You’ve got a new project, and you’re anxious to get it started. As nice as it may seem to jump right into the project work, your bosses, as well as the organization, could be well served with a few tasks to initiate and define the project. In fact, the Project Management Body of Knowledge (PMBOK) contains two phases prior to project execution. The first is Project Initiation.
In this first out of five Process Groups, the project is created and defined. It is separate from planning. Initiation seeks to initiate and define the project from the organization’s (as opposed to the project’s) point of view. Issues like project funding, goals and objectives, and the important stakeholders are defined. Management’s expectations are communicated. A Project Charter is created, which assigns a project manager and authorizes the project to proceed.
For small projects where a project sponsor initiates the project and has secured funding for it, there is no need for any documentation. But to medium size and large projects, a project charter is an important piece of the puzzle.
The Project Charter
The Project Charter is the document which authorizes the project by the funding organization. It outlines the organization’s vision for the project and the business case for it. Essentially it represents the company’s creation of the project, assigning the project manager and laying out the important success criteria. It puts a foundation under the planning phase, and can contain the following information:
- Scope statement
A general scope statement which identifies the vision the organization has for the project. For example, the construction of a new commercial building might require a certain number of offices, design to a certain standard, etc. Although it is a good idea to identify the key deliverables with which the project has been conceived, it is not the function of the project charter to identify all deliverables. A scope statement will be developed for the project during the planning phase, but the project charter can (and should) identify the scope of the project as it relates to why the project is being created.
The major milestones should be identified in the project charter, although it is not the role of the project charter to list all milestones. A project charter should contain a description of the key milestones to aid in communicating the organization’s vision for the project.
- Business case
A description of why the organization is undertaking the project is helpful to put everyone on the same page from the beginning. Business metrics such as expected profit or revenue, or required Return on Investment (ROI) can make it clear to the project management team what the expected benefit will be. Maybe there is a single problem that is being solved. Stating this explicitly can guide in decision making during the project.
- Funding amount
Most projects start out with a funding level approved by the organization. Stating the amount in the project charter ensures that everyone is envisioning the same project. Also, potential funding changes have a massive impact on project success, therefore issues like potential loss of funding to competing projects, and year-by-year carryover implications can be identified.
- Funding status
Funding always comes with conditions, even when a pot of money has been approved by the board. I’ve seen projects that have a certain funding level approved but run into funding issues later on, for example,
- Money moves to a future fiscal year and ends up on other projects.
- There are no contingencies available when the cost escalates.
- The money was always programmed for a future fiscal year.
- Success Criteria
Every project contains written or unwritten criteria for its success and the organization performing the project should identify these on a level “outside” the project, like the project charter. There are usually primary success factors, like a smooth road for a paving project, or adequate load times for a website development project. But it’s the secondary success factors that are usually overlooked and present the bigger risk to the project. These might include providing the right asphalt mix to minimize future maintenance, or providing the best data types in underlying database.
Although it is not the responsibility of the project charter to identify all stakeholders, the project charter should identify the primary stakeholders who are integral to the project and under whose auspices the project was created. For the paving project, the land developer is the project sponsor and the city (local government) is a stakeholder who is so integral to the project that they should be addressed within the project charter. The primary objectives of each party should be identified so it is clear why the project has been created. Stakeholders can be supporters of the project, or opposed to the project, and they can flip from one to the other if their expectations are not well managed.
A strong project charter sets up the project for success from the beginning. There is little doubt that a strong statement by project sponsors which authorizes the project and appoints the project manager results in a strong basis for project management throughout all phases.