Project Charter

Revision as of 21:38, 25 February 2018

A project charter is defined as a statement of scope, objectives, and participants in a project. It is can be used in project management as a marketing tool for the project since the charter is created at the beginning of a project. In recent year the project charter has become more conspicuous and people are understanding more how important it is to use it. On the other hand, the charter is still underestimated as deliverables in project management and many experts in program and portfolio management are not giving it enough attention. This tool is an important step in project management since it can avoid project failures and can help chose the right projects for organizations.

Project charter provides a fundamental project description and is used to formally authorize the project. There is no consideration or money assurance and therefore the charter is not a contract. However, it is an excellent place to explain the connection between the project and the organizational strategy. The charter is the best chance to stop the oncoming project if it is not coordinated with the organization’s strategy. Another attribute is that it connects the project sponsor, key stakeholders, and the project team, and will act as a contract during the project lifetime.

In the following article, the definition of a project charter will be introduced and how it is beneficial to use it. Guidelines will be represented on how to develop it and what contents are preferable, along with limitation it has. Lastly, references will be listed after the article for further reading.

Introduction

A project charter is a simple and straightforward document that is usually short and is done at the very start of a project. It is usually few pages long because if it is too long it is possible that no one will read it. Thus it is not necessarily one single document; it can also refer to other project-related documents. The project charter will initiate the project and more importantly, outline the project objective, identify main stakeholders and define the authority of project manager. Furthermore, it will determine the key role and responsibilities for each individual who are participating in the project. Mutual understanding of the project is vital because people have different perspective and thoughts on the project before the charter is developed. (For that reason it is important to align and clarify all topics and as a result, everyone will know what they are doing in the project and why they are doing it.)

For each project, a project manager is assigned to it. This 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 the project sponsor if he has the time for it. At last, the sponsor will sign the charter and authorize it and then the project manager will have the full authority to execute and arrange the project. Sometimes the sponsor is unable or unwilling to approve the charter and demands certain changes. If the project manager is professional, he will fix the desired changes until the charter will be signed. Continuing with a project without the sponsor’s approval will most likely end in failure. (Demanding a clear charter before the project begins is a behavior of a professional manager.) As a result of using a project charter, it will be easier for top management to formally accept and commit to the project, along with being easier for the project manager to control and pursue the project thoroughly.

Following are the three main reasons for using a Project Charter:

1. To authorize the project. This is used to sell the project to the stakeholders and give them a rough idea what the return will be.
2. To serve as the primary sales document. The project has a framework, so the resources can be allocated as necessary.
3. To use it throughout the life cycle of the project. The project manager and the team can pursue the project by using the charter and can refer to it during the project lifetime.

A project charter is sometimes misunderstood. The traditional charter is usually a document that is formal and legal, although, the 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.

Benefits

The main benefit of using a project charter is well-defined project start, certain project boundaries and create 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 and therefore, can help the team to see the big picture, and also to help new individuals that join the project later on. Another advantage is that the charter is a project planning tool that can emphasize on good and effective communication plan, which is essential for every project and will help the team to succeed. To elaborate, it will decrease problems that occur in a relation of miscommunication and therefore save time. Tutorialspoint.com

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 proceeding the project or not. Secondly, it will focus on organizational objectives and strategy and lastly, it can regulate the authorization and launching organizational assets. It is apparent that project charter is an important part of project management.

Guidelines how to develop a Project Charter

The process of developing a project charter is divided into three main steps and they are Inputs, Tools & Techniques and Outputs. In the following sections, these steps will be explained in more detail.

Figure 1: Inputs, tools and techniques, and outputs of developing a project charter.

Inputs

The inputs to develop a Project Charter are following: Project Statement of Work Description of deliverables for a project and references three topics; business need, product scope description, and strategic plan. 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, along with the connection between business need and product scope description.
• Strategic plan. Documentation of the company’s strategic vision, goals, and objectives. In addition, it can enclose a mission statement. It is important that all projects, within the company, are aligned with their strategy.

Business Case Required information that will give a clear idea if the project is worth doing or not. Usually, it includes the business need and the cost-benefit analysis to acknowledge boundaries in the project. When the scope and limitations have been determined the sponsor needs to approve it. The business 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 and make sure that the project is still in the business case. Agreements 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 Factors related to enterprise environmental factor 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 Elements related to Organizational Process Assets that can influence the development of the project chart are following:

• Organizational standard processes, policies, and process definitions
• Templates
• Historical information and lessons learned knowledge base

Tools and Techniques

Outputs

The output is the project charter and the project manager will allocate the project to organizational resources and has authority to use project activities. *reference: POMBOK* Contents of a project charter are following: *reference: http://www.projectmanagementdocs.com/initiating-process-group/project-charter-long.html#axzz4XoPzbU80*

• Executive Summary

High-level summary of reasons for creating the project and what problem it is supposed to improve. Moreover, it can contain background information and general statements about the project.

• Project Purpose/Justification

It is vital to know the purpose or justification of the project and what is the expected outcome of it. This section describes the project and how it is related to the company’s business 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. Analyze the logic for the business case and what effects it will have on the business. It is important to define the final goal of the project, and therefore it is vital to list the objectives for the project that are in a relation to the company’s strategy.

• Project Description

This includes project objectives and success criteria, requirements, constraints, assumptions and a preliminary scope statement. It will provide a more detailed description of the project, whilst not concluding too many details. General information 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. The effect is that each objective will be specific, measurable and achievable within a certain time frame, and for that reason, it will be easier to monitor them. Therefore, the project manager can monitor whether the project is on the right path and whether it is more likely to be a success. If the objectives are vague and unrealistic it makes it difficult to evaluate the process of the project. It is also important to list all project requirements that needs to be stated by the project team, it will not be exhaustive list since the requirements can change as the project moves forward. The project manager will deal with constraints that relate to people, money, time or equipment.

*to be continued*

• Risks

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, the team would be more ready and could reduce project delays and prevent complications.

• Project Deliverables

This should provide a list of all deliverables, whether it is from the customer, project sponsor or the stakeholders. The project sponsor needs to approve the list and the team must present all changes to the project sponsor and be represented in status meetings.

• Summary Milestone Schedule

All predetermined milestones in the project are listed but are subject to change throughout the project. All changes will be evaluated by the project manager.

• Summary Budget

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 clearer, but the charter will give a rough plan. In addition, it is crucial to run all changes by the project manager.

• Project Approval Requirements

Project approval requirements will state the point when the project has reached its goal. The goal and the requirements need to be clear, decisive and should be accepted by an authorized person. At last, if the project is approved and has met all the requirements it will be signed-off by the 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.

• Authorization

The project and all of its guidelines stated needs to be approved and signed by the project sponsor.

Limitations

Even though potential risks and issues are considered in project charter, nobody can predict the future, so the project manager cannot predict each complication. The teammates 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. On the other hand, it can also be a problem if the charter has a solution to a problem that occurs, it may not be adequate to solve it and therefore the project will delay.

*to be continued..*

Later on, the challenges are presented in this section.

References