Project Charter

Abstract

A project charter is defined as a statement of scope, objectives, and participants in a project. It can be used in project management to sell the project to stakeholders since the charter is created at the beginning of a project. In recent years 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 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.

A project charter provides a fundamental project description and is used to formally authorize the project.

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

Big Idea

Preferable Contents of a Project Charter

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Practical Guidelines

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.

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

The second step is to use tools and techniques. They are explained in detail here below.

Expert Judgment

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, project management office, and consultants.

Facilitation Techniques

The project manager will apply various methods that are within project management, like brainstorming, problem-solving and conflict resolution. This processes will help in developing the project charter.

Outputs

The output is the project charter. The project manager will allocate the project to organizational resources and has authority to use project activities. The charter will be created from the limited information that is accessible.

Limitations & Benefits

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. Another problem occurs if the charter already has a solution to a problem, it may not be adequate to solve it and therefore the project will delay.

Benefits

The main benefit of using a project charter is well-defined project start, certain project boundaries and creates 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, and also 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.

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.

Bibliography

Project Management Institute. (2013) A Guide to the Project Management Body of Knowledge (PMBOK® Guide) - Fifth edition.

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.