3.1 Project Charter

3.1.1 Project Initiation

In the initiation stage (Figure 3.1.1), 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, “Stakeholder Management.” The initiation of the project is a 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 prioritize addressing stakeholders’ expectations and concerns in order to properly determine all the components (e.g., scope, schedule, budget, resources, risks, and 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 developing a project charter. As with the project justification documents, low-complexity projects may have very short project charters, while higher-complexity projects may require longer, more comprehensive ones. In either case, the project charter has two important aspects: key stakeholders, including a detailed description of their roles and responsibilities and project success metrics.

3.1.2 Project Charter

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 champions” 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 as the “internal champion(s).” The sustaining sponsors are often leaders of the internal departments most affected by the project, such as a marketing 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 introduced changes. 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 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 escalation point 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 its 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.

3.1.2.1 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 develop one in their individual and team (group) assignments, as well as when they are involved in project teams. Our template has thirteen sections. The example for our Grocery LLC’s Mobile-Commerce Project below will elaborate on each section.

1. Project purpose
   • It describes the reason for initiating the project by highlighting problems and/or opportunities and provides an overview of the main objective to align the project with organizational goals.
2. Measurable project objectives
   • These are SMART objectives (see Section 2.2 SMART Objectives) that can be refined, detailed, and finalized in the Project Plan.
3. High-level requirements
   • These are business and stakeholder requirements (see Section 4.2 Eliciting Requirements).
4. High-level project description, boundaries, and key deliverables
   • This section summarizes the project’s scope, what is included and excluded, and identifies the main outputs or products to be delivered.
5. Assumptions and constraints
   • Assumptions are beliefs or statements taken to be true for the planning and execution of the project. They represent factors that, if different from what is assumed, could affect the project’s success.
   • Constraints are restrictions or limitations that set boundaries on how a project can be conducted. They define the limits within which the project team must operate and make decisions. These constraints typically originate from external or internal factors and are non-negotiable unless explicitly agreed upon by key stakeholders.
6. Overall project risk
   • These are the high-level risks that may affect the project in general, not only one or a few activities or decisions (see Chapter 10, Project Risks).
7. Summary milestone schedule
   • This section presents a high-level timeline of major milestones and their expected completion dates.
8. Preapproved financial resources
   • This section specifies the budget that was approved. Itemized budget that is created based on the activities and resource allocation is prepared during the project planning.
9. Key stakeholder list
   • This section includes the key stakeholders who have high interest and/or high power (see Chapter 5, Stakeholder Management).
10. Project approval requirements
    • These requirements are specific criteria or conditions that must be met for the project deliverables or phases to be formally approved by stakeholders.
11. Project exit criteria
    • These criteria are the conditions under which the project will be terminated, whether successfully (e.g., achieving objectives) or prematurely (e.g., due to issues that require early termination).
12. Project team
    • The roles, responsibilities, and contributions of the core team members are listed in this section.
13. Name and authority of the sponsor authorizing the project charter.

Below is an example of a short project charter for our 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 on weekdays. The second project aimed to create a new mobile application and make the current website compliant with smartphones. In Chapter 2, we performed a weighted scoring model to compute the total scores of project candidates based on various criteria that 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 and the increasing digitalization of companies and consumers, we will use this project in this chapter and the following chapters.