what is a project charter

What is a Project Charter in Project Management

There are two kind of projects in business environment. They are internal projects and external projects. Internal party or office staff involve in internal projects. Both internal projects and external projects are begins with Project Charter

Installation of new network system ABC Television is an example of a project. If maintenance department do the project, then it becomes an internal project.

Outsource contractors do the external projects.

Construction of new Hotel building for The Plaza, New York is an example of external project.

Before accepting the new project, the business owner wants to get an idea about the details and the effect of the project to the business. The document which contain those information is called Project Charter. This is the very first document, which is produced by the Project Management Office (PMO) related to the project.

Project Charter is presented to the senior managers of the company. The decision of proceeding or not, is taken based on this Project Charter.

Jeff Bezos takes the decisions related to Amazon.com. He may make decision based on the project charters, which he receive. 

Content of Project Charter

The content of project Charter is, 

    • Project Executive Summary
    • Project Background/ Project Business Case
    • Project Scope
    • Project Bounds
Content of Project charter - Project Executive Summary, Project Background, Project Scope, Project Bounds

Executive Summary of the Project

Even though Project Charter contain a lots of information about the project, senior managers do not have enough time to read the complete Project Charter. They may read only the Executive Summary take the decision.

It is important to contain Assumptions, Constraints, Cost, Goals, Management Approach, Objectives, Project Team, Risk, Scope and Timeline in Executive Summary.

Project Background/ Business Case

Project background contain project feasibility study report, External and Internal customer needs, Existing issues, problems and solutions.

Starbucks wants to improve their online platform. 

Most people are busy with their works and do not have time to go shopping. Online shopping gives solutions for those busy schedules. Expected customers are online customers and customers who lives in far away places. The cost of the project include improving the online platform, online marketing, stores handing services and delivery agreements.

Project Background also contain expected sales, budget, profit and years to cover the project cost. 

Project Scope

Project Boundaries are discussed under the Scope in Project Charter. Project Goals, Objectives, Budget, Critical Success Factor, Acceptance Criteria of Deliverable, Human Resource Requirement, Non – human resource requirement, Organizational Impact, Quality and the project schedule are the key components of Project Scope.

Budget

Sources of funding, amount available at the time of writing the Project Charter, breakdown of the project budget, initial estimate for each section, contingency reserve and management reserve are contain under project budget.

Consider the above project, the project cost contain updating online platform, online marketing to attract more customers, recruiting and training human resources for manage online business.

Goal

Purpose of the project, specific project goals, Key performance indicators for each goals, opportunities and project achievements are discussed under project goals.

Human Resource Requirement

Project Human Resource Requirement contain internal and external resource requirement, expected education qualification and required training for the project team.

American Tower Corporation is planning to engage in new real estate development project. The company require Architectures, Civil Engineers, Building Service engineers and Engineering assistant to success the project. The education qualification must be recognize by the Engineering council in USA.

Non – Human Resource Requirement

Hardware system requirement, infrastructure requirement, legal requirement, office space requirement, software requirement and other resource requirements are discussed under Non- Human Resource Requirement in Project Charter.

Project Schedule

Project Management Plan contain detail description of Project Schedule including project activities, relationships, resources and cost. There is no need of detail Project Schedule in Project Charter. Starting and Completion dates of key milestones and main sections are enough.

Project Bounds

Project Assumptions, boundaries, constraints, issues and risks are discussed under Bounds in Project Charter.

Project Assumptions

Project Assumptions contain financial assumptions, Legal assumptions, Organizational assumptions, Political assumptions, Technical assumptions and Temporary assumptions.

Project Boundaries

Project boundaries say things inside the scope and outside the scope.

In a real estate development project, the project scope contain only construction of the building. It does not contain landscaping works.

Project Constraints

Project constrains are the restrictions of the project. Constraints can be time, budget, scope and quality.

Project Risks

Risks are common to all projects. Project team identify the possible risks make mitigation plans at the beginning of the project. Summary of available risk, impact and mitigation plans are presented under Project Risk

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