Why Do We Need a Project Charter? | A step by step Guide

Last updated on 15th Jul 2020, Blog, General

(5.0) | 18212 Ratings 1082

Share:

What is the Project Charter?

• PMBOK Defines Project Charter as 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 the project.
  
• PMI gives a lot of importance to project charter. Project Charter will state the high-level requirements to satisfy the stakeholders’ needs and it also defines the authority of the Project Manager.
• Business Case and Project statement of work are the documents that are necessary to create a project charter.
• The purpose of a business case is to understand the business need for the project and determine whether it is worth investing in. Business needs or demands include market demands, organizational need, customers’ requests, technological advance, legal requirements, ecological impacts, and social needs.
• “According to the PMBOK Guide, the business case is an economic feasibility study. It is used to track progress and compare project results against the success factors identified in the business case”.
• A project isn’t a project until the project charter is approved, and the project charter cannot be started until the business case is approved.

The Project Charter highlights high-level initiation draft defined as below:

Let’s look at why the project charter is so important!

• The main purpose of the project charter is the formal authorization of the project and the go-ahead to commit organizational resources to it; without a project charter, the project can be canceled anytime and for any reason and can be subject to an audit as an unauthorized project.
• Let us imagine a project without a project charter. If there is no project charter, projects will have no direction. The Project Managers will lack authority.
• There will be no expectations for the projects undertaken. The scope of the projects will not be clearly defined.
• Let’s consider a project that has started for 2-3 months. A Project Manager is already authorized, and the project is moving well. Due to certain circumstances, the current Project Manager resigns from the company and the project is assigned to another Project Manager.
• The initial task of every Project Manager authorized should be to go through the Project Charter to understand its business needs and objectives. The Project Charter project describes goals, scope, stakeholders and a high-level deliverable at high levels. Imagine a project having no project charter then Project Manager would have been like a “Fish Out of Water”.

What is included in the Project Charter?

• A Charter is a document that elucidates the project in succinct wording without a lot of details. It’s written for high-level management needs. Charter doesn’t provide detailed end goals, schedule, and cost.

A Project Charter template may include some or all the following:

Components of the Project Charter

Learn MS Project Training & Become JOB READY

• Instructor-led Sessions
• Real-life Case Studies
• Assignments

Explore Curriculum

Do We Really Require Project Charter?

• Project Charter is important for the success of a project. The Project charter builds a foundation for any projects undertaken. It is a great communication tool for the stakeholders and provides a direction to the project.

Following are few of the benefits of a project charter:

• It gives an authority to the project manager to complete the project
• Explains the business importance and existence of the project.
• Demonstrates Management support for the project.
• Defines outcome for the project.
• Aligns project with the organization objectives.
• Provides a team with a clear concise reporting system.
• Protects team members from scope creep.
• Helps in avoiding disagreements between stakeholders.
• Authorizes the existence of the project or establishes the project.
• Defines the parameters within which the project manager is authorized to operate.
• Gives the project manager authority to spend money and procure resources.
• Provides the high-level requirements for the project.
• Links the project to the ongoing operations of the organization.
  
  Process of project charter:

• The project charter is an important document and a project should not be started without one. The success of the project cannot be measured without a project charter.

A project charter is important in the Project Management, because-

• It ensures that the project manager understands the sponsor’s needs and requirements.
• It provides vital information needed to get the projects started.
• It acts as a reference document to make sure everyone (i.e. Project Manager, Stakeholder, Higher Management etc.) are on the same page.