Wednesday 2 February 2022

Project Charter or Project Contract?

We all know that at the start of the project, the PMI PMBoK methodology, it is prescribed to create a project charter. Writing the charter of the project is an important and rather painstaking process, as a result giving a formal "green light" to the start of the project. 


However, working on the side of the customer or contractor, the project manager perceives the goals and the process of creating a charter differently. 

Moreover, often, the project manager on the part of the contractor understands the creation of the project charter as some unnecessary work, due to the presence of a project contract.


 Let's try to look at a project, say, the implementation of a CRM system through the eyes of a project manager on the part of the customer and the project manager on the part of the contractor.

The project manager from the customer's side works, in most cases, in a matrix organization, where powers and responsibilities are distributed among employees on a functional basis. When starting a project to implement a crm system, he needs to go through a number of approvals from interested parties of the same rank, but at the same time different functions. Each functional unit will have its own declaration of goals and requirements. 


For example, 

a sales department will expect from the crm system of the web interface for agents, various checks of input data and protection "from a fool" carried out at the stage of sales registration (alas, often sales agents are not the most technological people and working with the CRM system can easily cause them difficulties), maximum automation in the registration of sales and reporting on sales. 


At the same time, the marketing department can expect from the implemented crm system flexibility in sales analysis, customer segmentation, reports on the effectiveness of marketing companies, etc. Each department interested in implementing a crm system pursues its own goals and often, the coordination of the project charter causes difficulties. It is the goals agreed upon by stakeholders that the project manager usually writes down in the project charter in a generalized form.

On the other hand, when implementing IT systems (including CRM systems), the customer's project begins when the contractor has not yet been selected, and therefore there is no project contract. Project members are mostly inside the organization and need an internal document that streamlines the relationships between project participants. This document is the charter of the project.

As opposed to the customer, a project manager on the contractor's side usually works for a design organization. He has a manager who authorizes the project and the project contract, and there is no need for lengthy approvals of the scope of the project within the company. The main persons negotiating the project contract on the part of the contractor are a representative of the selling unit, a lawyer, a representative of the financial department and the project manager. 


That is, the project manager does not need to monitor and take into account the interests of many interested parties, bring them to a consensus, as a result of long discussions of conflicting requirements, and fix it on paper in the form of a project charter. From this point of view, the need for a charter is not obvious.

The second feature, from the contractor's point of view, is that the project for the project manager, as a rule, starts either from the moment of obtaining an RFP for the implementation of the CRM system, or from the moment of signing the project contract. In both cases, there is a formal starting point for the start of the project (one of the purposes of the project charter). 


There are cases when the time of the project manager is spent on presale, while there is no formal starting point for the project, because a tender was not announced and there was no RFP. However, there are not too many such cases and time is spent on them, mainly employees of selling units, and not the project manager.

In general, the value of the project charter for the contractor, as we see from the example of the implementation of the crm system, is not always obvious (in contrast to the value of the project contract), but if you see that in your organization the goals of the projects change periodically, or you are afraid of it, write and approve the project charter.


 It won't get any worse, but he can help you. If you work on the customer's side, then from experience I know that you should always write a project charter, as well as conclude a project contract with a contractor.

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