Chartering Projects

What is a Project Charter?

• An informal contract between the project team
and the sponsor
• A contract
– is an agreement entered into freely by two or more
parties.
– cannot arbitrarily be changed
– offers something of value for each party
– is a living document that can evolve with changing
conditions
 What is a Project Charter?
• Signing a charter represents the transition from
the project initiating stage into the project
planning stage
 Why is a Project Charter used?
• The four major purposes for a charter are to:
1. authorize the project manager to proceed
2. help the project team and sponsor develop a
common understanding
3. help the project team and sponsor to commit
 1. Authorize the project manager to
proceed
• The project charter authorizes the commitment
of resources to a project
• The project charter gives the project and the
project manager official status within the parent
organization.

Project charter “formally authorizes the project …

documents initial requirements that satisfy the stakeholders’
needs and expectations … and provides the project manager
the authority to apply resources to project activities.”
PMBOK® Guide
 2. Common understanding
• Benefits associated with the common
understanding include:
– Teamwork develops.
– Agreement, trust, communication, and commitment
between the sponsor, project manager, and project
team develop
– The project team does not worry if management will
accept a decision.
– The sponsor is less likely to unilaterally change the
original agreement.
 Typical Elements in a Project
Charter
• The term “charter” may be substituted with
project request, project submission form, project
pre-planning form
• Typical elements of a project charter include:
Title Risks, assumptions, constraints
Scope overview Spending approvals/budget estimates
Business case Communication plan requirements
Background Team operating principles
Milestone schedule Lessons learned
Signatures and commitment
Typical Elements in a Project Charter
 Scope Overview
• A high-level description of what needs to be
accomplished and how it will be done
• The project in a nutshell

Product scope – “features and functions that characterize a

product, service or result.” PMBOK® Guide

Requirements – “condition or capability that must

be met…to satisfy…needs, wants, and expectations of the
sponsor, customer, and other stakeholders.” PMBOK® Guide
 Scope Overview
• Used to help prevent scope creep
• Considered to be the project boundaries

Scope creep – “adding features and functionality (project

scope) without addressing the effects of time, costs, resources,
or without customer approval.” PMBOK® Guide
 Business Case
• The project purpose or justification statement
• Answers the question “why?”
• Used to justify the necessity of the project
• Clearly tie the project to the organization’s
strategy
• May be just the rationale or include high-level
estimates of the costs and benefits of the project.
• Persuades decision makers to support the project
and inspire team members to work hard on it.
 Milestone Schedule with Acceptance
Criteria
• Divides the project into 3 to 8 intermediate points
whose completion can be verified
• Lists major milestones and deliverables

Milestone schedule – “a summary-level schedule that

identifies the major schedule milestones or significant points or
events in the project.” PMBOK® Guide

Deliverable – “any unique and verifiable product, result, or

capability to perform a service that must be produced to
complete a process, phase, or project. Often … subject to
approval by the project sponsor or customer.” PMBOK® Guide
 Milestone Schedule with Acceptance
Criteria
• A column for acceptance criteria helps determine
who will judge the quality of the deliverable and
by what criteria
• Acceptance criteria represent the project’s vital
signs
• Never turn in a deliverable without knowing how
it will be judged
Acceptance criteria – “those criteria, including performance
requirements and essential conditions, which must be met
before project deliverables are accepted.” PMBOK® Guide
 Risks, Assumptions, and Constraints

Risk – “an uncertain event or condition that, if it occurs, has a

positive or negative effect on a project’s objectives.” PMBOK®
Guide

Assumptions – “factors that, for planning purposes, are

considered to be true, real, or certain without proof or
demonstration.” PMBOK® Guide

Constraint – “an applicable restriction or limitation, either

internal or external to the project, that will affect the
performance of the project.” PMBOK® Guide
 Risks
• Any risk that may inhibit successful project
completion needs to be identified and a plan must
be developed to overcome it.
• A risk that can create a positive effect on a project
can be considered an opportunity
• Must consider the risk of NOT undertaking the
project
• Contingency plans are developed for each major
identified risk
• An “owner” is assigned responsibility for each
contingency plan
Spending Approvals or Budget Estimates

• A preliminary budget should include the level of

confidence in the estimate
• Some internal projects do not develop formal
budgets
• Identify expenses the project manager can
authorize and expenses the sponsor needs to
control
 Lessons Learned
• Successes and failures of previous projects
become practical advice
• Avoid the risk of repeating mistakes from
previous projects
Lessons learned – “the learning gained from the process of
performing the project.” PMBOK® Guide

Lessons learned knowledge base – “a store of historical

information and lessons learned about both the outcomes of
previous project selection decisions and previous project
performance.” PMBOK® Guide
 Signatures and Commitment
• Who is involved
• Extent to which each person can make decisions
• Expected time commitment for each person
• The project sponsor, project manager, and core
team members show commitment by signing the
charter
 Constructing a Project Charter
• It is helpful if the sponsor creates the first draft
• The organization’s leadership team may
contribute information in addition to the business
case and scope overview
• One to four sentences should be written for the
scope overview and business case
 WHAT IT LOOKS LIKE?
• The project charter is a document. There is no
universal formula for a project charter. It can
either brief or as long as 50 pages. But the more
detailed it is the less chance that someone will
actually read it.

– We believe that you do want your project charter to be

read, so try to keep your project charter to a maximum
of 5 pages. Ideally it should be 1-2 pages.
 Milestone
Schedule
with
Acceptance
Criteria
Instructions
 Project Milestones

– Establish significant dates of your project:

start date, end date, invoicing dates. It’s
important to understand that these dates are
merely guesses. When writing the charter you
don’t have firm dates yet.
Risk Assessment Example
 Stakeholder List

• Make a list of people involved in your project.

e.g. PM, sponsor etc.
• Then identify all stakeholders in this list
• Determine which stakeholders are most
important
• If you don’t know names of individuals, list the
title of the required position and department.
 Summary
• The project charter is a vital document that enables the
project sponsor, project manager, and core team to
reach mutual understanding and agreement on the
project at a high level.
• Charters include sections such as a scope overview,
business case, milestone schedule, acceptance criteria,
risks, and signatures.
• The sponsor meets with the project manager and core
team to go over the charter in detail to ensure
understanding and to reach agreement.
• The charter is the document that completes the project
initiating stage.