The A to Z of a Project Charter
Bullets, flow charts, and graphs are a project manager’s currency. But a well-written, well-planned and well-formulated Project Charter should do something even more compelling.
It offers invaluable, re-orienting guidance that both validates your project’s existence and provides a clear light when you’ve lost the threads.
Certainly, a Project Charter’s efficacy is that it can eliminate chaos and articulate with clarity the milestones that the project will meet and work towards, as well as the resources it calls for.
But there’s a difference between a short, static document that states these tangibles and one, like a charter, that is an active record serving as a guide and a map for all changes, decisions, and crucial objectives going forward.
What Does a Project Charter Achieve?
A well-prepared Project Charter brings the team together under a clearly articulated framework to achieve well-defined objectives while mitigating known risks and constraints.
There is no ‘one-size-fits-all’ structure for a Project Charter. Its contents vary based on the nature, size and complexity of the project.
All Project Charters share one core purpose: They formally authorise the project and the project manager to plan, execute and allocate budget resources. This authorisation is why it’s called a ‘charter’ rather than a plan.
The Statement of Work (SoW), which is an agreement between the project delivery team and the client, fills in key details for the Project Charter. This allows the Project Manager to plan on broad strokes like project delivery, budget allocation, definition of roles and responsibilities, communication protocols, any known assumptions and risks, as well as the project sponsor’s approval.
What Are the Sections of Project Charters?
No two Project Charters need to maintain the same structure, but they usually include:
Business Case and Project Scope – The business case justifies why this project is necessary while the scope sets the boundaries of the project.
Key Business Requirements – The requirements necessary for the project to make business sense. It also outlines project acceptance criteria and deliverables.
Assumptions – The prerequisites for project success.
Schedule/Milestones – An estimation of how long the project will take, a target completion date and a
listing of major milestones along the journey.
Project Financials – The estimated cost to run this project, how contingency will be handled and who has authority over spending.
Known Constraints and Risks – This section introduces the transparency of potential risks to all stakeholders and all parameters of the project.
Team Structure/Roles and Responsibilities – Defining the roles required for successful project process and delivery. This section also outlines the responsibilities for each role, the number of resources, the team structure and the decision-making hierarchy.
Communication Plan – Decide what will be communicated by whom, to which audience, in what format and how often.
Signatories – Once the project sponsor(s) review, they sign. This formal approval essentially authorises the project’s commencement.
What Are the Benefits of Having a Project Charter?
To really understand the benefits of having a Project Charter, you only need to look at the failures and what they cost.
These are just a few of the major Australian projects that have cost businesses and stakeholders millions of dollars, sometimes over decades of work:
- The U.S.-based Project Management Institute (PMI) found that, when it comes to failing infrastructure projects due to bad planning, bureaucracy and high staff turnover, Australia fared worse than the global average, wasting USD108 million for every billion dollars spent on public works projects.
- ‘Underestimation of complexity, poor governance, and bad decision-making’ were found to be the major factors responsible for the failure of the Queensland Health Payroll replacement project in 2010, which was touted as the ‘worst failure of public administration in Australian history’ and cost the government AUD1.2 billion.
- In 2018, the Australian Criminal Intelligence Commission terminated its contract with NEC Australia for a new national biometrics database (BIS), because the NEC ‘lost control’ of project costs, which at the point of termination were AUD94.6 million, up from the estimated AUD52 million in budget approval.
These failures with ‘underestimation of complexity’ and ‘bad decision-making’ should tell you that having a Project Charter in place can:
- Help set up interim checkpoints along the way to ensure the project is on track
- Set clear expectations of what will be in place to support the project
- Minimise scope creep down the road and draw a clear line to manage any necessary changes
- Provide effective monitoring of budget usage and forecasting adjustments as early as possible if necessary
- Ensure that the risks that come with constraints are identified upfront so that key stakeholders can understand these potentials
In any project, issues are inevitable. They come up in an ongoing way, like fires a project manager has to put out. The only question is the size of the fires and how quickly a project gets back on track. A Project Charter transcends and guides the everyday process. It can provide a rallying point for stakeholders to adjust project parameters in a more aligned way.
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