How to create a project charter? Business case vs project charter

Project charters are the bread and butter of project management. They provide a clear and concise overview of the goals and objectives belonging to the project. The charter is a crucial document for all stakeholders, including the Project Manager, project team members together with the organization’s management. It forms the formal foundation of the entire project, as it yields the Project Manager the authority to start and continue the project, as well as defines the goals, scope and expected results.

Project charter – table of contents:

Introduction
What should the Project Manager include in the project charter
Justification for undertaking the project
Project goal
Scope of the project
Deliverables
Project timeline framework
Project budget and resource allocation
Project risks
How does the project charter differ from the business case?
Summary

Introduction

According to the PMBOK, the project charter is one of the most essential documents describing the project strategy. It is defined 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.”

The project charter is usually formulated at the beginning and remains unchanged. Although during the implementation of tasks, minor refinements are allowed. However, what should the document content and how to prepare it?

What should a Project Manager include in a project charter?

The volume of the project charter depends on the size and type of project being implemented. However, it should include the following elements:

the rationale for undertaking the project,
project goals,
project scope,
results,
project schedule,
project budget,
design risks.

The project charter should also include contact information for the Project Manager and key stakeholders.

Justification for undertaking the project

When preparing a brief justification for starting a project, it is advisable to use the business case prepared in advance. It should be written in simple language so that it can be understood by a person who is dealing with the project for the first time. Usually, one or two explanatory paragraphs are sufficient:

What is the business background of the project?
What problem does the project solve or what opportunity does it allow you to exploit? and
What are the expected results of the project?

Project goal

It is not worth including all objectives in the project charter. It is better to focus on the main goal and those that are in the hierarchy directly below it. After all, the description of the project goal in the business case should provide an answer to the question “What are we going to do?” which has to remain valid throughout the project. The main goals and objectives set the direction towards which the activities that make up the project are heading. They should be clear and measurable and in line with the overall targets of the organization.

Scope of the project

The project scope included in the charter defines the project boundaries, including what is and is not covered by the project. It needs to include a clear description of the project’s results and any limitations or assumptions that will affect it. Therefore, it is worth considering the answer to the question “What tasks will be implemented?” and “What tasks will not get implemented?”. This is especially important in projects that involve multiple stakeholders, whose unspoken expectations about the project’s results can be revealed in this way.

Deliverables

The project charter should include a list of all project deliverables, including a brief description of each and the specific goals they are working toward. It should also have a timeline for each item, preferably with a reference to a milestone, as well as the person or team responsible for delivering them.

Project timeline framework

The project charter should also include an overall project schedule, which is worth visualizing with a timeline. On it, the Project Manager should mark the project’s start and end dates, milestones, or planned dates for delivering results.

Project budget and resource allocation

The project charter should also include the overall project budget, most often presented in the form of a table. This will make it easy to indicate:

The main categories of costs – an estimate of labor, materials and equipment,
The projected range of changes – to take into account price fluctuations or unforeseen expenses,
Reserves and budget constraints.

This section of the document should also detail the allocation of resources, including personnel, equipment and facilities.

Project risks

The risk section of the project charter should outline potential risks and how to respond to them. This includes identifying potential risks, such as:

delays,
cost overruns or
scope changes.

Listing them helps stakeholders ensure that the Project Manager, project team and organization are prepared for potential problems and have a plan for what to do to mitigate or avoid them.

Business case vs project charter

The difference between a project charter and a business case lies primarily in the purpose for which they are prepared. A project charter is a document that initiates a project, while a business case argues why a project should be started. The charter defines what will be done in the project, while the business case answers the question “For what purpose?”. Both documents are very important for the proper management of a project and help make it successful.

Summary

The project charter is an essential document that serves as the foundation for the implementation of the project and authorizes its initiation. It outlines project goals, objectives, scope, budget, resource allocation and schedule. It also identifies potential risks and assumptions, increasing the chance that the project will proceed as planned.

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Author: Caroline Becker
As a Project Manager, Caroline is an expert in finding new methods to design the best workflows and optimize processes. Her organizational skills and ability to work under time pressure make her the best person to turn complicated projects into reality.
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