What are the contents of a project charter who prepares and authorizes the project charter?

Develop a Project Charter

Table of Contents Show

Table of contents
What is a project charter?
What does the project charter contain?
Main components of a project charter
Why are project charters useful?
Key sections of a project charter
One-page project charter example
Tips for writing a project charter
Next steps for your project charter

A Project Charter is a formal document that authorizes the project team to execute project activities and provides the project manager with the ability to apply organizational resources to project activities. The PMP exam could include six to ten questions on project charter. An understanding of the components of the project charter, effective use of each component and its application during the course of the project is essential to appropriately answer the questions during your PMP exam.

Developing a project charter involves assessing the project feasibility basis the given constraints and planning the project at a high level. We do not create a detailed project plan while developing the project charter as it is generally done after official sign-off from the project sponsor. An official sign-off allows allocation of money and resources and thus supplements the development of detailed project plan. During project initiation, you define high-level objectives, scope, risks, assumptions, constraints, and requirements with a view of checking the feasibility of the project by meeting the important stakeholders.

Developing a project charter requires a few activities as follows:

Identification of stakeholders/customers: A project manager needs to identify all the stakeholders and the customers at the start of the project.
Identification of project scope: Scoping is a critical activity to create a boundary of what work to be done and what not to be done. We will cover the project scope in detail in the Scope Management chapter.
Identification of project risks: Identifying risks is an on-going activity of the project manager. This activity starts from the onset of the project and continues throughout the life-cycle of the project.
Identification of project assumptions: There are multiple activities which are done on the basis of organizational and project environmental factors. These activities are executed either because of process policies or certain assumptions. Thus, it is important to uncover all the assumptions. This is usually done by the project manager in discussion with other stakeholders.
Identification of high-level project requirements and objectives: Detailed level requirements and objectives are not possible at this stage of the project. Hence, the Project Manager should focus on high-level project requirements and objectives.
Identification of project success criteria: Project Manager should also identify the success criteria of the project. This is used as a baseline and compared with actual project performance.
Documentation of identified elements: All the identified elements need to be documented to help standardize the project work.

The above cannot be done by an individual project manager. This requires meeting with important stakeholders, subject matter experts, and related process people.

An important point to observe is that the creation of a project charter encompasses all the project areas including, scope, risk, time, cost, quality, human resources, communications, and procurement). Thus, making the Develop Project Charter an integration process.

Develop a Project Charter – Example

In this example of a project charter, we have detailed the Project Title and Description, Project Manager Assigned and Authority Level and Business Case.

A few questions that are answered here include:

What is the project?
Who is given the authority to lead the project, and can he/she determine, manage, and approve changes to the budget, schedule, staffing, etc?)
Why is the project being done? On what financial or other bases can we justify doing this project? Describe the project purpose and justification.

Further details of the Resources Preassigned, Stakeholders and Stakeholder Requirements As Known.

A few questions that are answered here include:

How many or which resources will be provided?
Who will be affected by the project (influence the project), as known to date?
Requirements as stated by the Stakeholders

We have also listed the names of project sponsors who will authorize the project.

A few activities that also need to be added to a project charter includes High-Level Project Risks, Product Description and Project Objectives, wherever applicable.

The project charter includes the following:

Business Case
Project Selection
Project Purpose or Justification
Measurable Project Objectives and related success criteria
High-level Requirements
Assumptions and constraints
High-level Project description and boundaries
High-level risks
Summary milestone Schedule
Summary Budget
Stakeholder list
Project approval requirements (i.e, What constitutes project success, who decides the project is successful, and who signs off on the project)
Assigned Project manager, responsibility, and authority level
Name and authority of the sponsor or another person (s) authorizing the project charter

When you initially charter a plane, you don’t need to provide a seating chart or list of names to the airline company. But you need to know how many passengers you have, the cost of the trip, and your destination. The project charter is similar to that for your project.

What is a project charter?

A project charter is a short document that explains the project in clear, concise wording for high level management. Project charters outline the entirety of projects to help teams quickly understand the goals, tasks, timelines, and stakeholders. It is is an essential deliverable in any project and one of the first deliverables as prescribed by the PMBOK Guide and other best practice standards. The document provides key information about a project, and also provides approval to start the project. Therefore, it serves as a formal announcement that a new approved project is about to commence. Contained also in the project charter is the appointment of the project manager, the person who is overall responsible for the project.

What does the project charter contain?

When preparing the project charter, utilize the SMART method. Be Specific, ensure your goals are Measurable, Attainable, Relevant to the project, and Timely. The project charter includes:

Purpose and objectives of the project in clear, concise language
Requirements of the project at a very high level and without much detail
Project description in a paragraph or two that explains the project
Known high-level, major categories of risks for the project
Schedule of events with the start and end dates
Major events or milestones along the path.
Budget or summary of how much the project will cost
Requirements from the organization for approval, including what to approve, who will approve, and how to get the approval
Key players or stakeholders in charge of which parts of the project and who will approve the plans to go through
An introduction of the project manager, project sponsor, and their authority level

Read also: How to Write SMART Project Management Goals

Main components of a project charter

A project charter is a living document outlining the issues, targets and framework of a process improvement effort. A charter should have six main components that frame the document. Each of these component helps define the reasons for the project, explains how it improves the business, enumerate what steps are necessary to complete, and identifies the stakeholders responsible for the project. The project charter components are:

Problem statement
Business case
Goal statement
Timeline
Scope
Team members

Why are project charters useful?

