What is Six Sigma?

When we talk about six sigma, it means our process efficiency is 99.99966%. In other words, we can say there will be only 3.4 defects generation per 1000000 opportunities. Therefore, our process sigma level is directly related with product quality and product cost. Below matrix gives us a clear picture sigma level and cost of quality for our product manufacturing.

So, you can see it is evident being better is cheaper for any company. Now we will dive into step-by-step process to understand the DMAIC methodology. DMAIC is the short form of Define, Measure, Analyse, Improve and Control phases. First, let us talk about Define phase.

Define Phase

Define is the first and very important phase for any improvement project. This is the foundation of any successful project. You should understand a project will be successful or fail mostly depends on this phase.

The objective of this step is to recognise and understand the need of our stakeholders. Whether this project is important or not for them. Your stakeholders can be external or internal. External stakeholders are such as suppliers, customers, local administration, pollution control body, society, shareholders, etc. When we talk about internal stakeholders, it means those who are directly concerned with your project. They can be like, your manager, business head, plant manager, site head, etc.

Various activities in this phase are as below:

Identification of Project CTQ’s

CTQ is the abbreviation for Critical to Quality. For a project this is a characteristic of a product or a service that satisfies a customer requirement or process requirement. In a project there can be more than one CTQs. You can think various examples for CTQs in a business such as cost of product, numbers of customer complaints, employee attrition rate, % sales growth per year, etc.

Therefore, we can see the CTQ is the VOC (voice of customer) or VOB (voice of business), which is the pain area or need of a customer or a business. Let’s understand the CTQ identification exercise with an example VOC for Product Variable Cost reduction by 10%, which the need of your customer.

CTQ Identification for Product VC Reduction

Here we have taken a hypothetical product case, in which we are using two raw materials Chemical A & B. Other than this we are using Steam and Power as utilities. Moreover, other overhead cost includes like packaging cost, logistics cost and employee cost. This we can see in below figure.

In above exercise we can see there are total 7 nos of CTQs, which leads to the customers need through drivers. Therefore, if we address these CTQs then our customer or stakeholder will be satisfied.

Project ‘Y’

Now, these 7 CTQs will lead us to Project ‘Y’. This is the actual project on which we will work to improve the project CTQs. In our example these are as in below table:

So here we got seven projects, in reality it is not possible to take up all the projects simultaneously. Because every project needs resources which are limited such as man, machine and money. Therefore, it is necessary to prioritise your projects. It means you must take up high impact projects first and subsequently you can work upon other projects as well.

To prioritize the projects, we can use Pareto analysis of Prioritization Matrix. Here we will use Pareto Analysis, it says our 80% of benefits comes from 20% of work. We will make Pareto chart for our all CTQs based on their contribution in the product variable cost.

Pareto Chart

This is a statistical tool developed by Vifredo Pareto in 1896 and used for decision making. This is also known as 80:20 rule also. In our example contribution of various CTQs are in below table.

You can prepare Pareto chart in excel first put the contribution cost in descending order. And, add one more column showing cumulative contribution.

From above you can see if you focus on first 2 CTQs, that will address over 70% total variable cost of the product. Therefore, working on these two CTQs related projects will lead you towards major impact on product cost reduction.

Project Baselining

After freezing the CTQs and the Project ‘Ys’, you should collect the data for Project ‘Y’. In our case this is consumption norm of chemical ‘A’ and ‘B’. It is better we collect data for one year of consistent plant operation. Because in a year you can see the impact of seasonal change also. After collection of one year of data for the norms, just draw a Run Chart. This chart will give us the behaviour of our process over the year. In case there are any shutdown or breakdown we can see it in run chart. Remove these data points and estimate the mean as a baseline for your project.

When data are not normal then we should consider median as the baseline of our project. Because in that case mean will not give us a realistic representation of the operating process.

SIPOC (Supplier Input Process Output Customer)

In Lean Six Sigma we use SIPOC to identify the relationship between response (outputs) and independent variables (inputs) or in other words Y = f(X). Here, we try to recognize the suppliers which provides inputs to the process and customers who uses outputs from the process. You need to prepare a SIPOC for your project in the define phase of the six sigma project.

