Project Charter, Made Simple

Imagine that you are a Project Manager working for the city of Newtown, Alaska.

Do you think you can wake up one day and decide to spend municipality’s money to build a Gym & Indoor Pool for the city?

Of course not! As soon as you start calling potential stakeholders or suppliers, they will ask you if you have the money to spend, and who authorized you to do that?

Someone in the city council or town hall has to set aside a budget, and authorize you as the PM to spend it on building that Gym.

Project Charter is that document which formally authorizes the project.

What kind of information does the Project Charter contain?

Organizations tend to modify the project charter in a way where information is more relevant to their business environment but the basic structure of a project charter includes:

  1. Project description including expected benefits
  2. Business case of the project to highlight the business benefits of the project vs. cost
  3. High-level requirements
  4. Known risks
  5. Summary of project milestones
  6. Project budget
  7. Project success criteria
  8. Assigned project manager
  9. Approval of the project sponsor

Since the Project Charter is a document that marks the start of the project who is responsible for creating it? 

The completion and approval of the project charter has to be done by the Project Sponsor. He’s the person with enough authority to assign a budget so you as the project manager can spend it! In our example it can be the mayor of Newtown, or the city manager. Project Manager may assist in creation of the project charter.

What is the significance of Project Charter besides a formal project approval? 

– Acceptance by Senior Management: Project Charter indicates indicates acceptance of the project by senior management. They can be contacted for issues, escalations or guidance in reference to the approved tasks.

– Organizational Resources: Since the project budget is approved the project manager can start spending it (within the approved authority) and can also apply for organization’s investment into the project.

– Reference Document: Project Charter serves as the reference document through the life cycle of the project. It can be referred to in case of scope uncertainty, cost confirmation, understanding the business case etc.

– Critical Resource Assigning: In certain cases the project team members are assigned. This is done when the identified members are critical to success of the project.

How does a typical Project Charter look like?

Here is a sample Project Charter to give you an idea of how it looks like (click to enlarge):


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