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.