Let us consider the example for reducing steam consumption norm for a distillation column. For this below can be a typical SIPOC Diagram:

Benefits of SIPOC are mainly two, first it gives us understanding of the process from highest level. And, second it helps us to draw the scope of the project.

Project Charter

We need to understand this clearly that any Six Sigma project is a team work. Basis of six sigma is to develop cultural change in the organization for continuous improvement with sustenance. A Project Charter is a written document and which is an agreement between management and project team, about the project scope of work and goal. This project can be a new plant project, existing plant de-bottlenecking, process improvement initiative, plant maintenance work, new product development or plant digital transformation campaign, etc.

Below is the typical format of a project charter and this a very important deliverable of Define phase of six sigma project. It is very important to get signoff this project charter from all the stake holders named in this document.

Stakeholder Analysis

Whoever is affected directly or indirectly by the business operation are considered its stakeholders. These can be like, suppliers, customers, company management, its employees, families of employees, people living in vicinity, government, financers, shareholders, etc.

The stakeholder support is very critical for the success of any business. During the project cycle we need support from many stakeholders at various levels. So, it is necessary for you to carryout stakeholder analysis to understand and evaluate their support requirement. Subsequently you need to prepare a strategy to getting their support for the overall success of the project. When we talk about overall success it means working with man & machine both at the same time.

For this purpose, you can use RACI Matrix, which stands for Responsible, Accountable, Consulted & Informed. Example of RACI Matrix for a Six Sigma project can be as below:

In a Six Sigma project we need a cross functional team as we may need different functional inputs to solve the problem. A Six Sigma team is formed to include respective domain knowledge experts, as we need this expertise to find out the solution. For example, if we are looking to reduce steam consumption norm in distillation column, we need to include a Chemical Engineer (from Process Design Department). Similarly for procurement lead time reduction we require purchase manager in our team. For recruitment time reduction project, we need Human Resource Manager as a team member.

Communication Strategy

A proper communication plan is very important for the overall success of the project and it is must to prepare a communication strategy in define phase of six sigma project itself. This will eliminate the confusions & surprises during project. A good communication plan includes following things:

• Who will communicate?
• What to communicate?
• When & at what frequency communication will be done?
• It is important to mention the reason of communication.
• Who will be the recipient of the communication and what will be the mode of communication? Like written, verbal or meeting.

Conclusion

So, end of the define phase we should have performed following things typically:

• We have conducted first meeting with the project team and discussed about the goal of the project. Team members and their roles are clear with timebound deliverables.
• High level project schedule is ready with measure Milestones.
• Cost benefit analysis of the project is completed.
• Data collection is completed for the project CTQ with Run chart preparation. Project baseline is frozen.
• Project charter is ready and signed off with all the stakeholders.
• Stakeholder analysis is done and a communication plant is ready with us.

Once Define phase is completed, we are ready to move towards the next phase of our Six Sigma project which Measure phase.

Thanks for reading…

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First of all, let us understand different types of dependency relationships of tasks in a project management schedule.

Tasks Dependencies in Project Management

There are below four types of task dependency relationships. In simple words, dependencies are the relationships of predecessor activities to the successor activities. These relationships tell us in a logical way, how different tasks we should take up on it.

Finish to Start – This is the most common dependency relationship. In these types of activities previous task or predecessor must finish before next task or successor can start. Example for this can be completion of civil foundation before equipment erection.

Start to Start – here predecessor task must start before the successor task can start. We can understand this by the example of equipment erection and piping work. It means to start piping work, first you should start equipment erection.

Finish to Finish – this is the type where predecessor activities must finish before successor activities finish. For this, example can be piping work must finish before instrumentation activities finish.

Start to Finish – in this dependency where predecessor task must start before successor task can finish. Example can like structure work must start before painting work finish. In project scheduling methods, this relationship is least common.

During preparing project schedule we need to understand above dependency relationships between various tasks clearly.

Now in next section, let us go through main project scheduling techniques which are commonly used.

