Of all the documents, forms, statements, and filings that go into planning and carrying out a project, one stands above them all as the single most important: the project charter. Your project charter serves as a guiding light that summarizes the project’s intent, clearly defines its goals and the key players involved, and officially authorizes the project manager to commence work and utilize company resources in the pursuit of project delivery.
If you’re unfamiliar with a project charter, fear not — we’ve compiled an ultimate guide that will teach you how to write a project charter, show you project charter examples you can reference, and break down how to create a project charter template you can refer back to when a sponsor tags you for their next big project.
What is a project charter?
A project charter is a brief, formal document that outlines a project in its entirety including its objectives, key stakeholders, major milestones, risks, and budget. This concise document gives a high-level overview of the most salient points of a project for the benefit of stakeholders, project committees, PMs, and any other vested parties.
Why is a project charter important?
When a new city or town is formed, a charter is written to define its organization and governing body along with its basic powers, procedures, and functions. Much like the Constitution of the United States, the charter is a single, essential, and defining document that officially establishes the town as a legal entity.
A project charter serves the same basic function for every unique project an organization undertakes. The project charter is the single most important document associated with any project, as it acknowledges the project’s existence and defines its most essential elements. The project charter is important for codifying the project’s intent and communicating its critical features to stakeholders, the project committee, and any other approving or overseeing personnel.
In addition to formally authorizing the existence of the project, the project charter also “provides the project manager with the authority to apply organizational resources to project activities,” according to the PMI’s Project Management Book of Knowledge (PMBOK).
The charter also gives the project clear direction and a sense of purpose from start to finish. If a project were a plant, the charter would be the seeds you sow and nurture in fertile soil to ensure the plant grows to its full potential.
What are the benefits of a project charter?
Organizations that overlook or underestimate the value of a project charter do themselves a grave disservice, as the charter provides a multitude of benefits that will serve the project from beginning to end. As Rita Mulcahy wrote in her PMP certification prep book, “If the project charter serves as a definition of how success will be measured, then without a project charter, the project and project manager cannot be successful.”
With that in mind, let’s look at a few of the major benefits of a project charter.
- The project charter clarifies and defines the project’s objectives.
As the foundational document, the charter identifies the specific goals and objectives the project seeks to achieve. This is critical because without a clear sense of purpose and direction, a project is likely to flounder and ultimately end up falling by the wayside, wasting whatever time and resources have already been spent.
- The charter aligns the project’s objectives with organizational objectives.
Along with identifying clear goals and objectives, the project charter demonstrates how those objectives align with overarching organizational goals, if the project is internal. This is a crucial aspect that upper management will want to see clearly outlined before signing off on resource and budget allocation.
- The charter serves as the project’s marketing tool when buy-in is needed from stakeholders.
Speaking of signing off and garnering approvals, one of the primary functions of the charter in the project’s earliest stages is serving as the de facto marketing tool for selling the project to higher-ups and stakeholders. The charter succinctly states the most pertinent details of the project and presents its objectives as worthy undertakings during the approval process.
- The project charter officially authorizes PMs to begin initiating and executing the project.
Another primary benefit of a project charter is that it gives the project manager official authorization to begin executing and utilizing organizational resources to accomplish the project’s objectives. Just like James Bond leans on his license to kill when he’s out in the field, the charter serves as a PM’s license to do what needs to be done in service of the project.
- The project charter helps prevent scope creep.
Scope creep can quickly derail a project and lead to missed deadlines, blown budgets, and ultimately project failure if not quickly reigned in. The project charter helps nip scope creep in the bud by clearly delineating the project’s parameters.
- The charter serves as a contract of sorts among executives, stakeholders, and the project sponsor and ensures everyone is on the same page.
Although not a legally binding document like a city or town charter, the project charter clarifies the project’s key matters among executives, stakeholders, and the project sponsor to ensure everyone is on-board and in agreement with the project’s stated objectives.
