The project charter is a formal document that clearly defines the project’s essential details to reach its goals. The PMBOK ( project management body of knowledge) explains the inputs, tools and techniques, and outputs of the project charter. Furthermore, many project managers use some key elements when preparing the project charter. It includes a problem statement, business case, goal statement, timeline, scope, team members, constraints, assumptions, risks, and dependencies. As a document, the project charter is a crucial part of every project.
Table of Contents
What is Project Charter
A project isn’t a project until the project charter is approved, and the project charter cannot start until the business case is approved. Approval means that management is supportive. On the other hand, it is a prime step to ensure that the project matches the essential needs of the organization.
After the project stakeholders and project sponsor have reviewed and approved the project charter, the project managers can get the authority. As such, they can move forward with the project.
The project charter is a formal document that clearly defines the project and outlines the essential details to reach its goals. On the other hand, the project charter gives authority to project managers to apply organizational resources for the project. It also helps project managers to organize and plan their teamwork for what needs to be done by them.
The project charter provides a direct link between the project and project strategic objectives of the organization. That is the key benefit of the project charter. Also, it creates a formal record of the project. Furthermore, it provides clear benefits for the project. But the cost is high. Therefore, you can ask yourself the below questions when performing a cost-benefit analysis.
- What is the value of this project?
- How much money can our organization save through this project?
- How much time will project team members have to spend on this project?
By including this type of information, you can ensure that you and your stakeholders agree on the details of the project value.
The project charter is like a living document. That means it can evolve as the project progresses. As a project manager, you should inspect and refine the project charter throughout the process. And project charters are the prime key for securing approval from stakeholders and moving forward.
Project Charter Inputs, Tools and Techniques, and Output
Project charter Inputs
According to the PMBOK (project management body of knowledge) describes the project charter’s inputs, tools and techniques, and outputs.
Business Documents
- Business case
- Benefits Management Plan
The business case is an input for developing the project charter. It is used for decision-making by project managers. That is the first input of the project charter.
Business documents are necessary to create a project charter. A business case describes the essential information from the business stability for determining the expected outcome and justifies the requirement investment of the project. The following are the reasons and examples for creating a business case.
- Market demand – Ex: An automobile manufacturer authorizing a project to build more fuel-efficient cars in response to gas online shortages.
- Organizational needs – Ex: Due to high overhead costs, a company may combine staff functions and streamline processes to reduce cost.
- Technological advance – Ex: An airline authorizing a new project to develop electronic tickets instead of paper tickets based on technological advances.
- Economic impact – Ex: A company authorizing a project to lessen the environmental impact.
- Legal requirements – Ex: A paint manufacturer authorizing a project to establish guidelines for handling toxic materials.
The project manager doesn’t update or modify the business documents since they are not project documents. However, the project manager can take the recommendations.
Agreements
The second input of the project charter is agreements. The agreements can be used to define initial intentions for a project.
The following are the types of agreements.
- Letters of agreement
- Verbal agreement
- Several level agreement
- Written agreement
Enterprise Environment Factors (EEF)
The third input of the project charter is enterprise environment factors which can influence the development of the project charter process.
Organizational Process Assets
The fourth input of the project charter is organizational process assets which can influence the development of the project charter process.
Project Charter Tools and Techniques
Expert judgment
The second tool and technique of project charter is expert judgment.
Data gathering
The second tool and technique of project charter is data gathering. Under that can identify brainstorming, focus groups, and interviews.
- Brainstorming
Brainstorming can use to collect data and solutions or ideas from project stakeholders, subject matter experts, and team members when developing the project charter.
The following are the people who are involved in the brainstorming process.
- Project Managers
- Subject Matter Experts
- Stakeholders
- Focus groups
Focus groups are discussions. That is a very open interaction. For instance, During this process, stakeholders discuss the project management approach.
- Interview
The interview should be specific. And it can help to make some high-level decisions. The following are the types of interviews.
- Face-to-face interviews
- Skype interviews
- Telephone interviews
- Email/ Viber / WhatsApp interviews
Interpersonal and team skills
The second tool and technique of project charter is interpersonal and team skills. Under that can identify conflict management, facilitation, and meeting management.
- Conflict management
As a project manager working on a project, arguments may arise in many situations when dealing with stakeholders.
The following are reasons for arising conflict management.
