HomeAgileWhat is a Project Charter? Everything you need to know!

What is a Project Charter? Everything you need to know!

Before a project can efficiently begin, there are a couple of things you need to address. Without these building steps, you expose your project to unnecessary risks. One of the things you need to take care of is the project charter.

What Is a Project Charter?

So what is the project charter? A project charter is a summary that describes the whole project – from start to finish. It covers things like the goals of the project, how it will be executed, and who is involved.

It is a document that briefly outlines the different aspects of a project. Including the project’s:

  • Motivations
  • Goals and scope
  • Stakeholders (people with interests in the project)
  • Potential Risks or Problems
  • Benefits
  • General budget summary

The project charter is a short document that is created at the beginning of a project. It is created by the project sponsor or initiator to officially commence a project. Without it, a project cannot start.

Once a charter is drafted, the organization/project manager can begin committing the organization’s resources to the project.

A project charter does three main things:

  1. Recognizes and authorizes the project.
  2. Identifies, appoints, and authorizes the project manager.
  3. Authorizes the use of organizational resources in the project.

It also helps to define relationships between a project, its personnel, and the overall business strategy. When you begin writing your charter, you should aim for it to be short, simple, and unambiguous.

Once drafted, a project charter can lessen the need for emergency strategic planning as the overall objectives and problems have already been identified. Project managers can also use the charter to manage the overall strategy they will use to tackle the project.

Many people get confused by the “document” in the definition of the project charter. They assume that a charter must be a formal document. However, this isn’t true. A charter comes in many other forms, for example, a free-form email or memo.

The project charter is also sometimes called a project definition or a project statement. In CRM circles, it is equivalent to a project definition report.

The Role of a Project Charter.

A project charter is a multi-purpose tool that has some value to each person involved. For example, from an organizational standpoint, a charter serves as a ribbon-cutting ceremony for a project. It formally recognizes a project and authorizes it to begin.

From the project manager’s perspective, a project charter:

  • Marks the beginning of the project.
  • Acts as a badge of authority for the project manager
  • Authorizes the project manager to direct the organization’s resources into the project.
  • Identifies key stakeholders that he/she will be working with.
  • Provides a general budget summary to work within.
  • Highlights the project’s main deliverables or success criteria.
  • Identifies possible risks and problems

From other stakeholders point of view, the project charter:

  • Formally marks the beginning of a project.
  • Shows the approval of the project by the sponsor.
  • Identifies team members involved in the execution of the project.

As you can see, a charter serves many purposes. Although a project charter is short it addresses many key issues that affect a lot of people. That is why it becomes so important once you know how to use it.

Other purposes or roles that a project charter fulfills are:

  1. Primary Sales Document: You can use the charter to market and sell your project to stakeholders. As a primary sales document, the charter includes what their return on investment (ROI) will be.
  2. Badge of Authority: Because the charter identifies and clearly defines the role each individual plays. Team members can use it as their proof of rights to execute their duties.
  3. Project Sponsor’s Approval: Without the sponsor’s approval, a project cannot begin. Therefore a charter serves as written proof of the sponsor’s recognition and approval of a project.
  4. Resource Allocation Approval: Without a charter, if a project manager uses the organization’s resources on the project. He/she will be fired.

In short, a project charter should:

  • Summarize the essence of a project.
  • Give everyone a shared understanding of the project.
  • Serve as a contract between the sponsor and other stakeholders.
  • Identify key stakeholders.
  • Define responsibilities and authority.
  • Plot a rough forecast of the project.

Why You Need a Project Charter?

Besides serving as a contract and knowledge resource, a project charter has many other purposes. For example, if the project manager leaves in the middle of a project, the replacement should be able to use the charter to quickly get up to speed.

A project charter prevents extreme dependence on any individual. It gives everyone involved a shared understanding of the project’s goals, roles, reasons, and success criteria of the project. Hence everyone knows what they should do and why they are doing it.

Another reason why you need a project charter is that it provides the project manager with a generalized path that the project must take. It lessens the burden of eventual planning as before the project even begins, you already know the stages you will pass, the problems you will face, and who to ask for assistance.

What’s inside a Project Charter?

Writing a project charter is not a uniform process. Project charters for different projects will most likely be different. There is no one-size-fits-all project charter. However, most charters will include some if not all of the following items:

  • Project Name
  • Project Purpose
  • Project Objectives and Goals
  • Identities of Stakeholders
  • Risks and Potential Problems
  • High-level Requirements
  • Solutions for Potential Problems
  • Benefits
  • Roles and Responsibilities
  • General Budget
  • Milestone Schedule
  • Approval and Signature of Project Sponsor

Other components of a Project Charter:

  • Business Case (why do the project, from a business perspective)
  • Project Scope
  • Target
  • Success Criteria
  • Project Communication Plan
  • Project Timeline
  • Project Team

How to Create a Project Charter.

