Project Charters and Project Environments

Overview

All projects are undertaken for a reason.  Some projects can be initiated for business reasons (i.e., strategic objectives) such as increasing profits, decreasing customer wait time, and improving employee working conditions. Other projects exist for social reasons such as a municipal recycling system  or installing clean energy solutions. Often, the pressure to produce results encourages people to identify possible solutions without fully understanding the needs and purposes of the project. This approach can create a lot of immediate activity, but it also creates the likelihood that the change initiative will fail to deliver the proposed organizational value.

As detailed, one of the best ways to gain approval for a project is to clearly communicate the project's objectives and describe how the project provides a solution for an organizational need or how it capitalizes on a business opportunity. A needs analysis that accompanies a business case is often conducted to better understand the underlying organizational needs and how meeting these needs would help the organization achieve strategic objectives (e.g., increase profits, improve customer experience, develop new products). Once alternative solutions are identified, each solution is assessed to determine if it supports the organization's vision and strategies. Issues of justification ("should we do the project?") and feasibility ("can we do the project?") are addressed for each solution. Finally, some projects are selected to initiate. It is important to note that project justification is a key part of the project initiation phase: a project must have a reason to exist and, if no such justification can be determined, then it's best to stop the project before too much time, money, and resources are invested in it. If issues of justification are not adequately addressed, the project will lack the required organizational support and, therefore, will ultimately be unsuccessful.

Source: Abdullah Oguz, https://pressbooks.ulib.csuohio.edu/project-management-navigating-the-complexity/chapter/3-0-learning-objectives-and-overview/
This work is licensed under a Creative Commons Attribution 4.0 License.

Project Charter

Project justification starts when a business case is prepared which addresses the needs, and feasibility of solutions. Project managers may be involved during this phase though it is also common not to have a project manager in this pre-project work. In organizations having a Project Management Office (PMO) or a program department, project managers, or a team of project managers and their assistants, could participate in developing the business case with business analysts, subject matter experts, and representatives from relevant departments. A business case could be prepared during the initiation if it wasn't made in the pre-project phase.

When a project selection committee decides to go with some of the projects proposed, the sponsor, business analysis team, relevant departments, or selection committee members can start the preparation of a project charter which will allow the formal authorization of the existence of a project. A project charter provides the project manager with the authority to apply organizational resources to project activities. Developing a project charter requires inputs such as business documents (business case, needs analysis, and benefits management plan), agreements, enterprise environmental factors (discussed in Project Environment below), and organizational process assets. A project charter is necessary to initiate both internal projects at which a client is a unit in our organization and external projects at which the client is outside our organization. If we are conducting a project with an external client, the two parties (i.e., our organization and the external client) will also need a formal and legally binding contract to establish an agreement.

In the initiation stage (Figure 3.1), there are two main processes according to the PMBOK Guide 6th edition: Developing a project charter and identifying stakeholders. The former process will be discussed in detail in Chapter 5 "Stakeholder Management". The initiation of the project is the process group to start developing the project infrastructure to support all the activities associated with planning, executing, monitoring, and closing the project. In this stage, project managers should give the priority to address stakeholders' expectations and concerns in order to properly determine all the components (e.g., scope, schedule, budget, resources, risks, quality) of the project. Therefore, project managers conduct one or more kickoff meetings to align all the various stakeholders. The strength of the initial alignment will have a big impact on project success. At this early stage, project managers learn how to identify the appropriate means of communication with key stakeholders. Effective communication with project stakeholders is another critical success factor so this work must begin early (see Chapters 5 and 6).Initiation is the first project life cycle stage to begin team building and developing collaborative approaches for working together. During the kick-off meeting, the project manager, the team, or the sponsor should share the information below with the main stakeholders involved:

• The project's objectives
• Known priorities and success metrics
• Organizational constraints and related trade-offs
• A high-level description of the project scope
• Key milestones
• An initial list of project risks
• Key stakeholders

After the initial kick-off meeting, subsequent meetings with primary stakeholders lead to more clarification and elaboration on the information above and the development of a project charter. Just like with project justification documents, low complexity projects may have very short project charters while higher complexity projects may require longer, more comprehensive project charters. In either case, there are two very important aspects of the project charter: key stakeholders including a detailed description of their roles and responsibilities, and project success metrics.

