Sunday, May 8, 2011

Chapter 20: Developing a Project Charter

In the previous chapter we saw how projects are selected for execution by organizations. As the first step towards starting a project for execution, a Project Charter needs to be prepared. In this chapter, we are going to take a look at how to create a Project charter.

So, lets get started!!!

What is the Project Charter?

The project charter is a document that states the initial requirements to satisfy the stakeholders needs and expectations. It is the document that formally authorizes the project.

Trivia:
The project charter is the document that formally authorizes a project, which includes naming the project manager and determining the authority level of the project manager.

Developing a Project Charter

Obviously a Project charter has to be developed/created by someone. Let us see how it is created.

Look at the image below:


The input to developing the project charter comes from the origin of the project and from within the organization that will perform the project. The possible input items for the process of developing a project charter are:

1. Business Case
2. Project Statement of Work
3. Enterprise Environmental Factors
4. Organizational Process Assets
5. Contract

Business case - The origins of the business case are pretty much the same as the origins of a project. The business case is built on the business need addressed by the project that justifies the project. This will determine whether the project is worth the effort and the investment (Money). The business case may contain the cost benefit analysis that compares the benefits that would be received by executing the project to the money invested in running this project. The business case is written by either the person or the group within the performing organization that is proposing the project or by an external organization or the customer who is requesting the project or the product that will be produced by the project.

If the organization that is requesting the project is a separate entity than the organization that is performing the project, both may have their own business cases. In this case, the business case that goes into the project is the business case of the performing organization. The business case of the requesting organization will make its way to the project through the contract or the statement of work.

Project statement of work (SOW) - The statement of work is a document that describes the products, services, or results that will be delivered by the project. For an internal project, the SOW is provided by the project initiator or the project sponsor, whereas for an external project, the SOW is received from the customer as part of a bid document, such as a request for proposal, a request for bid, or a request for information. Alternatively, it could come as part of the contract. The SOW includes or refers to the business need that this project will satisfy, the product scope, and the strategic plan of the organization supported by the project.
Enterprise Environmental Factors - During the development of the project charter, you must consider the performing organization’s environmental factors relevant to this task, that might affect the project execution and outcome.

You can refer to the chapter on Environmental Factors for more details on them.

Organizational Process Assets – As with the Enterprise Environmental Factors, the Organizational Process Assets too can have a profound impact on the project execution and outcome. You can refer to the chapter on Organizational Process Assets for more details on them.

Contract - A project for a customer who is external to the performing organization is usually done based on a contract. This contract will outline the terms and conditions and the monetary aspects involved in executing a project.

You take the available input and apply the relevant tools and techniques to develop the project charter. The most important tool used in developing the project charter is the expert judgment described in the previous chapter.

The output of the Develop Project Charter process is a formal document called the project charter. It is a high-level document that summarizes the business needs, the understanding of customer requirements and needs, and how the new product or service will satisfy these requirements.

Any Project Charter, that is prepared by an experienced Project Manager would contain the following:
1. The project justification, which includes the purpose of the project and the business case for the project, which in turn may include return on investment.
2. A high-level project description that includes the business needs that the project addresses and the high-level product requirements.
3. High-level project requirements based on the needs of the customer, the sponsor, and other stakeholders.
4. Project objectives and success criteria, which are derived from the purpose section. This section explains exactly what will be done by this project and what exactly will be the outcome of this project. The most important point is that the objectives must be measurable.
5. High-level risks, which will be identified during the project planning. However, some high-level risks may be apparent during the time of developing the project charter.
6. Milestone schedule, some kind of high-level schedule.
7. A budget summary, A high-level summary of the project cost estimate with some kind of timeline.
8. Project approval and acceptance requirements , which include the name and responsibility of the person or committee that will approve and accept the project when it’s finished.
9. An assigned project manager, a specified authority level for that project manager, and the influences that the stakeholders might have.
10. Project sponsor, the name and authority level of the project sponsor authorizing the project charter.

Apart from these, the charter might include other elements like the list of functional departments of the organization and their roles (Like the Technical Support Team that would be supporting the Network and Hardware that the project team will be working on). Also, other external assumptions and constraints are outlined in this document.

An assumption is a factor that you consider to be true without any proof or verification. For example, an obvious assumption that any Project Manager might make during this stage is the fact that, his company will have sufficient personnel with the requisite skillsets that he needs to execute this project.

It’s important to document such assumptions clearly and validate them at various stages of the project because assumptions carry a certain degree of uncertainty or risk with them, and these risks can always have a negative impact on the Project if left uncontrolled.

A constraint is a restriction (or a limitation) that can affect the performance of the project. For example, there could be a schedule constraint that the project must be completed by a predetermined date. Similarly, a cost constraint would limit the budget available for the project.

The project charter provides the project manager with the authority to use organizational resources to run the project. Remember that formally speaking, project charters are prepared external to project management by an individual or a committee in the organization. In other words, the actual project management starts from where the project charter ends. But practically speaking, the project manager who is going to manage this project might actually be involved in writing the project charter. The project approval and funding will still be external to the project management boundaries.

Once you have the project charter, you know the high-level product (or service) requirements that the project will satisfy. However, a high-level requirement written in a certain way might mean different things to different stakeholders. So, after you get the project charter, your first task is to develop a common understanding of the project among the project stakeholders. You as the project manager must ensure that each stakeholder knows what is going to happen and what he/she can expect out of this project at the various timelines.

Once the project charter is developed, the project manager has enough information to identify all the project stakeholders.

Previous: Understanding Project Selections

Next: Identifying Project Stakeholders

No comments:

Post a Comment

© 2013 by www.getpmpcertified.blogspot.com. All rights reserved. No part of this blog or its contents may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the Author.

Followers

Popular Posts