Developed by Erna Gudny Aradottir
A project charter is defined as a statement of scope, objectives, and participants in a project.  It is a document that provides a fundamental project description and is used to authorize the project formally.  The main stakeholders are identified, and participants' roles and responsibilities are determined.  There are many different forms of a project charter, but it is recommended to document specific information that is gathered, and include certain content. A project manager is assigned to each project, but the project sponsor is the one who approves the charter before the project starts.  The charter can be used in project management to sell a project to stakeholders since it is created at the beginning of the project.  Creating a project charter helps in creating a good overview of the project, and thus all participants will be on the same page when it starts.  Companies can benefit from using the charter when choosing between projects that are available and can focus on the most profitable ones.  The development of the charter is divided into three steps; Inputs, Tools & Techniques and Outputs. These steps are vital to create an effective charter.  There are only a few limitations of using a project charter, so the advantages of using it outweigh them.
In the following article, the definition of a project charter will be introduced and the preferable content of it. Guidelines will be presented on how to develop it, along with its limitations and benefits. Lastly, references for further reading are listed.
A project charter is a simple and straightforward document that is usually short and is done at the beginning of a project. It is kept short so that it is more likely that people will read it. The charter does not have to be a single document; it can also refer to other project-related documents.  In essence, it will outline the project objective, identify main stakeholders and define the authority of the project manager. It will also determine the key role and responsibilities for individuals who are participating in the project. Before the project charter is developed, people might have different perspectives and thoughts on the project. However, mutual understanding is vital, and the charter helps provide that. 
A project manager is assigned to each project. It is done as early in the process as possible, ideally while the project charter is being developed. . A project charter is usually written by the project manager or, in some cases, the project sponsor.  In the final step, the sponsor will sign and authorize it and then the project manager will have full authority to plan and execute the project.  Sometimes the sponsor is unable or unwilling to approve the charter and demands specific changes. If the project manager is professional, he will fix the desired changes until the sponsor is satisfied. Continuing with a project without the sponsor’s approval will most likely fail.  As a result of using a project charter, it will be easier for top management to formally accept and commit to the project, as well as for the project manager to control and pursue it. 
A project charter is sometimes misunderstood. A traditional charter is usually a document that is formal and legal, but a project charter is not the same thing. Because of this misunderstanding, multiple project managers do not recognize their project charter even though the project does have one. The project charter is an excellent place to explain the connection between the project and the organizational strategy. Therefore, it is the best chance to stop the oncoming project if it is not in accordance with the organization’s strategy.  Another attribute is that it connects the project sponsor, key stakeholders, and the project team, and acts as a guide during the project lifetime. 
In recent years the project charter has become more conspicuous, and people are understanding more how essential it is to use it. On the other hand, the charter is still underestimated as a deliverable in project management and many experts in program and portfolio management are not giving it enough attention. This tool is important in project management as it can prevent project failures and can assist in choosing the right projects for organizations. 
Following are the three main reasons for using a Project Charter: 
- Authorize the project. This is used to sell the project to the stakeholders and give them a rough idea what the return will be.
- Serve as the primary sales document. The charter provides a summary of the project, so the stakeholders can more easily allocate resources as needed.
- Use it throughout the life cycle of the project. The project manager and the team can, throughout the project, refer to the charter during planning and decision-making.
Preferable Content of a Project Charter
A high-level summary of the reasons for doing the project and what problem it is supposed to solve. It will typically also contain background information and general statements about the project. 
It is vital to know the purpose or justification of the project and what the expected outcome of it is. This section of the charter describes the project and how it is related to the company’s operations by defining the business case and business objectives. The business case will explain the need for the project and how the company will benefit from it. In this section, there is an analysis of the logic for the business case and how it will affect the business. It is important to define the final goal of the project, which means listing the objectives for the project that are related to the company’s strategy. 
