What Is A Project Charter in Project Management?
By Nidhi ParikhOct 16, 2019
Remember when you started a course in your college and you were given a course outline. It had all the details - the outcome, the goals, the faculty names, the schedule, etc.
Project charter is just like that course outline when it comes to project management. It contains the scope, risks, goals, how the project will be carried out and who will be the stakeholders involved in the said project.
The project charter should be understandable by all the stakeholders involved in the project - client, project manager, project board, sponsors. This will make sure everyone has a clear understanding of the project.
Let’s further understand why every project should have a project charter in place.
Why is a project charter important?
From project proposal to project analysis, there are a lot many documents to prepare when it comes to project management.
A project charter is a document that contains an overview of almost all these project documents. This is the document that people come to when they need to have a quick glance or quickly refer to a past project.
It is also used as the document that authorizes the project manager and allows him to start the project and to use organizational resources to achieve project objectives.
If you have ever been a part of a project team and before the meeting, you just needed that one bit of information for your presentation, you know how important a project charter can be. In the absence of a project charter, you have to go through the minute details in all the other project documents.
It also gives a brief idea of what the return on investment will be and how much will the project cost.
What does it contain?
Typically, a project charter has all of the following information:
1. Reasons for the project: This helps everyone know why they are going through with a project and how this project aligns with the business’s strategic goals.
2. Goals of the project: What is this project helping you achieve? Is it to grow your customer base by 5%? Or is it to develop a new product and make a breakthrough in a different target segment?
3. Constraints of the project: The constraints could be anything from the costs to the technicalities of the project. While you’re at this step, you might as well think of how you will deal with these constraints. For example, what would you do if a request from your client raises your costs significantly with no inherent benefits to the company?
4. Costs and benefits of the project: You will be creating a detailed budget but it’s good to have an estimate noted down here. Having the benefits is a must as it will give an idea of what the success of the project will bring to the sponsors.
5. Stakeholders of the project: These stakeholders will be the people who you will report to or who you will have to go to for information. In any case, listing them down is better so that there are no confusion and everyone has a clear idea of who is in charge of what.
6. Risks to the project: List down all the risks that could come up within the life cycle of the project and how you will address those.
Depending on your organization and scale of the project, you may choose to add or cut short some things. It’s always better to have team collaboration and ask for opinions and suggestions. It might help you look at things from a different perspective.
How To Create A Project Management Charter?
Step 1: Identify The Vision And Decide On The Scope
When you set on identifying the vision, the two most important questions that it should answer are, “Why are we doing this project?” (purpose) and “What will we achieve at the end of this project?” (goals)
You will then translate the purpose into specific and clear objectives. Your project charter should at least have 2-4 of them.
Then break the goals of your project into specific deliverables. For example, if the goal of your project is to achieve business growth, some deliverables could be (i) reducing customer churn by 5% (ii) making a foray into two new customer segments (iii) finding five ways to make the product better.
Once you have finalized the vision and broken it down into detailed parts, you define the scope. It will just have an overview of the project’s costs and schedule. The detailed part should best be left for the project scope document.
Step 2: Establish A Structure
The best way to go about doing this is to create a chart. List down all the stakeholders who will be involved in the project - project manager, sponsor, clients, project board to the project team.
Define their roles. What will they be focusing on during the life cycle of the project? What will their responsibilities be? You don’t need to go into details, just summarize it in a small paragraph.
To establish a structure, draw reporting lines in the chart. Will someone on the project board report to the client or will it be solely the project manager’s responsibility? Will the project manager report directly to the client or to someone else in the client’s organization?
Doing this will ensure there is no confusion moving forward.
Step 3: Create A Plan
This part will focus on how you will actually run the project.
Define the milestones in your project. Milestones are the major events in your project. For example, milestones in a designing project could be - Research, Designing, Approval, Testing and Finalization.
Once you have decided on the milestones, you go about deciding the individual tasks and marking dependencies between them in your task management software.
The outcome of this should be a timeline, which will be of most importance to the stakeholders. You can even choose to go a step ahead and make a resource plan. The resource plan will consist of how much labor, materials, equipment, etc. you will be needing and will help you draw out a budget estimate.
Step 4: Determine The Risks
No project decision-making process is complete without a risk assessment in place.
Figuring out what risks will plague the project isn’t a negative approach, it’s a proactive one. It helps the project team think ahead and stay on course if a problem crops up during the life cycle of a project.
Once you are done with this step, your project charter is now up and ready to be signed.