Project charter

What Is a Project Charter?

A project charter is a formal document that officially authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. It is a foundational document in project management, serving as a high-level roadmap that outlines the project's purpose, goals, objectives, and overall scope. The project charter defines the initial framework for the project, setting expectations among all stakeholders and ensuring alignment before significant work begins.

History and Origin

The concept of formal project documentation, including the precursor to the modern project charter, evolved alongside the professionalization of project management in the latter half of the 20th century. Organizations recognized the need for structured approaches to manage increasingly complex endeavors. The formalization of the project charter as a critical initiating document is closely associated with the Project Management Institute (PMI) and its development of A Guide to the Project Management Body of Knowledge (PMBOK Guide). The PMBOK Guide, first published in 1996, provided a standardized framework for project management practices, explicitly including the project charter as a key output of the project initiation process. This guide originated from earlier reports and efforts by PMI in the 1980s to document and standardize accepted project management information and practices.

Key Takeaways

• A project charter formally authorizes a project and grants the project manager the authority to allocate resources.
• It outlines the project's high-level objectives, scope, and stakeholders.
• The document serves as a foundational agreement among key parties, including the executive sponsor.
• It helps prevent issues like scope creep by establishing clear boundaries early in the timeline.
• While high-level, it sets the stage for more detailed planning documents.

Interpreting the Project Charter

A project charter is not a detailed project plan, but rather a concise, high-level document. Its purpose is to provide a shared understanding of the project's core elements and formally empower the project manager. When interpreting a project charter, focus on the clarity of its goals and objectives, the defined high-level scope, and the identification of key stakeholders and their roles. It establishes the "why" and "what" at a broad level, serving as a reference point throughout the project lifecycle to ensure ongoing alignment with strategic intent and to prevent deviations from the agreed-upon direction.

Hypothetical Example

Imagine a technology company, "Tech Innovations Inc.," decides to develop a new mobile application to streamline its customer support. Before diving into detailed development, the executive sponsor initiates a project charter.

The charter for the "Customer Support App" project would include:

• Project Purpose: To enhance customer satisfaction and reduce support call volume by providing a self-service mobile application.
• Project Objectives:
  • Launch a fully functional iOS and Android app within nine months.
  • Achieve a 20% reduction in support call volume related to common FAQs.
  • Maintain an average app store rating of 4.5 stars or higher.
• High-Level Scope: Development of user authentication, FAQ section, ticket submission, and live chat integration. Excludes complex AI chatbots or payment processing.
• Key Deliverables: Functional iOS app, functional Android app, user guide, and administrator dashboard.
• Assigned Project Manager: Sarah Chen.
• High-Level Budget: Estimated at $500,000.
• Success Metrics: App download numbers, user engagement rates, support ticket reduction, and app store ratings.

This project charter would be signed by the executive sponsor and Sarah Chen, formally authorizing her to begin assembling a team and planning the project. It provides the initial authorization and parameters, upon which a more detailed project plan would be built, outlining specific tasks and resources.

Practical Applications

Project charters are widely used across various industries, from software development and construction to financial services and product launches. They are essential in establishing formal project initiation, especially in organizations where formal project governance frameworks are in place.³

• Corporate Projects: Large corporations use project charters to formalize internal projects, ensuring they align with strategic objectives and receive necessary executive buy-in and resource allocation. This is crucial for projects impacting multiple departments or requiring significant investment.
• Government and Public Sector: Government agencies, such as the U.S. General Services Administration (GSA), utilize charters to provide structure and authorization for various initiatives, from IT system modernizations to infrastructure developments, ensuring transparency and accountability.
• Consulting Engagements: Consulting firms often develop project charters with their clients to define the engagement's scope, objectives, and mutual requirements, serving as a de facto contract for the project's initial phase.
• Product Development: In agile environments, while documentation is lean, a project charter or a similar high-level document can still be used to define the product vision, high-level features, and overall business case before detailed sprint planning. The charter serves as a foundational element, officially starting the project and empowering the project manager to proceed with the necessary organizational resources.²

Limitations and Criticisms

While critical for project initiation, project charters have limitations and can be subject to criticism if not developed and managed effectively. A common pitfall is unclear or ambiguous objectives, which can lead to confusion and misalignment.¹ If the charter is too rigid or overly detailed, it can hinder adaptability, particularly in dynamic environments where changes are frequent. Conversely, a lack of sufficient detail, especially regarding risk management or a realistic timeline and budget, can set a project up for failure from the start.

Another criticism arises when charters are seen as a mere formality rather than a living document that requires ongoing review and potential updates to reflect changes, decisions, and progress throughout the project lifecycle. Failing to involve key stakeholders sufficiently during the charter's creation can lead to a lack of buy-in, resistance, and conflicts later in the project. If the charter is not properly "socialized" and approved, it may lack legitimacy and organizational support.

Project Charter vs. Scope Statement

While both a project charter and a scope statement are essential project documents, they serve distinct purposes and operate at different levels of detail. The project charter is a high-level, authorizing document. It formally initiates the project, provides the project manager with authority, and broadly defines the project's purpose, objectives, and high-level scope. It's typically brief and focuses on the "why" and the overall authorization.

In contrast, a scope statement is a much more detailed document that elaborates on the project's scope defined in the charter. It specifies the deliverables, project boundaries, constraints, assumptions, and acceptance criteria in granular detail. The scope statement defines the "what" of the project in an exhaustive manner, often changing and evolving as more information becomes available. While the charter gives the green light, the scope statement provides the precise blueprint for what will be built or achieved. The charter contains an overview of the scope, and the scope statement breaks it down into more detail.

FAQs

What is the primary purpose of a project charter?

The primary purpose of a project charter is to formally authorize a project and empower the project manager to utilize organizational resources for project activities. It also provides a high-level understanding of the project's goals and objectives.

Who is responsible for creating a project charter?

Typically, the executive sponsor or project initiator is responsible for drafting and approving the project charter, often with significant input from the designated project manager and other key stakeholders.

Is a project charter a legal document?

While a project charter formalizes a project within an organization, it is generally not a legally binding contract in the same way a commercial contract is. However, it represents a formal commitment of resources and authority within the organization, serving as a critical internal agreement.

What are the key elements included in a project charter?

Key elements typically include the project's purpose and justification, measurable objectives, high-level scope, identified stakeholders, a high-level budget and timeline, major deliverables, high-level risk management considerations, and defined success metrics.

Can a project charter change during the project?

While the project charter is meant to be a foundational document, it can be updated if there are significant changes to the project's high-level scope, objectives, or authorization. Any changes should be formally reviewed and approved by the executive sponsor to maintain alignment and control.