Project Scheduling Techniques

As we know project schedule is the list of milestones and all the activities within a project from start to finish. Also, this schedule is based on the project work breakdown structure which provides duration and resource requirement for each project activity. Using project scheduling we can list down the activities in a logical and sequential manner to achieve best possible early finish date to complete project work. In other words, we can estimate the duration of complete project scope of work. Moreover, if you have a proper project schedule ready, then time management and adjustments with the scope of work of a project is easily possible. So, let us discuss commonly used project scheduling tools and techniques as below:

Critical Path Method (CPM)

Each project has a critical path, which is the total duration of start to finish interlinked activities. However, in a project schedule there can be many paths from start to finish date of a project. But, when we talk about Critical Path, it is the longest path among all the possible other paths to complete a project work. Also, a critical path has the least float available. Below are some definitions, which we use in project schedule:

Float – Is the amount of time duration up to that you may delay an activity from it’s early start without delaying the project finish date. Also, when a float is sharable among other activities it is known as Total Float.

Critical Activity – All the activities which lies in critical path, we call them critical activities.

It is very important to understand, you can not delay the activities of critical path, otherwise your project will not finish on time. Also, the critical path in a project is dynamic in nature and it is not fixed.

Example for CPM

Let us take a hypothetical example to understand the CPM technique. For this below is a network diagram which we can draw.

In above project network diagram, we can see there are three paths between start to finish date of the project. Which we can write as below:

1> Path -1: Start – A – C – F – Finish = 3 + 7 + 8 = 18 days

2> Path -2: Start – B – D – F – Finish = 5 + 1 + 8 = 14 days

3> Path -3: Start – B – E – G – Finish = 5 + 7 + 5 = 17 days

Therefore, in case of above project Path -1 is the critical path, since it has longest duration required for completion (which is 18 days). So, as a project manager you should focus on the activities of Path -1 very critically. You should understand completing this project before 18 days is not possible for given resources. Other two paths, Path -2 & Path -3 have slack or float of 4 days and 1 day respectively. It means if you delay Path -2 activity by <4 day it will not affect the total project completion duration. Similarly, for Path -3 you have 1 day slack time.

Also, you need to understand in a project, critical path is dynamic in nature. It means, if initially one path is critical, it is possible in later stage of project another path can be a critical path. Let us consider the above example, if because of some unforeseen reason in Path -2, activity ‘D’ duration changes from 1 day to 7 days, the total duration will become 20 days. So, now Path -2 is the longest and will be the critical path for this project.

Program Evaluation & Review Technique (PERT)

There are situations, when many uncertainties are present in your project, then critical path method technique is not so handy. In those circumstances, we can use PERT, which is also similar to CPM. However, this technique is based on three time estimates to determine the duration of an activity. These three-time estimates are Optimistic, Pessimistic and Most Likely. So, we can estimate the duration of an activity as below:

Estimated Duration = (Optimistic + 4*Most Likely + Pessimistic)/6

Main differences found between PERT and CPM techniques are, PERT is probabilistic whereas CPM is deterministic. In CPM, estimates of activity duration are based on historical data, while in PERT, estimates are uncertain (i.e., estimated based on above relationship). In PERT we talk of ranges of duration and the probability that activity duration will fall into that range. While, the CPM concentrates on Time/Cost trade off, high-cost low time required or vice versa.

Moreover, other techniques which we can find are Resource Constrained Project Scheduling Problem (RCPSP) Model, Search based techniques, Event Based Scheduler (EBS), etc.

Resource Planning and Allocating

In a project schedule when we assign a duration it depends on physical resources such as man, machine, material and money. Also, this time duration depends on quantities of each resource will be used to complete the project activities. As a project manager, you need to assess in advance and allocate the various resources to the activities coming in line as per the project schedule. This is very critical, to ensure smooth execution of the project.

Moreover, as a project manager you need to consider both qualitative and quantitative aspects of the human resource. So, during estimating project completion duration you need to be very realistic, otherwise there can be many unpleasant outcomes in future.

