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Inputs for Developing a Charter You Should Know for the PMP Certification Exam

Preparing a useful project charter is important knowledge to have when it comes to getting your PMP Certification and requires gathering a good bit of information about the project’s purpose and its expected benefits to the organization. The PMBOK Guide identifies these five inputs for the Develop Project Charter process:

  • Project statement of work (SOW): This narrative description of a project does the following:

    • Explains the business need that the project will fulfill

    • Clarifies the product of the project

    • Tells how the project aligns with the organization’s strategic plan

  • Business case: This information demonstrates the project’s value to the organization. Such value can be judged by these metrics:

    • Financial: Increased revenue, expense reduction

    • Nonfinancial: Customer loyalty, innovation

  • Agreement: For a project based on a contractual obligation, the agreement (contract) is an input to the project charter. Its contents include

    • The contract statement of work

    • Contractual requirements, terms, and conditions

  • Enterprise environmental factors (EEFs): These internal factors (such as organizational structure and human resource capabilities) and external factors (such as competition and regulations) affect whether you do a project and how you approach it.

  • Organizational process assets (OPAs): These comprise the policies, procedures, templates, and prior-project documentation that organizations use to manage projects in a consistent way.

Project statement of work

Not all organizations create a formal statement of work (SOW), so don’t be surprised if you haven’t seen one. For organizations that do have a formal project SOW, it could be created by the person requesting the project, or by a portfolio steering committee, the project sponsor, or the PMO.

When the PMBOK Guide refers to a SOW, it isn’t necessarily referring to one from a contract. Instead, this use of SOW refers to a narrative description of the project. If the SOW is from a contract, the term contract will be used in conjunction with SOW.

The SOW describes the business need and how the project will meet that need. It can also describe how the project is in alignment with the organization’s strategic plan.

Always make sure the following elements are documented:

  • Narrative description

  • Business need

  • Product description

  • Alignment with strategic plan

Business case

The business case documents the business reason for undertaking the project as well as the cost-benefit analysis. Much of the financial information used in the cost-benefit analysis comes from the project selection process. Many organizations use nonfinancial metrics to justify a project as well, such as customer loyalty, business process improvement, reduced employee turnover, innovation, and so on.

Review the business case periodically throughout the project to ensure that the assumptions on which the business case was built are still valid.

Agreements

Agreements can take the form of contracts, memorandums of understanding (MOU), letter of intent, or other written agreements. When doing work for an external customer a contract is used. If this is the case, you use the SOW contained in the contract to document information in the charter.

You would also look at any terms and conditions that provide direction on how the project should be performed, key milestone dates, funding constraints, and any other relevant information in the contract.

Enterprise environmental factors

Think about some of the enterprise environmental factors (EEFs) that might constrain or guide how a project is chartered. What are some of the internal factors? What are some of the external factors?

Internal factors that you definitely want to keep in mind include

  • Organizational structure of any organizations that are involved in the project

  • Information systems in an organization and their ability to share information

  • Human resources: their skills and availability

  • Portfolio management policies and processes

  • Project Management Office (PMO) policies and processes

  • Estimating, risk, and defect-tracking databases

External factors that can influence your project include

  • Industry standards that apply to products or services

  • Regulatory laws or codes you need to comply with

  • Governmental policies, restrictions, and political climates

  • Marketplace conditions that influence pricing and availability of materials and services

  • Competitor information, such as the number of competitors, opportunities, and threats based on your competition

  • Financing availability and rates

  • Pending legislation that could impact your products, services, and processes

  • Availability of resources, both physical and labor

  • Changes in the market, either from competition or economic factors

  • Economic influences, such as unemployment and availability of credit

All these EEFs can have an effect on whether you do a project, and how you approach it. Here are a few quick examples:

  • You work in a weak matrix organization. Therefore, your ability to negotiate for team members will frequently be overridden by functional managers. Additionally, most of your team members will have their regular work, and work for your project and other projects. This is an example of an internal environmental factor that relates to the organization.

  • Your organization does work for a government agency. The government is getting ready to mandate a particular type of reporting for all projects. This external environmental factor relates to governmental and regulatory topics.

  • The interest rate for borrowing money has been rising lately. Assumptions about the cost of money now may be different than it will be in six months when you’re estimating needing to draw from a line of credit. This is an example of an external environmental factor that relates to financing and the economy.

Organizational process assets

Organizational process assets (OPAs) are supposed to help you do your project. Some interesting ones for this particular process include

  • Organizational policies, procedures, and intranet sites

  • Templates for forms, reports, and documentation

  • Documentation from prior projects

  • Lessons learned from prior projects

Although the PMBOK Guide has this lessons learned concept throughout many of the processes, it isn’t always implemented well in the real world.

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