What is a project charter? (Definition, uses and components)

By Indeed Editorial Team

Published 8 June 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A project charter is a document that includes information about an incoming project and an outline for its implementation. Professionals use these documents to organise the planning stage of projects and to present them to company shareholders to earn approval. If your career involves project management, it's helpful to understand more about project charters. In this article, we answer the question 'What is a project charter?', and share more information about these documents, including their uses, components and tips for creating your own.

What is a project charter?

To answer the question 'What is a project charter?', you can think of it as a document that explains the objectives and resources relating to an upcoming project. These documents often include general information about various project elements. This can help project managers pitch their ideas to shareholders and organise their resources before a project. Project charters typically have three main objectives:

Explain the project

Project charters include explanations of what the project can achieve and why it's important. This is helpful, as it can convince shareholders to support the project. The document can help provide clarity on the project, with sections that detail project goals, implementation plans and milestones.

Convince shareholders

Project managers present project charters to shareholders and investors in hope of gaining their support and approval for the project. Since shareholder approval is a necessity for most projects, professionals may include persuasive content in their project charters. These sections usually mention the benefits the project can offer once it reaches completion.

Related: 3 elevator pitch examples (plus how to structure your pitch)

Identifies roles

Project charters can identify the employees and investors who may have involvement with the future project. This can help in a variety of ways. First, by identifying the key investors, you can tailor the project charter to appeal to those shareholders. Defining the roles of each employee who may work on the project can help demonstrate that the company has enough human resources to meet the needs of the project.

What do project charters include?

Project charters often contain general information about a variety of important project concepts. Though project charters can vary in content and structure, they typically include:

Reasoning

Including the reasoning for the project can help investors and other executive professionals understand its purpose and benefits. As these types of professionals rarely experience the daily operations of a business, this aspect of a project charter can help provide important information to persuade them to support the project.

For example, a professional may pitch a project to upgrade the computer systems in a department and train the staff to use better equipment. Explaining why this upgrade could be essential can allow investors to gain an insight into the organisation's daily operations.

Objectives

Objectives include the goals you wish to accomplish during and by the completion of the project. Documenting project objectives in the charter can help create a plan for the project's implementation, as goals can guide the employees working on their project-related tasks. When including objectives in the project charter, it's important to note both long- and short-term goals.

Related: How to write an action plan to help you achieve your goals

Risk management

The risk management section of a project charter identifies potential risks and obstacles. It also includes strategies to avoid or address them. This can help prepare employees for challenges they may face while working on the project. This section can also help earn an investor's support by demonstrating that you considered the risks involved with the project and can take the necessary steps to reduce them.

Project scope

The project scope summarises the project as a whole. It informs the audience of important aspects of the project, including an estimation of the work it requires. Depending on the shareholders who oversee the project charter, you may add more information upon request.

Benefits

To help shareholders make the decision to approve the project, you can also include the potential benefits of the plan in the project charter. This section predicts the outcomes of the project and the advantages of the team meeting project goals. These benefits can include increased profits, skill set advancement or more efficient daily operations.

Cost and resources

When creating a project charter, you may also compile a list of resources the project requires. This includes the number of people who might work on the project, the labour hours, office supplies and any other tool necessary for the project's completion. After creating this list, you can then calculate how much the project may cost. This is an important aspect of the project charter, as many shareholders may base their decision on whether to approve the project based on its cost.

How do professionals use project charters?

Professionals create project charters for several purposes, including:

Project approval

One of the primary reasons professionals creates project charters is to earn approval for the project. Project managers often require permission from company executives, shareholders or investors to begin a project due to its risks and costs. Project charters allow them to present their ideas and share a document that can explain all aspects of the project. These documents can help professionals explain their idea without using jargon and provide insight into the daily operations of the organisation.

Record keeping

Project charters are a great record-keeping tool because they include all relevant information on projects. This is especially helpful for tracking the resources the project requires. Since professionals may seek approval or help from other departments to receive funds and supplies, it's important to have an official record of the resources the project uses. This helps with both resource allocation and planning stages.

Having the project charter as a record can also be helpful if a professional joins the project team later than others, as they can use the document to understand more about the project's objectives and scope.

Project guide

Project charters can serve as a guide for the entirety of the project. This can help teams track the progress of goals, allocate resources and monitor the project's schedule. Having a document to reference throughout the duration of the project can help professionals focus on specific tasks and objectives, which can increase productivity and efficiency.

Related: How to stop overthinking and increase productivity at work

Tips for writing a project charter

Usually, project managers create project charters, though they may work in a group to help ensure a thorough and effective document. If you're writing a project charter, you might consider the following tips:

Understand stakeholders

Since the primary purpose of project charters is to present them to stakeholders, it's important to understand the perspective of these individuals. Depending on the size of the company for which you work, there may be several investors, stakeholders or executives to whom you present your project charter. In some cases, you may only present to a smaller panel of shareholders. You can consider which people may watch the presentation and tailor the project charter accordingly.

For example, if you know that one person values effective risk management, you might spend extra time completing a risk analysis for the project. Catering to stakeholders' priorities may help you earn project approval.

Consider planning tools

Consider planning tools when creating your project charter to aid in the organisation. Project management software can also help you work more efficiently. Since some project management software requires a subscription, consider asking a manager or colleague in human resources to either authorise a purchase or direct you to software the company already has.

You might also research project charter templates to help you structure the document. You can often find these examples online. Using a template can help if you're unsure how to begin writing.

Related: Project management skills and how to improve them

Set SMART goals

When writing about the project objectives, consider setting SMART goals. This means creating goals that are specific, measurable, achievable, relevant and time-based. Setting these types of project objectives can help ensure that professionals can confidently focus on project goals and achieve them. It also allows you to consider the benefits the project can offer the company, which is another section of the project charter.

Read more: How to develop SMART goals

Organise milestones

Organise project milestones by creating an estimation of the schedule. It's often best for projects to have a few milestones. Usually, these milestones mark the beginning and end of project phases. This can help with task delegation and goal setting, as you can explain in the project charter how the implementation of the project plan helps earn progress towards these milestones.

Related:

  • How to write a project charter, plus elements and samples


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