What is a Project Charter and Why Do We Need One? (2024)

What is a Project Charter?

The project charter is a document that officially starts a project or a phase. It formally authorizes the existence of the project and provides a reference source for the future. The charter gives a direction and a sense of purpose to the management from start to end. As Randy Tango, a business-driven project practitioner, mentioned in one of his articles: “Take great pride and care in your project charter because this is where you sow the good seeds. It will eventually take care of you.”

A project charter names the project manager and defines the authority of the project manager. It gives the project manager the power to utilize organizational resources to accomplish the project objectives.

Learn more about What is Project Management?

Key Elements of Project Charter

A project charter is a document that outlines a project's scope, objectives, and stakeholders. It is typically created at the beginning of a project and serves as a roadmap for the project team to follow. Here are the key elements that should be included in a project charter:

1. Project title: The project's name should be clearly stated at the top of the document.
2. Project background: This section should explain why the project is necessary and how it will benefit the organization.
3. Project scope: It should define the boundaries of the project and what is included and excluded from the project.
4. Project objectives: It should be specific, measurable, achievable, relevant, and time-bound (SMART).
5. Project timeline: It should include the start and end dates of the project and any key milestones.
6. Project budget: It should outline the estimated project cost, including any resources needed.
7. Project stakeholders: The project charter should identify all stakeholders, including project sponsors, project team members, and external stakeholders.
8. Risks and assumptions: The project charter should identify any potential risks and assumptions associated with the project.
9. Project management approach: It should outline the methodology and processes used to manage the project.
10. Project deliverables: It should be clearly defined, including any reports, products, or services that will be produced as a result of the project.

How to Create a Project Charter

Creating a project charter involves gathering information, defining project goals, and communicating the details to stakeholders. Here are the steps to create a project charter:

1. Identify the project's purpose and goals: This is the first step in creating a project charter. Clearly define the project goals and objectives and identify how they align with the organization's overall strategy.
2. Identify stakeholders: Identify all stakeholders who will be affected by the project, including project sponsors, team members, and external stakeholders. Engage with them to understand their expectations, goals, and requirements.
3. Develop a project scope statement: Define the project's scope, including the boundaries and deliverables of the project. Identify what is included and excluded from the project, and ensure that the scope is aligned with the project goals and objectives.
4. Identify project risks: Identify any potential risks that may impact the project, and develop a risk management plan to mitigate them. This may include identifying contingency plans or alternative courses of action.
5. Develop a project timeline: Create a timeline that includes key milestones, deliverables, and deadlines. Ensure that the timeline is realistic and achievable.
6. Develop a project budget: Estimate the project's cost, including all necessary resources and materials. Develop a budget that aligns with the project goals and is acceptable to stakeholders.
7. Develop a communication plan: Define how stakeholders will be informed about project progress and how feedback will be received.
8. Document the project charter: Create a written document that includes all the above details and any other relevant information. Share the document with stakeholders to ensure agreement and understanding.

Project Charter Template

Why Do We Need a Project Charter?

As mentioned previously, the primary purpose of a project charter is to authorize the project manager to start the approved project and allow him to use organizational resources to accomplish the objectives of the project.

If the charter is created correctly, it also helps executives see the business value of the project. They can also reference the charter to understand how well the project is aligned with the organizational strategies.

Josh Nankivel, PMP®, a trainer and principal of PMStudent, said that “A project charter should also serve as an executive overview of your project, one that any new executive can reference to evaluate it. A good project charter can help save you from unnecessary scrutiny or having your project shut down because some executives didn’t see the business value in it from their perspective".

When Do We Create a Project Charter?

As per the PMBOK® Guide, the project charter is created during the "Define" process. This process is one of the first ones to be performed in a project and is completed during the "Initiating" process domain.

Who Signs and Issues a Project Charter?

The sponsor or the initiator signs the project charter. The PMBOK® Guide, 4th edition (new one) states: “Projects are authorized by someone external to the project such as a sponsor, PMO or portfolio steering committee. The project initiator or sponsor should be at a level that is appropriate for funding the project. They will either create the project charter or delegate that duty to the project manager. The initiator’s signature on the charter authorizes the project”.

It should clearly state who is responsible for funding and who needs to sign the document. Josh Nankivel states in one of his articles, “I have worked with several project managers who ran into funding issues because a particular director or executive who said they would fund a project from their budget didn’t come through. The project charter should clearly state who is responsible for funding, and they need to sign it, too!”

You may be interested in learning about how you can save money when implementing a project.

Can the Project Manager Be Involved in the Preparation of a Project Charter?

Though he is appointed in the project charter, a project manager can still be involved in the preparation of the project charter. The sponsor or the initiator usually creates the charter along with the project management team. The sponsor may lack the skills required to prepare a project charter and may need the help of a Project manager to make a charter.

As Cornelius Fichtner, PMP® trainer and host of the PM Podcast, mentions in one of his articles, “The PM is a subject matter expert when it comes to initiating and starting a project. Hence the PM is more qualified to create the project charter. He or she has more experience in doing this and knows what kind of details to add to the project charter ”.

Some Key Facts to Be Remembered About the Project Charter for the PMP Certification Exam are

• It is developed in the "Develop" project charter process in the initiating process domain.
• It is created based on a business need, and the document must explain that need.
• The sponsor or the initiator signs it.
• It names and authorizes the PM.
• It should include high-level project requirements.
• It should include a high-level milestone view of the project schedule.
• It is a high-level document that does not include the project details. The specifics of project activities will be developed later.
• It includes the summary level preliminary project budget.

Project Charter Sample Questions

1. The project charter should always include:

a. The Schedule Management Plan
b. Historical Information
c. A detailed budget
d. The business needs underlying the project

2. In which of the following processes is the project manager assigned his or her role in the project?

a. Initiating
b. Planning
c. Executing
d. Monitoring and Controlling
e. Closing

3. Who issues a Project Charter?

a. Customer
b. Project Manager
c. Any Stakeholder
d. Sponsor or initiator

Answers

1. Ans d.
The project charter should include the business need behind the project.

2. Ans a.
The project manager is officially named and assigned to the project charter. The project charter is developed in the develop project charter process in the project integration management knowledge area and the Initiating performance domain.

3. Ans d.
The Sponsor or the initiator issues the project charter, not the customer, project manager, or any other stakeholder.

Conclusion

The project charter is an important part of any project wherein it actually accredits the existence of any project and allows the project manager to start the project. To learn more about project charter and several other project management aspects, the PMP® Certification Trainingwill help you to understand the role of a project manager and how important project charter is.

PMP and PMBOK have registered trademarks of the Project Management Institute, Inc.

FAQs

1. What is a project charter?

A project charter is the official document that states that the project exists.It includes goals,resource requirements and scope in detail.

2. Why are project charters useful?

Project charter ensures that all stakeholders are involved in the project and have a clear roadmap of when to start and finish the project.

3. Who writes the project charter?

Project management team along with the person responsible for ideating the project, write the project charter.

4. What is the difference between a project charter and statement of work?

Statement of work is a derailed document which is legally binding. Whereas project charter is short and non legal in nature.

5. What is included in a project charter?

Project charter includes your project objectives, scope, and responsibilities.