Project Charter - Simply Explained

Project Charter - Simply Explained

Developing a project charter should be one of the very first steps in the project management lifecycle, since it's specifically designed to inform everyone involved about what they are in charge of and what needs to be done.

Unfortunately, the project charter is often a forgotten part of project management as it gets lost among other assets like Gantt charts, a statement of work, a project timeline, and even project management tools. However, the project charter might be the missing link in delivering the project on time and at its most effective.

In this article, we will learn more about the project charter and try to explain all its essential elements.

What Is a Project Charter?

A project charter is a formal document that outlines project objectives, scope, vision, risks, timelines, project team and their responsibilities, key stakeholders, and how the project will be carried out. It also goes by the name of the project definition report or project statement.

Simply put, a project charter summarizes a future project. This document is created even before the project begins in project planning phase, and its purpose isn't to explain how the project will be completed, but why it should be done. The project charter usually contains no more than three pages.

Project Charter Benefits

Project charter has the following benefits:

  • It provides the project manager with the authority to complete the project.
  • It explains why the project exists.
  • Displays management support for the project.
  • It defines the outcome.
  • Helps the organization align its objectives with the project.
  • Project team members get to experience a transparent reporting system.
  • It will save you from gold plating and scope creep.
  • It ensures avoiding disputes during the project lifecycle.
  • Helps you build a solid foundation for your project.
  • You will have a common understanding of project objectives.
  • Serves as a contact among stakeholders, sponsors, and executives and ensures everyone is on-board.
  • It saves time.

Who Creates the Project Charter?

As in many business instances, you would assume that the project manager is responsible for creating the project charter. However, it would be best for the project sponsor to write the project charter, since they are the ones who requested the project in the first place.

Project sponsors are CEOs or senior management members who should be in charge of this task because they often initiate discussions with stakeholders and other clients about the project's objectives, purpose, and constraints. However, it's not uncommon for a project manager to write a project charter.

Who Can Approve and Sign the Project Charter?

The initiator or the sponsor approves and signs the project charter. Projects are authorized by someone external to the project, like a portfolio steering committee, PMO, or a sponsor. Multiple sponsors may be involved, mainly if you are dealing with a major project requiring heavy involvement from several departments.

Depending on the organization, an authorization may be delivered by a formal chartering ceremony or a formal signature, or you will get an email saying, "Proceed! I agree!"

A project sponsor can be:

  • Individual financier
  • Community leader
  • Institution or government
  • MD/CEO of the performing organization
  • Top management of the performing organization

Who Can Change the Project Charter?

The project sponsor owns the project charter. They can authorize and create a project charter. On some occasions, project managers also actively participate in creating project charters. However, once this document is approved, you can't change it throughout the project lifecycle.

What Does a Project Charter Look Like?

It needs to be visual: Stakeholders will most likely read your document more than once, even if it is a block of text. But, adding design elements or images will make it easier for people to go back to key parts later on.

Separate the different sections of your charter with accentuated headers for better visibility. You could also create a Gantt chart or a timeline to show the milestones of your project.

It needs to be collaborative: At some point, you might need to print out your charter to present later, but while putting all the pieces together, keep it in a Google Drive or another document where multiple people can see and edit it.

Project Charter Elements

  • Project name: Make a title as specific as possible to define your goals right away, like "Software Update."
  • Purpose, goal, and project specification: These sections explain why the project was proposed, what it entails, and what you can accomplish.
  • Budget: If it's not done earlier, explain how much the project will cost and where the money will come from.
  • Deliverables: What services, products, or results will you deliver when you finish the project?
  • Scope and risks: The project charter should state known constraints, risks, and plans for managing and analyzing the risk throughout the project.
  • Timeframe and milestones: It's important to show when you plan to finish each project stage.
  • Key stakeholders: Even though the project charter is an internal document, you will be working and reporting to external stakeholders, so you should complete a stakeholder analysis.
  • Team roles and responsibilities: List the people involved in a project and their roles.

Project Charter Six Sigma

Six Sigma project charter is a two-page document outlining a project improvement. The charter is packed with data-driven details explaining the project's needs. Once approved, this document becomes the team's main reference.

Unlike the project charter, the Six Sigma charter is the first document that states the project's purpose. It's also a document that team members will review and update throughout the project lifecycle.

Project Charter Lean Six Sigma

A lean Six Sigma project charter and Six Sigma look the same. While some indicate there is no relevant difference between these two, others imply that lean charters focus more on preventing issues rather than making incremental improvements.

We do have to say that the difference is subtle. Like Six Sigma, Lean Six Sigma charters help team members eliminate or reduce waste in the process.

Project Charter vs. Project Plan

The project charter is a brief official record of a planned project. It outlines the project's scope, stakeholders, goals, objectives, and many other elements that support the work. A company will use a project charter to obtain permission from stakeholders to start with a project, ensuring that the scope meets the expectations and needs of the group.

On the other hand, a project plan outlines project objectives and scope based on the project charter. It also establishes the specific instructions for managing and executing the project while determining milestones, deadlines, and responsibilities. Both documents must work together to provide a detailed record of successful project management.

Some Organizations Initiate Projects Using a Contract in Place of a Project Charter

While some organizations tend to use a contract instead of a project charter, you need to be aware of the differences between these two terms. A contract is a legal agreement between two parties or separate organizations, while a project charter is a document that formally acknowledges the existence of the project. Additionally, a project charter is not a legally binding agreement.

Instant Messaging Cheat Sheet

*Enter your email address and subscribe to our newsletter to get your hands on this, as well as many other free project management guides.