New PM - The What?, Why?, and How? of Project Charters
March 14, 2019
Creating a great project charter is an art and a science. Anyone new to the profession of project management needs to learn how to create a project charter. It is not only an important early project deliverable, but it also sets the tone and lays out the foundation for the rest of the project.
While we can spend our careers improving our ability to craft effective project charters, we can get to a 70% good-enough state by addressing some basic topics. This article explains those basics.
Context is Crucial
First, it is critical to understand that context matters. The definition of what makes an acceptable—or great—project charter will vary from organization to organization. It will also be driven by factors such as project size, criticality, type, approach, etc.
The project charter for kicking off a safety-critical public works project will be very different than a charter for a small internal project to, say, build a tool to recover disk space used by duplicate files.
Large, critical projects will require large comprehensive charters. These can take teams of experts weeks or months to create. Small projects will likely have their three- to eight-page charter written in a day or two by the project manager. When creating (or reviewing) project charters, we need to understand this context. Ask, what is appropriate? What level of rigor and detail does this effort require and deserve?
To start the chartering process, we first need to understand a few things about the project goals and our internal processes.
- For the project, we need to understand the business case and an outline of the desired scope.
- For our organization, we must understand any strategic plans we need to align with, our standards and processes, contracts to use, and any relevant external factors like market conditions and industry standards.
Once we know these things, we can start writing our charter.
Make it Clear
I am a simple person and like simple ideas and definitions. I probably miss subtle nuances but have learned that most people appreciate simple, clear documents. The style points we lose for a lack of sophistication are made up for by improved comprehension and clarity. So, my definition of a project charter is a document that authorizes the project and explains the what, why, where, when, who and how aspects of the project.
We can call the what, why, where, when, who questions W5 and add a “+” for the final how question. Provided the project charter answers the W5+ questions and provides approval to start the project—all at the appropriate level of rigor—it’s a winner. So, let’s get started by reviewing each question…
In your project charter, you will not call the section “What?” It will likely be called “Scope” or something similar. The “W5+” idea is just a tool to make sure we address the important sections. So, in the scope section, we would describe or list the major deliverables or high-level functionality the project should deliver. People need to understand what we are talking about before they can appreciate further details such as schedule and approach.
When defining what the project will deliver, it is also useful to state what it will not deliver. So, a list of “out of scope” items is also valuable. It is better to have sponsors or user representatives complain now rather than halfway through the project (or worse, at completion when there is nothing we can do about it) that their anticipated element will not be delivered.
The why of a project is described in a “Problem Statement” or “Business Need” section. Some people put this section before the what. That is fine; follow your organization’s standard, or the preferred sequence of who approves project charters (or failing those, your own preference). Just make sure the what and the why are addressed early on.
People need to understand why this project is important. What new revenue will it bring? What problem or legal requirement does it serve? What new opportunities, new products or new customers do we hope it will attract? Projects are expensive and risky endeavors, so we better have a good reason to undertake one. The business case or problem statement is where we describe it.
It needs to be clear and compelling. It may reference a separate business case or return on investment analysis. If these components are necessary and not in separate documents, include a summary in the charter body and put the details in an appendix. We don’t want people to stop reading our project charter because they came across pages of calculations.
“Where?” can seem a strange question, maybe inserted just to get the “W” count up to five. However, think broader. Which markets, products, and departments are we impacting? Where is the project going to touch our organization, customer base, and market segment?
Remember: The project charter normally provides approval for a project to start. We need to provide the relevant context so people are thinking appropriately before they approve, reject or request changes be made.
This information may be contained in a section called “Organizational Impact” or form a sub-section of the scope section. It also explains how the project is aligned with the organization’s strategic plan.
This is where we describe the “Project schedule”—not only when we plan to start and (hopefully) complete the project, but also major steps along the way.
Being a project manager writing a charter, it’s easy to get caught up in the apparent importance of your project. You might assume that once approved, the organization will rush full-steam ahead into kickoff and execution. We need to inject some caution and realism. What seems important and obvious to us is often low priority for the sponsors or those already over capacity in executing existing projects and operations. Things might take a while to get going.
So, do not build a schedule based on starting work immediately after approval. That just sets everyone up for failure. The most common source of late project completions is not poor estimating or a lack of risk management, it is late starts. Every late project I have reviewed had a late start. They may also have been terrible at estimating and blind to common threats, but late starts are very common. We need to explain that real end dates are driven by real start dates.
