What is a Project Charter ? | Project charter vs Contract vs Statement of Work

What is a Project Charter ?

A Project Charter is a document that describes the purpose of a project and its scope, it legally authorizes the beginning of the project.It provides a preliminary delineation of roles and responsibilities, outlines the project objectives, identifies the main stakeholders, and defines the authority of the project manager. It serves as a reference of authority for the future of the project.

A project charter includes:

  • The essence of the project.
  • Provide a shared understanding of the project.
  • Act as a legal agreement between the project sponsor, key stakeholders and the project team to start the project.

The purpose of the project charter is to document:

  • Reasons for undertaking the project
  • Objectives and constraints of the project
  • Directions concerning the solution
  • Identifies the main stakeholders
  • In-scope and out-of-scope items
  • High level Risks identified
  • Target project benefits
  • High level budget and spending authority

Who creates the Project Charter or Who signs the Project Charter?

The project charter is a document that officially starts a project or a phase. It formally authorizes the existence of the project and provides a reference source for the future.It explain the business need that lead to the project being taken up.The project charter is signed by the sponsor.The charter is usually created by the sponsor or the initiator along with the project management team, however the task can be delegated to project manager.

Project Charter vs Contract

Many people do not understand the importance of a Project Charter. They believe that Project Charter does not serve any specific purpose.They do not realize Project Charter and Contract serve different purposes. They believe when contract is available project charter is not needed.

A Project charter recognizes & authorizes the project within an organization and  authorizes the start of the project whereas a Contract is a legally binding agreement between two different organizations (the Buyer and the Seller). A document issued by the Project Sponsor to the Project Manager that formally authorizes the existence of a project and provides the authority to the Project Manager to use organizational resources for the completing the project.

The Project charter is issued by the Project Sponsor whereas the Contract is negotiated & signed by the the buyer and the seller.Project charter gives the commitment from the Sponsor and other stakeholders to provide support to the project team.

Project Charter vs Statement of Work

We have seen the different between project charter (PC) and contract, lets talk about project charter vs sow.

To reiterate project charter formally authorizes the existence of a project and provides the authority to the Project Manager to use organizational resources for the completing the project.This is mainly used for internal project management.

Statement of work is a part of project charter, however in project charter it will be very short and crisp as at the time of initiation of project you may not have the detailed information of scope.The primary function of the SOW is to specify the deliverable or deliverable's that a vendor or internal department is responsible for. It must also specify timelines and define reporting responsibilities.

The SOW begins with the Scope Statement that describes the complete requirement of  project and goes on to provide detailed information on the deliverables.The sow will consist of scope of work, deliverables, due date, task responsibility, acceptance criteria, milestones etc. The SOW will describe the project manager, clients and stakeholders how the work will be tackled.

SOW is a part of panning process group, where as project charter is done in the initiating process group.

Project Charter Elements/What Is Included in the Project Charter?

The project charter includes fundamental information used to authorize and establish the basis for a project. We can say a simple project charter includes the below contents. These are required in a project charter template.

  • Project Title
  • Project Description
  • Business Case
  • Project Manager Assigned and Authority Level
  • Stakeholders
  • Resources Assigned
  • Deliverables
  • High Level Project Risks
  • Signature and Approval

Refer the project charter sample from below..

Project charter template word download or project charter template free download from here Project Charter.


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