Section: Volume E
Explanation:
Process: 4.1. Develop Project Charter
Definition: The process of developing a document that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities.
Key Benefit: The key benefit of this process is a well-defined project start and project boundaries, creation of a formal record of the project, and a direct way for senior management to formally accept and commit to the project.
Inputs
1. Project statement of work
2. Business case
3. Agreements
4. Enterprise environmental factors
5. Organizational process assets
Tools & Techniques
1. Expert judgment
2. Facilitation techniques
Outputs
1. Project charter
4.1.1.2 Business Case
The business case or similar document describes the necessary information from a business standpoint to determine whether or not the project is worth the required investment. It is commonly used for decision making by managers or executives above the project level. Typically, the business need and the cost-benefit analysis are contained in the business case to justify and establish boundaries for the project, and such analysis is usually completed by a business analyst using various stakeholder inputs. The sponsor should agree to the scope and limitations of the business case. The business case is created as a result of one or more of the following:
Market demand (e.g., a car company authorizing a project to build more fuel-efficient cars in response to
gasoline shortages),
Organizational need (e.g., due to high overhead costs a company may combine staff functions and
streamline processes to reduce costs.),
Customer request (e.g., an electric utility authorizing a project to build a new substation to serve a new
industrial park),
Technological advance (e.g., an airline authorizing a new project to develop electronic tickets instead of
paper tickets based on technological advances),
Legal requirement (e.g., a paint manufacturer authorizing a project to establish guidelines for handling toxic
materials),
Ecological impacts (e.g., a company authorizing a project to lessen its environmental impact), or
Social need (e.g., a nongovernmental organization in a developing country authorizing a project to provide
potable water systems, latrines, and sanitation education to communities suffering from high rates of cholera).
Each of the examples in this list may contain elements of risk that should be addressed. In the case of multiphase projects, the business case may be periodically reviewed to ensure that the project is on track to deliver the business benefits. In the early stages of the project life cycle, periodic review of the business case by the sponsoring organization also helps to confirm that the project is still aligned with the business case. The project manager is responsible for ensuring that the project effectively and efficiently meets the goals of the organization and those requirements of a broad set of stakeholders, as defined in the business case.
