How to write a project charter (with a template for payments projects)

A project charter is a short document, issued by the project sponsor, that formally authorizes a project and gives the project manager authority to use the organization's resources on it. It records why the project exists, what it must achieve, what is in and out of scope, the main milestones and budget, the known risks and constraints, and who can decide what. Write it at the start, keep it to a few pages, and get the sponsor's approval in writing. The template below is built for payments projects, where external certification windows and control owners need a place on the first page.

What is a project charter?

PMI describes the charter as a document issued by the project initiator or sponsor that formally authorizes the project and gives the project manager authority to apply organizational resources to it. PMI's guidance also notes that the sponsor only has to authorize the charter, not write it; the project manager often drafts it. PMI: project charter, what it is and how to write one

The important word is authority. A charter answers three questions: does the sponsor want this project to exist, who leads it, and what can that person decide without going back to the sponsor?

PRINCE2 does not use the term "charter". Its closest equivalents are the project brief, produced when starting up a project, and the project initiation documentation, which the project board reviews before authorizing the project. AXELOS: PRINCE2 project brief · AXELOS: project initiation documentation

How is a charter different from a business case, PRD or project plan?

The charter points to the others instead of repeating them. The payment program business case guide covers the investment decision and the payments PRD template covers product requirements.

What sections should a project charter include?

PMI's guidance lists the business need, objectives and success criteria, high-level scope, key stakeholders, assumptions and constraints, and the sponsor and project manager, with risks, milestones and approval requirements in a fuller version. PMI: project charter For payments projects, add two fields that are often missed: external gates (scheme, partner or regulator approvals) and control owners (security, compliance, finance).

Project charter template

Copy this table and fill in the right-hand column. If a field cannot be filled, that is a finding: resolve it before work starts.

The "out of scope" and "authority" rows prevent most later arguments. Product vision boundaries and non-goals shows how to write exclusions that hold.

A payments integration charter (illustrative)

This example is invented. Names, numbers and dates are illustrative.

Two details reflect payments reality. The certification window is listed as an external gate because the acquirer controls it, and the project plans backward from it; payment partner certification covers that work. Compliance is asked a question rather than assumed: whether a change needs regulatory notice depends on the firm's license and the change, so the charter records who will confirm it.

Who writes and who signs the project charter?

The sponsor authorizes the charter. The project manager usually drafts it with the sponsor and key stakeholders. PMI's guidance recommends getting the authorization in writing, even if it is a one-line reply. PMI: project charter

Signatures should match decision rights:

• Sponsor: always. Without the sponsor's approval, it is a draft.
• Budget holder: if different from the sponsor.
• Control owners: acknowledge the constraints that concern them, for example security on PCI DSS scope. They do not approve the project, but they should not first hear of it at launch.
• Project manager: accepts the role and the authority limits.

In PRINCE2 the equivalent decision sits with the project board, with the executive as the final decision-maker. AXELOS: PRINCE2 roles

What are the most common project charter mistakes?

1. Objectives that cannot be checked. "Improve resilience" is a wish. "Fail over automatically within the agreed time" can be tested.
2. No out-of-scope list. Silence on exclusions is read as inclusion. This is where scope creep starts.
3. Writing the plan in the charter. Detailed task lists date quickly. Keep the charter at milestone level.
4. No authority limits. If the project manager's decision rights are not written down, every decision escalates or none does.
5. Signed by the wrong person. A charter approved by someone without budget or authority does not authorize anything.
6. Ignoring external gates. In payments, the scheme, partner or regulator date often sets the schedule. Leave it out and the plan is fiction.
7. Never revisited. The charter normally stays in place for the life of the project, but when scope, budget or sponsor changes materially, update it and re-approve the new version.

For where the charter sits among the other initiation steps, see what project management is.

FAQ

What is a project charter?

A short document, issued by the sponsor, that authorizes a project to exist and gives the project manager authority to use resources on it. It records the business need, objectives, scope, milestones, budget and risks.

Who signs a project charter?

The project sponsor, and the budget holder if different. Control owners often acknowledge relevant constraints, and the project manager accepts the role.

How long should a project charter be?

Usually one to a few pages. PMI's guidance describes it as concise and high level; detail belongs in the project plan.

What is the difference between a project charter and a project plan?

The charter authorizes the project and sets its boundaries. The plan describes how and when the work will be done, and changes much more often.

Is a project charter used in agile projects?

Often yes, in a lighter form. Even an agile team needs a sponsor's decision on purpose, boundaries, budget and the fixed external dates it must meet.