Six Sigma Green Belt Project Charter

Project Name Household Expense Reduction

Today’s Date 12/30/2022
Project Start Date 12/1/2023
Target Completion 12/2/2024
Date

Project Element Response

Problem Statement Currently the customer is in job transition, the monthly household
 Includes time, income has decreased by 25% from April 2022 while the average
measurable item, expenses remain high at $7,034in average. This has caused a
gap and business steady decrease in monthly savings resulting in a long-term loss
impact for the household.
Business Case By reducing the monthly expenses, the household can transition
 Why is this project from a drain in savings to an influx on them.This will not only
important to do help in achieving household targets but also increase the
now? customers’ satisfaction score by reducing the strain and
 What is the pressure of seeing the savings account decrease.
project’s financial
impact?
 What is the impact
on DPMO/ Sigma
level?
 What is the impact
on customer
service
Goal Statement Understand the current monthly fixed and variable expenses
 Specific and identify those items that contribute most to the overall
 Measurable outflow. Create a monthly expense plan for 2023-2024.
 Achievable Reduce the overall expenditure by 25% per month within one
 Realistic month of plan deployment.
 Time-bound
List of Improvement Measure (units) Baseline Goal
Goals Dollars per month $7,034 $5,275.50
1. Reduce expenses by Dollars $4,200 $12,000
30%
2. Double current savings % identified dollars 20% 100%
at the end of 6months per item
 Six Sigma Green Belt Project Charter
3. Identify 100% of
expenses made in cash

Process On monthly basis 2 household members make payments for

 Describe the fixed and variable expenses depending on the needs
process in which determined by their weekly routine.
the problem exists During the week:
Member A drives to work, holds a 9 to 5 job where he has
lunch and sometimes coffee and dessert, drives back home and
indulges in a leisurely activity for the evening. Member B stays
at home, does housekeeping activities, some days of the week
engages in recreational activities, has lunch outside and joins
Member A in the evening activity of choice.
During weekends activities are decided on depending on
the monthly city events and festivities.

Project Scope In Scope: Review the work week and weekend the activity plans
 What part of the and redefine routines as needed. Ad hoc activities and events
process will be (holidays, sales, etc.) to be discussed. An expenditure plan to be
addressed? built around these.
 What are the Out of Scope: Changes to major fixed expenses (Rent,
boundaries of the insurances, etc.), we must focus on daily activities rather than
project or process? thinking of big moves or changes in the family lifestyle.
 What areas are
inside or outside the
team’s focus or
authority?
 Attach a SIPOC
diagram if
necessary
Team Member Name
Project Sponsor Mr Aung
Key Stakeholders Mr Htet
Team Lead Mr Zay
Team Members Mr Yan , Mr Myo , Mr Win , Mr Linn
Process Owner Mr Koti,
Other
Timeline by Project Milestone Target Completion Date
Stage
Define Project Charter and kickoff 1/1/2023
Measure Define and collect data 3/2/2023
 Six Sigma Green Belt Project Charter
Analysis Find causes 1/3 /2023
Improve Fix causes 17/4/2023
Control Standardize the fix 20/5/2023
 Six Sigma Green Belt Project Charter
Monthly Household Expense
Project Title Reduction

Expectation Team Rule

Attendance is required at all team meetings. Changes in
Attendance meeting times must be made at least24 hours ahead of
time.
Participation Team members may not be substituted unless
approved by team leader.

We will stay on task and on topic, using the Project

Focus
Charter as our guide. A meeting agenda will be
published at least one day in advance.

Interruptions Interruptions for emergencies only. Phones turned to silent

All deliverables are expected to be completed in a

Preparation timely manner. Each meeting will have a published
agenda

Timeliness
Meetings will begin promptly as scheduled

We will choose the best decision-making method for

Decisions
each situation. We will support decisions made by the
team.

Data
We will rely on data to make decisions
 Six Sigma Green Belt Project Charter
Monthly Household Expense
Project Title Reduction

Expectation Team Rule

We welcome honest disagreements so long as everyone

Conflict is treated with respect. A facilitator will be
used if conflict cannot be resolved
Other

Team Member Signature

Mr. Yan Mr.Yan

Mr. Myo Mr. Myo

Mr. Win Mr. Win

Mr. Linn Mr. Linn

 Six Sigma Green Belt Project
Charter

Voice Of the Customer

Customers are those living in the house, Member A and Member B.

