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The purpose of a Business Risk Management (BRM) risk assessment tool at the project level is to enable
a project team to properly evaluate the risk(s) that a project may introduce to the organization.
In order to make informed decisions throughout each phase of the project, a project team will:
Assess the impact that the project, solutions, or changes will have on other areas or processes.
External Risks These risks arise from external forces impacting the organizations value chain, including
fundamentals that affect the overall objectives and strategies. These are typically presented by the
general business environment and are not within the control of the organization, but are within the
ability to influence or react.
1. Competitor risk: New entrants, exits, or actions of competitors in the market that impact the
organization.
2. Economic risk: Changing economic conditions (e.g. local, regional, and/or global) that impact the
organization.
3. Legal/Regulatory risk: Changing or new laws or regulations that impact the organization.
4. Market requirements risk: Changing or new market/customer requirements that impact the
organization.
5. Political risk: Changing political conditions in a country or region that impact the
organization.Technological innovation risk: Changing or new technologies in the external market place
that impact the organization.
Financial Risks These risks arise from activities that provide input into business and financial reporting,
impacting the achievement of the organizations objectives.
1. Budget & forecasting risk: Unreliable, unrealistic, or non-existent budgeting and/or forecasting
information or processes including S&OP and the annual budgeting process.
2. Credit risk: Exposure to loss or opportunity cost as a result of financial default, or other financial
failure by a customer, dealer, or third party.
3. Financial & regulatory reporting risk: Incomplete, inaccurate, or untimely financial or regulatory
reporting (internal or external).
4. Fraud risk: Fraudulent activities (e.g. achieving personal gain while causing injury to another party,
unfair or unlawful gain, misleading others for personal benefit) by employees, customers, suppliers,
agents, brokers or third-party administrators.
5. Investment evaluation & monitoring risk: Lack of relevant, reliable, or complete information
supporting investment decisions, including ongoing monitoring of investments.Liquidity risk: Inability to
meet cash flow obligations in a timely and cost-effective manner, including unplanned cash flow
fluctuations or concentration to a limited group of counter parties.
People Risks These risks arise from activities of people, including employees or external parties,
impacting the achievement of the organizations objectives.
1. Communications risk: Inconsistent, ineffective or non-existent communications.
2. Employee engagement risk: Absence of alignment or misalignment between employee and
organizational objectives, principles, or values.
3. Employee knowledge/skill risk: Shortage of human resources or lack of knowledge, skill, or experience
among the organizations existing workforce.
4. Health & safety risk: Failure to provide a safe and/or healthy working environment.
5. Knowledge capital risk: Failure to effectively capture and share knowledge.
6. Leadership risk: Failure to provide effective leadership (e.g. direction, focus, motivation, credibility,
trustworthiness) to employees, stakeholders, and process partners.
7. Legal compliance risk: Failure to comply with laws or regulations (environmental, financial, trade,
etc.).Process/Policy compliance risk: Lack of or failure to comply with organizational processes, policies,
or procedures.
Operational Risks These risks arise from ongoing operations impacting value creation, customer
satisfaction, or achievement of the organizations objectives.
1. Business interruption risk: Inability to operate due to disruptions to information systems, utilities,
workforce, or other resources (e.g. catastrophic events, natural disasters, labor strikes, computer viruses
etc.).
2. Capacity risk: Failure to appropriately respond to changes in production or service demand.
3. Customer satisfaction risk: Failure to meet customer or process partner expectations.
4. Distribution channel risk: Poorly performing distribution channels (e.g. dealers, distributors, etc.)
impact the organizations ability to effectively service current or potential customers.
5. Information access risk: Failure to appropriately grant or restrict access levels to information.
6. Information infrastructure risk: Information technology systems (e.g. hardware, networks, or
software) that do not effectively support user requirements.
7. Information relevance risk: Lack of relevant or correct information.Inventory management risk:
Inability to manage inventory to desired targets.
8. Partnering/Supplier management risk: Ineffective alliances, joint ventures, affiliates, suppliers, or
other external relationships (non distribution channel partners).
9. Performance risk: Inability to perform at world class levels (e.g. Baldrige criteria, Quality Certification,
Operational Excellence).
10. Performance measurement risk: Unreliable, unrealistic, irrelevant, or non-existent performance
metrics or measures.
11. Quality risk: Faulty or non-performing products or services.
Strategic Risks These risks arise from activities to determine and support the future direction of the
organization, impacting the achievement of the organizations strategies.
