A project charter serves as the foundational document that formally authorizes a project and provides the project manager with the authority to allocate resources and execute the planned activities. Whether you are implementing a lean six sigma initiative or launching a new product development effort, a well-structured project charter is essential for project success. This comprehensive guide will walk you through all the critical sections of a project charter template and explain how to complete each component effectively.
Understanding the Importance of a Project Charter
Before diving into the specific sections, it is crucial to understand why a project charter matters. This document serves as a contract between the project sponsor, key stakeholders, and the project team. It establishes clear boundaries, objectives, and success criteria that will guide decision-making throughout the project lifecycle. Without a properly developed charter, projects often suffer from scope creep, misaligned expectations, and inadequate resource allocation. You might also enjoy reading about How to Define Project Scope: Setting Boundaries That Prevent Scope Creep.
In methodologies such as lean six sigma, the project charter is developed during the recognize phase, where organizations identify opportunities for improvement and define the project scope. This initial phase sets the stage for all subsequent project activities and ensures that everyone involved shares a common understanding of what the project aims to achieve. You might also enjoy reading about Define Phase vs. Traditional Project Kickoff: Why DMAIC Wins Every Time.
Essential Sections of a Project Charter Template
Project Title and Identification Information
The first section of your project charter should include basic identification information. This includes the project name, a unique project identifier or code, the date of creation, and the current version number. Additionally, list the project manager assigned to lead the effort and the executive sponsor who will provide organizational support and remove barriers. This section may seem straightforward, but it establishes the official record of the project and makes it easy to reference in future documentation. You might also enjoy reading about How to Write a Lean Six Sigma Project Charter: Step-by-Step Guide with Examples.
Project Purpose and Justification
This section answers the fundamental question of why the project exists. Clearly articulate the business case that justifies the investment of time, money, and resources. Explain the problem or opportunity that the project addresses and how it aligns with organizational strategic objectives. For lean six sigma projects developed during the recognize phase, this section should quantify the current performance gap and the potential benefits of closing that gap.
Strong justification connects the project to measurable business outcomes such as increased revenue, reduced costs, improved customer satisfaction, or enhanced operational efficiency. Executives and stakeholders will refer to this section when evaluating whether the project should continue to receive support and funding.
Project Objectives and Success Criteria
Project objectives should follow the SMART framework, meaning they are Specific, Measurable, Achievable, Relevant, and Time-bound. Rather than stating vague intentions, articulate precise outcomes that the project will deliver. For example, instead of writing “improve customer satisfaction,” specify “increase customer satisfaction scores from 3.2 to 4.0 on a 5-point scale within six months.”
Success criteria define how you will know when the project has achieved its objectives. These metrics should be quantifiable and verifiable. Include both project delivery success criteria, such as completing the project on time and within budget, and business outcome criteria that measure the actual impact of the project deliverables on organizational performance.
Project Scope Statement
The scope statement defines the boundaries of the project by describing what is included and, equally important, what is excluded. This section should detail the major deliverables, features, or functions that the project will produce. Be as specific as possible to prevent misunderstandings later in the project lifecycle.
Equally valuable is a clear statement of what falls outside the project scope. Explicitly listing out-of-scope items prevents stakeholders from developing unrealistic expectations and helps the project manager control scope creep. For lean six sigma projects, the scope statement should clearly define which processes, departments, or locations are included in the improvement initiative.
High-Level Requirements
This section summarizes the key requirements that the project must satisfy to meet stakeholder needs. These requirements typically fall into several categories including functional requirements that describe what the deliverable must do, technical requirements that specify how it will be built, quality requirements that establish performance standards, and compliance requirements that address regulatory or policy constraints.
At the charter stage, requirements do not need to be exhaustively detailed. The goal is to capture the most critical expectations that will shape project planning and execution. Detailed requirements analysis will occur later in the project lifecycle.
