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What is the Project Charter?

The project charter is the first document that exists in the project. It causes the project to come into existence. The project charter names the project and briefly describes it. It names the project manager and causes a cost account to be opened to capture the cost of the project. Once these essential things have been done, work on the project can proceed. The project charter should be written by the project manager, but it must be issued under the signature of someone above the project manager who has the authority to make project assignments.

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The essential parts of the project charter are the naming of the project and the project manager and the creation of one or more cost accounts for the project. The signing and issuance of the project charter must be done by someone in authority who is able to assign project managers to projects.

Unless a project charter is written, there is no formal creation of the project, and there is no formal recognition that the project manager is the project manager for this project. The early creation of a unique cost account for the project is essential because without it, the cost of the project in the early stages could be lost or misapplied to other projects or functions in the company.

Since it is not possible for a project manager to assign himself to his own project, a person of authority must make the assignment instead. The project manager of the new project probably knows more about the project than anyone else. (Of course, this is not very much at this stage.) The project manager therefore writes the project charter, and a superior signs and issues the project charter.

In addition to the essential parts of the project charter, other items can be included. A description of the project along with goals and objectives and an explanation of how the project will fit into the strategic plans of the company can be included. Some companies also include a project justification.

Although it is good to give additional information in the project charter, there is a risk involved in doing so. Lengthy descriptions inevitably lead to claims about what the project is expected to do when it is completed. Not much is known yet about the project; therefore, claims about the savings or functionality of the completed project create a forum for debate among the managers and encourage questions that are difficult or impossible to answer at this point. This can cause unnecessary delays in the start of the project and may create quite a lot of unnecessary work for the project manager.

Since the project does not start until the project charter is approved and the cost account for the project is assigned, any delay in getting the project charter approved means that the cost of work that is done on the project is lost. We do not recommend including anything but the barest essentials necessary to get the project charter approved. A project manager who feels that it is necessary to fill several pages with project descriptions and speculation on the project that will result at completion may be deluged with questions that will take time and money to answer. Much money can be spent answering questions about the project, and this money will be unaccounted for if there is no project charter and cost account to capture the money spent.

Much of the same thing can be said about including project justifications in the project charter. It takes time and effort to create a project charter. This is true whether it is early in the project and very rough justifications are being made, or whether a definitive justification is being made. If the project justification is included in the charter, it means that the work of doing the justification was done without the project charter. Since the cost account cannot be created until the project charter is approved, the cost of the project justification must have been collected in some other cost account and now must either be reversed or lost as part of the project cost.