Develop Project Charter and It’s Significant Role in Project Management Planning

When professionals start preparing for PMP® many begin by reading PMBOK®, and they come across Develop Project Charter as the first process in PMBOK® Guide. What is a Project charter and what role does it play in Project Management? Let us unravel it step by step.

A Project gets initiated in many different ways in organizations and many times the process or document which triggers the project are not exactly called the project charter,  this generate good amount of curiosity about project charter.  In this blog, I am trying to elaborate Project Charter.

What is project charter? The PMBOK® Guide Fifth Edition defines it as

“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. “

As elaborated in definition, the project charter is a document which gives recognition to the existence of the project, and designates the project manager, and also provides project manager an authority to allocate organizational resources for the project goal. Here, as we are lending the authority of using organizational resources, now who do you think can give that authority?  Only the one who owns these resources or who pay for these resources, and that person / group is called a sponsor.  The PMBOK® guide defines sponsor:

“A person or group who provides resources and support for the project, program, or portfolio and is accountable for enabling success.” – PMBOK® Guide Fifth Edition

The sponsor is authorizing the project by way of giving a project charter to the project manager. The sponsor also wants to communicate what he expects out of this project because a project manager must know for what goal these resources have been allotted.

1. Project vision, purpose or justification
2. Measurable project objectives and related success criteria
3. High-level requirements
4. Assumptions and constraints
5. High-level project description and boundaries
6. High-level risks
7. Summary milestone schedule
8. Summary budget
9. Stakeholder list

Project charter contains all the above mentioned information at a high level. Now, since we are at the beginning of the project and based on the visibility at that instance, this is created, the time and cost estimated given in project charter are actually on the rough order of magnitude. This means that there will be high variance of actual estimates.  At a later stage, when we create the Project Management Plan, each of these items will get elaborated.

Many times Project managers from the organizations, who execute projects for external entity may wonder, when all this information is given in contract, so why one needs a separate project charter? The answer is, even if you execute projects for external entity you will still need project charter, and project charters are different from contracts in following way:

Contract	Project Charter
It's a procurement document which defines the legal relation between supplier and customer	It's an internal document, which the organization is giving to internal team to communicate what is expected from them
Contract may include SOW where all deliverables need by customers are listed	For a given contract, the executing organization may execute more than one project and divide the deliverables; the sponsor of executing organization may also add some goals or deliverables which are not mentioned in Contract. Like sponsor may ask to build a capability of doing such projects as part of this project.
Contracts are approved by the customer and given to executing organizations to get the things done.	The executing organization (sponsor) approves the project charter and sends across to project manager to get things done.

Now you may wonder, how the changes in Project Charter get managed, does project charter falls under integrated change control.

Project Charter provides a trigger to project management planning, and it is expected that the organizational resources will get elaborated. There may be a slight variation from what has been agreed in the project charter, and in the normal situation, it is definitely not suggested to back tread and update the project charter to reflect latest discoveries. Once we start planning, we use a project management plan as a base and as things change, as an impact of integrated change control, we update the project management plan and not the project charter.  Does this imply project charter never changes? The answer to this is that the change in charter would be a big exception; organizations prefer to scrap the project or create a separate project whenever there is a requirement to change the project charter. For PMP® exam point of view you can safely consider that project charters rarely changed.

I hope this blog has sufficiently answered your all queries related to what is Project Charter, how to develop a project charter and what significant role it plays right from the onset of Project Management Planning. Good Luck with your PMP® Certification Exam.