- The charter provides continuity in the event of a mid-project personnel change.
Finally, a project charter will help cut down the learning curve if a project changes hands before completion. For instance, if you have a PM replacement mid-project, the incoming project manager can reference the charter to quickly get up to speed on the business needs and objectives the project is intended to fulfill.
What is the difference between a statement of work and a project charter?
There are a few key differences between a statement of work (SOW) and a project charter. First, the SOW is typically an external document shared between the client or buyer and the agency or organization carrying out the work. A project charter, on the other hand, is a document that clarifies the project for internal audiences within the organization that is actually carrying out the project. Who is the client in the project charter? It's the person who solicits the services of the organization — to create, improve, or do something on their behalf.
Secondly, a statement of work is an extremely detailed, legally binding contract that defines precisely what the project will include and guarantees that the work will be carried out to the client’s expectations. SOWs can be extremely time consuming to create and must be meticulously reviewed, because one small mistake can lead to big problems and potentially even legal troubles down the road.
Finally, the SOW almost always comes before the charter in the project timeline. Once the statement of work is completed and signed off, the project charter can be drafted and work can commence.
Who writes the project charter?
According to the PMBOK, “Projects are authorized by someone external to the project such as a sponsor, PMO or portfolio steering committee. The project initiator or sponsor should be at a level that is appropriate to funding the project. They will either create the project charter or delegate that duty to the project manager. The initiator’s signature on the charter authorizes the project.”
In other words, the project sponsor is ultimately responsible for authorizing the project, which includes signing off on the project charter. However, because project managers are subject matter experts and typically have more hands-on experience with charters, the sponsor may delegate the actual drafting of the charter to the PM. In this case, the project manager will write the project charter, but the sponsor must be the one to officially approve and sign the charter. Unlike the PM, the project sponsor is someone with the authority to approve budget expenditures and who will ultimately pay for the project or justify its cost to the board or approving committee.
What does a project charter include?
The specific contents of a project charter may vary from organization to organization. However, there are some key characteristics that all charters should have. These characteristics are:
- Recognition of the project’s existence and appointment of the project manager
- Authorization of the PM to execute the project and utilize organizational resources
- Clarification of the project’s goals and objectives
- Recognition of key stakeholders
- Identification of risks, assumptions, and constraints
Additionally, a defining characteristic of a project charter is that it is kept as brief as possible, typically between one and two pages at most.
More specifically, the project charter typically documents the reasons for the project’s existence, how the project will benefit the organization or the client, and the general overview of the budget. The charter may also include some or all of the following elements as well:
- Project title
- Description of the deliverables
- Description of the project manager’s authority level
- Pre-assigned resources
- High-level requirements
- Acceptance criteria
- Summary of major milestones
It’s important to distinguish the project charter from the project management plan. The project charter is ultimately owned by the sponsor, even though the PM may physically draft the charter. The charter is also a high-level overview that succinctly summarizes the key points of the project.
The project management plan, on the other hand, is owned by the PM and goes into much greater detail of the individual tasks that comprise the project, the overall timeline, and the assigning of resources.
Project charter example
Here’s a project charter example you can use to develop your own project charter template:
Tips for writing your project charter with Wrike
When beginning a new project, one of the easiest ways to save time and hassle is to have ready-made templates you can use for the standard documents that are part and parcel of every project. By creating a project charter template for your organization, you won’t have to waste time trying to reinvent the wheel every time a stakeholder or project sponsor approaches you with a new project idea.
With Wrike, not only will you have access to a stable of tried-and-true templates for everything from creative briefs to sprint planning, you’ll also have the ability to create your own templates for repeatable processes and needs, including project charters.
What’s more, with Wrike you’ll have access to all the pertinent information needed to complete your project charter thanks to a centralized information repository and easy communication capabilities.
You can get started with Wrike today with a free trial. Learn how much simpler project planning and execution is with Wrike!