Initiation of the Project

A project comes into existence with the creation of a formal document called the project charter. The project charter is a small document but one that is extremely important to getting a project started in the right direction. Projects are done for a number of reasons. Generally, for commercial companies, the reason for doing a project is to make money. There are many other reasons for doing projects, such as establishing goodwill, conforming to government regulations and laws, and attempting to stay current with developing technology.

Project Charter

In the third edition of the PMBOK®, PMI® has chosen to expand the content of the project charter. It also recommends that the contract with the customer be completed before the approval of the project charter. Some considerations must be made for this approach. The more information that is put into the project charter, the greater the possibility for people to disagree. If there is much disagreement about the project charter and its specific contents, there will have to be discussion and clarification in order to get managers to approve it. Since the project charter officially begins the project, work that is done prior to project charter approval may not be accounted for properly. This means that the effort taken prior to the approval of the project charter may not be properly accounted for. This in turn understates the true cost of the project and leads to underbud-geting of future projects when this project is used as a reference. I feel that project charters should be kept to a minimum in order to speed approval. The host of documents PMI considers could easily be done after the completion and approval of the project charter. For these reasons, in the real world of project management, some caution must be used when following the PMBOKrecommendations for the project charter.

The project charter should contain a statement of the purpose of the project and the project name. It should also contain the business case for doing the project, the needs and expectations of the stakeholders, a rough schedule and budget for the project, and a list of the assumptions and constraints that we recognize at this point in the project.

The project charter formally authorizes the project to begin and names the project manager. This is usually done by creating some sort of financial account that will allow costs to be accumulated for this project.

The project charter is written by the project manager, but it must be distributed under the signature of the person who is authorized to initiate or sponsor the project and create funding for the project. It would make no sense to have project managers creating and authorizing their own projects. However, it is important that the project manager actually write the project charter, because this is the first opportunity for the project manager to define the project as he or she sees it. Several documents should be done prior to the creation of the project charter.

Statement of Work

The statement of work is a narrative that describes what work will be done in the course of completing this project. The statement of work for the project can come in many forms. It can be part of the bid process or the request for proposals process. When coming in the form of a bid, the statement of work is defined by the organization requesting the bid. In the case of a request for proposals from outside the company, the statement of work is only functionally defined by the requestor and the detailed statement of work is proposed by the proposing organization. It can also be a statement of work required by part of our own organization.

Business Need

The business need is a statement of the need to do the project. This can be in the form of a request for a needed product or service that will result from doing the project.

Scope Description

The project scope description is a statement of the requirements of the project as they are seen today. The scope of the project at this point is not terribly detailed and will be progressively elaborated as the project plan unfolds. The project scope should be sufficiently detailed so that it can be used for planning purposes. The scope description should also show how the items described in the scope description relate to the business needs that were to be addressed by the project.

Environmental and Organizational Factors

This document should address all of the organizational factors surrounding the project and the marketplace. It should identify strengths and weaknesses in the environment in which the project will have to be done and the ability of the company to carry on the project. Since projects are so dependent on information, a statement of the company's management information systems is appropriate. Stakeholder and industry risk tolerance should be estimated and addressed. Personnel administration should also be addressed as the company's hiring and firing practices will have an effect on the ability of the project manager to add and remove people from the project team.

Organizational Process Assets

These items, included in the project charter or subsequent documentation, are the principal company documentation of standards and procedures already completed and available for the project to use. They include any standards that have been created for managing projects as well as lessons learned from previous projects, both successes and failures.

Also included are all procedural standards and communication policies, such as distribution of reports, the frequency of distribution, reporting of actual cost during the project, and the method used for reporting progress and performance of the project team. It should be noted that when we refer to the project team we include people normally considered outside the project, such as vendors and functional departments that do work for the project.

Change Management Procedure

The project charter should include the change management procedure. This procedure will need to be followed as soon as the baselines of the project are established. The procedure itself needs to be in place early so that stakeholders and project team members are aware of how changes to project scope, cost, and schedule should be processed.

Risk Control Procedures

As companies become more mature in the management of projects, the need for good risk management becomes more important. The project charter should contain the risk management procedures, the methods of identifying risk, and the methods for calculating impact, probability, and severity.

Organizational Knowledge Bases

The project charter should contain the lessons-learned documents, including progress and performance, identified risks and the results of risk management, financial data, issue and defect management, and history from previous related projects.

Constraints and Assumptions

In addition to the project charter, any constraints that will limit the project team's choices in any of the project activities must be noted. Predetermined or edicted project schedules, project completion dates, and project budgets need to be reckoned with early in the project.

Assumptions must be made for the purpose of planning the project. These will be considerations for the availability of resources, other needs and expectations, vendors, start dates, contract signing, and others. Assumptions are not a bad thing—we make assumptions every day. From the moment we get out of bed each morning we assume that the electricity will work and the water will come out of the faucets. To successfully plan a project many assumptions will be made or the project will never get started.

Project Selection Methods

This section of the project charter should outline the standard methods that should be used in justifying projects. It should include the methods that can be employed during different times of the project life. In the early stages of the project when only small commitments are being made, fairly easy but less accurate justification methods, such as ''breakeven'' analysis or the calculation of ''payback points,'' can be employed. As the project develops, more complete and accurate justification methods can be used. As the amount of money committed to the project increases it is necessary to have more detailed and accurate project justifications, such as the ''internal rate of return on investment'' calculation. These will be discussed in detail later in this chapter.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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