Projects get delayed for a host of common reasons. We were delayed in getting our team, we were delayed in finding a space, we were delayed in accessing funds. So, do yourself (and everybody else) a favor and explain that the project will likely take three weeks, months or years from having the requisite start conditions.
We also need to be realistic about uncertainty. The uncertainty associated with our estimates needs to be reflected (to some degree) in our schedule. It is probably not acceptable to say, “We have no clue when we will be done.” But do not commit to completing within a certain timeframe unless you have a realistic and robust plan for achieving that.
Robust means including contingency to address uncertainty. Be open about it, such as, “We included a 15% buffer for unanticipated work.” You might get asked to remove it and “work smarter” or “find a way, damn it!” and that is fine. You reflected the uncertainty inherent with the work. Depending how supportive the sponsors are, we could consider explaining that removing contingency is accepting the risk of an overrun due to learning in the future things that we do not know today.
Plans and estimates created at the beginning of the project are, by definition, the least reliable because that is when we know the least about the project. It is only when we begin to execute that we learn about its true complexity and the actual abilities of the team, vendors and supporting groups. Sponsors usually don’t want to hear this kind of smartass insolence from the project managers. PMs are hired to deliver projects, not tell them how to set stretch goals or run a business.
There are other ways to shorten a schedule. We can cut the scope of what is delivered. This could allow us to hit a deadline and maybe have a follow-on release for lower-priority work. It is not ideal and is really wriggling out of the defined scope. However, for software products, where must-have and nice-to-have features are more fluid, it could be a viable option.
We can also add more people to the project. This works great if you are undertaking simple work like digging ditches or building pyramids. For anything more complex that involves problem-solving, idea sharing and collaboration, books like The Mythical Man-Month explain that adding people to a project that is late will make it later (while spending more, too).
For these reasons (and others learned the hard way), make sure schedules clearly contain contingency to reflect uncertainties. Also, ensure that schedules work from a project start date that is contingent upon having prerequisite project conditions in place. Yes, they might both get ignored, but it is the responsible thing to do—and you can bring them up at steering committee meetings when asked why the project is behind.
The who question represents the “Team” and “Stakeholder” sections of a project charter. It is normal to show org charts of core project roles and list known team members and open positions. RACI charts can be used to list who is responsible, accountable, consulted and informed (RACI) for work and deliverables.
We should understand that the term stakeholder encompasses not only the people working on the project and sponsoring it, but also everyone it will impact. This extended family of project influencers include suppliers, customers, and even the general public if the project is likely to draw public opinion. Obviously, we do not list these broader communities by name, but we should identify them and assign a contact within the project for managing that group.
The PMI definition of a stakeholder includes not only those impacted by the project, but even those who perceive they may be impacted by the project. This is important—the scope of people who may influence development is wide. It is better to have a plan for engaging or at least monitoring these groups (be them environmental, minority or special interest) before they can blindside the project. Inventing a fire-response plan is always easier to do before you also have a fire on your hands.
The how question reminds us to explain the “Project Approach.” We should describe how the project will be executed. Will we be following the standard corporate project lifecycle? Are we trying a new approach? Are we outsourcing portions?
People need to understand how the project will be executed before agreeing to fund it or participate in it. If they think the project has merit but we are suggesting to go about it all wrong, they will want the ability to influence the approach used.
When we are following a standard approach, it is sufficient to just name it. When we are proposing something different, we need to describe it in more detail. This could be a reference to another document or pointer to an appendix in our project charter.
The charter describes the project from a holistic perspective by addressing the W5+ questions; it also provides the approval/authorization to start work. In most organizations, approval of the charter triggers a request for funds or authorization for expenditure (AFE). For this reason, we need some formality around the approval and sign-off of the charter. It is normal to have a signature section for sponsor, division leads and other steering committee members.
The approval circumstances are rarely as simple as either approved or not approved. It is usual to have definitions of the various options that the steering committee may use. Common status options include:
Approve – Looks good, let’s get started
Approve with modifications – Will be okay if you make these changes (provide some space in the signature area to hand-write requested changes and then get signatures)
Request changes – Major changes are required and a new charter will need to be submitted
Defer – Not at this time, keep on hold
Reject – No, do not proceed
What about agile projects that do not have charters?
Today’s agile projects produce fewer documents. However, since charters often authorize work to start and trigger the release of funds, we still sometimes see them used in hybrid traditional/agile environments. If project charters are not used in name, typically a lighter-weight deliverable with a different name is used.