A project charter must be approved by the project sponsor. The project sponsor is the most powerful stakeholder and is usually an executive in the organization with the authority to assign resources and enforce decisions regarding the project. They often initiate the project and, as such, are often referred to as the "initiating sponsor." A project sponsor has the authority to start and stop the project and will support the completion of project objectives by removing the barriers to success. They can be regarded as the "external champion" because they often serve as the last escalation point when the project team needs support bringing an off-track project back on track. Successful project teams know how to leverage the power and position of the project sponsor and will proactively ask them to deliver influencing communications throughout the organization in order to maintain the project's momentum and high morale within the team. Many project sponsors can assign one or more sustaining sponsors to act as the "internal champion(s)" of the project. The sustaining sponsors are often leaders of the internal departments that are most affected by the project, such as a marketing manager or human resources manager. When the project sponsor selects the sustaining sponsor(s), one of their goals is to ensure that the project team frequently considers the organizational impacts of the changes being introduced. By keeping the sustaining sponsor(s) actively engaged in the project, they will ensure their teams are intently participating in the project and identifying the operational impacts that must be considered in order for the change to be sustained once the project has been completed. On a day-to-day basis, the sustaining sponsor(s) act as the first point of escalation as issues/risks are raised.

The project charter formally recognizes the existence of the project by presenting the project leader's understanding and conceptualization of the project's objectives. Most importantly, it authorizes the project leader to apply organizational resources to achieve the project's objectives. Once the Charter is approved and formally signed off, it becomes an agreement between the project leader and the project sponsor. As such, some organizations prefer to refer to this document as a letter of agreement instead of a project charter. Approval of this document, whether a letter of agreement or a project charter, signals the transition into the planning phase of the project.

The Content of a Project Charter

A project charter is a necessary document to initiate a project. Organizations may have different templates for a project charter. Below is a generic template for a project charter that would help students understand the main components and hence develop one in their individual and team (group) assignments, and when they are involved in project teams. Our template has thirteen sections. Case Study 3.1 below will elaborate on each section.

1. Project purpose
2. Measurable project objectives
3. High-level requirements
4. High-level project description, boundaries, and key deliverables
5. Assumptions and constraints
6. Overall project risk
7. Summary milestone schedule
8. Preapproved financial resources
9. Key stakeholder list
10. Project approval requirements
11. Project exit criteria
12. Project team
13. Name and authority of the sponsor authorizing the project charter.

Case Study 3.1: Project Charter of Grocery LLC's Mobile-Commerce Project

In Chapter 1, we started evaluating the uniqueness and temporary nature of the two projects. The first project aimed to establish self-checkout areas at all fifty markets across five states to solve the problem of more than usual traffic between 4 pm and 7 pm during the weekdays (Case 1.1). The second project aimed to create a new mobile application and make the current website compliant with the smartphones (Case 1.2). In Chapter 2, we performed a weighted scoring model (Table 2.8) to compute the total scores of project candidates based on various criteria which are not only dependent on financial factors and chose projects A (self-checkout stations) and D (m-commerce). Project D addressed the problem of declining sales at Grocery LLC's all fifty markets in general with the onset of the COVID-19 pandemic. Considering the priority of the project and the pessimistic trends forecasted regarding the pandemic as well as the increasing digitalization of companies and consumers, we will use this project in this chapter and the following chapters.

1. Project Purpose:

To create solutions for customers who purchase goods and services from our grocery stores through their smartphones.

2. Measurable Project Objectives:

1. 1. 1. To redesign the website in 2 months so it's more responsive and easier for the customers to place orders on their smartphones.
      2. To create a new mobile application in 2 months that can work in both operating systems (Android and IOS).

In three months after the mobile website and the new mobile application go live, online sales will increase at least 25%, customer satisfaction will increase at least 20%, and we can retain our loyal customers.

1. 1. • Online sales figures before the mobile solutions are introduced and three months after they go live will be compared.
      • Two surveys (before the mobile solutions are introduced and three months after they go live) will be conducted by a market research company to measure the satisfaction level of customers.
      • The customers who have bought items from our company for the last three years will be interviewed to understand if they still do their shopping at our grocery markets and on new mobile solutions.

3. High-Level Requirements
   • • The mobile website and smartphone application shall:
       • Include all the functions that a desktop website possesses.
       • Be accessed with the same login username and password.
       • Synchronize the customer profile and the cart with the desktop website.

4. High-level project description, boundaries, and key deliverables

Needs Statements are retrieved from the business cases if available.

