5th Edition PMBOK® Guide—Chapter 4: Project Charter


The last post dealt with the inputs to Process 4.1 Develop Project Charter. It doesn’t take a great deal of imagination to figure out that the output of the Process 4.1 Develop Project Charter is, in fact, the Project Charter.

The purpose of this post is to into a little more detail about what’s in the Project Charter.

I want to ask similar questions that I asked about the What is it? How does it fit in the flow of PM processes? What are the elements within it?

1. Project Charter—What is it?

The project charter takes the “seed” of the project, the Project Statement of Work (and input to Process 4.1 Develop Project Charter) and prepares it to be “watered” or authorized by the sponsor.

2. Project Charter—How does it fit in the flow of PM processes?

As you can see by the chart below, it is an output of Process 4.1 Develop Project Charter

4.1 DEVELOP PROJECT CHARTER
INPUTS
1. Project Statement of Work (SOW) Description of product, service or result to be delivered by project, the business need, and the strategic plan
2. Business Case Ties together the elements of the SOW (description of product, etc.), business need, and the strategic plan.
3. Agreements Contract or MOU (memorandum of understanding); used when project is being performed for external customer
4. EEFs Government or industry standards, organizational culture, marketplace conditions
5. OPAs Organizational policies and procedures, project document templates and corporate database of lessons learned
TOOLS & TECHNIQUES
1. Expert Judgment Used for analyzing technical and management-related details of inputs in order to develop the output (project charter)
2. Facilitation Techniques Brainstorming, conflict resolution, problem solving
OUTPUTS
1. Project Charter Formally authorizes the project

3. Project Charter—Who creates it?

The project manager is the one that should be creating it together with the stakeholders, in particular the sponsor who will authorize the project, and the customer for whom the project is going to be carried out. However, the project manager cannot on his own authorize the project, this must be done by the sponsor.

Asking the various experts and stakeholders about the requirements of the project is, in fact, what the tools & techniques of Expert Judgment and Facilitation Techniques are used for, respectively.

4. Project Charter—What are the elements within it.

Here are the elements of the Project Statement of Work (the “seed” idea of the project) compared to the elements of the Project Charter (used for approval of the project). Those elements which are similar are put in the same row. In this chart, the elements 1 and 3 from the above chart on the Project Statement of Work correspond to the first element of the Project Charter, and element 2 from the above chart corresponds to the second element of the Project Charter.

Category Elements
1. Business Case Project purpose or justification (fits business needs, strategic plan)
2. Scope Management Measurable project objectives
3. Project success criteria
4. High-level project description and boundaries
5. Risk Management High-level risks
6. Time Management Summary milestone schedule
7. Cost Management Summary budget
8. Stakeholder Management Stakeholder list
9. Authority Project approval requirements (what they are, who decides approval and signs off)
10. Project manager assigned to project
11. Name and authority of sponsor or authorizer of project

Project Charter

Category: Business Case

1. Project purpose or justification

In order for the project to go forward, it has to be for a specific business need (both external or internal to organization) and it must fit into the company’s strategic plan. This is why a program manager and/or portfolio manager would be involved in the decision to green light a project. The project has to fit into the company’s work that is external to the project.

Category: Scope Management

2. Measurable project objectives

The difference between the high-level description of the product contained in the Project Statement of Work and this element of the Project Charter is the word “measurable”. The objective has to be measured in order for there to be…

3. Project success criteria

That’s why when you want to go somewhere in your car, you don’t say “take me somewhere nice”. You have to enter a specific address in order for the system to take you to a specific location.

4. High-level description of the project and boundaries

This is not a description of the product, it is a description of what the project will achieve. Boundaries in this context means exclusions: what is specifically NOT in the project. This becomes increasingly important in project management, as it is the place where you can prevent a lot of scope changes right away by agreeing with stakeholders right from the start what you will NOT do on the project.

Category: Risk Management

5. High-level risks

What are those events or other factors which have a chance of causing the project to be delayed, or in the worst case, to fail to achieve the objectives?

Category: Time Management

6. Summary Milestone Schedule

What are the major schedule milestones within which the project must operate? Is there an overall absolute time constraint? Now is the time to state this clearly. If a change comes along that knocks the schedule off past what the project charter says is an absolute deadline, then a) the project schedule needs to be accelerated, b) some other constraint (like scope) has to be altered, or c) the project may need to be terminated.

Category: Cost Management

7. Summary Budget

The other major constraint besides scope and time is that of cost. Is there an overall absolute budget constraint? Again, now is the time to state this clearly. If a change comes along that will cause the budget to go over what the project charter says is an absolute budget ceiling, then a) the project needs to be brought under, b) some other constraint (like scope) has to be altered, or c) the project may need to be terminated.

Category: Stakeholder Management

8. List of Stakeholders

Identifying all the relevant stakeholders needs to be done as the first step in managing them.

Category: Authority

9. Project approval requirements (what they are, who decides approval and signs off)

The project approval requirements are not the same as the project success criteria. The project success criteria (element #2 of the project charter) is more related to the scope. What are the customer’s requirements and how will we know that we have fulfilled them?

The project approval requirements are not focused on what the scope, but on whether the project was successful in achieving those results within the time and schedule constraints given at the beginning of the project. You can achieve your goals, but were they done in a timely manner and within the allotted budget? That is the focus of these project approval requirements.

10. Project manager assigned to project

This is important for obvious reasons. PMI recommends assigning the project manager during the initiating process, and not in the planning process.

11. Name and authority of sponsor or authorizer of project

This will be the not only the person who gives the green light to the project, but also the one authorizes to terminate the project if it is not able to achieve the objectives listed in the project charter.

These elements are what take the “seed” of the project as an input to the 4.1 Develop Project Charter Process, with the approval of the project charter by the authority, allow that seed to germinate so that it can be planted during the planning process, grow during the executing process, be pruned during the monitoring & controlling process, and finally harvested during the closing process.

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