Project Charter

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Also known as Project Summary, Project Initiation Document, and Project Definition Report.

Variants include Project Statement of Work and Terms of Reference.

Once a project opportunity has been identified, it must be translated from a concept into a well-written project charter. A project charter is a one-page document that summarizes the fundamental information of a project before it begins. It clarifies project objectives and scope, addresses the needs of stakeholders, and defines roles and responsibilities. The completed and signed project charter is a requirement for the project kick-off.

A project charter is one of the first essential steps in many different types of projects. In Lean Six Sigma for example, a project charter is used to summarize the findings of the Define phase. And as per the PMBOK, it is a document that formally authorizes the existence of the project. The information in the project charter is critical for obtaining leadership support and commitment. Once signed, it authorizes the project leader to formally start the project and use the necessary resources and funding.

The components of a project charter vary depending on the methodology used. For example, it is useful in Lean Six Sigma to include elements that are related to the process improvement methodology such as a summary of the voice of the customer (VOC), defect definition, estimated defect level, baseline data and COPQ. It is important to note that although project charters are short and brief, they often refer to more detailed documents. Let’s discuss now the key elements of a project charter.

Key Charter Elements — Key charter elements

Business Case Summary

A business case analysis should precede any project to justify why the project is being selected. A business case summary should be included in the project charter to summarize the impact on the business in terms of benefits or savings.

Problem Statement

A problem exists when there is a difference between where we are and where we want to be. A problem statement should be specific and brief, and should describe when and how often the problem occurs.. It should not however include background information nor should it discuss the causes or solutions.

Goal Statement

A goal statement defines the target for the project and should respond to the problem statement. It should be brief, specific, clearly define the purpose of the project, should not be using technical language, and should not assume or suggest solutions.

For example, the following is a goal statement which has been created for a project in a manufacturing facility: “Reduce oil losses of the manual refilling process of the forming machines in line #4 to less than 1% per drum by the 30th of October”.

Project Team

A project team is often composed of a dedicated project leader and team members directed by a project sponsor. The project leader provides the purpose, communicates, facilitates, monitors and tracks. The team members are responsible for executing the project activities to produce the desired deliverables. The project sponsor facilitates the provision of the necessary resources and provides support as needed to execute the project.

Project Scope

A project scope defines what is involved in the project and what is not. It is important to identify the products, services, processes, departments, locations, and customers during the project definition phase. It is also important to avoid the temptation of expanding the scope of the project or you will not be able to complete the project within the allocated time. Additionally, more resources will be required and the action plans will be too detailed.

It is important to identify what is involved in the project and what is not

Voice of the Customer

Customers are the elements that identify the need for executing the project. It is important to take their voice into consideration during the project definition phase. A customer representative may be required to evaluate the outcomes of the project definition process and provide feedback as necessary.

Project Metrics

Using project metrics brings attention to the future progress and results. It keeps the team focused to achieve the project goals and expectations. The success of any project is often measured by a primary metric, a financial metric, or both. Tracking these metrics is important not only during the project period but also several years after the project completion.

Project Time Frame

A project time frame is the time required to complete the project and often represented by the start and expected completion dates. It must be determined so that a project could be managed in terms of schedule, cost and resources. It is possible to assign approximate completion date, however, you need to revise it as the project progresses.

Project Authorization Section

Signing on the project charter by key stakeholders serves as a formal approval of the project and empowers the project leader to proceed with the project. Moreover, a signature from a financial representative provides credibility and support to the proposed financial gains.

In Six Sigma projects, the project charter must be filled in and agreed by the Champion. Adjustments to the project charter are possible with the approval of the Champion.

Many other elements can be added to the project charter depending on the methodology used, including:

A list of key stakeholders affected by the project.
Project approach or implementation methodology.
Key milestones which could be simply the completion of each project stage.
The key deliverables at every stage.
A communication plan summary.
The required resources needed for the project including the source of funding.

Project Charter Template Example — Project charter template example

Preparing an Effective Project Charter

A project charter should be customer focused and addresses their specific needs.
It should be clear and concise (preferably one page).
It should contain realistic and achievable objectives (use the SMART checklist).
It should be developed as a collaborative effort.
It should be dealt with as a live document during the project lifetime.
It should be updated as the project progresses.