At the end of this chapter

• Describe what a project charter is and why it is

Project Charter critical to project success.
• Explain what a project scope statement is and
why it is important.
• List the various elements of a charter and tell
why each is used.
• Create each section of a charter for a small
sample project using given project information.
• Work with a team to create a complete charter
for a real project.

What is a Project Charter? What is a Project Charter?

• An informal contract between the project team • Signing a charter represents the transition from
and the sponsor the project initiating stage into the project
• A contract planning stage
– is an agreement entered into freely by two or more
parties.
– cannot arbitrarily be changed
– offers something of value for each party
– is a living document that can evolve with changing
conditions if both parties agree and receive
something of value for making the change

1. Authorize the project manager to

Why is a Project Charter used?
• The four major purposes for a charter are to:
1. authorize the project manager to proceed
2. help the project team and sponsor develop a
common understanding
3. help the project team and sponsor commit
4. quickly screen out obviously poor projects
proceed
• The project charter authorizes the commitment
of resources to a project
• The project charter gives the project and the
project manager official status within the parent
organization.

Project
Projectcharter
charter––“authorizes
“authorizesthe
theproject
project
and
andprovides
providesthetheproject
project
manager
managerthe
theauthority
authorityto
toapply
applyresources
resourcesto
toproject
projectactivities.”
activities.”
PMBOK®
PMBOK®Guide
Guide

1
 What is a preliminary scope
2. Common understanding
statement?
• Benefits associated with the common • An elaboration on the charter
understanding include: • For small projects, the preliminary scope
– Teamwork develops. statement may be part of the project charter
– Agreement, trust, communication, and commitment • For large projects, the scope statement and
between the sponsor, project manager, and project
team develop
project charter are distinct documents
– The project team does not worry if management will
accept a decision.
– The sponsor is less likely to unilaterally change the Project
Projectscope
scopestatement
statement––“a
“adefinition
definitionof
ofthe
theproject
projectdocuments
documents
original agreement. the
thecharacteristics
characteristicsand
andboundaries
boundariesof
ofthe
theproject
projectand
andits
itsassociated
associated
products
productsand
andservices,
services,as
aswell
wellas
asmethods
methodsof ofacceptance
acceptanceandandscope
scope
control.”
control.”PMBOK®
PMBOK®GuideGuide

Elements in a Project Charter Scope Overview

• The term “charter” may be substituted with • High-level “what and why” of the project
project request, project submission form, project • The “elevator speech”
preplanning form • What needs to be accomplished and how it will
• Typical elements of a project charter include: be done
Title
Title Risks,
Risks,assumptions,
assumptions,constraints
constraints • Used to help prevent scope creep
Scope
Scopeoverview Spending
Spendingapprovals/budget
approvals/budgetestimates
overview estimates • Considered to be the project boundaries
Business
Businesscase
case Communication
Communicationplan
planrequirements
requirements
Background
Background Team
Teamoperating
operatingprinciples
principles
Milestone schedule Lessons
Scope
Scopecreep
creep––“adding
“addingfeatures
featuresand
andfunctionality
functionality(project
(projectscope)
scope)
Milestone schedule Lessonslearned
learned
without
withoutaddressing
addressingthe
theeffects
effectsof
oftime,
time,costs,
costs,resources,
resources,oror
Signatures
Signaturesand
andcommitment
commitment without
withoutcustomer
customerapproval.”
approval.”PMBOK®
PMBOK®Guide Guide

Business Case Background

• The project purpose or justification statement
• Used to provide more detail to support the scope
• Answers the question “why?” statement and business case statements
• Used to justify the necessity of the project • The background statement is optional
• It should clearly tie the project to the
organization’s strategy
• May be just the rationale or include high-level
estimates of the costs and benefits of the
project.
• Should persuade decision makers to support the
project and inspire team members to work hard
on it.

