What is a Project Charter?
The Project Charter is your starting point when it comes to New Product Development, and your first step to getting your project underway, so it’s really important to get it right. The project charter should be completed early in the planning stage and not in the initiation stage. Your project charter is your project’s best marketing tool. It will help sell your project’s viability to stakeholders and provide you with the authorization you need to begin the project.
The Project Management Institute (PMI) defines a Project Charter as “a document issued by the project initiator that formally authorizes the project and provides the project manager with the authority to apply organizational resources to the project activities.”
The charter will sell your projects goals and ensure that your project is in line with your business strategy. You are laying out your project to stakeholders and team members, and anyone else who will be involved in the project – and outlining to everyone what the project is about. This ensures that everyone is on the same page, and that the project stays on track, keeping in line with business objectives. Therefore, it will ensure your whole team is on board with the project plans and deadlines.
It is also a great document to refer back to throughout the whole lifespan of your project. The Charter reminds people what it is that you’re doing and what agreements are in place. It also ensures that your project stays in line with your organisational strategy, and that you are executing your strategy accordingly.
The project charter is the heart of your project and is something that every project should have. Yet the charter seems to be one of the least talked about deliverables in project portfolio management. Often organisations fail to have an adequate charter because they simply don’t recognise the key components of a charter, or the importance of having one.
PMI points out that a charter should be simple, straightforward, and concise, but must contain certain key elements. “Once the basic components of a charter are clear, it is possible to give it a central role in the organization. The charter has a critical influence on any application of organizational strategy, organizational project maturity, program management, and portfolio management.”
How Does the Charter Differ to a Project Brief?
PMI defines the Project Brief as a high-level overview of the goals, deliverables, and processes for the projects. Whereas the Project Charter is a document issued the Project Manager that formally authorizes the project and gives the PM the authority to apply resources to the project.
Other documents that are created at the start of the project may include the Business Case. This is a value proposition for the proposed project and may include financial and non-financial benefits. The Project Summary, which is a one-page visual summary that describes the value proposition, infrastructure, customers, and finances (these are often used in lean start-up operations). And the Vision Statement, which is a concise, high-level timeline that depicts milestones, significant events, reviews, and decision points.
The PMBOK® Guide, 3dEdition, lists specific information that the charter should provide, either directly or by reference, including:
- Business needs
- Summary schedule
- Assumptions and constraints
- Business case, including return on investment.
The PMBOK® Guide suggests that a project charter doesn’t have to be a formal document, formatted with certain headings. Instead, they point out that the project charter can take many forms. What is important is that you address the following questions:
- Does the sponsor know the project exists, and does the sponsor agree that it should exist? In other words, has it been authorised by the sponsor?
- Does the sponsor know who the project manager is, and does he or she support that person’s leadership of the project?
- Has the sponsor given the project manager authority over money, people, and other organizational resources, to accomplish that project?
- Has the sponsor ever written an e-mail, written a memo, spoken at a meeting (preferably a meeting with documented minutes) indicating, even implicitly, a “Yes” answer to the questions above?
However, other organisations have suggested that it can be beneficial to have a more official document containing some key high-level information that everyone in the project team has access to (information such as project objectives, scope, and risks). That’s because the project management teams will reference this document throughout the project’s lifecycle – so having an official document to refer to (rather than say, an email) will make this far easier and more accessible. Having an official project charter document ensures that you have everyone’s buy-in to the project, and this will help drive the project to success.
Having a more official document also means you can create a template that can be used repeatedly on other projects – so that you’re not reinventing the wheel each time. Consistency will keep team members informed and aware of what information is needed at the start of the project in order to put together a robust charter.
10 Things to Include in the Project Charter
1. Project Description.
This is the ‘what’ of the project. A short powerful phrase outlining the outcome – what are we doing?
2. Problem Statement (or Project Objective).
This is the ‘why’ of the project. It should include some background and reasoning as to ‘why’ the project is being carried out. Keep it short – this is simply a high-level justification for undertaking this project. What problem will this project solve? Or what opportunity will it take advantage of?
3. Project Scope and Process Statement.
This is the ‘how’ of the project. This defines what the project is all about. What are the key areas of focus? What should you not focus on? What are the boundaries of the project? While PMs typically write detailed project scopes in the project planning stage, keeping it brief in the project charter is best practice.
4. Project Deliverables.
What will be the key high-level deliverables? Be clear on what your team is delivering to avoid disagreement and delays.
5. Project Team.
Who are the project team members? Who are the key stakeholders? Gatekeepers? Here you can identify and assign key roles and responsibilities. Listing the names and responsibilities of the parties involved, and stating their different tasks holds team members accountable.
6. Project Timing.
This is not a detailed timeline, but your key dates.
7. Key Documents and Resources.
An outline of the key documents that will be required, as well as a list of resources you will need. Not just financial resources, but anything that is critical to the project’s success, such as team members, facilities, and equipment. High level list or description.
