

    Work out what it is worth

    Show the sum. Number of units, cost per unit, change in rate. Mark which part is hard savings that will show in the budget and which is soft.

  7. 7

    Sign it, and treat changes as changes

    Sponsor and leader sign before the work starts. Keep one copy where the team can see it. If scope or goal changes, edit the charter, date it and sign again.

Worked example: a charter for a scrap project on a packaging line

Illustrative example. A plant wants to cut scrap on a packaging line. This is what the charter says, field by field.

Project charter: reduce scrap on Line 3 (illustrative)
FieldEntry
TitleReduce film and carton scrap on Line 3
Problem statementLine 3 scrapped 4.2% of units started over the last 12 months, 25,200 of 600,000, mostly at the sealer and the case erector.
Business caseEach scrapped unit costs $2.50 in materials and processing. Scrap on Line 3 costs $63,000 a year.
Goal statementReduce Line 3 scrap from 4.2% to 2.5% of units started, measured weekly from the scrap log, within 16 weeks of kickoff.
MetricScrap units divided by units started, weekly, from the shift scrap log and the line counter.
ScopeIn: Line 3, sealer and case erector, all products. Out: other lines, upstream film quality, new equipment.
TeamSponsor: plant manager. Leader: process engineer. Members: two operators, a maintenance tech, a quality tech. Finance contact for savings.
MilestonesDefine weeks 1 to 2, Measure 3 to 5, Analyze 6 to 8, Improve 9 to 13, Control 14 to 16.
RisksLine time for trials: agreed with planning for two shifts a week. Seasonal volume peak in week 10: trials move to the quiet shifts.
ApprovalsPlant manager and process engineer, signed and dated.

The savings are worked out in the case. Scrap now: 600,000 x 0.042 = 25,200 units, and 25,200 x $2.50 = $63,000 a year. Scrap at the goal: 600,000 x 0.025 = 15,000 units. The change is 25,200 - 15,000 = 10,200 units, and 10,200 x $2.50 = $25,500 a year. The phase weeks add up too: 2 + 3 + 3 + 5 + 3 = 16 weeks, which matches the goal date.

The $25,500 is a hard saving only if the plant buys less material or makes more good units with the same input, and a finance partner confirms it. If scrap falls but nothing is bought less, it is a soft saving. Decide that before the project, with the savings validation checklist.

How the charter is used through the project

A charter is not filed. It is the page you return to at each phase review. Does the team still work on the problem in the statement? Is the metric moving toward the goal? Is anything out of scope creeping in? The sponsor uses the same page to decide at each review whether to continue, change the goal or stop.

At the end it becomes the first page of the project record: the goal against the result, and the savings against the case.

Common project charter mistakes

  • A solution in the problem statement. 'We need a new sealer' is not a problem. 'The sealer scraps 1.8% of units' is.
  • A goal with no baseline or no date. 'Improve scrap' cannot be missed or met.
  • No sponsor signature. Without it the team cannot get line time or people when it needs them.
  • A savings figure nobody has checked. Ask finance before the project, not after.
  • Treating the charter as fixed. If the data shows the real problem is elsewhere, change the charter and sign it again.

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FAQ

Questions about project charter

  1. It is a one page agreement that starts a project. It says what the problem is, what the team will achieve and by when, what is in and out of scope, who is on the team and who the sponsor is. The sponsor signs it so the team has the authority to start.

  2. For an improvement project: a title, a problem statement with a baseline, the business case, a goal statement with a date, the metric, the scope with an out list, the team and roles, milestones, constraints and risks, and the approvals. Each is described with a test in the table above.

  3. The charter says what the project is for and gets it approved. The plan says how the work will be done: the tasks, the owners and the dates. The charter comes first and is one page. The plan comes after it is signed and can be much longer.

  4. The project leader writes it, with input from the sponsor, the process owner and finance. The sponsor and the leader sign it. The signature gives the team access to people, line time and decisions.

  5. One page for an improvement project. If it needs more, the scope is probably too large.

  6. Yes, but a short one. A kaizen event charter fixes the process and the problem, the goal for the event, the scope, the team and the dates, and is signed by the sponsor before the event begins. See the kaizen event charter template.

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