The main reason every project needs a project charter at the very start is because without it, there is no proof or official document that an authorized project manager defined and presented a project and gained its approval from stakeholders to proceed. A project charter also provides several benefits:

Formally authorizes the project to commence
Creates a common vision and shared understanding of the project
Empowers the project manager to lead the project
Identifies the high-level objectives and scope of the project
Defines what success will look like at the end of the project
Gains support for the project by announcing it to the whole organization
Ensures that key stakeholders are aware of the project
Secures budget and resources for the project
Serves as the point of reference for the project team

Read also: Significance of Keeping Documentation in Project Management

Key sections of a project charter

Most project management methodologies and frameworks prescribe the use of a project charter but do not define the actual contents of the template. This is understandable, because projects differ in a variety of ways, such as in size, criticality, type, or approach. But the accepted principle in writing a project charter is that the document should help clarify the what, why, who, when, and what cost aspects or questions of the project. Referencing the PMBOK Guide, the inclusion of following sections in a project charter will answer these aspects and questions:

Project information

This section includes the name of the project, its ID (if organizations use one), the name of the project manager, and its sponsor(s). It can also include additional but brief project description details.

Business need, problem, or opportunity

This section tries to identify what the main driver for the project is for it to exist. It provides the context or situation that led the sponsor to start the project.

Project objectives and benefits

This lists the goals that the project will try to achieve. A guide for writing the objectives is to use the SMART acronym: they should be Specific, Measurable, Attainable, Realistic, and Time-bounded.

Project organization

This section identifies the people governing the project. It should clearly show the key roles for its management and direction. Using a RACI chart can be helpful.

High-level project scope

This section outlines the boundaries of the project at a high level. It is important to identify not only its scope, but also what is out of scope. Specifying key deliverables of the project should also fall in this section.

High-level project timescale

The project charter should list the key stages and the estimated duration of the project at a high level, including its milestones. However, the project manager should exercise caution in writing the project schedule, assuming that the project will immediately start after the approval.

High-level project budget

This section identifies the budget requirements of the project at a high level. It should include capital and revenue expenditure forecasts.

Key assumptions

This section lists the main assumptions that the project team took. It is important also to assess how these assumptions can impact the project should the team realize later that the assumptions they made were false or inaccurate.

Key project risks

This lists the main risks that may impact the project if they materialize. It assumes that the project team cannot avoid encountering the identified risks.

Success criteria

This section identifies the key metrics to help assess if the project is successful or not. The measurable terms describe an outcome that is acceptable to the end-user, customer, and stakeholders.

One-page project charter example

When creating a project charter, it is important to understand context. Project charters are usually very lengthy documents. This is to ensure that it completely describes the background of the project, the different options considered, the details of the scope, and other factors. For large projects, an additional one-page Project Charter Summary provides the summary of the most important sections of the full project charter. For small projects, this one-page template is an acceptable alternative. This short project charter is also useful when communicating with executives, who are usually not interested in all of the details and particulars. The sections of the document are as follows:

Project Name
Project Description
Target Date
Costs
Gains
Project Team
Key Milestones

Tips for writing a project charter

Writing effective project charters comes with experience. However, it is possible to write good enough ones early on by following some advice from professionals who have spent their careers learning how to write great project charters.

Keep it brief

Try to keep the project charter simple and brief. Most likely, the more pages it contains, the less chances it will get read.

Be explicit

Try to get to the point as early as possible. Project sponsors and other stakeholders are busy professionals who may not show interest or enthusiasm reading a vague summary of a project.

Build it with your sponsor

Most often, the sponsor hands it over to the project manager to write the project charter. However, the project charter is always better with the involvement of the sponsor, whether in support or actually co-creating and reviewing the document.

Next steps for your project charter

After creating the project charter, let the sponsor sign it without delay. Without the sign-off, there is no formal approval and authorization—and no project. Also, it is advisable to share the document promptly after approval. When more people in the organization know what the project is about, the easier it is to have supporters on board. Since the project charter is a key document in the initiation phase of a project, creating a great project charter lays the right foundation for the project and provides a greater chance it will proceed smoothly in its remaining phases.

A helpful tool in creating a project charter is project management software, which allows your team to analyze risks and choose appropriate stakeholders based on their existing resources and abilities. Project management tools also provide a view of the project’s timeline, each goal, and the progress team members make. Five of the best project management software listed below can make teams more aware of what exactly should be in each project charter.