A project charter is a formal document that authorizes the existence of a project and gives authority to the manager to use organizational resources for achieving the project objectives.
A project charter is generally prepared at the start of a project. It is signed by the project sponsor. Usually, it is an internal document but it can be issued by an external sponsor (customer) also.
I have written this article to explain every possible detail of a modern project charter. You will understand the definition, and meaning of a charter with the help of an example in this article. It will also tell you about the purpose and importance of this document in project management. You will also find a sample project charter template that can be downloaded as pdf document.
Different project management standards and methodologies define project charter differently. I have taken PMBOK Guide’s standard for project management for creating a project charter template. You can use it for your projects.
Definition of Project Charter from the PMBOK Guide
A Project Charter is a document issued by the project initiator or sponsor that formally authorizes the existence of a project, and provides a project manager with the authority to apply organizational resources to project activities.
PMBOK Guide
You can also refer to Max Wideman Glossary to read some other definitions of project charter.
Other Definitions
Refer to the following diagram for understanding the relationship between a client organization and a project performing organization.
Customer
Customer is the person(s) or organization(s) that will pay for the project’s product, service, or result. Customers can be internal or external to the performing organization.
Sponsor
A person or group who provides resources and support for the project, program, or portfolio and is accountable for enabling success.
Project Manager
The person assigned by the performing organization to lead the team that is responsible for achieving the project objectives.
Performing Organization
An enterprise whose personnel are most directly involved in doing the work of the project or program.
You can read my other articles to understand the difference between Project Sponspor vs Customer and Project Charter vs Contract.
Purpose of Project Charter
The most important purpose of the project charter is to establish the existence of a project and to assign the project manager to deliver on project objectives. It is a very important & critical document and serves few other purposes as well.
- It recognizes the existence of the project.
- It authorizes the project manager to use the organizational resources to meet the documented objectives of the project under the given constraints.
- It defines the authority level of the project manager.
- It ensures that all major project stakeholders formally agree on the project description and are fully committed towards the project goal.
- It provides a bird’s eye view of the project by documenting project’s goal, objective, description, and purpose.
- It contains high level information that is available at the start of the project e.g. scope, schedule, budget, resource estimates, risks, and deliverables.
- It lists all the major project stakeholders and their role in the project.
- It defines high level role and responsibilities of the major project stakeholders.
How to Prepare a Project Charter?
The Project Charter should ideally be prepared by the Project Sponsor but often this responsibility is delegated to Project Manager and the team. Sometimes the Charter is collectively prepared by a group of people that includes both the Sponsor and Project Manager.
Once PC is prepared, it is signed and issued by the Sponsor.
Ideally the PC should be prepared before the Project Kickoff meeting and presented to all major stakeholders during the meeting. This brings everyone on the same page and ensures commitment towards project goal.
The author of the Project Charter generally uses information contained in the following documents to prepare the Charter:
- Client agreements including but not limited to signed contract, Memorandum Of Understanding (MOU), Ltter Of Intent (LOI), and pre-bid documents.
- Business Case
- Statement of Work
Major Elements and Components of Project Charter
- Objective
- Vision
- Purpose
- Description
- High level Scope & requirements
- High level duration & effort estimates
- High level schedule and major milestones
- High level budget
- High level assumptions
- High level constraints
- High level dependencies
- High level risks
- List Of major stakeholders and their respective high level role & responsibilities
- Project Organization Chart
- Name of the Project Manager
- Name of the Project Sponsor
Project Charter Example for Attaining PMP Certification
I have used the above components to create a sample PC for a person who wants to attain PMP certification. It does not contain all the elements but it gives a fair representation of a real PC. The sample PC may look like:
Objective
To complete the PMP Certification within a period of 2 months.
Description
PMP Certification is an industry recognized credential for project managers. PMP demonstrates the experience, skill and competency required to lead and direct projects.
High level scope
- Complete 35 contact hour project management education/training.
- Study the PMBOK Guide.
- Study a good exam prep book.
- Do some practice tests.
- Fill online application form.
- Take the certification exam.
- Pass the exam.
High level budget
USD 1000 – Reference taken from How Much Does It Cost To Fo PMP?
High level schedule
2 months – Reference taken from How Much Time Is Required For PMP Prep?
This is just a small example. A real world PC would include much more details.
Over To You
Does your organization use Project charter? Do you think PC is an important document?
I would love to hear from you.
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