There has been a steady decline for the last six months in online purchases. Our company lost many customers due to the pandemic. Customers prefer buying online instead of visiting a store in person since they have serious concerns to contract Covid-19. Our fifty stores in five states lost around 30% of regular customers, and the revenue declined by 25% since the start of the pandemic restrictions in March 2020. When our business analysts investigated the issue by conducting a root-cause analysis, they found that many customers use their smartphones to buy online rather than using their desktop or laptop computers. When the customers visited our company's website, they could not complete their online transactions since the website has not been optimized for mobile. Besides, we haven't had a mobile application that our customers can use on their smartphones. E-commerce websites such as Amazon, and brick and click stores such as Walmart and Target, and grocery chains such as Whole Foods (through Amazon) are strong competitors from which customers can do their online shopping conveniently.

Therefore, our project has been initiated to optimize the desktop website on both Android and IOS smartphones and to create a new smartphone application. In this project, we are not directly targeting tablets since their screen size would allow us to display the regular desktop website. Besides, the smartphone application can be used in tablets.

5. Assumptions and Constraints
   • • Assumptions:
       1. A positive trend is expected in the long term that mobile e-commerce transactions will rise.
       2. Our current website will continue to function during the project.
       3. The owners and the top executives will continue to support this project.
     • Constraints:
       1. Some loyal customers who prefer in-person shopping may be resistant to change so that they may not want to use online shopping.

6. Overall project risk
   • • Shortage of web designers and mobile app developers
       • Due to the COVID-19 pandemic, there is a higher demand for web designers and mobile app developers. Besides, these qualified employees may not be available if they contract COVID-19 when they are working on our project.
     • During the execution of our project, customers may prefer to do their shopping on large e-commerce websites such as Amazon as they can find more varieties with lower prices and better deals. Therefore, our deliverables may not be utilized in the way that is desired.

7. Summary Milestone Schedule

The project starts on May 2, 2022, and finishes on July 1, 2022.

1. 1. 1. Kick-off: May 2, 2022
      2. Finalization of requirements elicitation: May 10
      3. Completion of analysis and design: May 25
      4. Completion of coding and testing: June 15
      5. Completion of alpha testing: June 20
      6. Completion of beta testing: June 30
      7. Customers can visit the mobile website and install the smartphone app: July 1, 2022

8. Preapproved Financial Resources

The initial budget for this project was determined as $200,000. Two similar projects conducted and completed by two other companies were used. The itemized budget will be available and can be revised when the analysis and design are completed.

9. Key Stakeholder List

1. Project manager (Senior Systems Analyst)
2. Project team members (The core team)
3. Project sponsor (Chief Operations Officer – COO)
4. Product owner (The representative from the operational department who was assigned by the COO)
5. IT Department
6. Sales Department
7. Marketing Department
8. HR Department
9. Store managers and employees
10. Suppliers
11. Online customers
12. Customers who visit the stores in person
13. Government agencies that announce the pandemic restrictions

10. Project Approval Requirements

The mobile website and the smartphone app will be subject to alpha testing first. Then, beta testing will follow, where customers can install the beta version on their smartphones and do their online shopping. During the implementation of the beta version, all the feedback from customers and their mobile devices will be evaluated and the bugs and problems will be corrected. When the mobile website and the app are fully functional, customers should log in with their usernames and passwords, browse items, add them to their carts, proceed to checkout, and complete their payment.

The sponsor must approve the sign-off after they receive the inspection and acceptance report.

11. Project Exit Criteria

• • The project will be closed successfully if both deliverables pass beta testing and all the human resources working on this project are paid.
  • The project will be canceled if the financial situation of our company worsens significantly so that it is not possible to fund the project.

12. Project Team

1. Project manager: Senior systems analyst
2. Two systems (business) analysts
3. Two UI/UX designers
4. Three developers (including Android and IOS developers, and the backend developer)
5. Two testers (quality assurance engineers)
6. Two sales and marketing experts

13. Authority of the Sponsor

The COO (Chief Operations Officer) of Grocery LLC is the sponsor. The project manager will have the full authority to identify the necessary tasks and resources needed to complete all the project activities and deliverables. The sponsor shall authorize the project and assign the project manager when they approve this project charter.

Project Environment

When the business case and the project charter, and later, the project management plan and its subcomponents are prepared, the project environment surrounding the project should be examined thoroughly to delineate the factors that may have a negative or positive impact on the project activities and its outcomes. In PMBOK Guide 6th Edition, this environment is composed of enterprise environmental factors (EEFs) and organizational process assets (OPAs). PMBOK Guide 7th edition refers to them as the project environment. The project environment is composed of two components – internal and external, which are described in detail in the following sections.

Internal Environment

The internal environment in which a project is developed consists of the factors that are internal to the organization, but outside the project itself. These factors include elements such as organizational culture, structure, and governance as well as security and safety measures. Other tangible elements include geographic location as well as distribution of facilities and resources, infrastructure, IT software and hardware, resource availability, and employee capability. The internal environment also includes organizational process assets, which are processes, policies, and procedures as well as organizational knowledge bases (e.g., financial data, historical information, lessons learned, project files from previous projects).