The Voice of the Customer was used to understand the goals, expectations and limits of the
customer. The customer’s goal is to reduce expenses by 25%.

Customer expectations include:

 Meeting the goal of reducing expenses by 25%

 Maintaining a comfortable quality of life
 Minimizing the inconvenience resulting from reducing leisurely activities
 Establishing a method for maintaining the goal once it has been achieved

Customer meetings were held throughout this project to discuss results of the audits, and agree
to improvement plans.

Customers also agreed to monitor the continuation plan and implement an incentive plan for
positive results.

Constraints based on interviews:

Activities and events need to be entertaining

There should notbe a significant decrease in activities or events

Changes should be approved by all.

 Six Sigma Green Belt Project Charter

Fish Diagram based on interview with customers

 Six Sigma Green Belt Project Charter
DATA COLLECTION PLAN

• This project will be driven by both data collection and processes

• Expense data for both family members will be recorded, both how much and when

• Customer’s habits and requirements will be evaluated and recorded

• This project will document weekly and weekend expenses as well as ad hoc expenses

• A bank statement audit will be conducted and documented

 Six Sigma Green Belt Project Charter

After looking at bank statements of the past 6 months and categorizing each transaction to better understand the type of charges being
made, a Pareto Chart was created to identify the main concepts where money was being spent:

Pareto:
 Six Sigma Green Belt Project Charter
The types of expenses within the 80% are listed below:

Since major changes to fixed expenses are Out of Scope, the focus will be off Rent, Car
Insurance, and lunch for Member A, since this family member has lunch at the office diner
during the week and that behavior is not in scope.For the other main “culprits” in high expenses,
the interest is in analyzing the frequency with which:

 Family members attend restaurants (and get average per week to estimate weekly
frequency)
 Family members do shopping
 Family members attend entertainment events (festivals, concerts, cinema, etc.)
 Family members withdraw money, as this has been hard to track back to better
understand the type of expenses the money is ultimately spent on.

For these types of expense, the focus will be on decreasing the frequency of the activities to an
acceptable level that will both allow for family members to remain happy and engaged while
allowing for savings to be had.

The frequency of travel transactions, groceries, and lunch for member B will not be analyzed
since for these types of expenses the focus shouldn’t be on how many times an expense is made
but rather how much is being spent each time. For example, a family member might go to get
groceries on a weekly basis (4 times per month) and spend more on average than they would if
they went twice per week (provided they only buy what’s needed for those 3/4 days without
waste). The focus here is not on
 Six Sigma Green Belt Project Charter
decreasing the amount of times the person visits the grocery store but on how much is being
spent and how to spend less (sales, ratio high end / cheaper products, etc.)

PROCESS MAPS

Working week

Weekends
Six Sigma Green Belt Project Charter

HYPOTHESES& STATISTICAL
ANALYSIS
 Six Sigma Green Belt Project Charter
When getting the normal distribution for the information above, we’re interested in knowing in
the “As Is” process what is the probability of having the monthly expenses be
$5,000or less–because of the desire to reduce expenses by 30%. In excel, by applying the
formula NORM.DIST(5,000;7,034.89;1,418.68)we get an 8% chance that the monthly expenses
are $5,000 or less; this means that before improvement, there is a 92% chance of spending
$5,000 or more per month.

Looking at the 3 main expense categories that can be modified, the standard deviation is too
high (high margin of error) to be able to work directly with those numbers when creating the
hypotheses:

The data from the three tables above comes from bundling all available bank transactions per
category together.

Considering concepts with highest expenses, there seems to be a high variance in all categories.
Working with frequencies will make it easier to determine how many times per month the type
of expense is being currently incurred on and come up with a good
 Six Sigma Green Belt Project Charter
number to decrease the frequency, which will in turn decrease the overall monthly expense for
that category.

Taking into consideration the data for Restaurants costs we get the
NORM.DIST(X,37.04,31.66,1)to find an appropriate Restaurant cost to use in our future
calculations. The way this amount is determined is through hypothesis.

The first hypothesis would be that if we select a restaurant cost there is a 90% chance that the
cost will be $40 or less.

NORM.DIST(40,37.04,31.66,1)= 54% which means that the hypothesis is rejected.

