Business case and project charter in this lesson you will learn the following What is business case
why business case justification is required and how it is used to support projects.
Business Case Project charter a project charter is a brief description of the full project idea in one
shot.
This is kind of an informal contract which keeps the team on track with the goals and the objectives
of the organization.
This document further focuses on the improvement effort.
It can be characterized by two primary sections.
One basic project information and two simple project performance metrics.
Business case is the first and most important component in addition to being one of the deliverables
of project charter.
With the initialization of every project there must be the six deliverables for the project charter
also known as components of project charter.
The six components of project charter are one business case two problem statement 3 goals statement
for project scope 5 project CPQ 6 Project milestone business case the business case is about showcasing
what our business benefits costs and revenue generation of Six Sigma or project or any other type of
project.
How would improvement in the project metric benefits and improving customer process business metric
or organizations business.
There should be tradeoff between the efforts needed and outcome of projects.
When a project starts lots of efforts time is needed from all the stakeholders expected project outcomes
should justify the efforts of all involved in the Project for a six sigma project.
These three elements of project charter are one problem statement two goals statement three business
case are related to each other.
Business case speaks about the positive attribute typically the money value problem statement speaks
about negative attribute and goals statement speaks about the targeted attributes somewhere close to
or above positive speak about positive attributes in business case and negative attributes in problem
statement.
This is the only thin line between the business case and problem statement business case is explanation
of why to do a project linkage of project to business is the project worth doing.
Why is it important to do now.
What are the consequences of not doing the project.
What activities have higher or equal priority.
How does the project fit with business initiatives and targets.
Also what is the problem.
Why now.
Why is it not addressed.
Business value add.
What improvement in the project metric benefit in improving customer or process business metric and
or organizations business impact business case a structured approach.
A starting point the starting point is defined by the champion or process owner and the business case
is the output.
These are some examples of business metrics or Key Performance Indicators commonly referred to as K.P.
eyes EBIT earnings before interest and taxes cycle time defects cost revenue complaint's compliance
safety what metrics should you focus on.
That depends.
What is the project focus.
What are your organizations strategic goals.
Is cost of sales preventing growth or customer complaints resulting in lost earnings.
Our access cycle times and yield issues eroding market share is the fastest growing division of the
business.
The refurbishing Department It depends because the motivations for organizations vary so much and all
projects should be directly aligned with the organization's objectives.
Answer the question what metrics.
My department is not meeting what is causing us pain a structured approach.
Snapshot one symmetric point has been determined.
Another important question that needs to be asked is What are all of the things that affect this metric.
We utilize the tree diagram to facilitate the process of breaking down the metric of interest.
When creating the tree diagram you will eventually run into activities which are made up of processes.
This is where projects will be focused because this is where defects errors and waste occur.
A business case communicates the need for the project in terms of meeting business objectives.
The components are primary business measure of output unit for Project output unit product or service
for external customer baseline performance of primary business measure gap in baseline performance of
primary business measure for business objective business case component's level one be sure to start
with higher level metrics whether they are measured at the corporate level division level or department
level projects should track the metrics of interest within a given area.
Primary business measures or key performance indicators KPI as service indicators of the success of
a critical objective primary business measure or key performance indicator KPI focus on one primary
business measure or KPI primary business measure should bear a direct line of sight with the organization's
strategic objective as the champion narrows.
The greatest opportunity for improvement.
This provides a clear focus for how the success will be measured.
Business Case components business case process flow can be broken into its components and then followed
as follows.
Business measure to activities to process.
Post business measures product or service of the primary business.
Measure our lower level metrics and must focus on the end product to avoid internal optimization at
the expense of the total optimization business measures are a function of activities.
These activities are usually created or enforced by direct supervision of functional managers.
Activities are usually made up of a series of processes or specific processes.
The processes represent the final stage of the Matrix where multiple steps result in the delivery of
some output for the customer.
These deliverables are set by the business end customer and are captured within the voice of the customer.
Voice of the business or voice of the employee what makes up these processes are the x's that determine
the performance of the wise which is where the actual breakthrough projects should be focus.
Y equals f times x 1 x 2 x 3 and so forth.
First call resolution equals f Times calls operators resolutions and so forth.
Blackbox testing equals f time specifications.
Simulation engineering and so forth.
Resolutions equals f times new customers existing customers time defective products and so forth.
Simulation equals f times design Times data times modeling and so forth.
A business case is created to fulfill the strategic needs for your project.
It is the first step in project description development business case example.
This is an example of a business case.
This defines the problem and provides evidence of the problem.
As you review this statement.
Keep in mind what needs to be in a business case format.
What is wrong.
Where and when is it occurring.
What is the baseline magnitude at which it is occurring and what is it costing me.
Avoid underwriting a business case.
The natural tendency is to write too simplistically because you are already familiar with the problem.
Remember that if we are to enlist managements support and resource to solve our problem others will
have to understand the context and the significance in order to support us.
A business case cannot include any speculation about the cause of the problem or what actions will be
taken to solve the problem.
It is important that we don't attempt to solve the problem or bias the solution at this stage.
The data and the six sigma methodology will find the true causes and solutions to the problem.
Business Case.
Exercise.
Just follow the business case template.
You need to make sure that your own business case captures the units of pain.
The business measures the performances and the gaps.
Let us take the example of newly opened shopping mall during the last three months from January 1st
2015 to March 31 2015.
The accuracy for billing process was only 70 percent.
This the gap of 20 percent from target of 90 percent represents $4 billion cost impact.