A project must be authorized before it can begin. That authority comes from a document called a project charter. In this chapter, we’ll examine a charter’s components, purpose, and benefits.
How is a project charter defined?
A project charter is a formal document that affirms the existence of a project. It also gives the project manager permission to deploy the resources needed to execute the project.
For a charter to become official, it must be approved by the sponsor of the project. However, the sponsor doesn’t have to draft the charter or produce the final copy. Often this task falls to the project managers.
The process of approving the charter can be as simple as the sponsor replying to an email with the words, “I agree. Proceed.”
What is the purpose of a project charter?
The project charter gives authority both to the project and to the project manager.
By verifying that the sponsor knows about the project and agrees that it should exist, the charter gives the project authority.
The charter also acts as evidence that the sponsor knows who the project manager is and supports that person’s leadership of the project. This proof gives the project manager authority over the internal project activities and over the money, people, and other organizational resources necessary to accomplish the project.
What are the components of a project charter?
The charter is created at the start of a project and contains only what information is available at the time. Since it is created before any detailed analysis of the project has taken place, the charter can only ever offer a high-level overview of the project.
This early-stage document should be short and direct. While there is no set project charter template, most project charter examples include:
- The reason for the project (its purpose)
- The objective (what you plan to accomplish)
- Requirements (a group of tasks or conditions that must be completed to finish the project successfully)
- Assumptions (things that are assumed to be true but may not be true such as ‘the supplier will deliver goods on time’)
- Constraints (a fixed limitation on the project such as data privacy regulations)
- A summary schedule (a schedule that tracks major milestones)
- A business case (an evaluation of the benefit, cost, and risk of alternative project options that provides a rationale for selecting the preferred solution)
- If possible, a return on investment (a ratio that divides the net profit or loss from an investment by its cost)
What format does a project charter take?
The project charter is not a mutually binding agreement like a contract so it can take any format from a formal document with headings to an email or memo.
Ideally, the charter will consist of one document that references the components outlined above. However, if the authority has been provided, and the sponsor has approved project-related documents that include all that information, then those documents can collectively form the charter.
What are the benefits of having a charter?
Alignment - Drafting the charter is an opportunity to check whether the project is aligned with the overall goals of the business goals.
Minimizing waste – Critical examination of the project before it starts can identify a misaligned project before it begins (and fails). Canceling a project at the charter stage will save 100% of the project budget and schedule.
Consensus – Creating a charter fosters a shared understanding of the project’s goals, objectives, and resourcing requirements.
Marketing - The charter is an elevator pitch of your project that sells its goals and ideas. That makes it your project’s best initial marketing tool.
PM involvement – Writing a charter gives the project manager a chance to have a strategic impact in the organization and become more visible to its strategic thinkers.
When must a project be re-chartered?
Scope creep occurs in every project. However, some projects evolve so much that their charter is no longer sufficient to authorize the project in its entirety. This can happen in creative agencies when a client’s vision for a project can drastically change or begin as something highly abstract that takes shape over time. It can also happen in research and development projects that have a budget cutoff.
In cases like these, the project manager must get authorization for the project to continue by ensuring that a new charter is created and approved by the sponsor. The extra admin is worth the trouble as creating a new charter has the following benefits:
- Re-focus team efforts around a single vision that has been agreed upon and documented
- Improve team morale by officially recognizing that the project has changed
- Confirm executive support and improve access to organizational resources
As you can see, a project charter is a useful document to have throughout the lifecycle of a project. It can be used at any time to check how work is aligning with the set goals and objectives agreed by the project sponsor and/or key stakeholders.
Top Tip: Creating a project charter template that you can copy and use for all your projects will save you time and ensure you don’t miss any elements.
For creative agencies handling multiple client projects daily, project management software simplifies and speeds up tasks like learning how to write a project charter and making a reusable charter template. Plus, it makes it easy to store charters digitally in a centralized location that all team members can access. With project administration in order, creativity can flow with fewer distractions.
