Project Charter – A Document to Formally Authorize the Project

A project has many documents that are developed by the project manager with the help of the project management team. However, there is one document where the project manager does not have a role in creating; that is the project charter

This is the most important document for any project. It establishes the project and provides guidelines to stakeholders. Any change to this document can have a huge impact on the project. Therefore, changes to this document are rare and require top-level approval.

This document is important from a PMP exam point of view. You will see a few questions on this topic. Understand it well. 

What is the Project Charter?

A project may unofficially start when the sponsor gets an idea about it. Afterward, they will conduct a cost-benefit analysis to see if it is profitable. If the project aligns with their business objectives, they will pursue it.

Then they will create a project charter to launch the project. This authorizes the existence of the project. It appoints a project manager and dictates when it will begin. 

Many organizations call this the “Project Definition Document.” It gives the project manager the authority to direct and complete the project.

A minimalist project charter includes the following information:

• The appointed project manager
• A definition of the project scope
• The budget
• The defined milestones
• A list of the important stakeholders
• The technical characteristics of the deliverable

According to PMI, a project charter is an official document that authorizes a project or a phase.  It records the requirements that will satisfy the stakeholders’ needs and expectations.

The project starts the moment the sponsor signs the charter. No project charter means no project or project manager.

Characteristics of the Project Charter

The following are a few characteristics of a project charter:

• It recognizes the project and appoints a project manager.
• It gives the project manager the authority to lead the project.
• It defines the project’s objectives.
• It lists important stakeholders.
• It is only one or two pages of document.
• It lists important assumptions and constraints.

Many professionals think that the project manager can approve the project. Others wonder why the project manager is involved in developing the project charter but cannot approve it.

Please note that management needs the project manager’s help, as they are the expert. However, it must be approved by someone external to the project, who has the authority to do so.

The project charter is an important document in all organizations. However, its benefits are visible in matrix organizations. The project manager may not have control over the organization’s resources; the project charter gives the project manager authority.

Contents of the Project Charter

A project charter may contain the following information:

• Project title and description
• Project purpose or justification
• Measurable project objectives
• A description of the deliverable
• The assignation of the project manager and setting their authority level
• High-level assumptions and constraints
• Pre-assigned resources
• The names of the main stakeholders
• Expectations
• High-level project and product requirements
• Acceptance criteria
• A summary of important milestones
• The estimated budget
• High-level risks
• The name of the sponsor
• The project’s approval criteria
• Expected benefits of the project

A project charter builds a solid foundation for your project. It gives a common understanding of the objectives.

A Few Benefits of a Project Charter

The following are a few benefits of a project charter:

• It gives the project manager the authority to complete the project
• It explains the project’s existence
• It shows management’s support for the project
• It defines the outcome
• It aligns the project with the organization’s objectives
• It gives team members a transparent reporting system
• It saves you from scope creep and gold plating
• It helps you avoid disputes

Questions about the Project Charter 

Now, let’s discuss some FAQs about the project charter.

Who signs the project charter?

PMP aspirants often get confused and think that the project manager signs the project charter. 

Please note that the project charter appoints a project manager. Obviously, a person cannot appoint themselves.

The sponsor, or someone from top management, signs the project charter. They are external stakeholders and have the authority to provide resources and support.

Can a project have multiple project charters?

Most projects have one project charter. However, big, multi-phased projects can have many charters, one for each phase.

Project Charter vs Memorandum of Agreement

Many aspirants often get confuse the Memorandum of Agreement and the project charter. 

The Memorandum of Agreement (MOA) is an agreement between the two parties. When a contractor gets a contract from a client, they both sign a Memorandum of Agreement.

This is a business and legally binding document, you can only change it when both parties agree to do so. This document is one or two pages long.

On the other hand, a project charter is signed by the contractor. Here they assign a project manager. This is not a legally binding document and the contractor can amend it as long as it abides by the terms and conditions.

Conclusion

A project charter is a key to your project’s success. It provides stakeholders with a common understanding of the project. It is an agreement between the key stakeholders and it communicates the project manager’s authority. It is a core of the project the binding element that provides direction.

Have you ever taken part in developing a project charter? Please share your experience in the comments section.