How to Create a Project Charter: A Practical Guide for Project Managers
Starting a project without clearly defined objectives, scope, responsibilities, and expectations can create confusion before the work even begins. A well-developed Project Charter helps prevent that by establishing a clear foundation for the project and aligning key stakeholders around what the project is expected to accomplish.
For project managers, the Project Charter is one of the most important artifacts created during project initiation. It provides direction, establishes authority, defines high-level expectations, and helps ensure everyone starts with a common understanding of the project.
In this guide, we’ll walk through what a Project Charter is, what it should contain, and how to create one.
What Is a Project Charter?
If you were to rank the most important project management artifacts, the Project Charter would easily be near the top of the list.
A Project Charter is a high-level document that formally establishes a project and provides direction and focus to the project team. It documents why the project exists, what it is expected to accomplish, and the boundaries within which the project will operate.
Depending on the organization, the charter may also formally authorize the project manager to use organizational resources to execute project activities.
A good Project Charter should:
- Formally authorize the project.
- Establish the project manager’s authority and responsibilities.
- Connect project outcomes to business and customer expectations.
- Define the project’s purpose and high-level scope.
- Establish shared goals and objectives.
- Communicate the organization’s commitment to the project.
- Provide important inputs for detailed project planning and the Project Management Plan.
Think of the Project Charter as the project’s foundation and initial agreement. It helps answer a few critical questions: Why are we doing this project? What are we trying to accomplish? What is included? Who needs to be involved? And how will we know whether the project has been successful?
What Should Be Included in a Project Charter?
There is no single format that works for every organization or project. A smaller internal project may require a relatively simple charter, while a large technology or transformation initiative may require considerably more detail.
Regardless of format, most Project Charters should address the following areas:
- Project Overview — A high-level description of the project and why it is being undertaken.
- Project Scope — What is included and, where appropriate, what is specifically excluded.
- Business Objectives — The business results the project is intended to achieve.
- Success Criteria — How stakeholders will determine whether the project has achieved its objectives.
- Stakeholders — The sponsor, customers, business representatives, project team, vendors, and other key stakeholders.
- Deliverables — The major products, services, capabilities, or outcomes the project will produce.
- Milestones — Significant events, target dates, decision points, or deliverables.
- Cost Estimates — Initial budget expectations or high-level cost estimates, when available.
- Assumptions — Conditions believed to be true for planning purposes.
- Dependencies — Other projects, teams, vendors, systems, or activities upon which the project depends.
- Constraints — Known limitations involving time, budget, resources, technology, scope, or other factors.
- Risks — Significant uncertainties or threats that could affect project objectives.
- Approvals and Signatures — Formal acknowledgement and approval from the project sponsor and other appropriate stakeholders.
The objective isn’t to document every detail of the project during initiation. Detailed planning comes later. Instead, the charter should provide enough information for stakeholders to understand and agree on the project’s overall direction.
How to Create a Project Charter
As the project manager, one of your first responsibilities is to gather enough information to understand the project’s purpose and stakeholder expectations.
Creating the charter should be a collaborative process. You will typically need to meet with the project sponsor, business stakeholders, functional leaders, subject matter experts, vendors, and other participants to understand the project’s objectives and expected outcomes.
Strong facilitation, communication, active listening, and questioning skills are especially important during this process.
Here are eight steps you can use to develop your Project Charter.
1. Review the Business Case
Start by understanding why the organization is investing in the project.
Larger projects—particularly those requiring significant financial or organizational investment—often have a business case or another form of project justification.
Review the business case for information such as:
- The business problem or opportunity.
- The proposed solution.
- Expected business benefits.
- Success criteria.
- Estimated costs.
- Financial justification.
- Strategic objectives.
The business case provides important context and can help you connect project objectives directly to organizational priorities.
2. Review the Statement of Work
If the project involves an external vendor or consulting arrangement, there may be a Statement of Work (SOW).
A Statement of Work typically defines services, deliverables, responsibilities, timelines, commercial terms, assumptions, and other contractual expectations.
Not every project will have an SOW. However, when one exists, review it carefully and use the relevant information when developing the Project Charter.
Pay particular attention to commitments involving scope, deliverables, milestones, responsibilities, assumptions, and deadlines.
3. Understand the Big Picture
Don’t begin filling out a template simply because you have some initial project information.
Take the time to understand the bigger picture.
Ask questions such as:
- What problem are we trying to solve?
- Why is this project important now?
- What business value should it deliver?
- What does the customer or sponsor expect?
- What does success look like?
- Are there specific deadlines driving the project?
- What could prevent us from succeeding?
Be proactive with your questions and practice active listening. Understanding the business purpose behind the project will make the charter—and your subsequent project planning—much stronger.
4. Identify the Key Stakeholders
Stakeholders are individuals or groups who can influence the project, participate in it, or be affected by its outcomes.
During project initiation, your stakeholders may include:
- Project sponsor.
- Executive leadership.
- Business owners.
- Functional managers.
- Product owners.
- Subject matter experts.
- Technology teams.