We will look for a higher cost to use when estimating future expenses and will settle on
$70:NORM.DIST(70,37.04,31.66,1)= 85% which means that taking current costs there’s an
85% chance that a restaurant expense is $70 or less, this is an acceptable percentage and $70 will
be used as the number to estimate future costs instead of the mean.

The same procedure will be applied for shopping costs. The second hypothesis would be that if
we select shopping costs there is a 90% chance that the cost will be $60or less.

NORM.DIST(60,51.17,40.84,1)= 59% which means that the hypothesis is rejected.

NORM.DIST(94,51.17,40.84,1)= 85% which means that taking current costs there’s an 85%
chance that a shopping expense is $94or less, this is an acceptable percentage and $94will be
used as the number to estimate future costs instead of the mean.

Applying this for entertainment costs. The third hypothesis would be that if we select
entertainment costs there is a 90% chance that the cost will be $60or less.

NORM.DIST(60,47.14,48.8,1)= 60% which means that the hypothesis is rejected.

NORM.DIST(97,47.14,48.8,1)= 85% which means that taking current costs there’s an 85%
chance that a shopping expense is $97or less, this is an acceptable percentage and $97will be
used as the number to estimate future costs instead of the mean.

The focus should now shift to frequency, we should understand how often the three categories
are currently incurred on and how much they should be decreased to find a balance where the
customers are still satisfied with the amount of activities and events they attend but the overall
expenses decrease.
 Six Sigma Green Belt Project Charter

From the table below,we see that in average there are 24 outings to restaurants per month, that
would mean 6 outings per week.

Similarly, shopping happens 15 times per month in average or 3.75 times per week. The family
attends 9.3 times per month in average to events (concerts, museums, cinema, etc.) which would
be 2.3 times per week approximately.

The table also shows the average per week based on monthly data rather than the discussed
averages above.

Table of frequencies per month and average times incurred per week:

IMPROVEMENT SELECTION
 Six Sigma Green Belt Project Charter
Taking the information above into consideration the improvements below were selected, based
on the base of implementation and the return on investment. Improvements were also agreed to
by the customers.

The improvements were as follows:

 Attend restaurants in a lesser frequency, decrease to 3times per week (Friday, Saturday,
Sunday). If we take into consideration the current data, we know with 85% certainty
that a bill in a restaurant will be $70 or less so:
3 days * 4 weeks = 12 restaurant bills per month * $70 or less = $840 or less This will
save at least $325.18 per month considering current average monthly expenses
 Do shopping in a lesser frequency, decrease to 1timeper week. If we take into
consideration the current data, we know with 85% certainty that a shopping bill will be
$94or less so:
1day* 4 weeks = 4shopping bills per month * $94or less = $376or less
This will save at least $278.50per month considering current average monthly
expenses
 Attend events in a lesser frequency, or focus on free events. Decrease paid events to
1timeper week. If we take into consideration the current data, we know with 85%
certainty that a bill will be $97or less so:
1day* 4 weeks = 4eventbills per month * $97 or less = $388or less
This will save at least $230.44per month considering current average monthly expenses

As for the other 2concepts that could be decreased:

 Groceries–Focus on spending only $70 per week, this will create savings of $100 per
month in average
 Travel–In average, travel costs per month on the months in which the family travels
are $1,300. The main expense comes from flight tickets. In the following months
prefer short trips to closer destinations

CONTROL PLAN

Audit Restaurant, Entertainment, and Shopping expenses each week for 6 months and decrease
frequency of attendance depending on forecast for the month. Monthly communication to
customers with data taken from bank statement. Average daily / weekly usage should not
exceed that of the estimates in this project, “alarm” will be
 Six Sigma Green Belt Project Charter
triggered once an expense has reached 80% of monthly capacity during weekly audits. Action to
be taken will be discussed with customers at weekend.

REFLECTION ON COURSE

Expect other high priority projects to disrupt efforts to complete projects Numerous other factors
such as one-off expenses and unexpected charges can alter a monthly budget Pareto style bar
charts and scatter diagrams with trend lines are effective for graphically displaying data Often times
it is hard to get enough information to create proper inferences for the measure and analyze
phases. It’s important to properly brainstorm where the focus should be to ask for the appropriate
data or make sure that it can be obtained during future observations.