Therefore, resource management is very critical for the timely completion of your project. So, typically in resource management we cover below things:

• Resource allocation and it’s impact one completion time and project cost.
• Resource levelling and smoothing, to reduce the load and stress on resources, especially on the human resource.

 For resource management commonly we use two techniques, which are Resource Histogram and S-Curves.

Resource Histogram – Using this technique, we can understand and get insight on the resource allocation status of the project. Moreover, we can know how resources are impacting the project progress. We can develop resource histogram, from quantity of resource allocation to various activities during the project. And, based on criticality of the activities appropriate decisions we can take to mobilise the resources from one activity to another.

S-Curve – We can prepare S-Curve for planned activity schedule and can compare it with actual S-Curve to access the project progress performance. S-Curve is the plot between cumulative total of a resource with respect to the project time line.

Gantt Chart

As a project manager we all need to prepare a Gantt Chart or a project activity bar chart for our project. In project management, Gantt chart is a tool which we use in scheduling techniques and shows a project plan. In this we see there are two parts, left side there are list of tasks or activities. While, other side includes timeline with schedule bars that shows work duration. In Gantt chart there can be lots of other information like, start and end dates, dependency relationships among activities, milestones, resources, baseline, actual start & finish dates, etc.

Below is the Gantt chart for above mentioned example. This I have prepared on Microsoft Project Scheduler; in this we can see project calendar has 5 days working week. However, we can change this, by selection & customizing different calendar.

We use Gantt charts for planning and scheduling in project management. Using it we can monitor and control the project progress. Apart from this you can take timely decision for resource requirements, so that tasks complete on scheduled date. Also, you can manage dependency relationships between activities very easily.

Conclusion

Finally, as a project manager we need various resources (man, machine, money, material) to carry out and complete our projects. Moreover, any organization has fixed resources and as a project manager you are responsible to allocate them after reviewing meticulously. So that, project work can be finished within budgeted time and cost.

So, to meet above objectives, we tried to understand various project scheduling tools & techniques in this article. Which includes CPM, PERT, Gantt Chart and Resource Planning. We should use project scheduling software to develop our project schedules, which are easy to use. I have used Microsoft Project during my work experience and found it very useful. Using this project scheduling software, we can easily monitor and control our project progress, resource requirement and overall project cost.

Thanks for reading.

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So, when we think about a new plant project or a new machine/equipment with latest technology, one immediate question arises in our mind. Which asks “Whether it is profitable or not? To get answer of this question, above mentioned techniques are very useful. Each technique evaluates the project from a different angle and provides a different insight. Let us understand these techniques in brief. This is a very important exercise we need to do at the initial phase of project management.

Payback Period

The payback period of any project investment is the time which it takes to equalize the cost to the benefits/profits. In other words, we can say it is the time taken by a project to reach its break-even point. Whether a management will approve a project of not it is directly connected with payback period. If payback period for your project is shorter then it is more attractive investments. So, to estimate payback period for a project you can use below equation:

PBP = Total Project Cost/Net Profit from the Project

PBP or payback period we measure in months or year.

Net Present Value (NPV)

For an investment project, Net Present Value (NPV) is the future net cash flows from it. This is one of the popular ways to evaluate our investment. Therefore, it is a common term in the mind of any experienced business person. So, among the available options, the alternative which has highest NPV is the best option. The one difference between PBP and NPV is this, we measure PBP in terms of time (i.e., months or years), while NPV we calculate in terms of currency.

To estimate the net present value (NPV) for your project, you can use below relationship:

NPV = (Total Cash Flow) x (DCF) – Investment

In above equation there are two terms Total Cash Flow and DCF, let us understand them as below:

Total Cash Flow

You can estimate Total Cash Flow using below equation. In other words, this is the answer of a question, “How much cash you have in your hand?” at that point of time.    

Total Cash Flow = Cash Inflow – Cash Outflow

For a business Cash Inflow should be greater than Cash Outflow, otherwise that cannot be a profitable business. So, cash inflow includes all the activities and avenues which bring money into the business, while cash outflow takes away money from the business. The examples for these two terms are as below:

Cash inflow to a business includes customer payments from sales, earning from investments, financing from bankers and shareholders, asset liquidation, etc.

