Project Charter – A Document to Formally Authorize the Project

In today’s blog post we are going to discuss the project charter, which is the most important document of the project.

This is the document which authorizes the existence of the project and tells you when a project starts. The project charter is also known as a “Project Definition Document”.

Please note that a project may start from the moment when the sponsor thought of it, or when they got an idea from their friend, or the night they dreamed of it.

There may be some other starting points as well. Afterwards, they may discuss it with their colleagues, or do some analysis to see if it is really profitable to go with it, or if they should just leave it.

If the project is feasible, they will take the decision to go with it and call someone (the project manager) to lead the project. Then they will create the project charter and give the project manager the authority to lead and complete the project.

The moment the project sponsor signs the project charter, the project starts officially. Although the sponsor may have been working on the project behind the scenes, the project will only start when they sign the project charter.

According to the PMBOK Guide, the project charter is an official document that formally authorizes a project or a phase and documents the initial requirements that satisfy the stakeholders’ needs and expectations.

A project charter documents the business needs or demands that cause the project’s existence, as well as its benefits to the organization, and it includes a short description of the output of the project. As the project charter contains high level information, changes to this document are very rare.

The project charter should be created as soon as possible, because if there is no project charter there will be no project manager, no project title, no budget, and consequently a cost account cannot be opened to record the cost of the project.

A minimalist project charter should define the project scope, budget, milestones, and technical characteristics. Usually one or two pages are enough for a project charter.

Characteristics of the Project Charter

The following are a few characteristics of the project charter:

• It recognizes the existence of the project
• It appoints the project manager
• It sets the authority of the project manager to apply resources to the project
• It defines the project objectives
• It contains the list of main stakeholders
• Usually it consists of only one or two pages maximum
• It may be created by the project manager
• It must be signed by the project sponsor or someone from top management (external to the project)

Keep in mind that the project charter may be created by the project manager, but it must be authorized by someone external to the project. The project manager may help the project sponsor to create a project charter, or provide the input to create it, but only top management has the authority to sign it.

I have seen many professionals become confused here. Some of them think that the project manager has the authority to approve the project and others wonder how they can be involve in making the project charter if they do not have the authority to approve it.

The project manager or the project management team may help in creating the project charter because of their expertise on the subject; however, the document must be approved by someone external to the project. The signing authority can be someone from your organization or from the client who has authority to do so.

Although the sponsor or client signs the project charter, they will not be involved in your day to day activity. They are only interested in seeing the high level performance of your project or the milestones set in the project charter.

The benefits of the project charter can be seen in matrix type organizations where the project manager may not have the authority over the organization’s resources. In this case the project charter gives the project manager explicit authority to use certain resources whenever they require them.

Content of the Project Charter

A project charter may contain the following information:

• Project title and description
• Project purpose or justification
• Measurable project objectives
• Description of output of the project
• Assigning the project manager and setting his authority level
• High level assumptions and constraints
• Pre-assigned resources
• Name of main stakeholders
• Expectations
• High level project and product requirements
• Acceptance criteria
• Summary of important milestones
• Estimated budget
• High level risks
• Name of the sponsor
• Project’s approval criteria

Benefits of Project Charter

Having a project charter builds a solid foundation for your project and gives a common understanding of the project objectives.

The following are a few benefits of a project charter:

• Gives the project manager authority to complete the project
• Explains the existence of the project
• Demonstrates management support for the project
• Defines the outcome of the project
• Aligns the project with the organization’s business objective
• Gives team members a clear reporting system
• Saves you from scope creep and gold plating
• Helps you avoid many disputes

Conclusion

The project charter is a great communication tool for stakeholders and it provides direction to the project helps avoid confusion, and helps the project manager communicate his authority to run the project. This document should be signed by someone external to the project, such as someone from senior management, PMO or from the client.

Here is where this blog post on project charter ends. If you have something to share, you can do so through the comments section.