What is a Project Charter?
A project charter is a short document that contains all the details of a particular project. A project charter is a formal document and it contains project objectives, project stakeholder details, how the project will be carried out, among other things. A project charter is supposed to be presented to the project sponsors for approval before the project can be initiated.
Project Charter Vs. Project Management Plan: What’s The Difference?
Project charter and project management plan are almost similar documents, but there is a difference between them. As stated above, a project charter is a brief document that has all the details about the projects i.e., project scope, deliverables, objectives, project schedule and details of the stakeholders.
A project management plan, on the other hand, is a formal document which has been approved by the stakeholders, and that will act as a guideline for project planning, execution, monitoring, and control. It is derived from the project charter, which has to be presented to the stakeholders for approval before it can be considered and used by the project team to execute the project.
The difference between project charter and project management plan is that a project charter needs to be approved by the project sponsor while a project plan needs to be approved by the project sponsor and key project stakeholders.
The following are more differences between a project charter and project management plan;
Differences Between Project Charter and Project Plan in Scope
While a project charter is considered as a summary document which is mostly one page in length, it must contain the following;
- The project charter main purpose is to initiate a project, while project plan is the detailed planning of the project prepared during project planning stage
- Project charter only includes high level milestones, while a project management plan includes detail project schedule.
- Project charter list out high-level risks while project management plan includes detail risks info such as risk approach, risk register, etc.
- Project charter only contain key stakeholders, while project management plan has a complete list of project stakeholders including clients, vendors, affected users.
A project management plan must include clear instructions on how a project is supposed to be executed, managed, and also controlled. It should contain information on the following;
- Project management plan detail out roles and responsibilities for each stakeholder of the project.
- Project management plan has more info available such as project issues, change control procedure, communication management plan, procurement management plan, human resource management plan, scope management plan.
- It must cover the value proposition of the project.
- Must have an organization structure that is supposed to be followed.
- For each deliverable, the plan must indicate the task to be done and effort to be put in place.
- It must contain all the phases of the project and all project activities.
- It must identify the work breakdown formulae or structure.
- It must indicate all the project milestones and detail project timelines.
- It must document the inter-dependencies of the project.
- It Includes project budget and detail budget breakdown.
While the project charter has most of the information contain in the project plan, the information is not comprehensive enough. Therefore, it is considered as a draft copy that must be approved by stakeholders and detailed so that it can be considered as a project plan after approval from stakeholders.
Differences Between Project Charter and Project Plan in Application
- A project charter is used to get approval from project sponsor to initiate the project. Project charter only has high level info but detail information is found in the project management plan.
- The project charter and project plan remain important documents that run throughout the period of the project.
- A project plan is a document which a project manager prepares during project planning and will be used as a reference and updated throughout the project
When to Prepare a Project Charter?
A project charter should be prepared during the project initiation stage and presented to the project sponsor for approval. A project charter will follow after project proposal is accepted by customer. The project manager prepares the project charter before launching the project. Every project must have a project charter as the starting point, and it should be used as a reference guide.
Who Should Prepare a Project Charter?
The project manager is responsible for preparing the project charter.
Who Should Approve a Project Charter?
Once the project manager finish preparing the project charter, the project manager presents it to the project sponsor, who will then go through the document and approves it. It is the project sponsor that have the responsibility of approving the project charter.
Why It Is Important To Prepare a Project Charter?
A project charter is an essential document to the project management team for many reasons. Without the project charter, it is impossible to have a project plan as the project charter helps in creating the project plan.
It is therefore important to prepare a project charter for the following reasons;
- It is a basis for creating a project management plan.
- It gives the green light for the organization to allocate resources to the project.
- It provides a formal green light for the start of any project.
- It acts as a reference document that the project team will use throughout the project period.
- It gives the authority for the project manager to lead the entire project management team.
- It defines critical roles for each project team member.
- It defines the goals and objectives of the project.
- It identifies and defines risk management issues.
- It defines the critical deliverables of the project.
What Is Included In A Project Charter?
A project charter is a crucial document for any project, and it provides the platform for which a project team will carry out the project. The content of the project charter is significant and must contain all the details of the project.
Let’s look at what a project charter should include;
- Business Need and Justification
A project charter document must state the business need that the project should address. Business need in a project refers to the missing links/gaps between the goals of the business and the current affairs of the business operation. A business need necessitates a change in any company, and that will require the company or hire personnel to drive the change. It can also make a company implement a new project to address the business issue.
An example of a business issue can be a company lacking a clear procurement procedure. This will require the company to launch a project to implement a procurement management system to handle all procurement activities.
A business need will give the organization a clear direction and a strong foundation for making critical decisions on the project.
The primary purpose of the project charter is to give a clear understanding of the project. It should also provide the purpose for conducting the project and justification of the project.