1. Alignment risk: Failure to align business unit objectives with either process partner or enterprise wide
objectives and/or strategies. This may also include an ineffective organization/reporting structure.
2. Business intelligence risk: Absence of sufficient or accurate knowledge of the external business
environment.
3. Intellectual property risk: Failure to adequately protect intellectual capital, proprietary processes,
trademarks, brands, designs, etc.
4. Planning risk: Failure to adequately develop, update or change plans.
5. Product development risk: Failure to develop viable or innovative products or services.
6. Product/Service pricing risk: Failure to price a product or service within a range that is acceptable to
the customer and delivers appropriate profitability to the business unit.
7. Resource allocation risk: Inability to efficiently allocate resources (e.g. time, assets, people) or the
absence of sufficient levels of these resources.
Unbalanced measurements risk: Overemphasis on a particular metric or measurement at the expense of
other metrics or measures (e.g. cost versus quality).
Equipment Maintenance Several processes.
Objective: Get the right oil in the right hole at the right time.
Why? Too early throws away oil & filters with remaining life.
Too late accelerates wear on components.
The Steps:
1. Pick the service intervals (L&M Guide not a bad place to start).
2. Track usage operated hours or SMU.
3. Calculate due date.
4. Make a schedule and generate a work order.
5. Execute lube service work order.
6. Monitor compliance and accuracy with a scatter diagram.
The Implications: If the servicing organization cannot do this, what hope is there for something
complex?
The Steps:
1. Monitor machine condition.
2. Feed condition-monitoring findings into backlog system as individual repair items perhaps in
the form of individual work orders or work requests. Paper backlog management systems work
and so do most computer systems. (Abelardo Flores has written one in Microsoft Access that is a
dandy.)
3. Use technicians to convert any listed symptoms into problems or action needed items.
4. Assign repair priorities and estimated repair times to each work order.
5. Order parts per edited list of problems.Receive and stage parts.
6. Identify a widow of opportunity for repairs.
7. Schedule repairs and plan manpower resources based on backlog requirements and the
available window.
8. Communicate backlog particulars to production for go ahead.
9. If required arrange for tooling or special equipment.Complete backlog items per the plan and
work order instructions.
The implications: you can not plan for things you dont about nor work efficiently without
managing the repair backlog process. Condition monitoring and backlog management are two
parts of one process. A planner is key. A parts coordinator is worth the money.
Objective: Find out what has been happening so objective, rational analysis can be utilized to
make improvements.
Why? Seat-of-the-pants and gut feel have often proven to be wrong.
Many issues require quantification.
Pareto analysis requires data and date segmentation.
The Steps:
1. Open individual work orders for all repairs.
Fast, low cost field repairs and lube service can be blanket or standing work orders.
Header should show unit, component, date & time down and up.
Body should show problem description (not symptom) and action taken.
2. Open informational work orders for unresolved problems or complaints, bad SOS reports or
VIMS machine events with long range implications
3. Apply labor to the work order number.
4. Apply parts to the work order number.
5. Segment and sort to Pareto - ise in the computer.
Downtime.
Labor hours.
Repair incident count.
Costs (parts and labor).
6. Generate reports.
Big Conclusion:
Without Process 1 a company cannot survive.
Without Process 2 a company cannot be competitive in a world market.
Without Process 3 a company cannot improve
Benchmark Matrix
Benchmarks #1
Mechanical Availability
Mechanical availability (MA) has been a benchmark in the mining industry for a long time.
Notwithstanding, there are some drawbacks to mechanical availability which limit how useful or
informative it can be. These limitations make MA into more of an indicator rather than a true
measure (or benchmark). The first limitation arises because several different methods and formulas
for calculating MA have been developed. As a result MA works better as an internal benchmark (where
the calculation method will be known and consistent) than as a comparison between mines (where the
formulas may differ). The second, and more important limitation, is that MA is not very informative by
itself. It tells us the relationship between two factors, but that is not very useful without having some
additional detailed information about those two factors.
Both the Production Department and the Maintenance Department use mechanical availability but it
means different things to each. How Production uses MA follows immediately. How Maintenance uses
MA follows the sections on MTBS and MTTR.
Mechanical Availability and Production -- Mechanical availability is used by Production to establish the
ratio between two factors; operational hours (hours of actual machine usage), and downtime hours
(when the machine cannot be used for mechanical reasons). Production has routines in place to
collect the required data for measuring these two factors.
