Develop Project Charter

The project charter is the document that formally authorizes a project. The project charter provides the project manager with the authority to apply organizational resources to project activities. A project manager is identified and assigned as early in the project as is feasible. The project manager should always be assigned prior to the start of planning, and preferably while the project charter is being developed.

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, as a result of one or more of the following:

• A market demand (e.g., a car company authorizing a project to build more fuel-efficient cars in response to gasoline shortages)

• A business need (e.g., a training company authorizing a project to create a new course to increase its revenues)

• A customer request (e.g., an electric utility authorizing a project to build a new substation to serve a new industrial park)

• A technological advance (e.g., an electronics firm authorizing a new project to develop a faster, cheaper, and smaller laptop after advances in computer memory and electronics technology)

• A legal requirement (e.g., a paint manufacturer authorizing a project to establish guidelines for handling toxic materials)

• A social need (e.g., a nongovernmental organization in a developing country authorizing a project to provide potable water systems, latrines, and sanitation education to communities suffering from high rates of cholera).

These stimuli can also be called problems, opportunities, or business requirements. The central theme of all these stimuli is that management must make a decision about how to respond and what projects to authorize and charter. Project selection methods involve measuring value or attractiveness to the project owner or sponsor and may include other organizational decision criteria. Project selection also applies to choosing alternative ways of executing the project.

Chartering a project links the project to the ongoing work of the organization. In some organizations, a project is not formally chartered and initiated until completion of a needs assessment, feasibility study, preliminary plan, or some other equivalent form of analysis that was separately initiated. Developing the project charter is primarily concerned with documenting the business needs, project justification, current understanding of the customer's requirements, and the new product, service, or result that is intended to satisfy those requirements. The project charter, either directly, or by reference to other documents, should address the following information:

• Requirements that satisfy customer, sponsor, and other stakeholder needs, wants and expectations

• Business needs, high-level project description, or product requirements that the project is undertaken to address

• Project purpose or justification

• Assigned Project Manager and authority level

• Summary milestone schedule

• Stakeholder influences

• Functional organizations and their participation

• Organizational, environmental and external assumptions

• Organizational, environmental and external constraints

• Business case justifying the project, including return on investment

• Summary budget.

During subsequent phases of multi-phase projects, the Develop Project Charter process validates the decisions made during the original chartering of the project. If required, it also authorizes the next project phase, and updates the charter.