Essential Elements of a Project Charter [With Examples]

For any organization, taking up a project or initiating a project is followed by a series of pre-project work, which includes project acquisition, pre-sales activities, creativity, developing the business case, and drafting the benefits management plan. Once all of these are concluded, the sponsor or the sponsoring committee must appoint a project manager and authorize him/her to utilize organization resources to plan, execute, monitor, and close the project. At this critical juncture is where the project charter document comes into the picture. In this article today, I will take you on a journey to understand how all the pre-project work connects to the project initiation and what key elements of a project charter go into its formation. We will also, at every step, understand the importance of these elements and how they influence the later stages of the project. So, let’s get started!

What is Project Charter?

To understand the key elements of the project charter, let us first take a look at what the project charter is and what purposes it serves. A project charter is a project document created by the project initiator or project sponsor (or sponsoring committee) that formally authorizes the transition of activities from the pre-project phase to formalize project creation. It authorizes the project manager to use the organization’s resources to achieve the defined objectives and entails documentation of the following what’s:

• Business needs will the project serve,
• Assumptions and constraints the team/business faces at this time,
• Solutions proposed to solve the current challenges,
• Measurable objectives and success criteria,
• Milestones and budgets associated with defined activities,
• Stakeholder information,
• Details of the business sponsor, project manager

The above project charter major elements become crucial in formulating detailed project plans and also serve to create a direct link between the project and the organization’s vision.

It is vital to note that without a project charter, a project cannot be started, as there is no formal start indicated due to this missing project document. Understand this and a lot more in detail with interactive Project Management certifications.

Elements of Project Charter

Having understood the definition and importance of the project charter document, let us now see the key elements of a project charter in detail.

• Project Overview: One of the major elements of a project charter, the project overview, is analogous to the high-level project description or summary that defines what is required to execute and accomplish the project. It provides a brief overview of the overall context of the project and details to follow in the next few sections.
• Project Objectives: One of the other key components of a project charter, the project objective, states the purpose of carrying out the project. It provides specific information on what the project expects to serve, how the outcomes impact the current state to lead to the future state, and, more necessarily, why the project is being carried out.
• Project Scope:  Undoubtedly, yet another key ingredient or element in a project charter includes the project scope statement or summary, which sets the boundaries in which projects operate and helps create the project baselines. It gives the project manager critical guidance as to how to plan and how to engage, deploy, and manage the project team. This becomes a key reference section for all phases of the project to avoid scope creep and drive effective change management during project execution.
• Project Schedule: A project schedule is also among the key elements included in a project charter and helps define the project timelines - both overall and activity-wise to complete projects on time and as planned. Go through KnowledgeHut’s PMP classes online to understand the project lifecycle and how the project charter shapes and leads the other phases of project management.
• Project Risks: While the above elements of a project charter showcase a vision of how the current problems will be solved, there may be uncertainties that the team may face, which must be listed in the project charter to be actioned. These help the project manager keep a tab on what potential problems can arise for the project and how they can realign strategy to achieve the desired objectives.
• Project Budget: One of the essential elements of a project charter in project management is the project budget, which helps the project manager know the estimated cost of the organization’s resource utilization and plan the project steps/activities accordingly. Though this more or less flows down from the business case, it becomes a significant guiding point for the project manager to run the project and measure project performance, progress, and delivery.
• Project Stakeholders: The stakeholder list forms an integral part of the project charter as it is paramount for the project manager and the project team to recognize the project stakeholders and understand their power, interest, and influence on the project to run project operations effectively. So, the project charter must call out the level of interest/influence the stakeholders may carry and their expectations for the project. In my experience, I have drafted project charters that point to the stakeholder register and classification as they remain live throughout the project.
• Project Approval Requirements: Organizations execute different types of projects, including internal, external, regulatory, maintenance, etc. Each of these project types may involve other stakeholders who may have custom review and approval guidelines. Hence, a project charter mustcontaine information about who is in charge of signing off on changes, milestone reviews, success, or any other need-based approvals to run the project effectively. This section becomes essential to defining crucial areas such as:
  • What is the definition of project success?
  • Who is authoritative in defining what is project success?
  • Who can approve changes?
  • Who signs off the project?
• Assigned Project Manager and Team Structure: In my experience, I have used the project charter as a safety bridge between the sponsor and myself, the project manager, as it helps me come on the same page as the sponsor to understand the project ideation, proposed success criteria and activities to be performed. It is consequently paramount for the project charter to carry the name of the assigned project manager and the team structure to initiate project kick-off and get into the execution phase. This becomes a meaningful reference for the project team responsibility and assignment matrix.
• Project Sponsor: Listing the project sponsor and their responsibilities helps the project manager create a strong liaison between the team, the sponsor, and stakeholders. This information helps the project manager reach out to the sponsor to resolve conflicts, understand pre-project activities, and help drive effective change management, bringing all involved parties on the same page. It is necessary to remember that the project sponsor, the creator of the project charter, uses this document to engage the project manager, authorizing him to take the project forward on the executions agreed upon.

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Other Important Elements in the Project Charter

Having understood the core components or elements of the project charter, project managers may often include the following details as well as a proactive measure to effectively engage stakeholders and team members:

• Measurable project objectives and related success criteria
• High-level requirements
• Assumptions and constraints

It is crucial to note that the project charter is created only once during the project lifecycle, and any changes to it designate a new project initiation. Hence, it is important and customary for the project manager to include finer details before finalizing or baselining the project charter.

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Conclusion

A project charter is a vital project document that is made from the project business documents (business case and benefits management plan) following the organizational process assets and governance framework. It serves as a safety net and allows the sponsor to formally authorize a project manager to take over and go into project planning and execution. Not only this, but the elements of a project charter also help the project manager create project baselines and define the boundaries of work, responsibilities, and deliverables.

With this article today, I am sure you are now fully aware of how the initiator of the project charter, i.e., the sponsor or sponsoring committee or PMO, uses the project charter to mark the transition from pre-project activities to project execution using this formal document and what core elements or components does the project charter need to have to be effective in helping the project manager in the myriad of activities until project closure.