by Tim Knutsen
Purpose
According to the Project Management Body of Knowledge (PMBOK®) the project charter is the starting point for all other project activities. PMBOK describes the project charter as “a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities.” The key point in this statement is ‘authority to apply organizational resources to project activities.’ This is the only real point as without organizational resources you have no project. And it is why creation of this document is so crucial to any project’s – large or small – ultimate success. A project might range in complexity from simple internal project such as standup and install a replacement file server to large complex project such as design and construct the Trump Tower in Chicago. Each is a ‘project’ since it is a temporary activity which has a beginning and an end. And to be successful each requires the development of a project charter which reflects the desired output of the project sponsor.
Without the charter, which as we already know is a ‘document’; we really do not know what the sponsor is expecting to receive from the project. And if we do not at the bare minimum possess a very high level of understanding of what the project sponsor is expecting from the project we are on the path to failure. The project charter will be the foundation for the project scope and will be the determiner as to the final project quality. Since the project charter is the overall guiding document for the project the project sponsor needs to have a significant role in the development of this document.
Drivers
The key input to the project charter is the Statement of Work (SOW). For external projects a contract would normally be executed for the SOW. The main input for the SOW is the business case or business need of the requesting organization. The business case has a direct link to the organizational strategic plan and will describe the sponsor’s required output of the project. Business drivers will be linked to an organizational goal(s) and can cover a need for a single functional group or for the entire organization. For complex projects the business case will described in a separate document(s) and will be one of the many documents supporting the need and detailing the benefit that will be realized from the project. For simpler projects the business case might be included as part of the SOW.
Even for smaller projects a business need or case should be developed to provide a rational basis for managing the overall organizational project portfolio. As with the strategic plan, all project business cases should have a built in review process to ensure the project is 1) meeting the original needs of the business case and 2) that the business case remains relevant to the strategic plan. Other inputs could factor into project charter such as service level agreements (SLA’s) found in IT outsourcing contracts, environmental factors such as government regulatory (such as FDA, EPA, or FAA) and the organization’s marketplace. The project charter will also be influenced by internal factors such as standard operating processes (SOP’s) and the maturity of the organization in regards to project management. The existence or lack of a Project Management Office (PMO) will also have a major bearing on the project charter. The analysis of the organizational project portfolio and approval of projects to support the strategic plan will be managed at the senior level of the organization. The PMO in mature organizations will dictate the format of and required inputs to the project charter and will lead to a higher level of project success throughout the organization. Outputs of the project charter at a minimum need to include the project justification, high level requirements, summary budget and schedule, and the sponsor’s ‘measurable’ project objective(s).
What the charter drives
The project charter is the initiation point for the project and directly drives the creation of the project management plan and resultant subsidiary plans. The project charter is the document that provides the level of understanding between the requestor – internal functional area(s) or external customer — and the performing group. In order to develop the project’s baseline scope, schedule and cost and collect the project requirements we need to have a clear reference as to the sponsor’s needs. Without this information the project team is simply guessing at what is required for the project objectives. Considerable organizational resources can and most likely will be wasted if this crucial step is skipped or not fully understood.
What you should conclude
Without a clear documented charter a project will always be in a state of justifying its existence and searching for clear sponsor to navigate the organizational bureaucracy. The project will have no means to claim that objectives have been met and that the project supports the organization’s strategic plan. A project without a clear charter will not be able to measure progress against objectives or milestones. ‘Charterless’ projects will have a higher tendency to finish over budget and behind schedule or be terminated without realizing any ROI to the organization.