Cash outflow from a business includes operating cost (i.e., Raw Material & Utility Cost), payments of suppliers & employees, payment of loan interest & taxes, new plant projects and acquisitions, debt payment, stokes buyback, insurance premium payment, etc.

Discount Factor (DCF)

DCF for a project is a decimal number, which you multiply by estimated future cash flow value to discount it back to its present value. This factor increases over time (meaning the decimal value gets smaller) as the effect of compounding the discount rate builds over time. You can estimate DCF using below equation:

Discount Factor (DCF) = 1 / (1 x (1 + Discount Rate) ^ Period Number)

Here, in this context of DCF analysis, the discount rate refers to the interest rate used to determine the present value. Otherwise, you can get this value from the finance department of your company.

Average Rate of Return (ARR)

The ARR, Average Rate of Return and Accounting Rate of Return are same terms. We can calculate the ARR by adding all the expected cash flows and dividing by the total number of years. In other words, Average Rate of Return (ARR) is the average cash flow generated over the life of a project investment. In ARR calculation we consider simple cash flow and do not use DCF or Discount Factor. So, to calculate ARR for a project investment you can use below formula:

ARR (Average Rate of Return) = (Total Cash Flow )/(no. of years of investment) 

ARR = Average Annual Profit/Initial Investment

Here,     Total Cash Flow = Cash Inflow – Cash Outflow

              Average Annual Profit = Total Profit over Project Investment Life/Nos. of Years

Please note, ARR doesn’t take into account the time value of the money. As we know the worth of cash flows in future is lower than present worth.

Return on Investment (ROI)

We use ROI method to estimate the profitability of an investment project. You can estimate ROI using below relationship:

Return on Investment (ROI) = (Average Rate of Return)*100/Investment

For an investor, ROI is a simple financial matrix by using this he or she can decide whether to go for particular investment project or not. This clearly tells us the how your existing investment is performing till date.  So, using an ROI formula, you can separate low-performing investments from high-performing investments. This way ROI enable us to optimize our investment portfolio to make best possible profit out of it. 

Return On Capital Employed (ROEC)

This financial matrix is one of the best profitability ratio, which investors commonly use to get insight whether to investing in a running company is beneficial or not. This measures how efficiently a company is using its capital to generate profits. The formula for computing ROCE is as follows:

ROCE = EBIT/Capital Employed

Here,     Capital Employed = Total Assets – Current Liabilities

              EBIT (Earnings Before Interest and Taxes) = Net Income + Interest + Taxes

              Or, EBIT = EBITDA – Depreciation and Amortization Expense

Current Liabilities are financial obligations of a business entity that are due and payable within a year.

Example to Understand Project Selection Methods

Let us consider below simple example where we have two investment options to go for putting a manufacturing plant. In Option-1 we can produce Chemical-A and in Option-2 we can produce Chemical-B. So, we will use above mentioned investment appraisal methods to find out the best alternative investment for our case.

Option-1:

Investment required: Rs. 150 Cr.

Revenue (Cash Inflow) & Expenses (Cash Outflow) for 5 years are as in below able:

Option-2:

Investment required: Rs. 200 Cr.

Revenue (Cash Inflow) & Expenses (Cash Outflow) for 5 years are as in below able:

Investment Appraisal

Below are the various project investment appraisal methods for the selection of best option:

For Pay Back Period calculation,

Total Cash Outflow = Initial Investment + Total Expenses

And, Total Cash Inflow = Total Revenue

Conclusion

Finally, in this article we discussed various project selection methods. Also, we worked out an example to understand various investment appraisal techniques. In above example we found however using Pay Back Period Method Option-1 is preferable. But, remaining three methods, gave insight to go for Option-2. Moreover, we require these financial matrix to mention in our Project Charter also.

Also, we discussed about ROCE (return on capital employed), we use this financial matrix to evaluate a running business. Using this technique, we can get insight about running business financial health, moreover can take appropriate investment decision.

