Project Management 101: Project Charter

A project charter starts everything, i.e. your project or a specific project phase. This document (as well as some others) authorizes the project's existence and provides a valuable reference for the future. This charter also allows a Project manager (PM) to start working on the approved project, meaning that the PM can utilize the required resources to achieve the project's goal. As you can imagine, a signature from the project's sponsors is necessary for the project manager to start spending money and assigning resources to get the project rolling.

It should be noted that not necessarily a project manager should write a project charter. In theory, it should be written by the project sponsors; however, it rarely happens in real life. Still, a PM is usually involved in the writing process of a project charter. The charter describes the project's business value, so the key stakeholders and sponsors should approve and sign it. Because the project manager is responsible for the outcomes of the project, the PM must be involved in every single aspect of the writing of the project charter to be comfortable signing it in. A project charter should not be too detailed since you can't and should not keep updating it every time something changes in your project.

Main Components

A primary purpose of a project charter is to clarify the objectives and goals of the upcoming project. So what is the difference between the two terms? By and large, goals are general directions and intentions of the business or stakeholders. Objectives, on the other hand, are more specific actions required to achieve the project's goals. In this case, unlike what people usually say, project objectives should be SMART, not goals.

So now we know what we want to do and achieve, the next question is how much time we have to do it. The project charter should include a general overview of the project timeline. Sometimes PMs have more control over the project timeline and milestones; however, there are cases when the company drives the deadlines. So please include a list of milestones and their projected dates. It is not also essential to track the progress of the project but also to inform your Finance when they should expect to send invoices to the client.

The following important section that should be written in the charter is the project's budget. It usually follows the same principles or constraints as the budget. Only sometimes PMs have complete control over the final dollar value available for the project; there are cases when these numbers are driven from the top. It is also difficult to estimate your budget down to the dollar at the beginning of the project. The earlier you are in the project, the larger the Rough Order of Magnitude will be. It usually depends on your organization, but the RoM at this stage could be as high as 20-35%. It is also smart to outline the approval process for additional budget during the project. You need to know who should authorize your request to free additional funds and at what stage.

The next step is determining the resources you need to achieve the project's objectives, i,e, roles and responsibilities. Finally, you must include all relevant resources required to complete the project. These resources could be internal or external; sometimes, this arrangement changes depending on a project.

Why do you need to include internal resources in the project charter since they work for the same organization as you? This is because resources report to someone other than you but to their functional managers in a traditional matrix organization. It means you have no authority over them outside of your projects. So the project charter indeed authorizes you to be their temporary manager.

Risks. It might be a good idea to brainstorm this section of the project charter. Risks come in different forms and shapes, so it is vital to involve all relevant parties to get as many ideas as possible about what could go wrong and why.

Project Charter in the middle of a project – is it a good idea or a waste of time?

The Project Charter will help you and the key stakeholders know the project's scope and objectives. This is something everybody would benefit from, don't you think?

What if the senior management tells you it is a waste of time since everything is already in motion? You should remember that you and multiple team members/stakeholders will spend more time dealing with scope creep and numerous other issues than spending time to clarify what is needed and sign off on the project charter. As a project manager, you should never forget Murphy's law – "Anything that can go wrong will go wrong." Also, it is guidance on what your resources should focus on. If you think that people, incredibly experienced professionals, always know what to do, you will be surprised. Trusting people and not micromanaging them is imperative; to do so, you need to give them clear directions.

What about responsibilities and roles? You need to ensure that the allocated resources were indeed approved by the senior management during the initiation stage of the project. As soon as you see that somebody mentions "I think so…" or "I believe so…" the alarm should ring because those statements mean there is nothing in writing and signed. You will be held accountable when things go south.
How do we ensure that the final product meets the stakeholder's expectations? Quality approbation should have limits and be outlined in the project charter; otherwise, the stakeholders are not required to accept the final product despite your efforts.

Remember, the longer you wait, the worse it gets when writing the project charter during execution. Everybody will see less and less value in it with every day passed into the project.

Difference between a business case and project charter.

You can think of a business case like research to make it sense (usually financially speaking) to do your project. A project charter authorizes you to do this project and helps you to understand what and when it will be delivered.

What is the difference between the statement of work (Project scope statement) and the project charter?

According to PMBOK, the projector charter and the project scope statement are redundant to some extent; they differ in details. Usually, the project charter contains high-level information. While the project statement includes a detailed description of the scope components.

Fin

I hope this short write-up has answered most of your immediate questions about a project charter from both PMBOK and real-life points of view. Always stay curious and remember to ask questions.