Chapter 3. Project Initiation

3.1 Project Charter

Project justification starts when a business case is prepared which addresses the needs, and feasibility of solutions. Project managers may be involved during this phase though it is also common not to have a project manager in this pre-project work. In organizations having a Project Management Office (PMO) or a program department, project managers, or a team of project managers and their assistants, could participate in developing the business case with business analysts, subject matter experts, and representatives from relevant departments. A business case could be prepared during the initiation if it wasn’t made in the pre-project phase.

When a project selection committee decides to go with some of the projects proposed, the sponsor, business analysis team, relevant departments, or selection committee members can start the preparation of a project charter which will allow the formal authorization of the existence of a project. A project charter provides the project manager with the authority to apply organizational resources to project activities[1]. Developing a project charter requires inputs such as business documents (business case, needs analysis, and benefits management plan), agreements, enterprise environmental factors (discussed in Project Environment below), and organizational process assets. A project charter is necessary to initiate both internal projects at which a client is a unit in our organization and external projects at which the client is outside our organization. If we are conducting a project with an external client, the two parties (i.e., our organization and the external client) will also need a formal and legally binding contract to establish an agreement.

Figure 3.1: Pre-Project Work, Project Life Cycle, and Post-Project Work Source: PMBOK Guide 6th Edition. This figure is composed of six primary columns. The first one is titled "Pre-Project" Work. Following columns are Initiating, Planning, Implementation, and Closing. The sixth and final column title is Post-Project Work. Pre-Project Work includes Needs Assessment that is required to prepare a Business Case which should be in alignment with a benefits management plan. Initiation stage includes the preparation of a Project Charter. In the Planning stage, a Project Management Plan is prepared. Implementation stage includes the execution of activities and creating deliverables. Closing phase includes administrative closure, lessons learned, disbanding the team, and transition of deliverables. Post-project work consists of operations and maintenance. Monitoring and controlling overlaps with all four project life stages.
Figure 3.1: Pre-Project Work, Project Life Cycle, and Post-Project Work
Source: PMBOK Guide 6th Edition

In the initiation stage (Figure 3.1), there are two main processes according to the PMBOK Guide 6th edition: Developing a project charter and identifying stakeholders. The former process will be discussed in detail in Chapter 5 “People Management: Stakeholders and Communication”. The initiation of the project is the process group to start developing the project infrastructure to support all the activities associated with planning, executing, monitoring, and closing the project. In this stage, project managers should give the priority to address stakeholders’ expectations and concerns in order to properly determine all the components (e.g., scope, schedule, budget, resources, risks, quality) of the project. Therefore, project managers conduct one or more kickoff meetings to align all the various stakeholders. The strength of the initial alignment will have a big impact on project success. At this early stage, project managers learn how to identify the appropriate means of communication with key stakeholders. Effective communication with project stakeholders is another critical success factor so this work must begin early (see Chapters 5 and 6).Initiation is the first project life cycle stage to begin team building and developing collaborative approaches for working together. During the kick-off meeting, the project manager, the team, or the sponsor should share the information below with the main stakeholders involved:

  • The project’s objectives
  • Known priorities and success metrics
  • Organizational constraints and related trade-offs
  • A high-level description of the project scope
  • Key milestones
  • An initial list of project risks
  • Key stakeholders

After the initial kick-off meeting, subsequent meetings with primary stakeholders lead to more clarification and elaboration on the information above and the development of a project charter. Just like with project justification documents, low complexity projects may have very short project charters while higher complexity projects may require longer, more comprehensive project charters. In either case, there are two very important aspects of the project charter: key stakeholders including a detailed description of their roles and responsibilities, and project success metrics.

