CHARTERING PROJECTS

2

OBJECTIVES• Describe what a project charter is and why it is critical

to project success.• Explain what a project scope statement is and why it is

important.• List the various elements of a charter and tell why each

is used.• Create each section of a charter for a small sample

project using given project information.• Work with a team to create a complete charter for a

real project.

WHAT IS A PROJECT CHARTER?

• An informal contract between the project team and the sponsor

• A contract– is an agreement entered into freely by two or more

parties.– cannot arbitrarily be changed– offers something of value for each party– is a living document that can evolve with changing

conditions if both parties agree and receive something of value for making the change

WHAT IS A PROJECT CHARTER?

• Signing a charter represents the transition from the project initiating stage into the project planning stage

WHY IS A PROJECT CHARTER USED?

The four major purposes for a charter are to:

1. Authorize the project manager to proceed

2. Help the project team and sponsor develop a

common understanding

3. Help the project team and sponsor commit

4. Quickly screen out obviously poor projects

1. AUTHORIZE THE PROJECT MANAGER TO PROCEED

• The project charter authorizes the commitment of resources to a project

• The project charter gives the project and the project manager official status within the parent organization.

Project charter – “authorizes the project … and provides the project manager the authority to apply resources to project activities.” PMBOK® Guide

2. COMMON UNDERSTANDING

• Benefits associated with the common understanding include:– Teamwork develops.– Agreement, trust, communication, and

commitment between the sponsor, project manager, and project team develop

– The project team does not worry if management will accept a decision.

– The sponsor is less likely to unilaterally change the original agreement.

WHAT IS A PRELIMINARY SCOPE STATEMENT?

• An elaboration on the charter

• For small projects, the preliminary scope statement may be part of the project charter

• For large projects, the scope statement and project charter are distinct documents

Project scope statement – “a definition of the project … documents the characteristics and boundaries of the project and its associated products and services, as well as methods of acceptance and scope control.” PMBOK® Guide

ELEMENTS IN A PROJECT CHARTER

• The term “charter” may be substituted with project request, project submission form, project preplanning form

• Typical elements of a project charter include:

Title Risks, assumptions, constraints

Scope overview Spending approvals/budget estimates

Business case Communication plan requirements

Background Team operating principles

Milestone schedule Lessons learned

Signatures and commitment

SCOPE OVERVIEW

• What needs to be accomplished and how it will be done

• Used to help prevent scope creep• Considered to be the project boundaries

Scope creep – “adding features and functionality (project scope) without addressing the effects of time, costs, resources, orwithout customer approval.” PMBOK® Guide

BUSINESS CASE• The project purpose or justification statement• Answers the question “why?”• Used to justify the necessity of the project• It should clearly tie the project to the organization’s

strategy• May be just the rationale or include high-level

estimates of the costs and benefits of the project.• Should persuade decision makers to support the project

and inspire team members to work hard on it.

BACKGROUND

• Used to provide more detail to support the scope statement and business case statements

• The background statement is optional

MILESTONE SCHEDULE WITH ACCEPTANCE CRITERIA

• Divides the project into 3 to 8 intermediate points whose completion can be verified

• Lists major milestones and deliverables

Deliverable – “any unique and verifiable product, result, or capability to perform a service that must be produced to complete a process, phase, or project. Often … subject to approval by the project sponsor or customer.” PMBOK® Guide

Milestone schedule – “a summary-level schedule that identifies the major schedule milestones or significant points or events in the project.” PMBOK® Guide

MILESTONE SCHEDULE WITH ACCEPTANCE CRITERIA

• A column for acceptance criteria helps determine who will judge the quality of the deliverable and by what criteria

• Acceptance criteria represent the project’s vital signs

Acceptance criteria – “those criteria, including performance requirements and essential conditions, which must be met before project deliverables are accepted.” PMBOK® Guide

RISKS, ASSUMPTIONS, AND CONSTRAINTS

Constraint – “an applicable restriction or limitation, either internal or external to the project, that will affect the performance of the project.”

PMBOK® Guide

Assumptions – “factors that, for planning purposes, are considered to be true, real, or certain without proof or demonstration.… Project teams frequently identify, document, and validate assumptions as part of their planning process. Assumptions generally involve a degree of risk.” PMBOK® Guide

Risk – “an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.” PMBOK® Guide

RISKS, ASSUMPTIONS, AND CONSTRAINTS

• Reminders of what could prevent successful completion of a project

• The more comprehensive, the more likely to discover problems before they occur

• A false assumption becomes a risk

• A constraint that limits money, time, or resources is a risk

RISKS

• Two reasons for examining project risks– Any risk that may inhibit successful project

completion needs to be identified and a plan must be developed to overcome it.

