So you need to create your very first project charter but you don’t know where to start.
You might be confused because you don’t really see the benefits of having a project charter in the first place.
Before you read further, just keep in mind that a project charter can:
- Ease team, client, and stakeholder communication
- Help you get approval for starting work
- Keep all project elements aligned with your goals and business strategy
Note: If you’re looking for an online tool to help you with task prioritization check out this list of task management tools.
I’m going to show you how this document can help you and exactly what steps you should take to create a great first project charter [plus, you’ll get access to a free project charter example].
- What is a Project Charter?
- Project Charter Purpose
- The Elements of a Project Charter
- Project Charter Template
- Steps for Building a Project Charter
What is a Project Charter?
According to PMI®’s PMBOK Guide (5th edition), a project charter is 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”.
In simple terms, a project charter is a brief document that clearly points out the project’s scope, participants, benefits, and objectives.
It’s usually created by a project manager and presented to a group of stakeholders for approval. This is why the charter is written during initiation, before the project’s kick-off.
A common misconception is to believe that the project’s sponsor is entirely responsible for writing the project charter. In reality, sponsors might not even have the time or project management experience to do this. What they can do is delegate another person (commonly a project manager) to do this in their place (or help them in the process) and authorize its final version.
A project charter can help establish your responsibility as a project manager and keep the entire team on the same page even before work on the project starts.
The project charter is not the same thing as a project management plan. The latter is a comprehensive document that contains all the steps and details on how a project should be executed. Comparatively, a project charter doesn’t include all tasks that team members are responsible for and doesn’t further develop upon the execution stage. Most project charters are short and informative, compared to detailed project management plans. So keep them short at around 3-5 pages.
Project Charter Purpose
So, how will you use a project charter in real life?
Get authorization to start the project
Showing stakeholders what the project’s outcomes can be, what risks or constraints it could face, and how much they will need to invest in the project. This information can help them authorize projects and rank them accordingly.
Always think about the Return on Investment. When approving a project, stakeholders will first take into account what they can gain out of a project. That’s why it’s best to focus on a project’s benefits and profit opportunities at all times.
Show stakeholders how you’ll distribute their budget and resources
Creating a project charter is your perfect chance to identify the main stakeholders and find out their needs and problems. Based on these, you’ll estimate the costs of the project and name the resources you’ll most likely need.
Think of your project charter as a sales document or sales pitch. Through it, you’ll present stakeholders with a short file that can show them exactly what they get for the money they’re spending. This helps them make definite decisions and prioritize their needs.
Use it as a reference document during project development
You’ll likely use the project charter throughout all project management phases, using online project management tools. It’s a good starting point for managing the project’s scope as you’ve already outlined its basics.
You’ll also use it when completing your objectives because a correctly built project charter guides the team through a series of methods they need to follow and the obstacles they’ll encounter.
Use the project charter for your team’s meetings to remind your colleagues of your objectives and the project’s benefits.
Project Charter Elements
Covering all important elements that can impact a project’s evolution in the charter is vital.
In addition to the basics (such as the project’s name and description), your project charter should contain the following elements:
Answer the following question: Why are we starting this project?
Outline the project’s background and what your and your stakeholders’ reasons for starting the project are. These can be either internal (e.g. new strategic goals within the company) or external ones (e.g. market or competitor changes).
Hold a meeting with your clients and stakeholders to see exactly what their expectations and motivations are. This allows you to scope out potential misunderstandings that would later affect the project’s evolution.
Project Objectives and Targets
Knowing your objectives is one of the reasons why you’re writing this project charter. Define specific goals. Remember that you’ll then have to measure your progress against them and make adjustments. So make sure they’re measurable and think of the ways in which you’ll be able to meet these targets.
Create SMART (Specific, Measurable, Achievable, Relevant, Time-bound) objectives. This way you’ll be able to find out exactly if you achieved them or not, how you did it, and what the benefits are. Here’s an example of a SMART goal: Increase the website’s organic traffic by 20% in 3 months by creating new blog posts.
Mention all key stakeholders from the very beginning. A stakeholder is a person or group that can influence a project AND is affected by its success or failure. Stakeholders can be clients, managers, company employees, suppliers, investors, communities, administrators, organizations, and so on.
The project charter should clearly mention who’s in charge of funding, project charter approval, and any other key duties.
For small projects, it’s fine to mention every single stakeholder. But for larger projects, you can opt to include only those with decisive power in your project charter together with their role. But this is entirely up to your needs and the involvement of the project’s stakeholders.
This part refers to the project’s limits, what’s fine to work on, and what you should avoid. Define clear guidelines on what your team is allowed or not to do in order to finish a project.
Pay close attention to this part as you could later use it for your scope management steps and when creating the Project Scope Statement.
Project Risks, Assumptions, Constraints, and Dependencies
A risk is any event, factor, task, action, or situation that negatively affects a project’s evolution, timeline, costs, resources, goals, and results. A risk that’s not controlled nor removed on time can severely damage a project, even end it altogether. Some examples are conflicts between stakeholders, inadequate team training, system outages, late suppliers, etc.
