Hello fellow project managers, business analysts and stakeholders! Welcome to ShivyTech! I am excited to share an important topic with you on why project charters are important. Hope you find this post insightful!
A project charter signifies the start of the project. The Project Management Institute (PMI; https://www.pmi.org/) provides a clear definition of a project. charter. According to PMI, a project charter is a document that formally authorizes the existence of a project. It provides the project manager with the authority to bring resources to project activities. There are several reasons as to why a project charter is critical to a project:
1. A project charter is a deliverable that signifies the start of a project.
The publication of a project charter signifies that the project is now “official”. This is critical as it notifies the key stakeholders and project team that the project has officially kicked off. This will enable the organization to focus its resources (time, money and people) to the project.
2. The project charter contains the purpose and business case behind a project.
The project charter captures the purpose of the project. This includes the business case for the organization to pursue the project. Understanding the business case is critical. It provides a common vision to the organization and project stakeholders on the reasoning for starting the project. Capturing this information in the charter sets a clear path for the team to understand the common goals.
3. A project charter includes the scope, high-level requirements and assumptions of a project.
Capturing the high-level scope is critical in a project charter. It helps establish clear boundaries regarding what the project will (and will not) cover. In addition, the charter captures the high-level requirements of the project. Project stakeholders can focus on the high-level business requirements in the charter. Including high-level business requirements enables project stakeholders to understand the specific focus areas when working on this project. At times, assumptions are not captured in the project charter. However, if your project charter is capturing assumptions, it should be high level in the project charter. This may include areas such as assuming that the project will only focus on X components of System Z. It can include an assumption about how the work will be performed, e.g., in person vs. virtually. Also, a charter captures anything relevant to the project, which may not be captured in the scope or business case.
4. The project charter contains a high-level timeline.
A project charter should also capture the timeline for the duration of the project. Stakeholders need to be cognizant on how much time they will spend being committed to the project.
5. The project charter provides benefits and expected outcomes for the organization.
Key areas that the project charter should capture are the expected outcomes and benefits of the project. An organization may decide to pursue a project and defined the scope and purpose behind it. However, a project has no real meaning unless the organization benefits or are realizing outcomes from the project. When an organization commits money and time to execute a project, the organization should understand its benefits. Benefits can include improved time (e.g., faster processing, automation of certain tasks) or monetary benefits (e.g., increased revenues, decreased costs).
6. The charter contains a budget rough order of magnitude (ROM)
A project charter should also contain a rough order of magnitude (ROM), or clear indication of a cost estimate. A ROM is usually up to 50% accurate. The organization’s leaders and key project sponsors may not know the exact amount of the cost of the project. However, they need to provide a rough estimate to understand how much money they may be allocating to the effort. The ROM will eventually become a clearly defined estimate; however, at the time of the charter, it will be a “best guess”.
I hope you enjoyed this post! How has a project charter helped you and your team? Leave us a comment!