Project Charter: Very Important

A project charter can be a one-page document, but it can save you a lot of time and money. Here is why.

What is a Project Charter?

According to PMI's PMBOK , a project charter is "a document that formally authorizes a project and documents the initial requirements that satisfies stakeholders' needs and expectations". 

When is a Project Charter Written?

A project charter is written during the initiation phase of a project. 

What is the Content of a Project Charter?

I usually include the following in a project charter:

  • why the project is needed
  • a description of the project
  • a rough (+/- 50%) estimate of what the project will cost
  • a justification (economic or other) of the project 

What is the Purpose of a Project Charter?

The purpose of the project charter is to provide the project sponsor with sufficient information so that the project can be formally authorized. Once the project charter is approved, the project team can then proceed to develop the project plan (which also needs approval, see related posts below)

The project charter provides a go/no-go decision to develop the project plan.

Project Plan Without Project Charter

Imagine the the following (well known) scenario: company X requests Project Management Office Y to write a project plan. The PMO charges the company $ 30,000 to write the plan and gets the job. When the project plan is finished, it is presented to the company. The project plan contains the project budget. The project budget is $ 3,000,000. This amount surprises the company, since they had in mind that the project would cost at most $ 500,000. The project sponsor of company X can not approve the project because of the high budget. 

The Importance of the Project Charter

Had company X taken the time to approach a PMO to develop a project charter, they would have known that a +/- 50% estimate for this project is around say $2,500.000. With such a rough estimate, the sponsor would have never authorized the writing of a project plan. Company X would have saved time and $ 50,000.





Related Posts

Processes Case Study Part 2

Processes Case Study Part 3

4 thoughts on “Project Charter: Very Important”

  1. @Asad,
    Thank you for the nice comment.
    Sure, go ahead and link the page. I think many of us can learn from my posts and the comments.

  2. Another nice article from Victor.
    I am going to link this page on my LI Group, with your permission, of course!

  3. @Gloria. Thank you for your comment. Different names are used for the same document arount the world. That is why I stick to PMI's Glossary of terms. For the sake of uniformity.
    What I suggest, is to compare the documents you mention (concept paper and proposal) with the PMI's definition of a project charter given in my blog post above. Like that you know if a certain document is a project charter or not.
    The intention of this post is to show why you need a preliminay estimate of what a project will cost before spending money on developing a detailed project plan.
    Keep the comments coming. We all learn from them.

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