The Project Charter: Partnership Between Performing and Requesting Organizations

PMBOK v8 Definition

The project charter forms a partnership between the performing and requesting organizations. The approved business case, or similar item, justifies the reason behind initiating the project and the expected value. The approved project charter formally initiates the project, identifying and assigning a project manager as early as possible, ideally during the development of the charter and always before planning begins.

Why It Matters for the Exam

The project charter is a foundational concept tested in 15-20% of PMI exam questions, particularly in the Initiating Process Group. Questions frequently assess your understanding of when the project manager is assigned, what authority the charter grants, and how the charter differs from contracts in cross-corporate projects.

Key Points to Remember (for the exam)

• Main Purpose: Creates a partnership between performing and requesting organizations; formally authorizes the project
• Timing of PM Assignment: Project manager should be assigned as early as possible—ideally during charter development, always before planning begins
• Authority Granted: Charter grants the project manager authority to allocate organizational resources to project activities
• Key Inputs: Business case (justifies project initiation and expected value), benefits management plan, agreements, enterprise environmental factors, organizational process assets
• Cross-Corporate Projects: Contracts establish agreements between organizations; project charters create internal agreements to ensure fulfillment of contractual obligations
• Sponsor Role: Charter can be developed by sponsor or project manager in collaboration with the initiating entity
• Strategic Alignment: Projects are only authorized when aligned with the organization’s strategic objectives

Typical PMI Exam Example

A project involves two organizations: a customer and a contractor. The customer and contractor sign a contract defining delivery terms. Inside the contractor’s organization, a project charter is created to authorize the project manager to allocate resources and ensure the contractor fulfills its delivery obligations. The charter establishes the internal partnership between the performing organization (contractor) and the requesting organization (customer).

PMI Exam Traps

• Trap: Confusing the project charter with the contract

• Reality: Contracts are between organizations; charters are internal documents creating partnership and authority within one organization

• Trap: Thinking the project manager is assigned after the charter is approved

• Reality: The PM should be assigned during charter development, ideally before approval, and always before planning begins

• Trap: Believing the business case is part of the project charter

• Reality: Business case is a separate business document that originates outside the project and serves as an input to the charter

• Trap: Assuming the sponsor always writes the charter alone

• Reality: The charter can be developed by sponsor, PM, or PM team in collaboration with the initiating entity

Important PMI Connections

Quick Review Questions

1. When should the project manager be assigned relative to the project charter?

2. What document justifies the reason for initiating a project and the expected value?

3. In cross-corporate projects, what document establishes agreements between organizations, and what document creates internal agreements?

4. What authority does the project charter grant to the project manager?

5. Who can develop the project charter according to PMBOK v8?

PMBOK v8 Reference

Section 4.1 - Develop Project Charter (Initiating Process Group, Integration Management Knowledge Area)

Business documents (business case, benefits management plan) are inputs that originate outside the project. The approved charter formally initiates the project, establishes the partnership between performing and requesting organizations, and grants the project manager authority to allocate organizational resources.