- Vendors and external partners.
- Customers or end users.
Identifying the right stakeholders early is important because these individuals can provide the information you need to properly define the project.
You don’t want to discover halfway through planning that an important stakeholder was never consulted.
5. Confirm the Project Scope
One of the most important conversations you will have during project initiation concerns scope.
Scope establishes the boundaries of the project and describes the work and outcomes the project is expected to deliver.
Work with stakeholders to clarify:
- What is included?
- What is not included?
- What are the major deliverables?
- What business areas are affected?
- What systems or processes are affected?
- What assumptions are being made?
- Are there known limitations or constraints?
If scope isn’t clearly understood, different stakeholders may develop different expectations about what the project will deliver. This can lead to misunderstandings, scope creep, rework, schedule delays, and dissatisfied customers.
Remember that scope definition can be iterative during initiation and planning. Your initial charter establishes the high-level boundaries, which can then be developed in greater detail during project planning.
6. Identify Project Assumptions, Constraints, and Dependencies
Projects rarely begin with perfect information.
Document the important assumptions being used to establish the project’s initial direction. An assumption is something believed to be true for planning purposes but that may need to be validated.
For example:
Assumption: The vendor will provide the required technical resources by the planned implementation date.
Also identify constraints and dependencies.
A constraint limits your options, such as a fixed deadline, budget limitation, or resource restriction.
A dependency is something the project relies on, such as another project completing work, a vendor delivering a component, or another department providing resources.
Documenting these items early makes hidden expectations visible and gives the project team an opportunity to validate them.
7. Identify High-Level Project Risks
You don’t need a fully developed risk register before completing your charter, but you should identify significant risks that are already known.
Ask stakeholders:
- What could prevent the project from succeeding?
- Are there resource concerns?
- Are there aggressive deadlines?
- Are we dependent on external vendors?
- Are there technical unknowns?
- Are there regulatory or compliance considerations?
- Are there important decisions that haven’t been made?
Document the most significant risks and their potential impact on the project.
Detailed risk identification, analysis, ownership, response planning, and monitoring can continue as part of the project’s overall risk management process.
8. Review the Charter and Obtain Approval
A Project Charter shouldn’t simply be completed and filed away.
Schedule a review with the project sponsor and appropriate stakeholders. Walk through the charter and confirm that everyone has a common understanding of the project’s objectives, scope, deliverables, milestones, assumptions, constraints, risks, and expectations.
Pay particular attention to scope.
Ask stakeholders directly:
Is this an accurate representation of what we are committing to deliver?
Resolve significant questions or disagreements before requesting approval.
Once the charter is agreed upon, obtain the appropriate approvals or signatures according to your organization’s governance process.
Remember: Creating a Project Charter Is an Iterative Process
You probably won’t have every answer during your first stakeholder meeting—and that’s okay.
Creating a Project Charter is an iterative process. Information will become clearer as you meet with stakeholders, review supporting documentation, validate assumptions, and better understand the project.
The goal isn’t to make the document unnecessarily complicated. The goal is to create clarity and alignment before detailed project planning and execution begin.
Keep the charter concise enough that stakeholders will actually read it, but detailed enough that the project’s purpose, objectives, boundaries, and expectations are clearly understood.
Project Manager Tip: Don't Just Fill Out the Template
One of the biggest mistakes a project manager can make is treating the Project Charter as an administrative exercise.
The value isn’t simply in completing the document.
The value comes from the conversations required to complete it.
Those conversations can uncover conflicting expectations, missing stakeholders, unclear scope, unrealistic deadlines, hidden assumptions, dependencies, and risks before they become larger project problems.
Use the charter-development process as an opportunity to ask questions, challenge assumptions, and establish alignment.
Get Started with a Project Charter Template
You don’t have to start your Project Charter from a blank page.
The Your Agile Project Manager Starter Toolkit comes with a Project Charter Template provides a structured starting point for documenting your project’s purpose, objectives, scope, stakeholders, deliverables, milestones, assumptions, dependencies, constraints, risks, and approvals. The Project Management Starter Toolkit provides 12 ready-to-use, customizable templates designed to help project managers plan, execute, monitor, and control projects more effectively. Developed with real-world project management practices in mind, it helps reduce administrative effort, improve visibility, and focus more time on delivering results.
Use the template as a guide while working with your stakeholders to establish a clear foundation for your project.
Get the Project Management Starter Toolkit
Conclusion
A well-developed Project Charter gives your project direction from the beginning.
It establishes the project’s purpose, defines high-level scope and expectations, identifies key stakeholders, documents important assumptions and risks, and creates a shared understanding of what the project is expected to accomplish.
As a project manager, don’t rush through this process.
Ask questions. Listen carefully. Challenge unclear assumptions. Confirm scope. Engage the right stakeholders. Most importantly, make sure everyone understands what the project is expected to deliver—and what it isn’t expected to deliver.
Starting with that level of clarity can prevent many of the misunderstandings and problems that projects encounter later.
A successful project doesn’t start with a schedule.
It starts with clarity.