Key Stakeholders
Identify all individuals and groups who have an interest in or will be affected by the project. This includes the project sponsor, project manager, team members, customers, end users, and any other parties whose support is necessary for project success. For each major stakeholder or stakeholder group, briefly describe their interest in the project and their level of influence.
Understanding stakeholder dynamics from the beginning allows you to develop appropriate communication and engagement strategies. Some stakeholders will require frequent updates and active involvement in decision-making, while others only need periodic information about project progress.
High-Level Timeline and Milestones
While detailed scheduling occurs during project planning, the charter should include a high-level timeline that establishes major milestones and the overall project duration. Identify key decision points, phase completions, and deliverable due dates. This section helps set realistic expectations about when stakeholders can expect to see results.
For organizations using lean six sigma methodology, the timeline should align with the standard DMAIC phases: Define, Measure, Analyze, Improve, and Control. Each phase should have an estimated completion date to maintain project momentum and accountability.
Budget and Resource Estimates
Provide a high-level estimate of the financial and human resources required to complete the project. This does not need to be a detailed budget at the charter stage, but it should give decision-makers enough information to determine whether the expected benefits justify the investment. Include estimates for labor costs, materials, equipment, software, training, and any other significant expense categories.
Also specify the types and quantities of human resources needed, including full-time team members, part-time contributors, and subject matter experts who will provide specialized knowledge at key points in the project.
Assumptions and Constraints
Every project operates under certain assumptions about factors outside the project team’s direct control. These might include assumptions about resource availability, stakeholder support, technology capabilities, or market conditions. Documenting these assumptions makes it possible to monitor whether they remain valid as the project progresses.
Constraints are limitations that the project must work within, such as fixed deadlines, budget caps, regulatory requirements, or technological limitations. Clearly identifying constraints early helps the project team develop realistic plans and avoid pursuing approaches that are not feasible given these limitations.
Risks and Issues
At the charter stage, identify the most significant risks that could threaten project success. For each major risk, provide a brief description and indicate whether it relates to schedule, budget, quality, or scope. While comprehensive risk management planning will occur later, flagging critical risks in the charter ensures that they receive appropriate attention from the beginning.
If any significant issues already exist that could affect the project, document them in this section along with the planned approach for resolution.
Approval and Sign-Off
The final section of the project charter includes signature lines for key stakeholders who formally approve the project and authorize its initiation. At minimum, this should include the project sponsor and the project manager. In some organizations, additional stakeholders such as functional managers, customers, or executive committee members may also need to provide formal approval.
These signatures represent a commitment to support the project and an agreement that the charter accurately represents the project intent and scope. Without this formal authorization, the project lacks the organizational legitimacy needed to secure resources and overcome obstacles.
Best Practices for Creating an Effective Project Charter
To maximize the value of your project charter, involve key stakeholders in its development rather than creating it in isolation. Collaborative development ensures that different perspectives are considered and builds ownership among those whose support will be critical for project success. During the recognize phase of lean six sigma projects, this collaborative approach helps ensure that the right problems are being addressed and that solutions will be embraced by those who must implement them.
Keep the language clear and concise. The charter should be accessible to all stakeholders, including those without technical expertise. Avoid jargon when possible, and define specialized terms when they must be used. Remember that the charter serves as a communication tool, not just an administrative formality.
Treat the charter as a living document that can be updated if significant changes occur. While the charter provides stability and direction, projects sometimes encounter circumstances that require scope, timeline, or budget adjustments. When such changes are necessary, update the charter through a formal change control process and obtain renewed stakeholder approval.
Conclusion
A well-crafted project charter is an investment that pays dividends throughout the project lifecycle. By clearly defining purpose, scope, objectives, and stakeholder expectations from the outset, you create a foundation for effective decision-making and stakeholder alignment. Whether you are managing a lean six sigma improvement initiative that begins with the recognize phase or any other type of project, taking time to develop a comprehensive charter significantly increases your probability of success. Use this guide as a reference when creating your next project charter, and adapt the template to fit your organization’s specific needs and project management methodology.