- Project Objectives (Purpose)
The project charter should be able to answer the question; what is the reason for starting the project? In this part, you should state various reasons why it is important to start the project. One way of getting this right is by discussing the expectation for the project with stakeholders and what motivates them about the project. This will help you eradicate possible misunderstandings that can affect the project at a later stage.
A project charter should include clear objectives of the project charter, and this can be specific goals that will measure the progress of the project. Create smart objectives that are relevant, specific, achievable, and measurable.
- Project Scope
A project charter must include the scope of the project. A project scope is a document that contains features, goals and instructions of the work suppose to be done in any project to facilitate the project completion.
The scope of the project will help in determining the project’s limit. The scope should state areas within the project where work should be done. The scope should indicate areas to avoid on the project. The scope, therefore, should have an easy to follow guidelines that the project team will use from start to finish.
The project scope is an essential part of the project charter because it will help you develop project scope management later in the project.
- Key Project Deliverables
A complete project charter must have key project deliverables as part of the document. By definition, a project deliverable is a good or service tangible or intangible that is produced from a project to be delivered to the client. A project key deliverable can be internal or external. A project deliverable can be in the form of a software product, a report, a document, or any other thing that relates to the project.
Projects are done in milestones, and with every milestone, there are key deliverables that show the progress of the project. These key project deliverables should be clearly documented in the project charter and will act as a guideline that the project team will follow at various stages of the project.
- High Level Project Milestones
Project milestones indicate the start date of the project and the end date of the project phases. It also includes critical events of the project where the project team will monitor project progress. A project charter must contain information on when high-level project milestones are delivered at various stages of the project.
Gantt Chart is an excellent tool for displaying these high-level project milestones. It helps in keeping track of each milestone and in planning tasks ahead of time. Project milestones will help you deal with any project delays during work. Thus, documenting project milestones in the project charter is very important to avoid unforeseen risks.
- High Level Risks
A risk is a situation, factor, event, or action that hurts any project. Any project must have a potential risk that will affect the project, and if the risks are not addressed, it will affect the project significantly. Making provision for these risks is one way of ensuring the project will run without any interruption.
A good project charter should identify risks that come with each project and classify them accordingly. Identify high-level risks and deal with them early in order not to hinder the progress of the project. Examples of risks can be a lack of training for the project team, inadequate workforce, rise in the cost of production, conflicts that arise from stakeholders, late suppliers, among others. It is important to note that there can be positive risks too. These are risks that add more value to the project and contribute to the project completed faster. For example, a reduction in the cost of supplies is beneficial to the project as it will lower the budget of the project.
- Assumptions;
These are situations about the project progress which you make an assumption on and can be true or false with no evidence in place. For example, there can be assumption to develop the system will take 6 months, but it might be longer, because it may depend on various factors such as complete of user requirements, user cooperation among others.
- Key Project Stakeholders
Every project should have key stakeholders that require much attention as compared to others. You will need the input of these key stakeholders in making high-end decisions regarding the project. Key project stakeholders can be two or more depending on the nature of the project and should be indicated in the project charter document. A project charter document should include a list of key project stakeholders in the report.
Key stakeholders should be only project sponsor, project manager, client and project team members.
Other stakeholders in a project can be persons or organizations, for example, company employees, communities, managers, clients, suppliers, administrators, investors, organizations, among others. These information will be listed out later in Project Management Plan.
- Assigned Project Manager and Project Team Members
Assigning Project manager roles and responsibility to run the project is one of the primary purposes of a project charter. A project charter should assign the person who will be in charge of a project, namely project manager. Additionally, the project charter should include the project team members and indicate their roles. The project manager will be in charge of the project team and will oversee every activity of the project management team. If a project doesn’t have a project manager with clear roles and authorities, there will arise conflicts within the group, which in turn can derail the progress of the project.
- General Overview of The Budget
All projects are initiated within the framework of the organizational budget limits. This context must be included in the project charter so that it can be move on the budgetary limits into the next stage of project planning, which is the next phase of achieving the project.
The overall budget of the project should, therefore, be clearly mentioned in the project charter, and it should include all the costs associated with the project. The project sponsor will be able to go through the budget overview on the project charter and determine whether to approve the budget in its initial form or make necessary adjustments before it is recommended.
- Critical Success Factors
Project managers always endeavour to make sure their project is as successful as the client want it to be. While every project manager ensures that the project team works according to plan and every role and responsibilities taken care of, there are certain critical factors that every project manager require for every project to succeed. These factors are very significant, as the name suggests in ensuring that every loophole is taken care of so that the project can be completed. These critical success factors are;
- The Tools and Infrastructure.
- The User Involvement
- The Emotional Maturity
- The Skilled Resources
- The Executive Support
- The Project Management Expertise
- The Optimization of all project processes and procedures.
- The Clear Business Objectives
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