We might see an Agile Charter, Project Skinny or Product Canvas. The purpose is similar—describe the endeavor and get agreement to start. When working with agile approaches, we can still use the W5+ idea to make sure we address the common viewpoints. The coverage in each section will likely be brief, but is still helpful.
Consider the context you are working in. Organizational standards and project characteristics such as size, cost, and impact of failure will dictate the level of detail and rigor that will be necessary. Then keep the sections simple and clear. Use appendices or references to external documents if sections become too long. We want people to be able to read the core body of our charter through in one sitting and then make a decision to approve it.
Make sure the sections address the W5+ views of the project one topic at a time. For instance, do not mix schedule with business justification; keep them separate. Do not paint yourself into a corner by committing to unrealistic delivery dates or optimistic costs. Present what you believe is realistic and let the steering committee assume the risks of reduction (if possible).
Recommending a template is problematic since organizational needs vary, but common sections for a small- to medium-sized project might contain:
- Introduction – Explain the purpose of the charter
- Problem Statement – Outline the what
- Scope Outline – More detail on what would be delivered
- Definition of Success – Define what “done” would look like
- Risk Summary – Review the high-level threats and opportunities identified
- Constraints and Assumptions – Outline the accepted operating parameters used
- Business Case – Explain why the organization should do this
- Schedule – Explain when the project will be completed
- Deliverables Schedule – Outline when the key deliverables will be completed
- Budget – Explain how much this is likely to cost
- Team Structure – Outline who will be working on the project
- Organizational Structure – Explain who will be responsible for oversight and direction
- Project Approach – Explain how the project will be run
- Steering Committee Decision – Record the approval (or otherwise) of the charter
- Project Background – Supporting material about why this is a good thing to do
- Deliverables List – A list of what should be delivered and what Done looks like for each
- Deliverables Schedule – A schedule for the deliverables’ leave some wiggle room
- Risk Assessment Detail – Details of the threats and opportunities analyzed to date
- Communication Plan – Details of how people will be kept informed about progress and issues
[Note: I first wrote this article for ProjectManagement.com here ]
Great article. Thanks for sharing this.
Posted by: Gaurav Dhooper | March 14, 2019 at 07:25 PM
Thanks Gaurav, I am glad you enjoyed it.
Posted by: Mike Griffiths | March 14, 2019 at 08:37 PM
Writing a great Project Charter requires that we have previously worked a business case or a benefits management plan, however, many clients approve or authorize a project (without project charter) and inmediatelly ask project manager for the kick-off meeting to explain the project management plan, What???
Although this situation could look an exception, it is very common in organizations without maturity in project management.
As you mention in your PMI-ACP Exam Prep book, we try to write an Agile Project Charter trying to identify epics or features of the MVP, but without business case, we have to go back...
Posted by: Iván Tejera | March 15, 2019 at 05:13 AM
Organizations that undertake work without developing a business case or a benefits management plan probably proceed without a project charter also. Maybe it is non-discretionary and there is no cost/benefit analysis because it has to be done so they just want to get on with it.
More common is that they eyeballed the pros/cons and potential payback and decided it is good enough to proceed. Organizations with this lack of rigor rarely demand a charter and instead launch into project execution. In this situation, the PM is really a delivery manager.
The organization decided they wanted it and appointed a PM to run with it. I don’t think a business case would add much value here since it would lack the upstream inputs of good estimates and the downstream consumers of a benefits realization plan and benefits management process.
Organizations that operate like this (and I agree there are many) really just want to know how the project is doing, what your progress and spend is looking like right now, and what you think it will be like at completion. We can provide all this info from burn rates and proportion of features accepted. Deliverables like charters, business cases, and benefits tracking can be added if/when the organization decides it wants/needs them.
Posted by: Mike Griffiths | March 15, 2019 at 08:28 AM
Thank you. A great outline! We've reached an era where "Transformation Management" and/or "Change Management" is becoming increasingly important; with many organizations now employing Chief Transformation Officers. A section devoted/highlighting this would be beneficial.
Posted by: Steve Feldman | March 15, 2019 at 01:10 PM
Thanks for your comment. I agree, depending on what the project will deliver, it may be appropriate to have a section explaining how the change will be implemented.
Posted by: Mike Griffiths | March 15, 2019 at 01:35 PM
Very thorough and I completely agree with your point regarding agile projects. They most definitely would benefit from a project charter, although perhaps in a different format as suggested, and allowing the necessary reviews and amendments to be recorded effectively.
Posted by: Nadine Rochester | July 15, 2019 at 04:31 AM