2
 Milestone Schedule with Milestone Schedule with
Acceptance Criteria Acceptance Criteria
• Divides the project into 3 to 8 intermediate poits • A column for acceptance criteria helps
whose completion can be verified determine who will judge the quality of the
• Lists major milestones and deliverables deliverable and by what criteria
• Acceptance criteria represent the project’s vital
signs
Milestone
Milestoneschedule
schedule––“a
“asummary-level
summary-levelschedule
schedulethat
thatidentifies
identifies
the
themajor
majorschedule
schedulemilestones
milestonesor
orsignificant
significantpoints
pointsor
orevents
eventsinin
the
theproject.”
project.”PMBOK®
PMBOK®Guide
Guide

Deliverable
Deliverable ––“any
“anyunique
uniqueand
andverifiable
verifiableproduct,
product,result,
result,or
or Acceptance
Acceptancecriteria
criteria––“those
“thosecriteria,
criteria,including
includingperformance
performance
capability
capabilityto
toperform
performaaservice
servicethat
thatmust
mustbe beproduced
producedtotocomplete
completeaa requirements
requirementsand
andessential
essentialconditions,
conditions,which
whichmust
mustbe
bemet
metbefore
before
process,
process,phase,
phase,ororproject.
project.Often
Often  subject
subjectto
toapproval
approvalbybythe
the project
projectdeliverables
deliverablesare
areaccepted.”
accepted.”PMBOK®
PMBOK®Guide Guide
project
projectsponsor
sponsorororcustomer.”
customer.”PMBOK®
PMBOK®Guide Guide

Risks, Assumptions, and Constraints Risks, Assumptions, and Constraints

Risk
Risk––“an
“anuncertain
uncertainevent
eventor
orcondition
conditionthat,
that,ififititoccurs,
occurs,has
hasaa • Reminders of what could prevent successful
positive
positiveor
ornegative
negativeeffect
effecton
onaaproject’s
project’sobjectives.”
objectives.”PMBOK®
PMBOK®Guide
Guide completion of a project
Assumptions
Assumptions––“factors
“factorsthat,
that,for
forplanning
planningpurposes,
purposes,are
areconsidered
considered • The more comprehensive, the more likely to
to
tobe
betrue,
true,real,
real,or
orcertain
certainwithout
withoutproof
proofor
ordemonstration.
demonstration.Project
Project discover problems before they occur
teams
teamsfrequently
frequentlyidentify,
identify,document,
document,andandvalidate
validateassumptions
assumptionsas as
part • A false assumption becomes a risk
part of their planning process. Assumptions generally involveaa
of their planning process. Assumptions generally involve
degree
degreeof ofrisk.”
risk.”PMBOK®
PMBOK®Guide Guide • A constraint that limits money, time, or resources
is a risk
Constraint
Constraint––“an“anapplicable
applicablerestriction
restrictionororlimitation,
limitation,either
eitherinternal
internalor
or
external
externalto
tothe
theproject,
project,that
thatwill
willaffect
affectthe
theperformance
performanceof ofthe
theproject.”
project.”
PMBOK®
PMBOK®GuideGuide

Spending Approvals or Budget

Risks
Estimates
• Two reasons for examining project risks • A preliminary budget should include the level of
– Any risk that may inhibit successful project completion confidence in the estimate
needs to be identified and a plan must be developed
to overcome it. • Some internal projects do not develop formal
– A risk that can create a positive effect on a project budgets
can be considered an opportunity • Identify expenses the project manager can
• Contingency plans are developed for each major authorize or sponsor needs to control
identified risk to lessen probability of risk or
reduce impact of the risk
• An “owner” is assigned responsibility for each
contingency plan

3
 Communication Plan Requirements
• A broad communications plan can be outlined in the
project charter.
• Each stakeholder is identified along with:
1. what information each needs to know from us,
2. what information we need to learn from this
stakeholder,
3. when the communication needs to take place
4. what method most effectively helps the receiver of
each item of information to understand and act
appropriately.
Team Operating Principles
• Established to enhance team functioning
• Goal is to increase team effectiveness
• Ensure that all parties are aware of what is
expected
• Useful team operating principles deal with
conducting meetings, making decisions,
accomplishing work, and treating each other
with respect.