8. Project Risks.
You may want to identify some initial high-level risks. Outlining risks can enable you to devise risk mitigation strategies in advance.
9. Project Alignment.
Is the project aligned with the organisational strategy?
10. Exit Criteria.
What conditions need to be met in order to close the project?
Collaboration is Key.
Some of this information you will already have. Other information and insights may need to be gathered from your project team. It is essential to talk to your team members when putting together your project charter to ensure you have set realistic goals and timelines and ensure the project team are on the same page.
It’s also really important to store your charter in a central location that all team members have access to. This creates a sense of collaboration and ownership, as well as accountability.
Make sure you keep the project charter brief. You don’t need to capture every detail of the project. You can go in-depth in your project planning stages, but not in the charter. This is just a high-level overview that is short, useful, and valuable. Keep the information concise and digestible.
Example of a Project Charter in a PPM System
What are the Benefits of Having a Project Charter?
We have mentioned above some of the many benefits of having a project charter. These include:
- A simple process to authorize and approve a project.
- All team members are on the same page, and have stakeholders’ buy-in for your project.
- You can define the project outcome.
- It encourages collaboration and communication.
- It holds team members accountable.
- It improves visibility.
- It helps to avoid scope creep and help you stay on track and meet your deadlines.
- You can set the expected start and end dates of the project.
- You can clearly explain how your project goals align with organizational objectives.
- It will help you decide whether to proceed with the project early on, before resources are wasted.
- It considers organizational goals and strategy.
- It controls the authorization and deployment of organizational assets.
- It sets a standard process and controls for the authorization of new projects.
Misconceptions about Charters
It’s Not Written by the Sponsor.
The sponsor authorises the charter but does not write it. Sponsors are often senior executives with very little time. So typically, it’s the project manager that will draft, or write the charter and others will approve. Depending on the company, authorization may be delivered by a formal signature, or simply a reply e-mail saying, “I agree. Proceed.”
It’s Not Always an Official One-Page Document.
The Project Management Institute believes that a project charter does not need to be contained in a single document. Ideally, one document will authorize the effort and include references to other documents that show business need, milestone schedule, and other key information.
It Shouldn’t be an Essay.
A charter needs to be simple and concise. This isn’t a 26-page document including all the information you have, or think you may require. Save this for the planning stages where you will delve into a lot more detail. Project charters are created at the very early stages of a project before significant resources have been assigned. They should only be one or two-pages in length, covering the high-level information needed, and clearly providing authority to the project manager. The charter is best understood in its simplest form when it turns an idea into an authorized project. Longer, heavily structured documents are an evolution of this, and full details of the project are included in the project plan.
It Can be Written with Partial Information.
At the very start of a project, it’s very likely that you will only have access to limited information. The PMBOK® Guide recommends including “requirements,” “schedule,” and “budget,” but highlights that it will be impossible to give detailed accounts of any of these at the very start. So don’t worry if you don’t yet have all the information. You can revisit your charter once you do. Instead, prepare the charter based on the limited information available at the time. Future phases of the project could revise the project charter to include more concrete, more specific requirements.
From Strategy to Execution
A good project charter joins strategy to execution. The charter can make sure that the project is clearly aligned to the organizational strategy. Therefore, by creating and negotiating a charter, the project manager has a chance to work at a strategic level in the organization. A charter is an ideal place for project managers to critically examine whether a project truly supports organizational strategy. As the project is new, investment is low. If the project is not truly aligned with the business strategy, the charter is the best chance to kill that project before time and resources are wasted. If project managers consistently stopped misaligned projects early in the process, there would be far fewer failed projects.
Although the charter is short and concise, it should clearly contain the business needs or goals. Details of implementation are probably not known yet. Organizational strategy operates on exactly this level — business needs and goals, without implementation details. As The Institute of Project Management have suggested, “People can quickly compare a project charter to a vision statement, a business plan, or a strategy document and determine if the two are compatible. The charter provides a very pure expression of the business intent. Drafting the charter is a unique opportunity to align the project clearly with overall business goals.”
There has been so much written about portfolio management processes, yet very little regarding the project charter. Which is surprising, as this is such an essential and intrinsic part of any project. Controlling which projects start, when they start, and what business needs they address brings a huge benefit to the organization. The charter provides organisations with the opportunity to stop the wrong projects early on, before they have a chance to begin wasting valuable resources. The IPR points out that “These processes have the potential to avoid waste on unsupported or misdirected projects. Because the charter happens at the very start of a project, the potential savings are 100% of the project budget and schedule; there is no better possible savings for a failed project.”
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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. https://www.pmi.org/learning/library/charter-selling-project-7473#
Oboidhe, P. (2023). What is a Project Charter? The Complete Guide. https://blog.hubspot.com/marketing/what-is-a-project-charter