KEY TAKEAWAYS
A project charter provides a clear outline of 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.
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What Is a Project Charter?
Project charters are compiled after a project proposal 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 document must be signed by a senior leader who controls funding, as the charter 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 and the plan for achieving project goals by the end of the charter.
Read more: What is Project Management?
Why Is a Project Charter Important?
Project charters are an essential part of the project documentation process, as they provide the proof of approval to begin project work and utilize business resources. They act as a record of stakeholder 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 will 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 project scope and communicating project goals clearly to all project stakeholders.
Establishes a timeline
When working on a project, it is essential to adhere to the project timeline, but oftentimes, the project schedule is not relayed 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 to assign 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 to measure the project against. 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?
A project charter acts as the official sign-off for project work to begin, covering the essential information about what the project will cover and what it will take to accomplish the project successfully.
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 general 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 high-level 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 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, the team members working directly on the project, 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. In essence, this segment should clearly outline what the project work will look like and achieve to prevent scope creep and unclear expectations.
Deliverables
The deliverables portion outlines exactly what stakeholders can expect from the project in terms of 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 will 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 project 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
FREE Downloadable Visual Project Charter Template
Tips for Writing a Strong Project Charter
Explore visuals
Project charters contain a wealth of information, which can be overwhelming to digest at one time. Consider using visual aspects in your document in order to break up information and make it easier to understand. For example, when displaying the project timeline, adding a visualization by way of a timeline or Gantt chart view can help readers better understand the information.
Don’t forget the project title
While many overlook it, the project title is an important part of the document, as it establishes project details for the first time and creates referenceable information to fall back on throughout the project lifecycle.
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.
Lead with the “why”
Understanding the “why” behind your project can not only make it easier to draft the charter but can also help you write more clearly about the project itself. The “why” is a crucial aspect, and without it, drafting the essential information about the project will be a challenge.
Step back and reflect
Before wrapping up, take a step back and come back to the charter later on with fresh eyes. Drafting and editing the project charter is a significant undertaking, and taking the time to carefully edit the document and review it with a new perspective is essential.
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 a lot of 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. In addition, these types of tools 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 that can easily be implemented.
Read more: 10 Best Project Management Software for 2023