An operation develops production estimates based upon some expectation of MA so they use this
calculation to see if the expected availability is being achieved. If it is not, production will fall below
estimates. As pointed out above, MA is just an indicator of a problem. To know what action is required
in response to a change in availability, we would have to analyze the data on operated hours and
downtime hours.
Two more recently adopted benchmarks that are proving to be valuable indicators of performance are
Mean Time Between Stoppages and Mean Time To Repair.
Benchmarks #2
Machine reliability is defined as the ability to operate for long periods of time without stopping for
either maintenance or repairs. Reliability is often expressed (in engineering terms) as the Mean Time
Between Failures (MTBF). In mobile equipment management, MTBF is, in reality, mean time between
shutdowns or machine stoppages, not actual failures. Therefore, it is more accurate to use the
expression Mean Time Between Stoppages or MTBS to express reliability for mobile equipment.
Reliability -- the prime measure of a maintenance departments success at scheduling repairs and preventing failures is machine reliability -- expressed as
Mean Time Between Stoppages (MTBS). It is arguably the single most important measure of success because reliability has a dramatic impact upon
mechanical availability and therefore upon efficiencies in both production and maintenance.
Machine reliability (the MTBS number) has a significant and variable impact upon mechanical
availability. Graph #1 (above) shows that as MTBS (reliability) falls, the impact upon availability becomes
more pronounced. This illustrates why MTBS must be measured and why it must be kept in the range
where the influence on availability is gradual and roughly a straight line (above MTBS = 60 hours) rather
than in the range of accelerating negative impact (below MTBS = 60 hours).
Operational stoppages (or shutdowns) such as at shift change, lunch, or fueling are not counted.
Maintenance or mechanically related stoppages including scheduled lube service during PM (but not
daily servicing or oil level checks) are counted.
Many factors can effect MTBS. The following items are two of the most significant in terms of impact
upon MTBS.
Backlog / follow-up the use of condition monitoring information. If the system does not
respond to the findings of condition monitoring, problems or failures can result. Symptoms
and potential problems must be analyzed so priorities can be established and failures or any
stoppages can be avoided.
Many mines have begun to measure MTBS and to use it as a benchmark. MTBS can be used alone and it
can to help analyze mechanical availability.
As can be seen in Graph #2, when MTBS is used alone it can be graphed over time (monthly, for
example) to establish a trend in machine reliability. A graph such as this, leads to the conclusion that
machine reliability is falling. As was shown in Graph #1, when reliability falls, the impact upon
mechanical availability can be very significant. Therefore, a downward trend in MTBS signals the need
for an investigation (probably a work order analysis) as to the reasons for the decline.
Benchmarks #3
Repair planning and repair management, are key factors in a another performance measure known (in
engineering terms) as mean time to repair or MTTR. Mean time to repair is a measure of how slowly
(or quickly) a machine is returned to service once a downtime incident occurs. MTTR is becoming one of
the benchmarks that many mines are using to evaluate their performance particularly repair or
maintenance efficiency.
Efficiency -- a measure of turnaround time or efficient use of downtime in getting a machine back into
service expressed as Mean Time To Repair (MTTR).
Repair turnaround (the MTTR number) has an impact upon mechanical availability but the impact is not
as pronounced as that from MTBS. Graph #3 (above) shows that as MTTR (turnaround time) increases,
availability decreases. The change is close to a straight line so any incremental change in MTTR has roughly
the same impact upon mechanical availability.
MTTR is a relatively direct measure of efficiency in both planning and execution. It is calculated by the
following method:
MTTR = Downtime Hours / Number Of Downtime Incidents
Many factors can effect MTTR. A proactive (as opposed to reactive) management philosophy is one of
the most important. Timely information and proper planning based upon that information are also
important factors in getting a machine back into service in the shortest possible time. The following
items illustrate how MTTR is effected.
Decision-Making / Decision Timing deciding what course of action to take in completing repairs can
significantly impact repair times. Incorrect decisions are often the result of incomplete information
or improper planning. Timing is also critically important. If repair planning, and the ordering of
needed parts, is not started before the machine is in the workshop, downtime will be unnecessarily
increased.
Parts Availability the lack of readily available (and on-hand) parts can result in long delays in the
work bay. Unusual or unexpected parts requirements may be unavoidable. However, the majority of
parts needs can be anticipated (using condition monitoring) and planned for.