A sponsor is usually a senior executive within an organization. Hence they are often too busy to personally write the project charter. Other times, the project might be funded by a group of sponsors, e.g. a committee. Therefore, it’s impractical for them to write the charter.

That’s why a project manager should be prepared to serve as a ghostwriter for the sponsor(s) by writing the charter in their stead. The sponsor(s) only has/have to authorize the project manager’s copy with a formal signature, a chartering ceremony, or a confirmation email.

Before you begin writing your charter, you should gather and organize all the project relevant information such as:

  • Stakeholders
  • Budget
  • Objectives and Goals
  • Funding Sources
  • Estimated Time Frame

Once you understand and have this information ready, writing the management charter becomes very easy. As it’s only a matter of filling in the details.

Another key step in writing a project charter is defining and delineating the project members’ roles, responsibilities, and authorities. By doing so, you avoid a lot of confusion and conflict as everyone knows exactly when, where, and what they should be doing.

It’s inevitable that during your project’s execution you will face some problems. It will be unwise to act surprised when the inevitable happens. You would rather identify potential problems and strategize how you will either solve or prevent them.

Although you can write a charter as an individual, it’s better to ask your project team members for insights to create a more accurate project charter. By doing so, you will shore up any gaps you might have missed due to personal blind spots, bias, or forgetfulness.

By definition, a project management charter AKA project charter is a short high-level overview of your project. So avoid the temptation to wander unnecessarily by trying to break down every little detail. Always remember that it’s a summary, not a dissertation. Therefore it must be short but meaningful.

A project charter is far more useful than people realize. Once you know how much simpler and productive a project becomes with a charter than without it -you will want to use it more often. Therefore, you should not waste time reinventing the wheel by writing a unique project charter every time. Instead, create a template that you can use as a skeleton when you are drafting a charter.

Benefits of a Project Charter.

  • Acts as a project guide.
  • Declares the project’s existence.
  • Officially marks the project’s start.
  • Gives everyone a shared understanding of the project.
  • Serves as a marketing or selling tool.
  • Explains the business importance behind a project’s existence.
  • Sets S.M.A.R.T goals and objectives for the project.
  • Defines clear success criteria for the project.
  • Aligns organization. project team, and stakeholders to the project’s goals.
  • Avoids disagreements and role conflict between stakeholders, project team, and sponsor.
  • Defines the limits of the project manager’s authority.
  • Outlines and links the organizational relationships with the project.
  • Specifies the project’s hierarchy.
  • An effective communication tool between the different parties involved in a project.

Project Charter Example

Project Name: Construction of Employee Accommodation

Project Scope: To build a residency that can accommodate 20 employees + family.

Project Manager: Malcolm Swine Project Sponsor: Rhine Diamond

Project Approval Date: 20 June 2021

Project Description: Dolittle Inc. aims to design and build a 20 employee residency that is self-sufficient and is located close to company offices.

Time Frame: 8 Months

Business Case: Bring key employees closer to our offices and reduce their expenditure and commute.

Project Deliverables:

  1. Borehole + 50,000L tank(s) for water source
  2. Solar farm for electricity
  3. 2 Flats with 20 apartments total
  4. Car Park

Project Benefits:

Provide employees with nearby accommodation.

Increase organization’s attractiveness to new talent.

Increase employee benefits and satisfaction.

Less time spent in commute. Hence more time at work.

Build a productive employee culture & community.

Project Risks:

  • Technical Difficulties
  • Bad Weather
  • Insufficient Materials

Project Budget: 2.5 Million US Dollar

Project MIlestones:

  • Cast Foundation in Concrete.
  • Level and Pave Car Park.
  • Purchase and Install Tank(s) and Borehole Pump
  • Purchase and Install Solar panels + batteries + wiring
  • Complete First Apartment
  • Complete Last Apartment
  • Purchase and Install furniture and amenities

Project Stakeholders: Kole Slaw – Project Sponsor Buc Ket – Architect Warner Sigurdsson -Contractor Peter Bellyflop – Local Authority(Municipality) Moppy Toufa – Purchasing and Supply Officer Cao Tama -Housing Consultant

Project Charter Best Practices

Use Gantt Charts for Planning: Planning and implementing a project is a flexible endeavor. Nothing is ever certain. That’s why you need to employ other tools that can visually illustrate a project’s tasks, timeline, and relationships. Gantt Charts are one such tool.

Report Frequently On Everything: A project manager has a lot of work on his/her hands. Hence all team members should report and document everything they do, so that managers have enough information to accurately plan, track, and steer the project. Insufficient reports do not give managers enough information to do their jobs.

Give Clear and Explicit Instructions: A project manager is not a micro-manager. His/her job is to drive and manage the project’s overall progress. Therefore, it’s critical to attach enough information when issuing instructions so that the manager can focus on what is important. You can add extra documents or images to better communicate instructions.

Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind.” -Seneca


Subscribe to our newsletter!

To keep up to date with all the latest articles, ideas and tips for boosting your team's productivity