In the realm of project management and construction management, two crucial documents play pivotal roles during the project initiation phase: the business case and the project charter. These documents serve distinct yet complementary purposes, laying the groundwork for successful project development. In this blog post we will discuss the key differences and synergistic functions of these foundational documents and how they cater to different audiences. We will also examine how they guide and cross-check project implementation throughout its entire lifecycle.
1. What is their Purpose?
The business case and project charter serve distinct purposes in project management. A business case is a document that justifies the initiation of a project by outlining its benefits, costs, and risks, ensuring it aligns with organizational goals and objectives. It is created before project approval to assess the feasibility and potential return on investment. In contrast, a project charter formally initiates a project, defining its scope, objectives, and stakeholders. It authorizes the project manager to begin work and is typically created after the business case has been approved. While the business case provides the rationale for undertaking a project, the project charter sets the project in motion by establishing its foundational elements
– Business Case
– Explains why the project should be undertaken.
– Focuses on the business value, financial viability, and strategic alignment
. – Used to justify investment and secure approval from stakeholders or decision-makers.
– Project Charter:
– Officially authorizes the project and defines its boundaries, objectives, and key stakeholders.
– Serves as a reference document for the project team to understand the project’s goals and scope.
2. What type of project information do they contain?
The business case and project charter are two distinct documents in project management, differing in their content and purpose. A business case serves as a pre-project document that assesses the feasibility of a project idea. In contrast, a project charter normally initiates a project, providing a high-level overview of its scope, objectives, and stakeholders. It authorizes the project manager to begin work and is used as a reference throughout the project lifecycle. While the business case focuses on “why” a project should be undertaken, the project charter focuses on “what” will be done and “how” it will be executed.
– Business Case:
– Emphasizes financial analysis, including costs, benefits, ROI, and risk mitigation.
– Provides a high-level overview of the problem/opportunity and recommended solution.
– Includes details on market demand, competitive analysis, and alignment with organizational goals.
– Project Charter:
– Contains specific details about the project, such as objectives, scope, deliverables, timeline, and budget.
– Includes roles and responsibilities, key milestones, constraints, assumptions, and risks.
– Formal document that officially starts the project.
3. Which Audiences they are directed to?
The business case and project charter differ significantly in their intended audience. A business case is typically presented to senior management or project sponsors to justify the project’s feasibility and secure funding and resources. In contrast, a project charter is primarily shared with the project team and serves as a reference point throughout the project’s lifecycle. It formally initiates the project, defines its scope and objectives, and authorizes the project manager to proceed with the project.
– Business Case:
– Prepared for executives, investors, or other decision-makers who need to approve funding and prioritize resources.
– Project Charter:
– Used by the project team, project manager, and stakeholders to align on expectations and responsibilities once the project is approved.
4. How are they applied in the different project cycle phases?
The business case and project charter differ significantly in their timing within the project lifecycle. A business case is created before a project is approved, serving as a justification for the project by outlining its benefits, costs, and risks to determine its feasibility and alignment with organizational goals. In contrast, a project charter is developed after the project has been approved, formally initiating the project by defining its scope, objectives, and stakeholders, and authorizing the project manager to proceed. This sequence ensures that the project’s viability is assessed before it is officially launched.
– Business Case:
– Created before the project starts to determine whether the project is viable and aligns with business goals.
– Part of the pre-project or feasibility study phase.
– Project Charter:
– Created after the business case is approved** to officially initiate the project.
– Marks the beginning of the project planning phase.
5. What questions they answer during the projects cycle?
– Business Case:
“Why should we build this new residential complex? What benefits will it bring, and is it worth the investment?”
– Project Charter:
“How will we build the residential complex? What are the deliverables, timeline, and who is responsible for execution?”
6. Relation and Role of business case and project charter in the Project Phases
In the project cycle, the business case and project charter play distinct roles in different phases. The business case is developed during the pre-project phase to justify the project’s feasibility, outlining benefits, costs, and risks to determine if the project aligns with organizational goals. Once approved, the project charter is created in the initiation phase to formally authorize the project, defining its scope, objectives, and stakeholders.
The project charter serves as a foundational document that guides the project’s direction and ensures alignment among team members. As the project progresses into the planning phase, the charter provides a reference point for developing detailed project plans. Throughout the project lifecycle, these documents ensure that the project remains focused on its objectives and aligned with organizational goals.
1. Project Initiation Phase
– Business Case:
– Role:The business case is developed first during project initiation. It evaluates the problem or opportunity, provides justification for investment, and outlines potential benefits, costs, and risks.
– Outcome:Helps decision-makers determine whether the project aligns with organizational goals and should be approved.
– Project Charter:
– Role:Once the business case is approved and the project is greenlit, the project charter is created. It formalizes the project’s initiation, defining objectives, scope, and assigning a project manager.
– Outcome:Serves as a high-level guide for the project team and stakeholders, ensuring alignment on goals and constraints.
2. Planning Phase
– The business case provides context for detailed planning (e.g., scope, schedule, and budget), while the project charter acts as the foundation for creating the project management plan.
3. Execution and Monitoring Phases
– Business Case:
– Acts as a reference to ensure the project remains aligned with its intended business value. If the project starts to deviate, it may prompt a re-evaluation.
– Project Charter:
– Guides the project team to stay within the defined scope, timeline, and budget, ensuring proper governance.
4. Closure Phase
– Business Case:
– Used to evaluate whether the project achieved its intended business benefits (e.g., ROI, customer satisfaction).
– Project Charter:
– Verified during the final review to ensure all deliverables and scope were completed as agreed.
The business case and project charter are closely connected. The business case provides justification for the project, while the project charter formally authorizes its execution. Together, they create a seamless transition from strategic decision-making to actionable project management.
Sources:
[1] https://deeprojectmanager.com/business-case-vs-project-charter/
[2] https://accelerates.it/blog/project-management/project-charter-vs-business-case/
[3] https://firmbee.com/how-to-create-a-project-charter
[4] https://www.youtube.com/watch?v=o_5g1ep4Qnk
[5] https://asana.com/resources/project-charter
[6] https://projectmanagement.ie/blog/successful-project-manager-iii-the-project-charter-and-its-creation/
[7] https://www.reddit.com/r/pmp/comments/1ddc02y/difference_between_business_case_and_project/
[8] https://pressbooks.ulib.csuohio.edu/project-management-navigating-the-complexity/chapter/3-1-project-charter/
[9]https://www.greycampus.com/opencampus/project-management-professional/project-charter-business-case