PMP – What is a Project Charter and what does it mean? To help you prepare for the PMP exam, we are publishing a series of articles on PMP topics. This article will explain the best methods and approaches to choosing the right project for your organization. TRY NOW: 50 PMP Practice questions Access our 487 minutes Self-Study Training (Get 35 contact hour certificate) There are many factors that affect the idea of a project’s existence. There are many factors that influence the decision to start a project. Below is a list of all the activities that you should consider. Conception – The idea of the project which leads to a business need. In simple terms, we have identified a problem and created a solution. The problem and the prospect solution have been identified at a high level. The Project Business Needs – Why are we requesting the project? We describe and document the problem and link it to our business. This is a High Level scope documentation/project definition and alternatives to provide resolution to our established problems. How will this project meet our business needs? Project Business Case – This document contains all relevant information about the project for the sponsor and senior stakeholders. It contains details about Financial Investments required for the project, market status and opportunities that can be tapped. Payback period, Net present value, and other financial Metrics (we’ll be discussing it in our soon-coming articles, so stay tuned!). The business case is presented to the board members and sponsors, as well as all stakeholders who are high up on the Power and Influence grid. Before I talk about the formal authority for a Project, I want to mention the above-mentioned factors. These factors allow us to see how important the idea of a Project is for an organization before it is actually initiated. We can see how the project affects everyone, positively and negatively, once it is initiated. Any stakeholder can question the authority of the Project manager and raise questions at any time. He or she could exert influence to change the decision to suit them, as long as they have the power. This should not occur in a Project, not as often as possible and not as long that the Project is heading towards serious failure or unless the Project Manager has requested interference to address a major cost concern.
A Project Manager is assigned for a reason. A Project Manager is responsible for making big and small decisions and managing a Project. He/she should be allowed to do his/her job with authority. A Project Manager initiates the process of ‘Develop Project Charter’ to give him/her full authority over the project. What is a Project Charter? According to the PMBOK 5th Edition guide, a Project Charter is the document that authorizes the existence and gives the Project Manager the authority to use organizational resources for Project Activities. (Std. Def.) Def.) It doesn’t matter how the charter is created. The authority to authorize must be signed by the sponsor or initiator. It clearly states that the Project Manager is not the initiator of the project. The Project Charter ties the project to organizational strategy and operations. A charter not only authorizes the project manager but also identifies the stakeholders of the Project. It also establishes that the project will be in line with the ‘Enterprise Environmental Factors (EEF) of an organization. The PMBOK 5th edition states that the process of developing a project charter includes the following inputs. Project Statement of Work – This describes the product or service that the project will deliver. It includes the description of the Business Need, the Product Scope Description and how the Strategic Plan aligns with the organization. Business Case – A Business case is used for determining if the investment in the project is worthwhile. It provides evidence of organization’s value by identifying financial and non-financial metrics. Contract/Agreement – This is a contract that is used for projects in which an external team/organization is involved. An agreement is necessary when we outsource products or services or perform work for another company.