- Scarcity of resources
- Scheduling priority
- Personal work style
As a project manager, you can resolve conflicts through the following ways.
- Talking with team members
- Building positive relationships
- Understanding team members
- Understanding the essential requirements of the team members
- Resolving time pressure
- Motivation
- Facilitation
As a project manager, you should have the ability to effectively guide group activities to a successful decision, solution, or conclusion.
- Meeting management
Include preparing an agenda to enhance effectively and efficiently the meeting.
Meeting
The fourth tool and technique of the project charter is meeting. The following are the reasons for conducting meetings with stakeholders.
- To identify project objectives
- To identify project success criteria
- To identify project key deliverables
- To identify high-level requirements etc.
Project Charter Outputs
Project Charter
The first output of the project charter is the project charter. The following are the reasons for developing the project charter.
- High-level requirements
- Project approval requirements
- Measurable project objectives and related criteria
- Assigned project manager’s responsibility and authority
- High-level project description, boundaries, and key stakeholders
- Summary milestone schedule
- Project exit criteria
- Key stakeholders list
- Pre-approved financial resources
Assumption log
As a project manager, you can use an assumption log to record all assumptions and constraints throughout the project life cycle.
Project Charter Key Elements
The following are the key elements of the project charter.
- Problem statements
- Business case
- Goal statement
- Timeline
- Project scope
- Team structures
- Constraints, assumptions, risks, and dependencies
Problem Statements
The first key element of the project charter is the problem statement. The problem statement is a clear statement about the symptoms of problems encountered. The main goal of the problem statement is to stay with problem symptoms in a measurable way. It does not provide causes or solutions to the problem. That includes,
- What is the problem
- Where is it hurting
- When? – Is it current? How long?
- What is the extent of the problem?
The following are the common problems of the project.
- Limitations of the capacity of current resources
- Lower quality of information
- Increased of workload
Example of problem statement
In the last three months (when) 12% of our customers were late by 45 days when they did their payments (what). That represents a 20% shortage in our outstanding balances (to what extent) and navigate affecting our operational cash flows (where).
Business Case
The second key element of the project charter is the business case. This helps to understand how the project is linked with overall business objectives. It also explains the need of the organization to undertake the project and how it supports the organizational objectives. A business case answers the following questions.
- Why the project is worth doing
- Why it is crucial to customers
- Why it is important to business
- Why it is important to employees
- Why it is important to do now
- What is the consequence of not doing the project now
- How it fits with operational targets
Goal statement
The third key element of the project charter is the goal statement. It focuses on the approach to solving the problem statement but does not provide the solutions and how the goals are achieved. The following are the three elements of the goal statement.
- What is to be accomplished as a result of implementing the project?
- A measurable target for desired results
- A project completion date to reach the goal
Timeline
The fourth key element of the project charter is the timeline.
Project Scope
The fifth key element of the project charter is the project scope. The project scope can be categorized into two areas. That includes,
- In scope
- Out of scope
Project scope describes boundaries and identities of key parameters covered or not covered by the project. The project scope must be consistent with business objectives and functional requirements.
Team Structure
The sixth key element of the project charter is the team structure. Team structure broadly refers to project resources. That includes project managers, leaders, and project team members who are involved in the project.
Constraints, Assumptions, Risks, and Dependencies
- Constraints mean barriers that impact your project. For example, when developing a website limited, technical knowledge is a barrier.
- Assumptions – these factors can be considered as the truth but without including proof. For example, our client will visit the website.
- Risks – mean any barrier that may arise when trying to accomplish project goals. On the other hand, clear identification of project risks is essential for the project’s success. For example, the technical risks of our websites getting attacked by hackers.
- Dependencies– mean how much you rely on others.
How to Write a Project Charter
The following are the steps for writing a project charter.
- Discuss with stakeholders and team members
- Organize notes
- Use a template
- Include specific information
- Review with team members
- Present the approval
Example for Project Charter
Importance of Project Charter
The following are the importance of the project charter.
- Provide a great view of the project describing a fundamental framework of the project’s goal, scope, and high-level deliverables.
- A project charter helps the project manager to understand the sponsor’s needs and requirements.
- The project charter provides crucial information needed to get the project started.
- Show the dedication of the organization and senior management to the project.
- The project charter is the best key for ensuring that everyone agrees on how to move forward before going to the planning phase.