This section of the charter includes project objectives, success criteria, requirements, constraints, assumptions and a preliminary scope statement. It will provide a more detailed description of the project, while not going too much in depth. General information that needs to be determined is; what is the project, how will it be done and what will it achieve. It can be useful to use the SMART method to set the project objectives, and this means that each objective will be specific, measurable, attainable, as well as time-bound and realistic. For that reason, it will be easier to monitor the objectives and see whether the project is more likely to be successful. If the objectives are vague and unrealistic, it makes it difficult to evaluate the progress of the project. It is also important to list all high-level project requirements that are stated by the project team, it will not be an exhaustive list since the requirements can change as the project moves forward. Inputs from the project sponsor, customer, stakeholders and the project team are all taken into consideration. The project manager will deal with and determine constraints that affect people, money, time or equipment. In order to have a successful project, the manager needs to balance these constraints. Furthermore, all assumptions need to be listed by the project team. Finally, the preliminary scope statement is defined, which states what the project will include, describes high-level resources and requirements, and when the project is completed. This is done with possible changes in mind because this information can change throughout the project. 
Identifying the main stakeholders of the project is crucial as the people responsible will have to report to them throughout the project and meet their expectations. It is beneficial to form a productive relationship as soon as possible between the team and the stakeholders. 
Every project contains some form of risk. Risks and other potential issues that may happen in a project need to be taken into account and listed because without it, the project can derail. The project manager will address this and create a plan to solve these issues if they occur, so the team will be ready and can minimize project delays and prevent complications. 
Provides a list of all deliverables, whether they are from the customer, the project sponsor or the stakeholders. The project sponsor needs to approve the list, and the team must present all changes to the project sponsor. 
Summary Milestone Schedule
All predetermined milestones in the project are listed but are subject to change throughout the project. The project manager will evaluate all changes. 
It includes the sum of all relative costs and the total budget for the project. Since the project charter is done very early in the process, the costs are likely to change when the project becomes more explicit, but the charter will give a rough plan. It is also crucial to run all changes by the project manager. 
Project Approval Requirements
Project approval requirements will state when the project has reached its goal. The goal and the requirements need to be clear and should be accepted by the authorized person. If the project is approved and has met all the requirements, it will be signed-off by the project sponsor. 
Assigned Project Manager
This section will state the assigned project manager to the project, along with the responsibilities and authority level. These responsibilities can vary between organizations and projects. 
The project and all stated guidelines need to be approved and signed by the project sponsor. 
There are many ways to write a project charter. A document does not need to include all of these sections mentioned above to act as a project charter. It will still be a project charter even though it has different headers or does not contain all the information listed here above. The project charter can take various forms. For instance, a casual form is an e-mail or a verbal agreement. On the other hand, documentation is highly recommended to make the agreement clearer. 
A project charter can be applied to all projects in an organization, although they can be quite different when comparing them to each other, due to the size and importance of each project. The process of developing a project charter is divided into three main steps; Inputs, Tools & Techniques and Outputs. In the following sections, these steps will be explained in more detail. 
Project Statement of Work
It is a description of deliverables for the project. The project sponsor will provide the statement of work if the project is internal. On the other hand, if the project is external, it will be received from the customer, in the form of a bid document or as a part of a contract. The statement of work will determine the following three topics. 
- Business need. Can be based on market demand, technological advance, legal requirement, government regulation, or environmental consideration.
- Product scope description. Documentation of characteristics of the product, service or results the project will create, as well as the connection between business need and product scope description.
- Strategic plan. Documentation of the company’s strategic vision, goals, and objectives. Also, it can include a mission statement. It is important that all projects, within the company, are aligned with their strategy.
Required information that will give a clear idea whether the project is worth doing. Usually, it includes the business need and the cost-benefit analysis needed to acknowledge boundaries of the project. When the scope and the limitations have been determined the sponsor needs to approve it. The business case can include market demand, organizational need, customer request, technological advance, legal requirement, ecological impacts and social need. Moreover, risks concerning these examples need to be taken into account. The project manager has the responsibility to meet the requirements that are stated by the stakeholders and make sure that the project will be as effective and efficient as possible. Throughout the project, it can be helpful to monitor the process to make sure that the project is still within the business case. 
To define the initial intentions for a project, agreements should be used. Some examples of agreements are contracts, letter of agreements, verbal- or written agreements and letters of intent. 
Enterprise Environmental Factors
Elements related to Enterprise Environmental Factors that can affect the development of a project charter are following: 
- Governmental or industry standards, or regulations
- Organizational culture and structure
- Marketplace conditions
Organizational Process Assets
Factors related to Organizational Process Assets that can influence the development of the project chart are following: 
- Organizational standard processes, policies, and process definitions
- Knowledge base of historical information and lessons learned
Tools and Techniques
An individual or a group of experts with special knowledge or training criticize the inputs. These individuals can come from different sources. For example, other units within the organization, professional and technical associations, stakeholders, the project management office, and consultants. 