But not all risks are bad. Positive risks are a risk type that can leave a beneficial mark on a project and even help you reach your project goals. The best way to understand positive risks is to consider them as being too much of a good thing. Like getting more orders than you can deliver with your current resources, receiving so many website visitors that the website temporarily crashes, or getting too many interview requests after a product launch that you just can’t physically attend.
Assumptions are the statements and situations related to a project’s progress that you assume are true, without having any solid proof yet. You might expect that new technology will be available in time, outsourced work will be cheaper during the next two months, all stakeholders will attend your last meeting, and so on.
Constraints refer to your limits in terms of costs, time, quality, risk, scope, and resources. Having a constraint usually means you have to schedule and execute work by keeping limits in mind. Say you must finish 20% of all tasks within the first week or only one designer is available for a project when you’d really need at least two.
Dependencies represent all the elements (projects and other operations) that influence a project’s schedule. These can be a part of your risk management plan as well if they pose a threat to the project’s success. Some examples include a project’s start date depending on a previous project’s completion, a partnership influences the existence of a project, a deliverable from a previous project is needed in order for this project to start, and more.
Project dependencies can also refer to the relationship between a project’s tasks. Establishing these will show the right sequence in which you should complete them and if a task depends on any resource whatsoever. These dependencies, however, will be mentioned when you’re planning your project, and not in the charter.
In your project charter, include everything that can negatively impact your project or delay its development. If you’ve left out any factor from this stage, you’re more likely to forget about it even during planning and be unprepared to handle it when it actually matters.
Your milestones contain not only your most important events but also the date when your project starts and when you should complete it.
Missing a deadline is not something to worry too much about as long as you’ve clearly stated this possibility in the project charter. Project delays are normal. This means that these milestones might not be your final dates. Just make sure they are justified.
A great tool for displaying milestones is the Gantt Chart. You can use this project management technique to plan tasks in advance and keep track of their development, including the people responsible for them and their input. So choose an easy Gantt chart builder that is great for progress tracking.
Gantt Chart example
Create your first Gantt Chart with a free Paymo trial.
For now, come up with a rough estimate of how much the entire project will cost. Include the price of your resources, team salaries, outsourced services, and any other project-related expenses. You’ll go into more accurate details in your project management plan.
Use your previous projects and tasks as a benchmark to create these estimates – if they’re similar in structure. One way of doing this is to track the time you’ve spent on your previous projects. And you can use that data to create time reports.
Time report example from Paymo
NOTE: If you can’t be bothered to deal with consultants, attorneys, and accounting companies, you could invest in a sturdy project management system. So, if you’re looking for a project management solution that includes core features like task management, team scheduling, timesheets, and invoicing, read our article on the best 6 invoicing software taking electronic systems to a new level.
A communication method is sometimes included in the project charter as well. This helps you identify exactly how you (as a project manager) will communicate with your team, stakeholders, and clients, as well as when and how you’ll hold your meetings with them. Even if you won’t include this in the project charter, establishing a communication strategy is mandatory for the project management plan.
Project Charter Template
Here’s a general project charter downloadable template you can start with. Alternatively, you can download the project charter real-life example as a PDF file.
Use this project charter example as a reference and feel free to add any other elements that you might need to mention in your project.
Some of the other elements you might want to add to the project charter’s content are the publishing date, the charter’s version, and its history (to include any changelogs), contact details, a communication strategy, or other attached documents
But where do you really start when creating a project charter?
You can create a project charter in just three steps provided that the effort and focus put into these stages are at their highest:
1. Hold a meeting with all project stakeholders
Never come up with the project charter alone. As a rule of thumb, write the project charter after an interactive meeting with the other key stakeholders, clients, and other team members.
Make sure that everyone participates and brings their own feedback, put everything on paper, and further discuss conflicting opinions. Also, don’t miss any of the project charter elements listed above. This is your chance to get everyone on the same boat and prevent further misunderstandings.
Check out this PMI® article to see the importance of involving your team in the creation of the project charter.
2. Write and review your project charter
After the meeting, write the project charter and review its content. You can also show the project charter to the rest of the team members so they can review it as well.
Again, don’t forget to update it based on the team’s feedback.
3. Get approval for your project charter
Then, send the project charter to the key stakeholders and project sponsors so they too can review it, make any suggestions, and approve it so you can start working.
Keep the final document visible for all team members so they can use it as a reference for their tasks to see what their objectives, obstacles, and milestones are.
But what you truly need when writing the project charter is motivation and an understanding of its purpose.
If you’re still not convinced about the importance of this document, just keep in mind you’re not writing it just because you were told to. A project charter can actually help establish project member authorities, guide the overall project development, and ease the project approval process.
Putting together a project charter is only one of the several responsibilities a project manager can have. Check out our full guide to them.
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