– A risk that can create a positive effect on a project can be considered an opportunity

• Contingency plans are developed for each major identified risk to lessen probability of risk or reduce impact of the risk

• An “owner” is assigned responsibility for each contingency plan

SPENDING APPROVALS OR BUDGET ESTIMATES

• A preliminary budget should include the level of confidence in the estimate

• Some internal projects do not develop formal budgets

• Identify expenses the project manager can authorize or sponsor needs to control

COMMUNICATION PLAN REQUIREMENTS

• A broad communications plan can be outlined in the project charter.

• Each stakeholder is identified along with:

1. what information each needs to know from us,

2. what information we need to learn from this

stakeholder,

3. when the communication needs to take place

4. what method most effectively helps the receiver of

each item of information to understand and act

appropriately.

TEAM OPERATING PRINCIPLES

• Established to enhance team functioning

• Goal is to increase team effectiveness

• Ensure that all parties are aware of what is expected

• Useful team operating principles deal with conducting meetings, making decisions, accomplishing work, and treating each other with respect.

LESSONS LEARNED

• Successes and failures of previous projects become practical advice

• Avoid the risk of repeating mistakes from previous projects

Lessons learned knowledge base – “a store of historical information and lessons learned about both the outcomes of previousproject selection decisions and previous project performance.”

PMBOK® Guide

Lessons learned – “the learning gained from the process of performing the project.” PMBOK® Guide

SIGNATURES AND COMMITMENT

• Who is involved

• Extent to which each person can make decisions

• Expected time commitment for each person

• The project sponsor, project manager, and core team members show commitment by signing the charter

CONSTRUCTING A PROJECT CHARTER

• It is helpful if the sponsor creates the first draft

• The organization’s leadership team may contribute information in addition to the business case and scope overview

• One to four sentences should be written for the scope overview and business case

Scope Overview and Business Case Example

MILESTONE SCHEDULE WITH ACCEPTANCE CRITERIA INSTRUCTIONS

SIX-STEPS FOR CONSTRUCTING A MILESTONE

1. Briefly describe the current situation that requires the project• 1st row of the milestone column

2. Describe the project at its successful completion• Last row of the milestone column

3. Describe the acceptance criteria for the final project deliverables• Bottom row of 3rd and 4th columns

SIX-STEPS FOR CONSTRUCTING A MILESTONE

4. Determine the few key points in the milestone column where quality needs to be verified

5. For each milestone, determine who the primary stakeholder(s) is(are) and how the resulting deliverable will be judged

6. Determine expected completion dates for each milestone

Six Sigma Milestone and Acceptance Criteria Template

RISKS, ASSUMPTIONS, AND CONSTRAINTS INSTRUCTIONS

• Brainstorm all things that could pose a risk to the schedule, budget, usefulness of deliverables, or stakeholder satisfaction

• Assumptions are especially important when a cross-functional team is performing the project

• Quantify risks on one of several dimensions– probability of occurring– impact if realized– timing of probable occurrence– ability to detect

• Decide which risks should be considered “major” • Major risks require a formal contingency plan

RISK QUANTIFICATION EXAMPLE

RISK CONTINGENCY PLAN EXAMPLE

SPENDING APPROVAL EXAMPLE

• A limit of spending authority for the project manager is often developed

COMMUNICATION PLAN REQUIREMENTS INSTRUCTIONS

• The project manager and team list each stakeholder and work through the milestone schedule and the risks to determine the communications needs.

• The project manager and team should also consider their own communications needs

COMMUNICATION PLAN EXAMPLE

TEAM OPERATING PRINCIPLES INSTRUCTIONS

• Establish how meetings will be conducted

• Establish how decisions will be made

• Establish how work gets done

• Establish how everyone will treat each other with respect

TEAM OPERATING PRINCIPLES EXAMPLE

LESSONS LEARNED INSTRUCTIONS

• Consider what has worked well and what has worked poorly

• Each project should report lessons learned at key reviews and project completion

• Make lessons available in a lessons learned knowledge base

• The more specific the lessons, the more likely they will be found useful

PROJECT LESSONS LEARNED EXAMPLE

RATIFYING THE PROJECT CHARTER

• The project manager and team formally present the project charter to the sponsor for approval

• Questions are presented for clarification and agreement

• The sponsor, project manager, and core team sign the project charter

SUMMARY

• The project charter is a vital document that enables the project sponsor, project manager, and core team to reach mutual understanding and agreement on the project at a high level.

• Charters typically include sections such as a scope overview, business case, milestone schedule, acceptance criteria, risks, and signatures.

• The sponsor meets with the project manager and core team to go over the charter in detail to ensure understanding and to reach agreement.

• The charter is the document that completes the project initiating stage.