Developing A Project Charter: One of the Critical Documents of Project

Project charterHave you got a chance to prepare a project charter?

Chances are good that in some cases project manager is even not identified when project charter is created. In some cases project manager herself is asked to create the project charter.

An approved Project charter formally initiates the project and authorizes the project manager to use resources to achieve project objectives.

Assigning a project manager to the project right when project charter is created is of great advantage for the project manager. Earlier she is part of the team more control will she have on managing the project and its constraints.

Note: Look for downloadable project charter template towards the end of this post.

Who creates a project charter?

Typically the sponsor, PMO or portfolio steering committee. Having said this, in some cases this duty is delegated and the project manager is asked to create one. It would be a definite advantage for project manager to be involved in creating project charter, as it gives her all the prior knowledge, customer needs and possible constraints pretty early into the project – before planning exercise begins. This will be a good head start.

Exam pointer: A sponsor is someone who funds the project. This is someone outside of project team itself. Is she a stakeholder in the project? Definitely!

Project charter is one of the very first official documents created for a project.

“One of the first documents created? I thought this is THE first document. It is a charter document after all.”

No, Project charter is not the very first document on the project. Because by this time a Contract between requesting party and performing party, and also Project Statement of Work (SOW) are in place. So is the Business Case.

The words ‘requesting party’ and ‘performing party’ are a bit generic. Why? Because, a project can be internal (Engineering team is upgrading the account management software for Accounts department) or external (a construction company contracting a project to do the landscaping for its upcoming gated community project). One party, division or company is requesting the work, and the other party, division or company is executing it.

Exam pointer: Contract is needed only when the project is executed for an external company.

Consider an example scenario –
Kathy works for a company called Green Landscapes and is assigned the job to do landscaping for Mammoth Construction Company’s gated community project. Her first job is to develop project charter. She has a contract, and statement of work in place.

What is an Agreement?

An agreement is an intent do certain work between two parties. This is done by mutual consent between the two parties, and has an offer of payment made by one party to the other party for the work done. Any of SLA (service level agreement), LoI (letter of intent), contract, email or verbal commitment can be an Agreement.

What is Statement of Work (SoW)?

Statement Of Work defines, at a high level, the work to be done, pricing and the expected timelines. Some of the points covered in Statement of Work are given in this mind map –

Statement Of Work (SOW)
Figure 2: Statement of Work (SOW)

Business Documents

Essentially there are 2 business documents required to create a project charter –

  • Business Case
  • Project Benefits Management Plan

While the names are self-evident, let us look at then in a bit detail to understand more.

What is a Business Case?

This is an internal document. The organization that takes up the project has to decide whether it makes business sense to do this project. Business case should list the benefits that organization will get, if any, apart from monetary gains – such as leadership in the domain or future business prospects. If similar project have been executed earlier, those lessons can be employed to execute this project in an efficient way. In such scenario outcome is more certain and organization has better chances of success with this project.

Kathy has done her analysis and prepared the business case. It shows that all of their previous work has been done for smaller projects, and doing this work for Mammoth Construction Company will help them get valuable experience of doing a large scale project. This will also help them stake claims to being the experts in large scale landscaping work. This will certainly pave way for them get into the big league.
Considering these benefits, it makes a good business sense for Green Landscapes to take up this project.

Kathy looked at a previous project where they did a flower park, and used the lessons learnt there to do the similar park for this project. This came from Organizational Process Assets of Green Landscapes. So is the project charter template that Kathy decided to use.

Kathy needs to figure out whether any of the environmental standards govern large landscaping projects. This information comes from Enterprise Environment Factors.

An expert is a knowledgeable and experienced person within your company, or outside. This could be a consultant, subject matter expert (SME) inside the company, or someone from an industry knowledge group.

Facilitation refers to techniques such as brainstorming discussions, meetings and conflict resolution talks that help people arrive at a conclusion and make decision.

The project has to build a park with “all-season” theme. Green Landscapes has not done a similar project in the past. Kathy has some ideas but needs some help to figure out how to ensure that overall space looks colorful throughout the year, and have the flavors of seasons. She decides to take help from an Floriculture consultant, Dan.

Project Benefits Management Plan

This document outlines the steps to be taken to create, maximize, measure, report, and sustain the benefits created by the project.

This document, to some level, contains the following information –

  • Target Benefits – what exactly is the expected outcome?
  • Benefits Owner – who is responsible for this activity throughout the project lifecycle?
  • Time-frame for benefits realization – by when should the output be delivered?
  • Assumptions – what assumptions are made in the context of benefits and their measurements?
  • Risks – what are the potential issues/blockers in realizing identified project benefits?
  • Metrics – what yardsticks are used to measure the benefits?

Project Charter document

Kathy’s completed the project charter looks something like below –

  • short description of the project,
  • requirements such as walking-garden, all-season park, an area with exotic flowers
  • the project manager assigned (Kathy, that is) and her authority for being able to come up with budgeting, resource planning, decision on types of people she can pick having required skills. She has the complete responsibility for the success of this project.
  • milestones – the landscaping to be completed across 3 milestones, and tentative delivery dates
  • ballpark budget figures
  • risks – Kathy adds a risk that the soil properties and water sources may pose challenges for doing the “all-season” themed park

Exam pointer: A project charter, when approved, officially initiates the project. And you get the authority to run the project as its project manager. Which means that if you are working in a matrix organization, you now are authorized to get resources from functional manager.

Why do you need to identify stakeholders during initial stage of the project?

That is a great question!

And here are 2 reasons for that –

  • You need to know what is required to be achieved by the project. This information is required before you do any of the planning activities. And this information is available with certain stakeholders.
  • Any stakeholder could pose a potential risk to the project success, and a project manager can’t take that risk. Hence it is essential to identify all stakeholders as early in the project as possible. Project Charter, which is the output of this process, has all the necessary information to identify stakeholders.

Here is a simple project charter template you can download – MS Doc version and PDF version

Can you answer this question: Once a Project Charter is signed can it be changed with a Change Request?

PMBOK (v6) defines Change request as the following –
“A change request is a formal proposal to modify any document, deliverable, or baseline. When issues are found while project work is being performed, change requests can be submitted, which may modify project policies or procedures, project or product scope, project cost or budget, project schedule, or quality of the project or product results.”

Now if you apply this definition to project charter – it is most likely that changes in project does not trigger a change in project charter, it is usually the other way around. Moreover, project charter is NOT listed as a project document in PMBOK. And, PC is the one that sort of brings the project to life (and authorizes the PM).

Thus one can deduce that if project charter is to be modified a change request is not necessary.

There is another logic here – the project charter cannot be changed by project manager or project members, it is a document outside the scope of the project. Only project initiator or project sponsor can modify this. Hence change request should not be necessary to update PC, right?

Further PMBOK also states that, “As a general rule, each project’s configuration management plan should define which project artifacts need to be placed under configuration control. Any change in a configuration element should be formally controlled and will require a change request.”

So! What if the PM recommends and sponsor agrees to keep the project charter as a configuration item, and thus bring it under the purview of PICC? Quite possible, however, based on what we know till before the previous sentence, it is safe to assume that PC doesn’t need a CR to be updated.

Have you got a chance to develop project charter? This is possibly the first time when project manager meets up with some of the main stakeholders. What has been your experience?

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