Tools if the proper tools are not available, or are being used elsewhere, repair times will be
increased. Having both the correct tools and correct numbers of tools has to be considered.
Equipment the lack of specialized equipment can cause delays or reduce efficiency. This would
include equipment for lifting, blocking, cleaning, component handling, fluids delivery and removal.
Available Bay Space if facility burden is too great, work must be delayed or done under
circumstances where efficiency will suffer.
Available Manpower if skilled manpower is unavailable, repairs may be delayed, done inefficiently or
done by unqualified workers.
Because of the importance of the above items, many systems track, keep records and analyze delays
that occur when the machine is down. (These records often show total machine downtime and the
breakdown of that total time to show the reasons for delay in detail; i.e., waiting for parts, waiting for
shop equipment, etc.).
Many mines have begun to measure MTTR and to use it as a benchmark. MTTR can be used alone and it
can to help analyze mechanical availability.
When used alone, MTTR is graphed over time (monthly for example) to establish a trend in repair
turnaround (efficiency). Graph #4 (above) shows an example of how a change in repair turnaround will
look when graphed. This graph and the trend line shows that repair turnaround time is increasing. This
could be the result of increasing inefficiency or it could be caused by the nature of the work being done;
e.g., long duration jobs such as component changeouts.
The examples given above illustrate how MTBS and MTTR can be graphed alone to identify undesirable
variations or trends. These two factors can also used to analyze mechanical availability. The relationship
between MTTR, MTBS and Mechanical Availability is shown in the next section.
Benchmarks #4
Mechanical availability is a function of MTBS and MTTR. The formula showing the relationship follows:
(Note: Although this availability formula looks different than the one given for the Production Department,
namely MA% = [Operated Hours / Operated Hours + Downtime Hours] X 100, they are
the same. Substitution of the factors for MTBS and MTTR into the Production availability formula will yield
the Maintenance availability formula.) Because of this mathematical relationship, if any two of the three factors
are known, the third can be calculated (solved for). This means data only has to be collect for two factors instead
of three. The third factor can be established mathematically instead of trough additional data collection.
In April and again in August, low availability resulted from a drop in MTBS and an
increase in MTTR. To understand what took place in these two months we would
have to analyze both downtime frequency and repair duration (repair turnaround
time). We need to know what lowered reliability. We also need to know if MTTR
increased because of inefficiency or because of efficiently done, but long duration
jobs.
As the previous examples show, Mechanical Availability, MTBS and MTTR are
important equipment management benchmarks. Individually they tell a mine about
equipment reliability, workshop efficiency and the ability to reach production
objectives. Collectively they allow management to quickly and efficiently focus upon
problems and move toward resolution.
Benchmarks #5
Maintenance Ratio
Maintenance Ratio (MR) is another benchmark that many mining operations are beginning to use.
Maintenance ratio is used both as an indicator and as a planning tool. MR is calculated by the following
method:
MR can be tracked over time to provide a workshop and manpower efficiency indicator. It can also be
used by the Maintenance Department to plan manpower and budgets. When Production makes its
upcoming operational plans known to Maintenance, Maintenance can determine the manpower
resources it must have to care for the equipment during that period.
To be useful as a budgeting figure MR needs to be measured for each family of machines, (i.e. trucks,
bulldozers, motor graders, etc.) as each has different maintenance requirements. In addition, MR
changes with time, just as the repair and maintenance requirements for equipment change with time.
This means that MR data must be analyzed relative to the equipment life cycle. Mines that are tracking
MR report that for trucks and wheel-loaders (in loader / truck applications) the MR can be as low as 0.25
to 0.30 maintenance man-hours per operating hour. This figure applies to fleets that are old enough to
have begun the component replacement or reconditioning cycle. This number represents only on-site
maintenance and repair activity. Component repair or reconditioning, typically done off-site, is not
included.
On relatively new machines (those that have not yet reached the age when components are being
reconditioned) the MR number is lower. However, once components are being replaced, the MR
number will increase and then remain essentially constant.
Benchmarks #6
Work that has had the benefit of passing through the planning process is generally scheduled as the
last step in that process. By establishing the amount of work that has been scheduled (and therefor
planned) we can gauge an operations ability to complete work with a high level of efficiency. Data
collected from mine studies has shown that the average downtime for unplanned / unscheduled work is
up to eight times greater than the downtime for planned / scheduled activity. Because of this, many
mines track the percentage of work that is planned and subsequently scheduled. Mines with very
effective systems are able to complete between 80% and 90% of their work as planned / scheduled
work.
