What Is a Project Charter?

In business, a project charter is a document that defines a project and presents authorization for it. It states the core goals, the values and the intent of the project. This ensures that all stakeholders agree on the purpose and scope of the project, which prevents confusion as the project gets underway. Though a project charter might not be required by law, it is a valuable tool used by project planners and other interested parties to keep the project organized and focused.

If a company has written project charters in the past, planners can use an old project charter as a template, but if not, templates are available both online and in business planning books and periodicals. Many of the details can be taken from the project proposal. A project proposal generally is written as a way of getting funding or support for a project. It lists the goals of the project and how those goals will be met.

To be useful, a project charter must include certain information. First, it should state the name of the project and the person in charge. It should outline the roles of key people, such as investors, managers and property owners, and it should define terminology. This allows everyone involved in the project to share the same vocabulary, making it much easier to discuss the project.

The project charter should also list the goals of the project. These should be the same goals that were put forward by the project proposal. Alteration to those goals should be evaluated and approved by all stakeholders before changes are made. Like any good goals, the goals set forth in a project charter should be specific and realistically achievable. A time line should be outlined so that stakeholders can evaluate progress.

Other key elements of a project charter are the priorities and scope. The priorities tell what goals are most important, and the scope describes what the project will and will not entail. These are important to prevent what is called scope creep — the gradual widening of a project's focus until it becomes an impossible-to-manage mess of goals that drain away time, money and resources.

In fact, a detailed description of the time, money and resources available for the project should also be included. Projected cost and available funds should be outlined, as should the deadline for when the project must be completed. Depending on the size of a project and the needs of individual shareholders, a project charter might include additional information, but it should never leave out any of these key points.