The project manager will apply various methods that are within project management, like brainstorming, problem-solving and conflict resolution. These processes will help in developing the project charter. 
The output is the project charter. The project manager then is given the authority to use organizational resources to perform project activities.  The charter will be created from the limited information that is accessible. 
Limitations & Benefits
Even though potential risks and issues are considered in a project charter, the future cannot be predicted, so the project manager cannot be prepared for each complication. The project team will rely on the project charter to manage obstacles, but when a problem occurs that is not included in the charter, it can take a lot of time to solve it. Another limitation is if the charter already has a solution to a problem, but the solution is not adequate to solve it, and therefore the project will delay.  Because the project charter is essential in project management, it can be a challenge to put no unnecessary details in the document. Another potential drawback of creating a good project charter is the time and overhead involved in the process. 
The main benefits of using a project charter is a clear project start, project boundaries and a formal record of the project.  The project charter can be useful because all the basic information about the project is gathered in one document. Therefore, it can help the team to see the big picture, as well as help individuals that join the project later on.  Participants in the project will have a mutual understanding of the project because the charter aligns and clarifies what each one is responsible for and the reason why it needs to be done.  Not only is the charter a project planning tool but also an effective form of communication for persons involved in the project, which is essential and will help the team to succeed. As a result, it will limit problems that occur due to miscommunications and therefore save time. 
Organizations have the opportunity to become more mature by using a project charter to improve their project management process. First of all, the charter will support the decision on whether to go forward with the project or not. Secondly, it will focus on organizational objectives and strategy. Lastly, it can regulate the authorization and launching of organizational assets. It is apparent that using a project charter is an important part of project management. 
Project Manager. A Quick Guide to Project Charters. The article is published 26th of July in 2017 and is written by Stephanie Ray, the VP of Content at ProjectManager.com. She has a lot of experience leading teams and develops strategies for digital contents. This article is a quick guide and gives a good overview of the project charter. The company started their operation in 2008, and today they have more than 20.000 managers and teams using their service daily, which is producing project management software. This website can be seen as credible.
Project Management Institute. (2013) A Guide to the Project Management Body of Knowledge (PMBOK® Guide) - Fifth edition. Provides guidelines for managing projects, and defines concepts and tools that are related to project management. The book is well organized and concentrates on a specific topic in each chapter. Furthermore, it provides insight on the topic Project Charter; it explains the definition of a project charter, guidelines how to develop it and what content it should contain. The book gives wide-ranging information and is recommended for further reading.
Brown, A. S. (2005). The charter: selling your project. Paper presented at PMI® Global Congress 2005—North America, Toronto, Ontario, Canada. Newtown Square, PA: Project Management Institute. The article is published by Project Management Institute (PMI) and is written by Alex S. Brown. It gives a more in-depth knowledge of project charter and the importance of using it. Furthermore, it provides practical suggestions for the user. PMI is a US nonprofit organization and provides their customers valuable knowledge, networks, and resources. This article can be seen as credible.
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 https://www.projectmanager.com/blog/project-charter Project Manager. A Quick Guide to Project Charters. Retrieved 16-02-2018.
- ↑ 2.00 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 2.11 2.12 2.13 2.14 2.15 2.16 Project Management Institute. (2013). A guide to the project management body of knowledge (PMBOK® Guide). 5th ed. Pennsylvania: Project Management Institute, pp. 66-72.
- ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 Brown, A. S. (2005). The charter: selling your project. Paper presented at PMI® Global Congress 2005—North America, Toronto, Ontario, Canada. Newtown Square, PA: Project Management Institute.
- ↑ 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 http://www.projectmanagementdocs.com/initiating-process-group/project-charter-long.html#axzz4XoPzbU80 Project Management Docs. Project Charter (Long Version). Retrieved 15-02-2018.
- ↑ https://bizfluent.com/info-8055374-pros-cons-project-charter.html Bizfluent. Pros and Cons of a Project Charter. Retrieved 22-02-2018.
- ↑ Merrick, A. (2014). And away we go. PM Network, 28(7), 56–61.
- ↑ 7.0 7.1 https://www.tutorialspoint.com/management_concepts/project_charter.htm Tutorials Point. Project Charter. Retrieved 18-02-2018.