KEY TAKEAWAYS
A project charter clearly outlines significant project details to ensure alignment and set expectations for all parties involved. The project charter officially starts a project and empowers project managers to proceed. Read on to learn more about what a project charter is, how it’s used, and how to create one.
Featured Partners
{{ POSITION }}. {{ TITLE }}
What Is a project charter?
The Project Management Institute (PMI) defines a project charter as “a document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities.”
Project charters are compiled after a business case has been created and presented to stakeholders. It includes information that makes it clear what the project aims to accomplish and how you plan on accomplishing it. Once that approval has been granted, the project charter acts as the official sign-off to begin work.
The charter must be signed by a project sponsor, as it provides explicit permission to begin project work and utilize organizational resources—from team members and financing to technology and software. While the charter may look slightly different for various projects and teams, anyone reading the document should have a thorough understanding of the project, its scope, and overall project goals by the end of the charter.
Read more: What is Project Management?
Why is a project charter important?
Project charters are essential to the project documentation process, as they provide the formal acceptance to begin project work and utilize business resources. They act as a record of sponsor approval while documenting essential information about the project itself. Here are just a few of the other important purposes project charters serve:
Informs the team
More than just serving a formal need for project documentation, the information contained within the project charter—such as an estimated timeline, key deliverables and objectives, project scope, and more—is essential to team members who are being briefed on the project for the first time.
Highlights project value
The project charter highlights the value of the project itself by tying back the project objectives to overall organizational needs and goals. At a glance, stakeholders, both internal and external, can understand the significance of the project and what outcomes it aims to achieve.
Creates a link to portfolio management
Portfolio management measures the success of all of the business’s projects against overall objectives and goals across all departments and areas of business. The project charter establishes a clear link between the project itself and the goals and purpose it will serve in the organization, making it easier to identify successes and areas of improvement in an organization’s portfolio management plans.
Prevents scope creep
According to the “Pulse of the Profession” study by the Project Management Institute, 50% of all projects experience scope creep. Over time, scope creep contributes to budget overruns, project delays, and ultimately, poor project outcomes. Project charters help combat scope creep before it happens by clearly defining the scope and communicating project goals to all stakeholders.
Establishes a timeline
Adhering to the project timeline is essential when working on a project, but often, the schedule is not communicated to internal or external stakeholders until the actual work begins. In this case, the project charter establishes expectations for the project timeline and sets the groundwork for assigning individual project tasks.
Defines the criteria for project success
To measure the success of a project, you first need clearly defined expectations and a metric against which to measure the project. The project charter outlines how stakeholders will determine the success or failure of a project, making it easy for the team to understand the expectations ahead.
Read more: 5 Phases of Project Management
How does a project charter differ from a project proposal or plan?
The project charter is considered the official sign-off for project work to begin. It outlines essential information about the project and serves as a reference document to help prevent scope creep, as well as a reminder of key desired outcomes and goals.
The project proposal, on the other hand, is the document that initially proposes the project to stakeholders and decision-makers, outlining the project from a high-level view. This document is used to pitch the project itself.
The project brief is a high-level overview that describes the bare amount of key information about the project that someone would need to know. While it may seem extremely similar to the project charter, it is a much more brief and general description.
Read more: Project Proposal Templates and Examples
Essential components of a project charter
At a minimum, the project charter should include the essential information about the project and what it will require to be successful:
Business case
The business case highlights how the project serves the organization through its goals, deliverables, and outcomes. It presents the value preposition of the project and what benefits are expected to be realized. The business case should tie project objectives back to positive outcomes for the organization, especially concerning business-wide goals and initiatives.
Stakeholders
In project management, the term stakeholder can refer to a few groups of people, primarily including internal decision-makers and external stakeholders like investors, customers, or third-party contractors. In simple terms, you can consider stakeholders as anyone with a tie to the project who will need to be updated on the project at some point throughout the project lifecycle, regardless of their role.
Resources
Resources in the project are tools that keep project work moving smoothly, from people to technology to software and even charts and project tools. Additionally, resources consider the financial investment needed to complete a project, whether that’s paying external contractors, upgrading to a new project management software solution, investing in learning opportunities, etc.
Scope
The scope section of the project outlines what ground the project will cover. According to PMI, project score encompasses all work required to complete a project. This incldefining the project’s boundaries, deliverables required, and overall obectives. In essence, this segment should clearly outline what the project work will look like and what it wants to achieve to prevent scope creep and unclear expectations.
Deliverables
The deliverables portion outlines exactly what stakeholders can expect from the project regarding tangible outcomes, whether it’s delivering a new product, a measurable outcome, or even things as small as documents and reports.
Objectives
Outlining the objectives for the project defines the goals that the project aims to achieve, holding the team accountable to specific metrics so that progress can be tracked throughout the project lifecycle.
Timeline
The timeline portion outlines the key milestones for the project, such as dates when deliverables should be completed, and the larger markers such as when the project should begin and end.
Potential risks and dependencies
The risks and dependencies portion of the project charter should identify any potential risks or issues that may arise during the project and any task dependencies that need to be addressed before project work can begin. This also includes any potential dependencies that may occur during the project, for example, if multiple departments are working together on the project, a delay in turning over a deliverable from one team to another can create delays and roadblocks.
Read more: 100+ Important Project Management Terms and Concepts to Know
Tips for writing a strong project charter
Don’t forget the project title
While many overlook it, the project title is an important part of the document. It establishes project details for the first time and creates referenceable information to fall back on throughout the project lifecycle.
Discuss the what and the how
Make sure the project charter covers the whats and the hows of the project. What is it about? What end results do we want to achieve? How do we plan to achieve them? These are important pieces of information that all parties involved should know about before they can start working on the project. There is nothing more crucial than knowing what it is you are working toward.
Leverage the resources around you
When drafting the project charter, leveraging the existing resources around you can help you better understand the context of the project and draft a stronger charter overall. For example, reviewing past charter documents from within your organization can help provide valuable information about drafting your charter for a new project.
Step back and reflect
Before wrapping up, take a step back and revisit the charter later with fresh eyes. Drafting and editing the project charter is a significant undertaking, and it is essential to take the time to carefully edit the document and review it with a new perspective.
Tools for preparing a project charter
Before you begin drafting, gather a few tools that can help make the process easier:
Information about similar projects that have been completed
Taking stock of the projects that your organization has completed in the past can make completing the project charter much easier. Understanding how similar projects were structured and managed gives you a baseline understanding of how to construct a charter for a new undertaking.
Planning tools
Project charters involve many moving parts, and leveraging planning tools can help you organize project details much more easily. Gantt charts, for example, make it easy to map task dependencies while visualizing a larger project timeline against individual tasks and responsibilities. These types of tools also make it easier to present information visually, making it more likely to be received clearly.
Project management software
Project management software is one of the best tools for planning and executing projects. Various features, from task assignments to data reporting, multiple project views, and more make project management software a useful tool at every stage of project management life cycle. A lot of software solutions provide project charter templates PMs can use to get started with drafting their own.
Read more: 10 Best Project Management Software for 2023
