A Project Charter is a formal document that authorizes the start of a project. It names and appoints a project manager, assigns a summary budget, establishes a project time line, and documents key assumptions and constraints. The project boundary, its key deliverables – the mission of the project are documented as much as possible.

One key thing to remember is that although the project management team may help to write the project charter, approval and funding are handled external to the project boundaries. This means that the funding, and go ahead for the project is given by someone external to the project. This could be the Management of the company who is authorizing the project for strategic reasons. These people are not involved in the day to day running of the project, but are the driving force behind the project.

Importance of the Project Charter
PMI gives a lot of significance to the Project Charter. In fact, one of the 42 process is named “Develop Project Charter” in the Initiating Process group / Integration Management Knowledge Area. This alone can tell you how significant is the project charter in the PMP exam.

The project charter will state the initial requirements to satisfy the stakeholder’s needs and expectations and also formally authorizes the project.

Unfortunately most real life project start without a project charter. In fact it is not uncommon for project managers to be completely unaware about what a project charter is.

I was working in a large MNC, and projects were often started when I was walking to the Gents with my boss, and he’d mention how he had met with the VP of some department yesterday and the problems they discussed, and that I was to go and review the problem areas, and fix them. This was the beginning of countless medium to large scaled project for a long time… and finally I started to dread these walks with my boss… If you happen to be in a similar boat where you’ve not see the lights of a project charter, best is to understand that there is a big gap in your knowledge and day to day project management practice, compared to PMI. If you do not study the project charter, you are in for a big surprise in the PMP exam.

How Long is a Project Charter?
A project charter can be as short as 1 page, and as long as 200 pages. Typically though it is only about 1-3 pages in length. Writing too much detail in early stages is difficult, as too much detail may not even be available. It is better to have this document at a summary level, and then keep on elaborating it in the coming time, once the project is authorized.

PMBOK Definition of Project Charter:
A document issued by the project initiator or sponsor that formally authorizes the existence of a project, and provides a project manager with the authority to apply organizational resources to project activities.

This used to cause significant distress in previous versions of the PMBOK – students used to argue that a project manager could not write the charter because the project manager itself was appointed in the charter. Well, the fact is that the Sponsor or initiator may not have the necessary skills or time to develop the project charter. In the current version of PMBOK ( 4th Edition), it clearly says on page 74 that “a project sponsor or initiator will either create the project charter or delegate that duty to the project manager.

Sample Questions on Project Charter:

1. A project manager is employed by a software company and is responsible for the creation of the implementation plan. One of the first things that the project manager for this project should do is to write a:

a. Work breakdown structure
b. Budget baseline
c. Project charter
d. Project plan

2. All the following are key characteristics of a project charter except:

a. It is a useful document to bid for a project
b. It formally authorizes a project or a phase
c. It provides authority to the project manager to begin applying resources to project activities.
d. Projects are authorized by someone external to the project at a level that is appropriate to funding the project that either creates the project charter or delegates that duty to the project manager.

3. Who issues the project charter?

a. The customer
b. The project manager
c. Any stakeholder
d. The performing organization’s higher management?

4. Which of the following things are not included in the project charter?

a. Budget summary
b. Project schedule
c. High level product requirements
d. The purpose of the project

The correct answers are
1. c – All the other three come after the project charter is written, approved and the project manager authorized to get started on the project.

2. a – A project charter is never used to bid for a project. A RFP (Request for Proposal) or a RFQ (request for quote) are used to solicit bids.

3. d – The performing organization’s management authorizes the project charter – not the customer project manager or any stakeholder.

4. b – The project schedule is developed during planning, which occurs after the project charter has been signed. High level summary milestones may still be included in the project charter, but this does not make it the project schedule.

Hope this helps you in solidifying your understanding of the Project charter, and the kind of questions come in the PMP exam. Do leave a comment if this information helps you in your PMP exam preparation. And if you still have any questions, you can post them on our PMP Preparation Forum

Cheers,
Vinai Prakash, PMP