November 20, 2020

What is a Project Charter and Why Do We Need One?

It is exciting to think about having a project approved, particularly when said project is one that has been on the top of the list of things needing a desperate overhaul for a department or even the entire organization. It can be tempting to want to jump in and get started, assuming everyone is already clear on what issues need to be fixed and roughly how you would begin to tackle them. 

The number of projects that fail in the United States alone is staggering, especially considering the time and money that has gone in to their attempted execution. Before rushing in too quickly, it is important to consider taking some critical steps to set your team up for success. You need a project charter.

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What is a project charter

The primary purpose of a project charter is authorizing the Project Manager (PM) to begin an approved project. It is officially signifying that they and their team are allowed to utilize organizational resources such as people, technology, and finances to complete the project objectives. 

A project charter officially begins a project or phase. Not only does it signify that it has been approved, but it goes a step further in providing a clear outline of how the project is adding business value. Think of a project charter as defining an early framework of the goals, scope, and deliverables at a high level. It clearly defines the commitment of the PM, senior management, and the rest of the organization, and acts as a formal agreement to deliver on that commitment while also offering clear details about where you’re heading and how you’re getting there.

Read also: Agile vs Waterfall: What Are the Differences?

Why you need a project charter

A project charter is especially important when gaining and sustaining executive buy-in. It allows executives to see the business value of a project, which is critical in saving it from scrutiny and risking having it delayed or even being scrapped. This could be because some executives didn’t see or understand the business value in it from their perspective, or they fail to understand how it will impact their vertical or bottom line.

The project charter should act as an executive overview of your project so that any new executive or senior leader can refer to it, understand it, and evaluate it. Consider the reasons that so many projects and initiatives fail. It isn’t necessarily due to bad ideas and poor planning or a lack of talent and resources. Oftentimes, it simply comes down to never having proven the projects’ value to the executive team.

Defining project objectives

To successfully sell and launch your project, you must explain your business need. What problem or need is this project going to solve or fulfill? From there, capture the high-level planning information—this includes things like the scope, assumptions, and deliverables. Don’t get bogged down in the details of the “how” just yet, remember we’re defining objectives in this stage.

Here you’ll also prepare the Project Statement of Work (SOW) and the business case document. This is a written description of the project, product, service, or result. This will explain the why behind your reasons for doing the project at all, the benefits that it provides, problem(s) it will solve(s), and the cost savings the organization will ultimately realize. For help with the SOW and business case document, it can be beneficial to work with project management software to help guide you through the process.

Who should be involved in creation of a project charter

It is critical that when creating the project charter, it is done by the project sponsor. This should ideally be a senior executive who may ultimately be less involved in the day-to-day or technical aspects of working on the project. They may lack the skills necessary to create a project charter, which is where they can utilize the Project Manager to prepare it. It’s okay for a PM and other members of the project team to be involved in the preparation of the charter, as long as they are not the ones spearheading it. 

It’s critical that a senior-level executive is sponsoring the project and claiming ownership from the very beginning. Remember that this person will act as the investor, key decision maker, advisor, and administrator. They’ll be making sure that the project team is provided with the resources (financial and otherwise) necessary to deliver on the project plan. 

The best way to set a project team up for success is to mitigate risk before you start. A project charter not only clearly defines the purpose and plan for a project, but it aligns the project to the overall organizational strategies while providing visibility to its business value. It also builds in executive sponsorship which is key to making the investment in the project worthwhile.

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