The benefits of creating a Project Charter

“Things are always at their best in their beginning” – Pascal, Provincial Letters.

[otw_shortcode_dropcap label=”A” font=”Dancing Script” background_color_class=”otw-blue-background” size=”large” border=”border” border_color_class=”otw-silver-border” shadow=”shadow”][/otw_shortcode_dropcap] couple of times per year, I teach my colleagues a module on project management methodologies (it’s part of a training path organized by my company for all junior PMs).

In many of those occasions, though it’d not be the aim of the session, some of the attendants ask me about the importance of some documents, e.g. the project charter.

This is the scope of the article; clarifying what are the benefits of creating the project charter and when we should create it.

Let’s define the Charter

When we begin a new project (or when we take the responsibility of a project that is already ongoing), we must define what needs to be



accomplished and decide how the project is going to proceed. We know that every project begins with an idea, a vision, or a business opportunity and that is the starting point that must be associated with our organization’s business objectives.

The project charter is that starting point and this is the very first reason of its importance.

Why we should always create a Charter

It may sound absurd to begin a project without clearly defined goals, but this is a leading cause of project failure.

KPMG New Zealand Project Management Survey 2010

KPMG New Zealand Project Management Survey 2010

KMPG, in 2010, realized a research revealing that almost 60% of companies fail to consistently align their projects with corporate strategy. The complexity of project charters and other initiation documents can hide unclear organizational objectives. On closer reading, many goals turn out to be neither objective nor measurable.

We can find the research here

In 1994, the Standish Group, a project management and information technology company, published its “Chaos Report” finding that American companies wasted $81 billion on canceled information technology projects.

In its 2001 updated research, the Standish Group found that executive support is the most critical factor to project success. Companies that practiced senior management support of projects were more likely to achieve positive results and reduce problems throughout the project life cycle. Additionally, projects that did not have proper sponsorship delivered such poor functionality that most users would not count them as successful projects.

What’s the Charter?

The Project Management Institute (PMI) in its “PMBOK – A Guide to the Project Management Body of Knowledge” describes the project charter as “a document that formally authorizes a project”.

Project Charter

Project Charter

A charter authorizes a project, and ensures that necessary resources and management commitments are provided to achieve success. It is a tool to obtain commitment and ensure understanding of roles and responsibilities from all affected groups for a project before it starts.

A project charter is a formal agreement that ensures project stakeholders share a common understanding of why the project is being done, the timeframe, deliverables, boundaries, and responsibilities.

The project charter is one of the first steps in the project planning process following completion of the project initiation phase. The project charter should not be confused with the business case. The business case should already be completed, and the investment decision to proceed with a project should be taken before a project charter.

The project charter does not normally change through the project life cycle. It is created at the beginning of the effort, approved by key stakeholders, and signed before work starts on a project.

And what about its content?

In order to address the scope described above, we should include in the Charter at least the following content:

  • Project Description
  • Business Justification
  • Project Requirements
  • Estimated Level of Effort and Schedule
  • Risks, Assumptions and Constraints
  • Key Roles

Let’s write a few adding words for each of the preceding points.

First of all, let’s describe the project; we should have a clear project description that answers the classical questions “What”, “Where”, “When”, “How”.

After this, we should have clear why this project is strategic for our organization and we should indicate some sort of metrics by which the sponsor will be able to determine if the project lived up to its expected potential.

Let’s then concentrate on the project requirements; we should implement a simple excel table summarizing “features”, “must have” and a little “description”. This little table should be used as a motivator to the team. The must have column is an indicator that tells the team that the feature is mandatory or not.

Let’s then give a summary of the overall headcount requirements and a rough schedule range. In order to obtain a suitable result, let’s produce another excel table including “Headcount (XX people – by job function)” and “Rough schedule range (Delivery in the Q4 timeframe)”.

Coming to Risk, Assumptions and Constraints section, we should produce an understanding of internal and especially external risks, assumption and/or constraints. There can be a time to market assumption, or a budgetary constraint, and so on. It’s a preliminary analysis, we don’t need to be exhaustive.

Concluding, we should indicate who the project manager is, where the resources are going to come from, and who will have the overall authority to make decisions – we could use a RACI matrix, for example.

An example of charter’s use

Coming to the initial question made by my colleagues attending the methodology course, I’m giving you an example of how I used this document in the past.

Managers Arguing

Managers Arguing

During a project’s review meeting, I was challenged as the project manager by an executive on the availability of the delivery staff to support a series of preliminary training sessions.

Instead of sniping at him, I answered very calmly, showing the project charter and pointing out where the delivery manager had agreed to provide the necessary activity to support the schedule.

Reluctantly, the executive agreed. My boss was also at the meeting, and was a project stakeholder. He smiled at me, knowing that we had done our homework by getting the necessary signatures on the project charter.

A sample template

I’m concluding this brief article, providing a sample template we could use; I hope you’ll enjoy using it.
 Project Charter Template

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