I hope this article will help you to do quick calculation for selecting your best investment option among various available alternatives.

Thank you..

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What is a Project Charter?

So, in simple words we can say a Project Charter is a written document and which is an agreement between management and project team, about the project scope of work and goal. This project can be a new plant project, existing plant de-bottlenecking, process improvement initiative, plant maintenance work, new product development or plant digital transformation campaign, etc. Below are the objectives of any project charter, whether it is a big or small project.

• This clarifies clearly what and by when is expected from the project team. Describes clear-cut roles and responsibilities to avoid any confusions. 
• Project charter keeps the team focused as everything is clearly written and not a verbal statement.
• In an organization there can be many projects and various teams at any point of time. So, project charter helps the various teams aligned with organizational priorities. Which can be of their strategic importance also.

Various Sections of a Typical Project Charter

Let us take a sample project charter as below for our discussion. Now we will discuss each section of this charter one by one.

Title Section

In this we can mention the name of project, for example like “Project Charter for Reducing Steam Norm”. We can mention various other details like, location of the project, name of the business unit and project number for documentation purpose.

Project Description & Scope

This section we use to elaborate the project details which includes the name of your project and other details. Some of examples can be like, “New Plant Project for 100 TPD Distillery”, “Steam Norm Reduction Project for Solvent Recovery Column”, “ERP Implementation Project”, etc. In other words, here we are writing the name of our project which will clearly tells us that this project charter is for which project. And also, we explain scope of work clearly, which refers to the boundaries of the project.

Project scope outlines the area of team’s activity. You should answer to write down the project scope effectively:

• What are the boundaries of the process we are going to improve?
• List of key process which team will focus upon?
• List of resources available and required?
• Various constraints under which team will work?
• Expected time commitment of team members?

Business Case

Here we describe the strategic reasons to take up this project. You need to explain why this project is important strategically for the organization. Business case tell us about the product or service quality, cost or delivery with financial justification.

So, you should answer below questions in the project charter when you are writing a business case for your project:

• Why is this project worth doing for your organization?
• Why organization should take up this project now?
• What are the possible consequences, if your organization is not going for this project?
• How this project strategically fits for business goals?  

For your understanding we can write a business case for an example of, “Steam Norm Reduction for Solvent Recovery Column” as below:

“There is a stiff competition in the market. Customers are looking for good quality product at lower price.

This we can achieve by implementing out of the box improvements to our processes. As steam is the major contributor in variable cost of the product. Therefore, a reduction in steam consumption norm in solvent recovery plant will bring down the utility norm and subsequently reduce the manufacturing cost of the product. This variable cost reduction will enable the business to be more cost competitive in current market scenario. Also, organization can acquire larger market share.”

Please note here we have not mentioned any numbers, business case only explains qualitative strategic reasoning.

Problem Statement 

A problem statement tells us about the current business scenario, what is wrong with the business. Moreover, what are the opportunity losses in term of the market share. We describe for how long we are facing this problem and telling actual losses incurred till date. In other words, we are explaining here gravity of the problem and answering the question, “How big this problem is?”.

This section will explain the issue that team wants to improve, like capacity enhancement, variable cost reduction, batch cycle time reduction, etc. You should make a note, in problem statement our focus is on problem only and we are not concluding anything here.

So, we can write a problem statement for above example, which we considered in business case example:

“In solvent recovery plant after analysing last 12 months data we found average steam consumption norm is very high at 3.55 MT/MT. While benchmarking norm is 2.50 MT/MT, therefore @ 20000TPA production capacity and @1600 Rs/Ton steam cost, organization incurred loss of (1.05*20000*1600) around Rs. 336.0 lacs in last 12 months.”

So, seeing business case as a business head can decide whether he will sponsor or approve the project or not. Making an impactful business case will help you to get approval for your project quickly.

Goal Statement  

Next section of your project section is Goal Statement. Here we mention what is the target value or performance we are trying to achieve in present business scenario. This can be like, plant capacity enhancement, raw material and utility norm reduction, reduction in poor quality, on time delivery service improvement, etc. The project team creates and agrees on the goal statement. In goal statement we specifically mention, from where to where we want to improve or change the value. Also, we mention what will be the time frame for project completion, including project start and end dates.

