How to create a project charter

Lets start with defining what a project charter is. A project charter is a short formal high-level summary that describes you project.

It describes what the objectives are and what resources are needed to get there. It also defines what are the reasons for the project, who are the main stakeholders and what are the benefits. Furthermore, it gives a high-level planning and sums up the identified risks. Finally, it defines the scope of the project.

The project charter is created at the very start of the project. In a lean six sigma organization, this means that the project charter is created during the Define phase. It is next to a high-level process map one of the most important deliverables of the Define phase.

A project charter as a marketing tool to help sell your project

A project charter helps to outline the project and create a clear vision for all the stakeholders on what to expect of the project. You should see it also as a tool to sell your project to the management. By using a project charter you’ll present stakeholders with a clear overview that explains to them the benefits they can expect for the money they are spending. If the project charter is drafted well, it will make the decisions easier for them to accept the project.

The project charter is often overlooked but is an essential tool to avoid discussions of the project purpose and objectives later on. the project charter defines how success will be measured. Thus without a project charter how will you know that you are successful.

You can compare it with making vacation plans. You need to agree on where you will be going and how much you would like to spend. Will it be a vacation at the beach or would you go on a cruise (what is the scope). Who will go with you, In which period will you go ... Note that you do not yet have all the details. You do not yet have an exact idea of which hotel you will book, what activities you will do, the exact departure and arrival dates, ... Just like making vacation plans for your holiday. you should make a project charter for your project. The project charter outlines the project so that it becomes easily understandable for all the stakeholders and allows them to see the value of this project for the business.

A project charter is a contract between the project leader and sponsor

in a lean six sigma project, the project charter is used as a contract between the project leader, typically a green or black belt, and the sponsor. In the project charter, the goal which should be reached by the green or black belt is stated. A key performance indicator and target are defined so that reaching the goal successfully can be clearly measured. Also, a timeframe when these goals should be reached is agreed upon. Typically this is done by a rough planning of the 5 DMAIC phases. When drafting the project charter, the green or black belt states also the required resources to reach their goals. It is up to the sponsor to make these resources available.

The project charter authorizes the green or black belt to start the approved project and allow him to use the resources made available by the sponsor to successfully finish the project. the sponsor and green or black belt should always sign the document. The signatures are their authorization to go ahead with the project and their commitment to bring the project to a good end. Keep in mind that the sponsors always want to see the return on investment before approving a project. The sponsor and other stakeholders want to know, what is in it for me. The project benefits and costs should therefore be clearly stated.

A project charter is a living document

Be aware that a project charter is a living document. It could be opportune to change the content of the project carter when new insight is gathered during the define, measure, and analyze phase. For example based on the new insight the scope of the project could be adjusted. If you need to change the project charter you need to have the approval of the sponsor. Once you are in the improvement phase the project charter should be fixed. You can use the project charter during project meetings to remind everyone of the project objectives and check that the project charter is still reflecting the actual project.

Key elements of a project charter

It is a good practice to standardize the project charter and create a template for it. Doing so you will make certain that you do not miss any of the key elements when starting a new project. remember a project charter should be short. You should be able to summarize your project on one or two pages. Keep it high-level. The following list will give you so key element which you should consider when creating a project charter template:

A project title that describes the project is a few words
The sponsor who is assigned to the project
The location on which the project has an impact. This could be a site, a production line, a machine, ...
The benefits which will be gained if the project is successful often this is expressed in money saved. But also intangible benefits could be summed up.
The project objectives in clear language. Everybody should have the same understanding of the operation definition.
- Primary and secondary metrics. The primary metric is used to measure the success of the project while secondary metrics are used to see if our project has a positive or negative impact on other regions
- The targets which should be reached at which we consider the project successful
The stakeholder which are affected by the project. Who is accountable and responsible for which parts of the project and who should be consulted or informed.
The project team who will be working on the project
- The name of the team member
- The function of the team member
- The time spent by the team member on the project
The budget needed. In other words how much the project will cost.
The business case explains why this project is important for the business. It explains the business need that has led to the project.
A more detailed problem description. Use the 5W1H or is-is not a method for this.
The scope of the project defines the working area for the project
The known high-level project risks. these risks could delay or have a negative impact on the outcome of your project. Take risks that could delay your project into account in your planning if needed. You will have to define a more detailed project risk later on in the project when you get more insight.
The project milestones and their deliverables. Each milestone should have a specific date. A small Gantt Chart can be used for this.
Signatures of the main stakeholders which should approve:
- Project leader
- Sponsor
- Champion
- Fiancial analyst

While the green or black belt is the author of the project charter, he should not try to write it on his own. Creating a project charter should be a team effort. The insights of the team will help to define the project more accurately and get it approved more easily. Consult all the involved stakeholders to align their different expectations. This allows you to reduce the risk of future misunderstandings that could jeopardize your project.

Keep it SMART

When writing a project charter you should keep the SMART principle in mind. SMART stands for:

Specific – Target a specific working area for your project
Measurable – quantify how success will be measured
Assignable– specify who is responsible for what
Realistic – state realistic goals which are acceptable for all stakeholder given the available resources.
Time-related – specify when the target has to be reached.

An example of a SMART goal could be: Reduce the material scrap rate to 2% on the cutting machine within 6 months.

Conclusion

In a conclusion, The project charter is an important part of any project. It outlines the project and makes sure that all noises are pointed in the same direction on what to expect. It is a good tool to sell your project, brings stakeholders easily up to speed, and define a clear way to measure if your project is successful.