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
under budgeting 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 PMBOK recommendations 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
companys
management information systems is appropriate. Stakeholder and industry risk
tolerance
should be estimated and addressed. Personnel administration should also be
addressed as
the companys 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
teams 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 thingwe
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.