Project Charter – What? Who? Why?

The PMBOK® Guide 3rd edition (The “old” one)

A project initiator or sponsor external to the project organization at a level that is appropriate to funding the project, issues the project charter. Projects are usually chartered and authorized external to the project organization by an enterprise, a government agency, a company, a program organization or a portfolio organization […]

The PMBOK® Guide 4th edition (The “new” one)

Projects are authorized by someone external to the project such as a sponsor, PMO or portfolio steering committee. The project initiator or sponsor should be at a level that is appropriate to funding the project. They will either create the project charter or delegate that duty to the project manager. The initiator’s signature on the charter authorizes the project.

The reasons in support of PMBOK® Guide 4th edition definition are the following:

1. The Project Manager is the subject matter expert when it comes to initiating and starting a project. Hence, the PM is usually more qualified to create the project charter. He/She has more experience in doing this and knows what kind of detail to add to the charter. We PMs usually know from past projects what is important in the charter and therefore we can create a “better” charter than the initiator.
2. The initiator / sponsor on the other hand is the person who has to pay for the project. Therefore the project manager may under no circumstances sign the charter to authorize the project. Or what would you think, if a PM came to you and said “I have created this charter for our project, I have signed it, the project has started and you must now pay for it.”. The PM may of course co-sign the charter, but the primary signature that is needed on the charter is that of the initiator / sponsor.

In project management, a project charter or project definition is a statement of the scope, objectives and participants in a project. It provides a preliminary delineation of roles and responsibilities, outlines the project objectives, identifies the main stakeholders, and defines the authority of the project manager. It serves as a reference of authority for the future of the project.

The project charter establishes the authority assigned to the project manager, especially in a matrix management environment. It is considered industry best practice.

The purpose of the project charter is to document:

1. Reasons for undertaking the project
2. Objectives and constraints of the project
3. Directions concerning the solution
4. Identities of the main stakeholders

The three main uses of the project charter:

1. To authorize the project – using a comparable format, projects can be ranked and authorized by Return on Investment.
2. Serves as the primary sales document for the project – ranking stakeholders have a 1-2 page summary to distribute, present, and keep handy for fending off other project or operations runs at project resources.
3. As a focus point throughout the project – for example: project as people walk in to team meetings and use in change control meetings to ensure tight scope management.