8 Key Benefits of A Project Charter

Hi there! If you’re a project manager, or are interested in becoming one, you might be aware of something called the Project Charter. I’ve discussed this document before over here - but it is worth re-iterating why we would need one.

I've gone through many projects over the course of my career, and I can see that those which take the time to document a charter turn out much better than those which do not. This is true regardless of project size or nature.

So what exactly are the benefits of a project charter? Well, a project charter is absolutely critical for project success and we’ll go through its many advantages in this article.

1. Project Objectives

First up, the project charter makes it very clear where the project is going. It spells out what the project is trying to achieve.

Most senior project managers I know spell out project objectives in very business-focused and clear sentences, e.g. “Achieve 30% reduction in time for reconciliation of payments by the second quarter of 2014”, or “Improve top-line revenue by 5% by the fourth quarter of 2015”.

If you’re doing a system implementation project, the project objectives also spell out when the system will go live.

8 key benefits of a project charter 1 A project charter is important for specifying project objectives

2. Project Scope

The next important part of a project charter is the scope. A project always needs to be scoped out. If you don’t define the scope of a project, the chances of scope creep will be quite high.

After all, if we don’t have a reference point, how can we even determine what is out of scope?

An example of a good scoping statement in a project charter is e.g. “Functionalities covered are client account opening, credit monitoring and investment profiling only”.

3. Project Timeline

A project charter also spells out the timeline for the project. What tasks need to be done and who does what by when. A timeline helps to guide all work activities in a project, so that you know what is progressing, and what is being delayed.

A good project manager prints out the timeline from the project charter and tracks the tasks in extreme detail - one by one - each and every day. If a deadline has slipped, you’ll know that corrective actions need to be taken to prevent any downstream impact.

4. Roles and Responsibilities

Another important role of the project charter is to clarify roles and responsibilities. This is critical!

A project charter spells out who are the various players in a project - including vendors, project team members, business users and also management.

Always bring the roles and responsibilities upfront in a project. I find that many projects don’t like to discuss this - thinking it is a waste of time. However, when there is a crisis, knowing exactly who does what is very important.

Case Study. I was once running a core banking project in Malaysia. On the weekend the system was to go live, the cash balances in the old legacy system did not reconcile with those in the new system.

If you've been in a core banking project, you'll know what that means ... BIG TROUBLE! The go-live was at risk of being called off!

Fortunately, one of my team members remembered his role - and that was to confirm that specific scripts in the new system had been run. Once he did that, and we checked the balances again, they were in order! See what I mean about clarifying roles and responsibilities?

5. Project Approach

The project charter also spells out the project approach. Typically, the project approach consists of both a functional and technical approach.

If you’re implementing a core banking system, then how you gather requirements for account opening, client profiling, trade processing and payments would constitute the functional approach.

How you set up environments, what hardware and software is used, plus IT processes for supporting the new core banking system - would be considered the technical approach.

6. Change Control

A project charter also very importantly spells out the change control process. What should you do if a user feels that a system enhancement should be included in the final product, when it was originally not in scope?

Perhaps the change requires another 20 man-days of effort on the part of the vendor. This is known as a system change request. In a project charter, a flowchart is usually drawn to show how this type of change request should be routed between different stakeholders for approval.

7. Issue Management

The next thing that a project charter documents is the issue management process. Besides change requests, there are tons of other issues that a project manager needs to manage.

Without a proper issue management process (supported by good templates like an official issue log and project status reports), a project manager will soon be overwhelmed.

8. Contact Information

I also tend to record all team members’, vendors and business user names and contact information into a central project library. This is REALLY useful if you have a crisis and can’t seem to locate a key team member.

Just whip out the project charter and you’ll be able to find the person involved.

Wrapping Up ...

I hope the above has given you some insight into the benefits of a project charter. Remember, a project charter is absolutely critical for steering a project in the correct direction.

Without it, most projects (especially large scale ones like core banking) will go awry very soon.

The project charter is also useful when the project terms of reference become unclear - just take out the document and show everyone what was agreed before.

Ok - that’s all I have for now. Until next time, have fun managing your projects!

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