A project charter must be approved by the project sponsor. The project sponsor is the most powerful stakeholder and is usually an executive in the organization with the authority to assign resources and enforce decisions regarding the project. They often initiate the project and, as such, are often referred to as the “initiating sponsor.” A project sponsor has the authority to start and stop the project and will support the completion of project objectives by removing the barriers to success. They can be regarded as the “external champion” because they often serve as the last escalation point when the project team needs support bringing an off-track project back on track. Successful project teams know how to leverage the power and position of the project sponsor and will proactively ask them to deliver influencing communications throughout the organization in order to maintain the project’s momentum and high morale within the team. Many project sponsors can assign one or more sustaining sponsors to act as the “internal champion(s)” of the project. The sustaining sponsors are often leaders of the internal departments that are most affected by the project, such as a marketing manager or human resources manager. When the project sponsor selects the sustaining sponsor(s), one of their goals is to ensure that the project team frequently considers the organizational impacts of the changes being introduced. By keeping the sustaining sponsor(s) actively engaged in the project, they will ensure their teams are intently participating in the project and identifying the operational impacts that must be considered in order for the change to be sustained once the project has been completed. On a day-to-day basis, the sustaining sponsor(s) act as the first point of escalation as issues/risks are raised.

The project charter formally recognizes the existence of the project by presenting the project leader’s understanding and conceptualization of the project’s objectives. Most importantly, it authorizes the project leader to apply organizational resources to achieve the project’s objectives. Once the Charter is approved and formally signed off, it becomes an agreement between the project leader and the project sponsor. As such, some organizations prefer to refer to this document as a letter of agreement instead of a project charter. Approval of this document, whether a letter of agreement or a project charter, signals the transition into the planning phase of the project.

The Content of a Project Charter [2]

A project charter is a necessary document to initiate a project. Organizations may have different templates for a project charter. Below is a generic template for a project charter that would help students understand the main components and hence develop one in their individual and team (group) assignments, and when they are involved in project teams. Our template has thirteen sections. Case Study 3.1 below will elaborate on each section.

  1. Project purpose
  2. Measurable project objectives
  3. High-level requirements
  4. High-level project description, boundaries, and key deliverables
  5. Assumptions and constraints
  6. Overall project risk
  7. Summary milestone schedule
  8. Preapproved financial resources
  9. Key stakeholder list
  10. Project approval requirements
  11. Project exit criteria
  12. Project team
  13. Name and authority of the sponsor authorizing the project charter.

Case Study 3.1: Project Charter of Grocery LLC’s Mobile-Commerce Project

In Chapter 1, we started evaluating the uniqueness and temporary nature of the two projects. The first project aimed to establish self-checkout areas at all fifty markets across five states to solve the problem of more than usual traffic between 4 pm and 7 pm during the weekdays (Case 1.1). The second project aimed to create a new mobile application and make the current website compliant with the smartphones (Case 1.2). In Chapter 2, we performed a weighted scoring model (Table 2.8) to compute the total scores of project candidates based on various criteria which are not only dependent on financial factors and chose projects A (self-checkout stations) and D (m-commerce). Project D addressed the problem of declining sales at Grocery LLC’s all fifty markets in general with the onset of the COVID-19 pandemic. Considering the priority of the project and the pessimistic trends forecasted regarding the pandemic as well as the increasing digitalization of companies and consumers, we will use this project in this chapter and the following chapters.

  1. Project Purpose:

To create solutions for customers who purchase goods and services from our grocery stores through their smartphones.

  1. Measurable Project Objectives:
      1. To redesign the website in 2 months so it’s more responsive and easier for the customers to place orders on their smartphones.
      2. To create a new mobile application in 2 months that can work in both operating systems (Android and IOS).

In three months after the mobile website and the new mobile application go live, online sales will increase at least 25%, customer satisfaction will increase at least 20%, and we can retain our loyal customers.

      • Online sales figures before the mobile solutions are introduced and three months after they go live will be compared.
      • Two surveys (before the mobile solutions are introduced and three months after they go live) will be conducted by a market research company to measure the satisfaction level of customers.
      • The customers who have bought items from our company for the last three years will be interviewed to understand if they still do their shopping at our grocery markets and on new mobile solutions.

 

  1. High-Level Requirements
      • The mobile website and smartphone application shall:
        • Include all the functions that a desktop website possesses.
        • Be accessed with the same login username and password.
        • Synchronize the customer profile and the cart with the desktop website.

 

  1. High-level project description, boundaries, and key deliverables

Needs Statements are retrieved from the business cases if available.

