Every successful project starts with a clear road map. Whether you’re launching a new product, revamping your website, or expanding into new markets, a project charter acts as your North Star—defining what you’re building, why it matters, and how you’ll get there.
As a business owner, you juggle big goals like gaining market share or increasing profit alongside smaller objectives like upgrading your inventory management systems or launching a marketing campaign. A project charter helps you tackle these goals systematically, ensuring everyone’s aligned before you begin.
If you’re launching a new project, a project charter can help you set goals, boundaries, and expectations for your team members and key stakeholders. Here’s how to create one that drives results.
What is a project charter?
A project charter is a short document—from a few paragraphs to a few pages—detailing the purpose, scope, and goals of a specific project. It serves as the first formal reference point for team members and stakeholders, including project managers, sponsors who provide resources, and those responsible for execution.
For example, a product manager at a furniture company might draft a project charter for a product line extension of desk chairs with size and color variations. After sharing it with senior management and marketing for approval, the manager can use the charter to align the product team on the project’s goals, resources, scope, and overall purpose.
Project charter vs. project plan
A project charter and project plan (also known as a project management plan) are both project documents businesses use to outline a project, but they serve different functions.
-
Project charter. A project charter typically documents high-level needs and goals in a short, focused document managers can use to establish and approve projects. Teams create project charters as the first official step toward a new endeavor in the project initiation phase.
-
Project plan. A project plan is a detailed document outlining every step of a project, defining the specific actions needed to bring that project to life. It’s a comprehensive follow-up document created once a project receives approval.
What are the benefits of a project charter?
- Authorizes the launch of a project
- Establishes responsibilities for a project team
- Helps avoid scope creep
A well-crafted project charter delivers three key business benefits:
Authorizes the launch of a project
Project charters act as the first formal document managers use to authorize and initiate a new project. For example, a website designer could create a project charter document to define the scope and objectives of a new site design and submit it to senior management for approval.
Because a project charter outlines the scope of work and required resources. It serves as a key document when deciding whether to invest financial, human, and technological resources in a new project.
Establishes responsibilities for a project team
A successful project requires clear division of responsibilities and communication between team members. A project charter helps set expectations and establish explicit roles for everyone involved.
For example, the website redesign project charter could assign website copy responsibilities to a content writer on the team. While site optimization responsibilities go to a third-party user experience (UX) designer.
Helps avoid scope creep
Scope creep occurs when a project’s boundaries continually expand, leading to unexpected resource needs like a larger budget, more personnel, or a longer timeline. Defining the scope upfront helps set clear limits and prevent this from happening.
For example, an ecommerce merchant could create a project charter for opening a brick-and-mortar retail store with a specific budget and timeline. They could regularly compare the resources allocated to the new store against the project charter to monitor progress and avoid unwitting scope creep.
When do you need a project charter?
Create a project charter when you’re in the early stages of a project and need to clearly define its overall purpose and objectives—but only after you’ve decided what the project will be. Use it to gain buy-in from a project sponsor and key project stakeholders. For example, a marketing manager might draft a project charter for a new influencer marketing campaign to share with the CEO for approval.
Project charters keep stakeholders informed about your project’s purpose, scope, and progress, making them especially useful for public companies with shareholders and larger private companies with multiple departments and employees.
A solo entrepreneur without other stakeholders might choose to start directly with a project plan instead of creating a project charter for approval.
What are the elements of a project charter?
A project charter includes several sections that you need to research and gather information about before drafting your document. Here are the key elements:
-
Business case. A business case describes your project’s purpose, justifying it based on expected benefits or potential value.
-
Project scope. A project scope statement sets project boundaries, outlining what the project involves and specifying what’s excluded to establish clear limits and constraints.
-
Project objectives. These are the specific goals the project aims to achieve, measured by key metrics to track progress.
-
Resources needed. This section describes the organizational resources allocated to the project, including financial resources like the project budget, and human resources like the time commitment from team members.
-
Project stakeholders. Project stakeholders are those with a vested interest in the project. Key stakeholders include department heads, managers, senior executives, team members, shareholders, investors, suppliers, and even customers.
-
Project timeline. Define the expected timeline for completing the project, including major milestones.
How to write a project charter
- Discuss the project with team members and stakeholders
- Set measurable SMART goals for the project
- Use a project charter template
- Share your project charter draft with the project sponsor
- Refine your project charter as needed
- Use project management tools
Here’s how to create your own project charter:
Discuss the project with team members and stakeholders
A successful project charter requires collaboration and communication. Involve key stakeholders and project team members in discussions about your project charter from the start.
For example, if you run an ecommerce store selling cosmetics, you might decide to invest in a loyalty program to encourage repeat purchases. In this case, meet with your sales and marketing teams to define the objectives, and consult your web development team to assess the resources needed to implement the program.
Set measurable SMART goals for the project
Use the SMART goals framework to define your project objectives by breaking them down into five components:
-
Specific. Set specific project goals (using the loyalty program example, you could include how many customers you want to bring into your new program).
-
Measurable. Establish the key metrics for evaluating success criteria. For example, use key performance indicators (KPIs) like customer retention rate and customer lifetime value (CLV) to understand how well your program works.
-
Attainable. Make sure your project objectives are realistic enough for you and your team to achieve.
-
Relevant. Define how your project objectives align with your overall business goals—for example, increased sales from repeat customers through your loyalty program.
-
Time-bound. Set goals with defined deadlines for your project (like when you’ll get your loyalty program up and running on your site).
Use a project charter template
Use a project charter template to build out the key components of your project charter. Using a consistent template across projects keeps your approval process streamlined and standardized.
For example, you could use the same project charter template for your loyalty program and other relevant projects, like new cosmetic product development or market expansion.
Share your project charter draft with the project sponsor
A project sponsor is the individual ultimately responsible for evaluating project risks and opportunities to decide whether it’s worth pursuing. The project sponsor signs off on the project charter, providing the approval needed to allocate resources and officially begin.
Project sponsors include CEOs, department heads, and senior-level managers or executives. Some projects have several project sponsors, especially at larger or public companies that need approval from shareholders or investors before moving forward.
Refine your project charter as needed
As you apply organizational resources to your project, regularly review your SMART goals to evaluate project success or identify issues using measurable metrics.
Avoid changing goals during the project lifecycle to prevent scope creep—but stay flexible enough to adjust elements of your strategy based on performance. For example, if customers aren’t joining your paid loyalty program due to mandatory fees, you might switch to a fee-free, point-based system to increase participation.
Use project management tools
Research project management tools you can use to manage the execution of your project charter. You might download a project management software tool like Asana or Airtable to create task lists and calendars your team can reference as they build your loyalty program.
Software tools can help establish automated workflows to facilitate easy collaboration between project team members, project managers, and project sponsors.
Project charter FAQ
What is the primary purpose of a project charter?
The primary purpose of a project charter is to outline a project’s goals, scope, and overall purpose for approval in the initial phase of that project.
What are the six elements of a project charter?
The six main elements of a project charter include a business case, project scope, project objectives, resources needed, project stakeholders, and project timeline.
Who writes a project charter?
A project manager typically writes a project charter, although it can involve gathering input from a range of participants, from senior executives and project sponsors to team members implementing the project.
