What is a Project Charter? - Elements & Example

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  • 0:03 Project Charter
  • 0:52 Major Elements
  • 3:08 Example
  • 5:41 Lesson Summary
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Lesson Transcript
Instructor: Mike Miller
In this lesson, you'll learn about project charters, including the key elements typically found in these documents. You'll also have the opportunity to explore a real-life example of a project charter.

Project Charter: Defined

A project charter is a critical document that provides written authorization for a task to either start or continue to move forward. It is sometimes known as a project authorization or project initiation form. Project charters are created and signed by high-level members of an external government agency, organization, or sponsor that is funding the project, not a member of the project team. However, this individual can assign the creation of the charter to the project manager, who may not begin work until the funding organization or sponsor signs the document. The project charter contains a scope statement and outlines project deliverables and objectives. It also identifies key stakeholders and the project manager, including his or her related authority.

Major Elements

At a minimum, a project charter should include the business need for a task and how the project will meet the need. Major parts of the charter include statements of work, contractual or other agreements, organizational details, and budgets, among other components. Let's take a look at some of these parts.

Statement of Work

The statement of work is a narrative description of the deliverables of the project. This narrative can be given by a project sponsor or derived from a contract for an external customer. The statement of work will include the product scope description and refer to an organization's strategic plan.

Agreements

The project charter will outline agreements between organizations, both internal and external to the company. These can take the form of letters of agreement, emails, memorandums of understanding, and verbal or written contracts. Agreements can cover numerous aspects of the project, including manpower, funding, sub-contract work, or quality.

Project Organization

The project charter will provide an overview of the task's organizational structure, including the names and contact information for key stakeholders. Typically, these include the executive sponsor, project director, project manager, and the project manager's direct reporting manager. Names and contact information for finance, quality, and lead technical representatives may also be found in this section.

Roles and Responsibilities

Another part of the project charter describes the roles and responsibilities of each person identified in the project organization section. Some personnel may have more than one role or responsibility, depending on the corporate culture of the organization that is controlling the project.

Assumptions

The project charter will also discuss assumptions. These are circumstances and events that need to occur or be assumed to allow the project to continue.

Risks

Risks are circumstances or events that lie outside of a project's control. If a risk is actualized, then a project may have severe hurdles to overcome.

Budget

The project budget should include an estimate of the overall cost at completion. It will also include phase budgets and manpower costs and cover any buy versus build decisions.

Approvals

The approvals section is the section of the project charter that reflects the written authorization for a project.

Example

Now that we've identified the major parts of a project charter, let's explore a real-life example for a small construction company building a new home for a client.

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