Lessons Learned Signatures and Commitment

• Successes and failures of previous projects • Who is involved
become practical advice • Extent to which each person can make decisions
• Avoid the risk of repeating mistakes from • Expected time commitment for each person
previous projects • The project sponsor, project manager, and core
Lessons
Lessonslearned
learned––“the
“thelearning
learninggained
gainedfrom
fromthe
theprocess
processof
of team members show commitment by signing the
performing
performingthe
theproject.”
project.”PMBOK®
PMBOK®GuideGuide charter
Lessons
Lessonslearned
learnedknowledge
knowledgebase
base––“a“astore
storeof
ofhistorical
historical
information
informationand
andlessons
lessonslearned
learnedabout
aboutboth
boththe
theoutcomes
outcomesof ofprevious
previous
project
projectselection
selectiondecisions
decisionsand
andprevious
previousproject
projectperformance.”
performance.”
PMBOK®
PMBOK®GuideGuide

Scope Overview and Business

Constructing a Project Charter
Case Example
• It is helpful if the sponsor creates the first draft
• The organization’s leadership team may
contribute information in addition to the business
case and scope overview
• One to four sentences should be written for the
scope overview and business case

4
 Milestone Schedule with Six-Steps for Constructing a
Acceptance Criteria Instructions Milestone
1. Briefly describe the current situation that
requires the project
• 1st row of the milestone column
2. Describe the project at its successful
completion
• Last row of the milestone column
3. Describe the acceptance criteria for the final
project deliverables
• Bottom row of 3rd and 4th columns

Six-Steps for Constructing a Six Sigma Milestone and

Milestone Acceptance Criteria Template
4. Determine the few key points in the milestone
column where quality needs to be verified
5. For each milestone, determine who the primary
stakeholder(s) is(are) and how the resulting
deliverable will be judged
6. Determine expected completion dates for each
milestone

Risks, Assumptions, and

Risk Quantification Example
Constraints Instructions
• Brainstorm all things that could pose a risk to the
schedule, budget, usefulness of deliverables, or
stakeholder satisfaction
• Assumptions are especially important when a cross-
functional team is performing the project
• Quantify risks on one of several dimensions
– probability of occurring
– impact if realized
– timing of probable occurrence
– ability to detect
• Decide which risks should be considered “major”
• Major risks require a formal contingency plan

5
 Risk Contingency Plan Example Spending Approval Example
• A limit of spending authority for the project
manager is often developed

Communication Plan
Communication Plan Example
Requirements Instructions
• The project manager and team list each
stakeholder and work through the milestone
schedule and the risks to determine the
communications needs.
• The project manager and team should also
consider their own communications needs

Team Operating Principles

Team Operating Principles Example
Instructions
• Establish how meetings will be conducted
• Establish how decisions will be made
• Establish how work gets done
• Establish how everyone will treat each other with
respect

6
 Lessons Learned Instructions
• Consider what has worked well and what has
worked poorly
• Each project should report lessons learned at
key reviews and project completion
• Make lessons available in a lessons learned
knowledge base
• The more specific the lessons, the more likely
they will be found useful
Ratifying the Project Charter
• The project manager and team formally present
the project charter to the sponsor for approval
• Questions are presented for clarification and
agreement
• The sponsor, project manager, and core team
sign the project charter
Project Lessons Learned Example
Summary
• The project charter is a vital document that enables the
project sponsor, project manager, and core team to
reach mutual understanding and agreement on the
project at a high level.
• Charters typically include sections such as a scope
overview, business case, milestone schedule,
acceptance criteria, risks, and signatures.
• The sponsor meets with the project manager and core
team to go over the charter in detail to ensure
understanding and to reach agreement.
• The charter is the document that completes the project
initiating stage.