How to Develop a Project Charter
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How to Develop a Project Charter |
Project Charter:
A project charter is created during the initiating phase of the project and it is a document that provides authority to project manager to apply resources to project activities. It is a formal authorization to commence project activities. It provides details on project scope, schedule, budget, the project team and enumerates the befit of undertaking a project. An agency external to the project organisation like project sponsor, government agency authorizes a project.
Inputs Required for Developing a Project Charter:
1. Contract Copy
2. Statement of Work(SOW): SOW consists of
a. Business Need: Market Demand, Technological Advancement, Legal/Statutory requirement
b. Product characteristics
c. Relevance to organisations strategy
3. Organisational Structure / Chart
4. Regulatory Standards
5. Quality Standards / Policies
6. Existing Manpower and their skill set
7. Human Resource Policy
8. Work Authorization System: A system of sanctioning and authorizing project team members to commencement of work on a specific activity or a group of related activities to ensure that right things are done in a proper sequence.
9. Costing Estimates / Policies
10. Risk information
11. Project Management Information collection and distribution system (Project Management Software)
12. Change control procedures
13. Procurement / Outsourcing policy
14. Communication Policy
15. Policy on document creation, storage, distribution, retrieval, approval and retention
Contents of a Project Charter:
1. Identification / Reference No:
Each project is identified by an acronym or a reference no. Naming a project gives the project and its team a sense of identity. Most organisations have a laid down procedure to name and reference a project. The project identification or reference should appear in all documents related to that project.2. Record of revision:
All documents undergo a change once approved. It is a good practice to incorporate a table indicating record of revisions to a project charter. The table should indicate document title, approval date, revision no, description of change, name and designation of person approving the charter/changes, name and designation of the person preparing the charter.3. Project Overview:
Project charter is a document that will be used by those who may not be familiar to the project. The project overview should consist a narrative of the project description highlighting the reasons for taking up the project, main benefits that the project will deliver, and how the benefits are aligned to the organisations strategy. Project overview should mainly elaborate the business aspects of the project. This section should briefly indicated the estimated duration and the cost required to complete the project4. Justification
4.1 Business Need: The opportunity, reason for taking up the project
4.2 Business Impact: Benefits of taking up the project
4.3 Strategic Alignment: How the project is aligned to organisations mission and vision
5. Scope:
Explicitly define the project boundary and the key deliverables, distinguish between what is included and what is not included in the project scope. A well-defined scope will reduce confusion among the stakeholders and help the project team in preparing a detailed project plan.6. Deliverables:
The project charter should list each of the major deliverables expected from the project and describe them in detail.7. High-Level Requirements:
The project charter should enumerate the essential requirements that the deliverables should meet in order to satisfy the objectives8. Project Milestones:
This section should cover the high level milestone schedule and should clearly indicated when key project phases would complete. Key deliverables should form part of project milestones9. Budget:
Highlight the funds required to complete the project. Present the total cost of the project and a cost break up would be beneficial. For eg split the cost into land and buildings, machinery, installation and commissioning, training, preoperative expenses etc for a detailed list of cost break up refer to my post “Components of Project Cost”
9.1 Funding Requirements: Indicate phase wise / period wise funds requirement
9.2 Funding Source: Indicate how the project is being financed, internal accruals, loans etc
10. Alternative Analysis:
Present a high-level analysis of the various alternatives and how each one does not fit the business need, impact and strategy.11. Assumptions:
Assumptions are statements believed to be true and from which a conclusion is drawn to prepare the project charter. Assumptions related to cost, schedule should be indicated in this section.12. Constraints:
Constraints are limitations that must be taken into consideration prior to initiation of the project. These limitations could be with respect to schedule, cost, resources, quality requirements, and statutory regulations.13. Risks:
Risks are factors both internal to the project and external to the project that can go against the project and impact the project schedule, budget resources etc. All known risks along with the risk mitigation plan should be identified and incorporated in the project charter.14. Project Stakeholders:
Identify the project stakeholders and group them under internal and external stakeholder. Briefly describe the expectations with the project and their involvement, communication needs.
14.1 Internal: Project Manager, Project Team, HOD’s, functional managers
14.2 External: Sponsor, Suppliers, Vendors, Govt agencies/departments
15. Project Team:
15.1 The Project Team: List the names of the team members and the project manager, include their contact details, designation etc.
15.2 Organisation Chart: Include the project organisation chart with photographs of the team members
15.3 Roles and Responsibilities: Mention the role and responsibility of each individual team member and that of project manager.
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