What is a P.I.D or Project Charter?

I believe as PM’s we believe the project charter is the essential document for your projects. It’s the first document that will your project life, dictates the tone and direction of your project and the one document where you may revert back to for referencing project expectations. However the charter is meaningless unless you have stakeholder “approval”.

Without a charter the PM and authorities can’t be established or defined... Among many other critical items; It's not a formality, it's a necessity. I’ve seen various forms of Project Charters from formal to informal and inherited projects without project charters and/or plans creating a lack structure. The lack of structure places a burden on both parties the customer and the PM. It’s cost effective to include the Charter in your projects and should be a basic tool in your PM tool belt. A project charter can be a one-page document, but it can save you a lot of time and money. Here is why:

What is a Project Charter? 

According to PMI's PMBOK , a project charter is "a document that formally authorizes a project and documents the initial requirements that satisfies stakeholders' needs and expectations".  

When is a Project Charter Written?

A project charter is written during the initiation phase of a project.

What is the Content of a Project Charter? 

I usually include the following in a project charter:  

·       Why the project is needed  

·       A description of the project  

·       A rough (+/- 50%) estimate of what the project will cost  

·       A justification (economic or other) of the project 

What is the Purpose of a Project Charter?

The purpose of the project charter is to provide the project sponsor with sufficient information so that the project can be formally authorized. Once the project charter is approved, the project team can then proceed to develop the project plan. The project charter provides a go/no-go decision to develop the project plan.

Project Plan Without Project Charter

Imagine the following (well known) scenario: company X requests Project Management Office Y to write a project plan. The PMO charges the company $ 30,000 to write the plan and gets the job. When the project plan is finished, it is presented to the company. The project plan contains the project budget. The project budget is $ 5,000,000. This amount surprises the company, since they had in mind that the project would cost at most $ 800,000. The project sponsor of company X can’t approve the project because of the high budget.

The Importance of the Project Charter

Had company X taken the time to approach a PMO to develop a project charter, they would have known that a +/- 50% estimate for this project is around say $4,500.000. With such a rough estimate, the sponsor would have never authorized the writing of a project plan. Company X would have saved time and $ 90,000.

How the Project Charter is positioned versus a Contract when you are in a client-supplier relationship? 

At the end of the day, the contract is the ultimate place to refer and in such the Project Charter shouldn't be a re-statement of the contract. In another words the project charter is a document that exists within the supplier organization and is provided by a sponsoring business manager (who accepts the cost, risk, etc. of creating the deliverable) for the project manager (who is empowered by the sponsor). In the case of an external contract, the sponsor in the supplier organization has decided they should respond to and deliver against the contract and, with the PM, will aim to ensure that the project then complies with the contract; internally, the work of the PM is authorized, however, by the charter which may for example impose additional constraints and rules that are not in the contract.