There has been a steady decline for the last six months in online purchases. Our company lost many customers due to the pandemic. Customers prefer buying online instead of visiting a store in person since they have serious concerns to contract Covid-19. Our fifty stores in five states lost around 30% of regular customers, and the revenue declined by 25% since the start of the pandemic restrictions in March 2020. When our business analysts investigated the issue by conducting a root-cause analysis, they found that many customers use their smartphones to buy online rather than using their desktop or laptop computers. When the customers visited our company’s website, they could not complete their online transactions since the website has not been optimized for mobile. Besides, we haven’t had a mobile application that our customers can use on their smartphones. E-commerce websites such as Amazon, and brick and click stores such as Walmart and Target, and grocery chains such as Whole Foods (through Amazon) are strong competitors from which customers can do their online shopping conveniently.

Therefore, our project has been initiated to optimize the desktop website on both Android and IOS smartphones and to create a new smartphone application. In this project, we are not directly targeting tablets since their screen size would allow us to display the regular desktop website. Besides, the smartphone application can be used in tablets.

  1. Assumptions and Constraints
      • Assumptions:
        1. A positive trend is expected in the long term that mobile e-commerce transactions will rise.
        2. Our current website will continue to function during the project.
        3. The owners and the top executives will continue to support this project.
      • Constraints:
        1. Some loyal customers who prefer in-person shopping may be resistant to change so that they may not want to use online shopping.
  1. Overall project risk
      • Shortage of web designers and mobile app developers
        • Due to the COVID-19 pandemic, there is a higher demand for web designers and mobile app developers. Besides, these qualified employees may not be available if they contract COVID-19 when they are working on our project.
      • During the execution of our project, customers may prefer to do their shopping on large e-commerce websites such as Amazon as they can find more varieties with lower prices and better deals. Therefore, our deliverables may not be utilized in the way that is desired.

 

  1. Summary Milestone Schedule

The project starts on May 2, 2022, and finishes on July 1, 2022.

      1. Kick-off: May 2, 2022
      2. Finalization of requirements elicitation: May 10
      3. Completion of analysis and design: May 25
      4. Completion of coding and testing: June 15
      5. Completion of alpha testing: June 20
      6. Completion of beta testing: June 30
      7. Customers can visit the mobile website and install the smartphone app: July 1, 2022

 

  1. Preapproved Financial Resources

The initial budget for this project was determined as $200,000. Two similar projects conducted and completed by two other companies were used. The itemized budget will be available and can be revised when the analysis and design are completed.

 

  1. Key Stakeholder List
  1. Project manager (Senior Systems Analyst)
  2. Project team members (The core team)
  3. Project sponsor (Chief Operations Officer – COO)
  4. Product owner (The representative from the operational department who was assigned by the COO)
  5. IT Department
  6. Sales Department
  7. Marketing Department
  8. HR Department
  9. Store managers and employees
  10. Suppliers
  11. Online customers
  12. Customers who visit the stores in person
  13. Government agencies that announce the pandemic restrictions

 

  1. Project Approval Requirements

The mobile website and the smartphone app will be subject to alpha testing first. Then, beta testing will follow, where customers can install the beta version on their smartphones and do their online shopping. During the implementation of the beta version, all the feedback from customers and their mobile devices will be evaluated and the bugs and problems will be corrected. When the mobile website and the app are fully functional, customers should log in with their usernames and passwords, browse items, add them to their carts, proceed to checkout, and complete their payment.

The sponsor must approve the sign-off after they receive the inspection and acceptance report.

 

  1. Project Exit Criteria
    • The project will be closed successfully if both deliverables pass beta testing and all the human resources working on this project are paid.
    • The project will be canceled if the financial situation of our company worsens significantly so that it is not possible to fund the project.

 

  1. Project Team
  1. Project manager: Senior systems analyst
  2. Two systems (business) analysts
  3. Two UI/UX designers
  4. Three developers (including Android and IOS developers, and the backend developer)
  5. Two testers (quality assurance engineers)
  6. Two sales and marketing experts

 

  1. Authority of the Sponsor

The COO (Chief Operations Officer) of Grocery LLC is the sponsor. The project manager will have the full authority to identify the necessary tasks and resources needed to complete all the project activities and deliverables. The sponsor shall authorize the project and assign the project manager when they approve this project charter.


  1. Project Management Institute. (2017). A guide to the Project Management Body of Knowledge (PMBOK guide) (6th ed.). Project Management Institute.
  2. Project Charter template from www.projectmanagement.com

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Project Management by Abdullah Oguz is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License, except where otherwise noted.

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