How to Develop a Project Charter

In this post I'm going to show you how to develop a project charter.

In fact, these are the exact techniques that I used to create charters for small-budget to multi-million dollar projects.

Let's kick things off by defining the project charter.

text: how to develop a project charter

What is a Project Charter?

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" (PMBOK® Guide—Sixth Edition. Page 715).

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The Importance and Benefits of a Project Charter

Charters provide many benefits. Some are not so obvious.

  1. Allows an organization to formally authorize a project
  2. Establishes the authority of the project manager and project sponsor
  3. Helps to ensure projects are approved based on the business case rather than subjective opinions
  4. Helps to ensure a better return on investment
  5. Allows the project selection committee to consider whether the project aligns with the company's strategic plan
  6. Provides information needed to orient team members in the project kick-off meeting
  7. Allows the team members to review the approved charter when confused about the purpose of the project
  8. Provides the project manager with a way to bring new team members up to speed when members are added initially as well as later in the project
  9. Helps nonprofits to create grant proposals

Project charter. 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. PMBOK® Guide—Sixth Edition

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Agile Project Charters

Occasionally, someone asks me do agile projects have a charter? 

Short answer. YES.

Agile projects benefit in the same way traditional projects do. In all projects, the project initiator of sponsor can reduce risk and improve communication through the charter process. 

And keep in mind, for small projects, it doesn't take much time.

Engage your key stakeholders. Work together in crafting this document. Furthermore, it's a great way of finding and reducing conflicts early. 

The Elements of a Project Charter

So, what should you include in a charter. This document may include but is not limited to the following elements.

checklist

1. The Authority of the Sponsor and Project Manager

First, the charter should include the name and level of authority for both the project sponsor and the project manager.

2. The Business Case

If a business case has not been developed, consider adding this element to your charter.

Here, you are answering one primary question: Why should we do this project now? There are always competing projects. Why should this project take priority?

You may wish to include some combination of the following information:

  • Background information or history
  • Trends
  • How the project connects and supports the company's strategy
  • Market demand
  • Consequences of not doing the project now
  • Financial, operational, and customer benefits
  • Cost savings and avoidance
  • Legal requirements or government regulation

3. Business Problem Definition

Too often, people take action without first defining the problems. Therefore, project members may misunderstand the problems and waste time and money focusing on the wrong things.

Make the problems crystal clear.

What is wrong? Where are the problems occurring? What are the magnitudes of the problems? Additionally, make the problems as specific and measurable as possible.

4. Goals

What do you wish to accomplish by when? Write SMART goals. Make sure the goals are specific and measurable.

a hand writing goals

5. Deliverables

What product, service, or result do you expect from this project? Provide a high-level description of the deliverables.

6. Constraints

The PMBOK® Guide defines a constraint as "a limiting factor that affects the execution of a project, program, or process." For example, list budget and schedule constraints.

7. Assumptions

An assumption as "a factor in the planning process that is considered to be true, real, or certain, without proof or demonstration." What are stakeholders assuming to be true?

rocket

Tired of the confusion and rework due to a lack of early stakeholder engagement and agreement? 


Join me in my online course—What, Why, & How of Powerful Project Charters.


Just want a brief guide? Grab a copy of my eBook—Start Writing Your Project Charter Today.

8. High-Level Risks

Risk management starts day one of the project. As you walk through the charter process, ask the stakeholders about risks (i.e., threats and opportunities). Capture the most significant things that may hinder or advance the cause of the project.

9. Stakeholders

Stakeholders include an individual, group, or organization who may be affected by the project. If you do not know an individual's name, list the title of the stakeholder, their title, and organization.

10. Team Members

If you know who will serve as team members, capture each team member's name and department. If you do not know, list the title of the required position and department.

PMI Pulse research shows actively engaged sponsors are by far the top driver of projects meeting their original goals and business intent.

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What You Need for a Great Project Charter

1. Every Project Needs a Project Sponsor

PMI Pulse research shows actively engaged sponsors are by far the top driver of projects meeting their original goals and business intent.

Sponsors are typically senior level executives from the C-suite. These individuals possess authority in the organization that allows them to secure the funding and resources necessary for the project. In addition, the sponsor should also ensure that their projects align with the vision, mission, goals, and strategies of their organization.

So, how do sponsors start projects?

These leaders see a need or opportunity. For example, the head of the Accounting Department may see billing problems due to a legacy bug-prone billing system. Furthermore, the sponsor creates and submits a project charter to the Project Board or similar group for approval.

So, what do you do when your sponsor is busy and you are having difficulty getting their attention? Elizabeth Harrin provides some great tips on What to Do When Your Sponsor is Too Busy.

Tip: Use the Project Charter in Your Kickoff Meeting

In all of my project kickoff meetings, I review the charter. I provide everyone with a copy. And I walk through each section such as the project goals, deliverables, and assumptions, to name a few. As a result, the project team and other stakeholders leave the meeting with a common understanding of the project. This enhances communication and reduces risk.

2. Engaged Project Stakeholders

In addition, we need engaged stakeholders. Not everyone, mind you, but we do want the key stakeholders involved. Wise sponsors invite key stakeholders to the initial meetings to discuss the project charter.

When sponsors choose to ignore stakeholders, risk increases. These same stakeholders will discover the project later and may avert your efforts. 

It's not like they have malicious intent. Rather, they have insights that others lack. For example, a stakeholder has knowledge of regulatory requirements. 

Why not invite them into the inner circle early?

3. Project Charter Template

Ready to get started? Here is a template. Feel free to modify it as needed.

How About You?

Want to go deeper? I have great news. I've created an online course where I will walk you through the charter process step by step.

By the end of this short course, you will have greater confidence. Additionally, you'll know how to create more value for your sponsors and teams.

Online Course: The What, Why, & How of Powerful Project Charters

One of the best ways to reduce communication risks early in your projects is by writing project charters. This is not a documentation exercise! The aim is to ensure that the project sponsor, project manager, and the key stakeholders are on the same page. In this course, you will discover the 16 powerful elements of a project charter, how to use a project charter after initiation, the four project charter checkpoints, the secret sauce of writing clear goals, and how to right-size your project charters.