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The three main uses of the project charter:
- To authorize the project – with a consistent and easily comparable format, projects can be ranked and authorized by their expected Return on Investment.
- Serves as the primary sales document for the project – stakeholders have the charter as a short summary to distribute, present, and use to fend off other project or operational tasks that may drain project resources.
- Serves as a focal point throughout the project – it operates as a baseline for team meetings and in change control meetings to assist with scope management.
Goals of This Chapter
Upon completion of this chapter, you should be able to:
- Define a project charter
- Give examples of soft and hard metrics of a project
The project charter, a formal document recognizing the existence of the project, is frequently created by the project manager, but is officially issued by the project sponsor. It defines the high-level requirements for the project and links the project objectives to the ongoing work of the organization
Without an approved project charter, upper management may change priorities and a worthwhile project may end up being cancelled. Having a properly approved project charter dramatically reduces the risk of a project being cancelled through a lack of support or perceived value to the company. The project charter documents the overall objectives of the project and manages the expectations. The charter should be written so that it is broad enough to not require changes as the project evolves. If it does become necessary to change the project charter, then the changes have to be approved by the sponsor (and possibly other stakeholders.)
The project charter is owned by the project sponsor, usually a member of upper management. The charter gives the project manager and their team the high-level scope, schedule, and resource window for the project. Should events change those given parameters, then the sponsor(s) must be contacted to approve the changes.
It is important to keep in mind the difference between the project charter and the project management plan. The charter is considered to be owned by the executive sponsor. The project management plan is owned by the project manager. Any deviations to the plan that remain within the overall scope of the approved project charter can be handled by the project manager and the project team. Of course, project sponsors may be included in the decision-making process. The project manager likely submits regular (weekly) status reports in order to manage expectations and to give advance warning of any events that could impact the charter parameters.
What Is Included in the Project Charter?
A sample household cleaning product has been used to illustrate the project charter development process. The project charter includes fundamental information used to authorize and establish the basis for a project. The charter justifies the project in terms of its value to the company.
Project Title and Description
This section includes a simple, high-level description of what is the project. For example, the description may be to launch a new variant of a household cleaning product.
Project Manager Assigned and Authority Level
This section names the project manager for the household cleaning product project and states whether he or she can determine, manage, and approve changes to the budget, schedule, staffing, etc. The charter gives the project manager the authority to use company resources to complete the project. It may also help provide credibility on projects when authority must be used to gain cooperation.
What a project manager is given the authority to do depends on individual company policy. Some companies allow the project manager to select human resources; others may require the sponsor to be involved. Some companies allow the project manager to come up with a detailed schedule as long as it meets the desired end date. Other companies may not be concerned with a required end date and let the project manager tell them how long the project will take.
The business case section of the charter explains the specific business problem that is being solved through the household cleaning product project. It answers the question of why the project is being undertaken. The project manager needs to know this as many day-to-day decisions need to keep the business case in mind.
In this section of the project charter, the sponsor will identify how which resources will be provided for the household cleaning product project. Some projects come with a limited number of open human resources available, for example, or with specific team members pre-assigned to the project team. Some team members may require office space, computers, or other capital expense items. There may be geographic considerations with team members spread out, which will impact the project in different ways than a centrally localized team.
This is the sponsor’s impression as to who are the stakeholders for the given project. Stakeholder analysis comes later in the project management process.
Stakeholder Requirements as Known
This section of the project charter identifies any high-level requirements that relate to the project and product scope. Known stakeholder requirements are the requirements that have been used to justify the project. Further work to clarify and finalize the requirements will come later in the project process.
This section includes the project sponsor’s indication of what specific household cleaning product project deliverables are wanted, and what will be the end result of the project. It is important to have a clear picture of what constitutes the successful end result of the project. One measure of project success is that all the deliverables are met.
Measurable Project Objectives
This section addresses how the household cleaning product project ties into the organization’s strategic goals, and includes the project objectives that support those goals. The objectives need to be measurable and will depend on the defined priority of the project constraints.
Soft metrics are typically difficult to quantify. “Improved quality” would be an example of a soft metric. Hard metrics have a unit of measure (e.g., a percentage of change, a specific dollar value, a unit of time). In general, it is preferable to have hard metrics.
Examples of soft metrics include:
- Improve customer satisfaction with the household cleaning product
- Increase household cleaning product project quality
- Improve process flow of manufacturing of the household cleaning product
- Increase employee productivity
- Improve information flow
Examples of hard metrics include:
- Increase in sales by a defined percentage of existing household cleaning product sales
- Reduce costs by a defined percentage or specific dollar amount
- Reduce product production waste by a defined percentage
- Reduce manufacturing time by a defined period of time on a per unit basis
If only soft metrics are provided by the project sponsor, then the project manager should encourage adding some hard metrics. Instead of “increase product quality,” the metric could be “reduce product issues by [a defined percentage.]” Instead of “increase employee productivity”, the metric could be “increase the number of calls handled by each household cleaning product channel sales rep by [a defined percentage], allowing us to handle more calls with the existing staff.”
Notice how different metrics are used when developing the household cleaning product project charter. The key “ah-ha” that spans all of the discussions for the household cleaning product project is that the metrics selected for a household cleaning product project’s charter are selected specifically to support the company’s bigger vision or strategy.
Household Cleaning Product Project Approval Requirements
This section identifies what items need to be approved for the project, and who will have sign-off. The question “What defines success?” is answered.
High Level Project Risks
Potential threats and opportunities for the project are listed here. In-depth risk identification occurs later in the planning processes.
Signature and Approval
The household cleaning product project charter requires a signature from the project’s sponsor. The signature is necessary in order to give authority and make the project official. Depending on the environment in which the project will be completed, there could be more than one signature necessary.