For our example, we can write goal statement as below:

“Reducing the steam consumption norm in solvent recovery plant from 3.55 MT/MT to 2.50 MT/MT by 30^th Jan, 2022. Implementation of this project will bring around Rs. 336.0 Lakhs savings annually.”   

When we talk about problem and goal statement it should be SMART, which we can elaborate as below:

S – Specific (it should be specific and not a generalized statement)

M – Measurable (we should be able to measure the goal, so that we can compare it before & after)

A – Attainable (our goal should be realistic, which we can achieve)

R – Relevant (goal should be aligned with business strategy, otherwise project is a wastage of company’s valuable resources)

T – Time Bound (we can not take up any project for endlessly, it must be finished within agreed time period. For long time projects we should break the goal in small – small milestones to keep track of our project)

So, you can use above guidelines for setting up your project goal.

Project Milestones

We need this to track the project progress and get commitment from team on the timelines. In project charter team agree upon major milestones start and end dates. However, afterwards project manager prepares a detailed activity schedule to achieve each project milestone. Generally, in our project charter we mention below five milestones. However, you can customize them as per your project requirements.

Initiating – Define the project goal, scope, time, cost and team members with clear cut roles and responsibilities. In this phase actually we are setting the project’s baseline for time, cost and quality.

Planning – Identify best possible plan for activities and resources (including Man, Machine and Materials) among available options. This you need to achieve the objective or goal of your project.

Execute – This phase includes integration activities of a project manager in which he interacts among team members to implement the project plan.

Commissioning – After mechanical completion in this phase we take up the activities which are related to run the process to achieve envisaged results. In this we perform first pre-commissioning activities which includes running the plant on air and water. During pre-commissioning we are ensure no leakage in system, control loop trials, pump & fans trials, system pressure testing, safety system test, etc. Subsequently, we take up the commissioning activities and run the plant with actual fluid and process parameters. We demonstrate the plant performance and handover the plant to production team.

Closing – This is the last phase of any project and project manager get the acceptance from stakeholders regarding the product or services. Here project manager submits a closing report including standard operating procedures, user manuals, performance certificates, training, etc.

Financial Details

This section is to show the financial feasibility of your project. Here you provide the estimated CAPEX value of the project and also mention net benefit/profit from this project. Based on this we can estimate payback period and ROI, which is information of interest to our project sponsors. For the low payback project, we will get approval immediately from the management.     

Project Team Details

In a project charter, this section is very important, an excellent team can make your project successful. While, poor team combination can derail your project. So, depending on the type of your project you should choose the team members intelligently. When we take up a project, we will find three types of people in our organization (1) Supporters, (2) Opposers (3) Neutral. So, during making our team we should see how can we handle the “Opposers”, as they are the people who will always create hurdles in your project. Moreover, it is very good strategy to take the buy-in of “Neutral” people also.

In Project Team every team member should feel this project belongs to them and they are committed for the success of the project. Moreover, during formation of team, competencies of team members must be kept on top priority and biasness should be avoided. On project charter provide the name of each team member with their clear roles and responsibilities. And, take the sign-off form each team member as a token of acceptancy for all the information written in project charter.

In remarks section you can provide miscellaneous information which are important for the project.

Conclusion

Finally, we have gone through a typical project charter. Additionally, you can add detail documents for supporting the information written on project charter. These documents can be like, conceptual scheme showing present and proposed process. Details of tentative mass and energy balance for the scheme. You can attach the details of various effluent generation with quantity. Apart from this you should provide an annexure for the project cost break up and benefit/profit estimation with payback calculation. You can also provide a Level-1 project activity schedule with your project charter.

I am sure this article will give you sufficient information and guidance to prepare a good project charter. So, onwards when you start a new project prepare a project charter and get it signed-off from all the team members/stakeholders. This will make your life easy during entire project life cycle.

Thanks for reading….

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