Some mines code work orders (as scheduled or unscheduled) so they can establish the percentage
based on work order count. Other mines prefer to keep track of downtime hours and make the
calculation based on scheduled and unscheduled downtime. Whichever data is easier to collect should
decide which method is best for any particular mine.
Benchmarks #7
Service Accuracy
The ability to complete oil changes, oil filter changes and greasing (collectively known as routine
lubrication service) at intervals close to what the equipment manufacture specifies, is important. Oils
and their additives wear out and filters have finite capacity. If routine service exceeds recommended
intervals, abnormal and accelerated wear and damage takes place. Component lives are shortened and
costs and downtime will be driven upward over time.
Keeping track of the ability to complete lubrication service at close to expected intervals is important. A
factor for this is call Service Accuracy or SA.
Graph #5 (above) is a scatter diagram used to track adherence to a target service interval. In this
example the mine is planning to complete services every 400 hours. The scatter diagram has
management lines (upper and lower limits) at 10% above and below the target. As can be seen, in
the early part of the period, a high percentage of the services fell within the limits. Later in the period,
the ability to come close to the target interval became much worse. Collecting data and producing a
scatter diagram is no more difficult than completing the calculation methods that follow. The scatter
diagram is, however, easier to analyze and is more informative than finding SA through any calculations.
Some mines calculate an average service interval. This is deceptive. In the above example the average
interval is close to the target. The scatter diagram shows that a calculated average is meaningless. The
numbers can average. The component wear does not. Metal worn away during extended service
intervals does not get replaced when a short service interval occurs.
The benchmarks discussed above; mechanical availability (MA), mean time to repair (MTTR), mean time
between stoppages (MTBS), maintenance ratio (MR), percent scheduled service (SS) and service
accuracy (SA) are certainly not the only benchmarks that a maintenance organization should use.
However, the experience gained from studying maintenance systems and organizations over the past 20
years has shown that they should be the core benchmarks in any system.
Glossary of Terms
Billable Hours - labor hours that are charged on a work order to external
customers or interdepartmental customers on all work orders.
Billable Hours Invoiced labor hours that are charged on a work order to
external customers or interdepartmental customers on invoiced work orders.
Billable WIP Hours - billable labor hours that have not been invoiced to the
revenue customer or interdepartmental customer on open and close work
orders.
Claim Dollars dollars that have been submitted as part of warranty and/or
policy, product improvement safety work carried out by the dealer.
All dollars are at Cost. Goal is based on average of top 25% DCAL
Note:
dealers in NACD. These dollars exclude Reman. Intend to add Reman to
calculation once tracking of Reman parts within Service shops is possible.
Expense Hours labor hours paid to service personnel, which are not
billable to external customers or interdepartmental customers.
Field Trips per Work Order reflects the average number of field trips made
per field Work Order to complete the job.
Field Trips per Work Order = (Total Field Trips / Total Field WOs Closed)
Firm Quote quote to customer for work to be performed for one price (parts
and labor) based on a standard repair before failure job, plus add-ons for
additional contingent parts and labor; it provides an up-front cost that the
customer will expect to pay for the job.
First Labor date at which labor begins to accrue on the Work Order.
First Labor to Last Labor reflects the average number of days that pass
between the first labor and the last labor.
First Labor to Last Labor = (Elapsed Days from First Labor to Last Labor / # of WOs closed)
Flat Rate pricing for work to be performed for one price (parts and labor)
based on standard jobs and published pricing to complete a specified repair;
except for exchange assembly rebuild and contracted with customer, it
provides an up-front cost that the customer will expect to pay for the job.
Flat Rate Service Sales % = (Flat Rate Service Sales $ / Total Service Sales $) *
100
Gross Profit % - reflects, as a percentage, the gross profit of the total service
sales dollars for the reporting period.
Gross Profit % = (Gross Profit / Total Service Sales) * 100
Hours Paid hours paid to employees that include Billable Hours and
Expense Hours.
Hours Worked hours worked by employees that include Billable Hours and
Expense Hours.
ISO 16/13, 18/15, etc. - fluid particle count standards defined by the
International Standards Organization. These standards are used to establish
the cleanliness level of fluids.
Last Labor date at which labor stops accruing on the Work Order.
