importance of project charter

What is the Importance of the Project Charter?

There is excitement and anticipation at the start of every IT project. Although everyone involved is eager to get started, the first step in any project of this magnitude should be the creation of a project charter. In this article, we will look at the importance of project charter, its components, its benefits, and the process of a project charter.

What is Project Charter?

A project charter is a report which is provided by the sponsor or project initiator. It permits the emergence of the project and allows the project manager to use their power to use resources provided by the organization. It defines the authority of the project manager and also states the level of requirements that satisfy the stakeholders’ needs.

To create a project charter, the statement of the project and business case is the necessary documents. Business cases are mainly used to know the needs of the project, which include ecological impacts, market demands, organizational needs, technological advancements, etc. A business case is also an economic viability study that can trace and compare the progress of the project against the identified success factors. A business case ensures the approval of a project.

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Importance of Project Charter

A project without a charter can end up like a flop movie, similar to how a movie without a script can be a disaster. A project charter’s sole purpose is to document and acknowledge the project’s existence. This document will serve as proof that organizational resources have been committed to the project.

The main reason for a project charter is to formalize the authorization of a project and to give its consent to use resources provided by the organization. There is a chance for the project to get canceled without the project charter at any point in time and for any excuse. It can even be audited as an unofficial project.

We can consider a case where a project only begins for a couple of months and due to unfortunate circumstances the project manager has to resign from the project, a new project manager will be assigned. The beginning task for the authorised project manager is to look at the project charter to have a thorough understanding of the business needs and objectives of the project assigned.

The project charter helps the authorised manager to better describe the stakeholder, scope, goals of the project, and high-level deliverables. If a project does not have a project charter, it is going to be really difficult for the new manager to learn about the project.

Elements of the Project Charter

A project charter is a piece of document which provides an overview of the project without too much detail. It does not include a detailed end goal, costs, or schedule. The template of a project charter may include the following:

  • Project title and description
  • Purpose of the project
  • Project objectives
  • High-level description of the project
  • High-level assumptions and constraints
  • Stakeholders
  • Granting authorization to the project manager
  • Expectation of the project
  • Acceptance criteria
  • Summary of Project milestones
  • High-level risks
  • Name of the sponsor
  • Project closure and
  • Approval criteria.

Components of a Project Charter

A project charter refers to a document that outlines the targets, issues, and the framework for the process of improving efficiency. There are a total of 6 components of a Project Charter. These include:

  1. Problem Statement: A problem being captured
  2. Business Case: The business reason behind the project
  3. Goal Statement: The end target of the project
  4. Timeline: The different phases of the project are mentioned with their duration and completion time
  5. Scope: The in’s and out’s of the project
  6. Team Members: The members which will be part of the project

Project Charter Benefits

The project charter is critical to the project’s success. The project charter lays the groundwork for all future projects. It’s a great way for stakeholders to communicate and give the project direction.

  1. It grants the project manager the authority to finish the project.
  2. Explains the project’s value and existence in the business world.
  3. Demonstrates the project’s backing from management.
  4. Assists in the avoidance of stakeholder conflicts.
  5. Authorizes the project’s existence.
  6. Defines the framework where the PM has the authority to function
  7. Allows the PM to lay out money and obtain resources.
  8. Connects the initiative to the organization’s ongoing operations.
  9. Provides a simple and succinct reporting mechanism for a team.
  10. Provides the project’s high-level needs.

importance of project charter

5 Step Process for a Project Charter

  1. Initiator: Here the key stakeholders are identified, and the scope of the project is also identified. Understand the constraints of the project and identify the risks.
  2. Develop: Considered to be the crucial step in the development process, here goal, scope, and Timeline grow with workflow. Besides, the business case of the project is also set to grow.
  3. Get Agreement: Here there is an agreement between the sponsors and stakeholders of the project, a confidentiality agreement is also signed by the team members.
  4. Sign off by the Authority: The sponsor and stakeholders proceed by making signatures to the agreement and Project Charter.
  5. Publish the Project Charter: After completing the above steps and final check, the final step comes into action, where the Project Charter is ready to Publish.

A project charter refers to an essential document that is required to start a project. You will not be able to measure the favorable outcome of the project without the help of the project charter.


A Project Charter is a significant document as it makes sure that the PM is aware of the expectations and needs of the sponsor. It acts as the medium of passing information in a comprehensive way to the final party.

It gives you all the information you need to get started on the project. It serves as a reference to ensure that everyone is on the same page (for example, stakeholders, project managers, higher management, etc.). It even authorizes and safeguards the project manager by specifically stating the best interests that need to be achieved through the projects.

Salman Zafar

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