In project management, a project charter is a document that defines the objectives, scope, and participants of the project. It sets the tone and provides structure to the entire project.
The Project Management Body of Knowledge (PMBOK®) defines the project charter as a document formally authorizing the existence of a project. The project sponsor or initiator usually submits the document. The issuance of the project charter gives the project manager the authority to allocate organizational resources for the project.
PMI® emphasizes the importance of the project charter. The project charter is responsible for highlighting the high-level requirements that satisfy the needs of the stakeholders. It also defines the project manager’s role.
Given the importance of this document in the PMBOK guide, it is important for PMP candidates to understand the basics of the project charter. In this article, we discuss how to create a project charter and understand each of its basic components.
Key Elements of a Project Charter
Since the exam assumes that you are handling large-scale projects, we will focus on large scale projects. Usually, projects that have a smaller scale do not require as much information as we have outlined here.
Additionally, when you are writing the project charter, it is also necessary to know which resources your organization will give you. In most cases, the project charter is available in a template form within an organization.
As a PMP candidate, you should be aware that template documents, such as the project charter are also known as project definition, project statement, and even as OPAs (Organizational Process Assets). If you know which resources your organization provides, you will be able to give the right answers.
Let’s continue to learn about the key elements in the project charter, which are listed down below:
Project Title and Description
The first element in a project charter document is the project title and description. Although the project charter is usually self-descriptive, the section should also include a short description that summarizes what the project is.
Project Business Case
A business case is the component of the project charter that captures the logic behind starting a project. In other words, it mentions the specific business need behind the project that your company wants to start.
There are usually three key parts of a business case – the business need, the business value and reasons for selecting the project. When writing the business case, you should write down what facilitated the request for the project (the business need).
After that, you need to mention solid reasons why your company should select a given project and invest their resources. You should outline what could happen if the organization doesn’t pursue a given project.
Lastly, you should write the potential business value from a given project. Here, you need to mention all the potential benefits your company will receive after pursuing the project. With that said, it is not necessary that every company has the same standards regarding what is deemed “beneficial” for an organization.
Project Deliverables and Objectives
After you complete the business case section, it’s time to enlist the project deliverables and objectives. Deliverables are the services and products that your company can expect after the completion of the project.
On the other hand, the project objective is responsible for explaining how the project deliverables align with your organizational goals. In the end, the section explains what the project stands for and the different ways it can align with the mission of your organization.
With that said, PMP candidates should remember that the objectives listed down in this section need to be measurable. Otherwise, the project objective may sound vague and abstract, and, thus, lose its purpose.
Next, you need to add high-level information about the relevant stakeholders of your project. In broad terms, stakeholders are all the people that are directly impacted by the project. These individuals can be a part of your organization or someone from outside.
Project Assumptions and Constraints
Before starting a project, it is important to list down all the key constraints and assumptions of the project. To put it simply, assumptions are the things you believe to be true. It can be the assumption that your company resources can complete the project in the given time.
At the same time, constraints are components that can slow down the completion of the project. For instance, if you are proposing overseas projects and the employees can only work in a timeline between 8am to 5pm, then it is a constraint you should mention in the project charter.
In business terms, risks are defined as opportunities or threats that can impact your project. To succeed in the PMP exam, you should understand the difference between a negative and a positive risk.
Similarly, when you are writing a project charter, it’s necessary to point out all the potential risks as soon as possible. Not only is it important to document potential risks, but you also have to mention contingencies to handle those risks effectively.
Project Manager and Authority
In the last section of a charter, it is your duty to assign the project manager for a given project manager and what authority the project manager will have. If you plan to grant the project manager significant authority, it is necessary to make this clear in the project charter document.
Once you list down all the important details of your projects, you can conclude it by signing the document at the end. You should remember that the project could only begin after you have signed the project charter document. Although project managers are not responsible for writing down project charters, knowing how to write a project charter can help you for the PMP exam.