Last Labor to Work Order Close reflects the average number of days that
pass between the last labor date and the work order close date.
Last Labor to Work Order Close = (Elapsed days from Last Labor to WO Close / # of WOs
Closed)
Line Item Returned % (Parts) measures the number of part line items per
work order returned to the parts department.
Line Items Returned % = (# of Line Items Returned / # of Line Items Ordered) * 100
Parts Integrator - a Dealer Business System tool that allows parts identified
in SIS to be electronically processed for a parts order.
Parts service percentage - percentage of parts (by line item) supplied from
dealer's inventory or the distribution network.
Physical Asset Recovery (Field) = ((Total Service Sales (Field) - Vehicle Expense) / # of
Vehicles)
Physical Asset Utilization - percentage of time the asset (service truck &
service work area) is utilized to reduced revenue.
Physical Asset Utilization (Shop) = (Billable Hrs Invoiced (Shop) / Size of Shop in Square Feet)
Profit after Direct Expense dollars left from Total Service Sales less Cost
of Sales and Direct Expenses
Promised date - the date that the dealer promises the customer that the work
order repairs will be started or completed.
Promise Date GAP analysis measures the average number of days that
pass between the promise date and the date of last labor (calendar days).
Promise Date GAP analysis = (Elapsed Days from Last Labor to Promise Date / # of WOs with
Promise Date)
Repair area utilization study - a study that measures how efficiently and
effectively available service repair space in the service shop is utilized. Used
to evaluate the possible need to expand or reassign assets.
Revenue labor hours - all labor hours worked by technicians that will be
invoiced to external customers.
Revenue Service Parts is the parts sold (at cost) to the service department
that are invoiced to external customers.
Revenue Service Sales is the selling price of work done by the service
department to be invoiced to the external customer, includes Time & Material
and Flat Rated jobs.
Rework Hours hours that are performed more than once do to poor
workmanship and/or material defects.
Service expense rework - the cost charged to the service department for
work performed due to reasons of defective workmanship. A good
measurement of the quality of workmanship and the amount of work that is
done right the first time.
Settled Claims dollars recovered dollars that have been received as part
of a settlement from warranty and/or policy, product improvement or safety
work carried out by the dealer.
Standard Jobs jobs that share a common outline of parts and labor.
Total Service Sales is the dollars received from Revenue Service and
Interdepartmental invoiced.
Transfer per Work Order tracks the number of parts, labor and misc.
record transfers made per work order.
Transfer Per Work Order = (Total # of Transfers / Total # of WOs Closed)
Trend Analysis Module (TAM) - software that monitors wear analysis trends
in the SOS program. Typically used to track wear analysis trends for a
particular machine to better predict potential problems.
WIP Turnover Ratio - the labor and miscellaneous cost of sale dollars for all
open or uninvoiced Work Orders at the end of the reporting period compared
to the labor and misc cost of sale dollars on all invoiced Work Orders for the
past 12-month period.
Service WIP Turnover (Ratio) = (Labor and misc cost of sale dollars on all invoiced Work Orders
for the past 12-months) divided by (Labor and misc cost of sale dollars for all open or
uninvoiced Work Orders at month end)
WIP in Days = (Billable WIP Hrs "times" number of days in the reporting period) divided by
Work Order Close to Invoice reflects the average number of days that
pass between the Work Order Close date and the Work Order Invoice Close
date.
Work order process review - a study of the activities associated with all
steps and functions involved in the work order process as a means to improve
the processing.
Work order segmentation - predefining a work order into job elements that
can be assigned, tracked and analyzed.
Staffing Process
Project Charter
What is a Project Charter?
The project charter is part of your Project Strategy document. This document is one of the first deliverables
on your project. The project charter should be no more than one page, even on large projects. The intention
of the project charter is to provide an overview of the project, in business terms, that everyone can
understand. It is not a list of requirements. In a sense, it is the project's mission. The project charter should
consist of the following sections:
Background
Who is requesting the project? Focus on the original group requesting the change, not those joining
the project with their own requests. This section is a very brief statement of the business area
originating the request and who eventually owns the application.
Problem Statement
What problem is the project's completion solving? It is very easy to include too much detail in this
section - don't! Instead, focus on solving the main problem. This should not be a list of
requirements, simply an explanation of the problem to solve.
Justification
Why should the project be done? This section should be a high-level statement of the reasons why
the project should be done. Do not give detailed justifications, such as cost-benefit ratios.