Consider the project charter example above. While we are creating the business case as well as preparing the project charter and project management plans, it would be wise to incorporate all the factors that may affect the mobile app and website optimization project. We should enumerate the main properties of our grocery store chain, some of which are provided below:

• Strategic objectives, mission, and vision
• Organizational values and beliefs
• Cultural norms that influence the relationships among coworkers
• Code of conduct
• The number of employees
• Geographic locations and the size of the stores
• Variety of the products and services sold
• Financial situation

We should also take into account the organizational structure of the headquarters and all the branches. This also helps us identify internal and external stakeholders who are affected by our project and who may affect our project. Additionally, this helps us identify the dependencies among the departmental units, and also identify internal resources that might need to be utilized to complete the project. Reporting structure inside the organization could influence our project's decision-making and change request processes. When our project needs to utilize hardware and software tools to facilitate the activities, we can obtain them in an expedited way directly from the assets of our organization, which also saves the budget. When we need resources such as human resources, materials, and equipment, since we have already delineated the organizational structure with tasks and responsibilities of each unit, we can benefit from the agreements which have already been made with approved providers and subcontractors. Another advantage of listing all the capabilities of our organizations would be when we establish the project team. If our organization employs business or systems analysts, developers, user interface designers, or testers, we can ask their managers or executive-level managers above these managers to provide these qualified employees with specialized knowledge for our project. This may also reduce the external risks that we may face if we hire them from outside our organization. We will elaborate on the organizational structure in the "Organizational Structure" section below.

External Environment

A project's external environment consists of the factors that exist outside of the organization. It includes market conditions, social and cultural influences and issues, legal restrictions, commercial databases, academic research, government or industry standards, financial considerations, and physical environmental elements.

Figure 3.2 illustrates types of general macro environments and forces that are interrelated and affect organizations: sociocultural, technological, economic, government and political, natural disasters, and human-induced problems that affect industries and organizations. Macro environment refers to the outermost layer of elements in a firm's external environment that can impact a business but are generally beyond the firm's direct control, such as the economy and political activity. This environment can also affect projects conducted by organizations. For example, economic environmental forces generally include such elements in the economy as exchange rates and wages, employment statistics, and related factors such as inflation, recessions, and other shocks - negative and positive. Additional factors include hiring and unemployment, employee benefits, factors affecting organizational operating costs, revenues, and profits, all of which are affected by global, national, regional, and local economies. Politics and governmental policies, international wars, natural disasters, technological inventions, and sociocultural forces could directly affect our organization and the projects or may interact with other forces such as economic forces.

Figure 3.2: Macro Forces and Environments

Besides the macro environment as explained above and illustrated in Figure 3.2, the micro environment is another external environment element that refers to the middle layer of elements in a firm's external environment, primarily concerned with a firm's industry situation. Harvard strategy professor Michael Porter developed an analysis tool to evaluate a firm's micro environment. Porter's Five Forces is a tool used to examine different micro-environmental groups in order to understand the impact each group has on a firm in an industry (Figure 3.3). In this textbook, we will not explain each factor. However, these five factors, industry rivalry, the threat of new entrants, threat of substitutes, supplier power, and buyer power, could have a substantial influence on a project. Therefore, we should take these external factors into account while assessing the factors that may affect our project from outside the organization.

Figure 3.3: Porter's Five Forces Model of Industry Competition

It is important to keep these external factors in mind when preparing for and managing a project since many if not most of these external factors and any changes in these factors may have negative or positive impacts on projects. They could lead to risks that may put the project activities and deliverables, and the overall project in jeopardy.

Organizational Dimensions and the Structure

Organizations have formal and informal subsystems that affect everything from big-picture strategic planning and execution to daily operations. Figure 3.4 shows internal organizational dimensions. Formal subsystems include leadership, strategy, management, goals, marketing, operations, technology, and structure. Informal subsystems consist of culture, norms, relationships, politics, and leadership skills. Understanding organizational dimensions – and how projects fit within them – gives project managers insights into managing projects more effectively and efficiently.

Formal Subsystem

An organization's formal subsystems govern how various tasks are divided, resources are deployed, and how units/departments are coordinated in an organization. An organizational structure includes a set of formal tasks assigned to employees and departments, formal reporting relationship, and a design to ensure effective coordination of employees across departments/units with the help of authority, reliability, responsibility, and accountability, which are fundamental to developing organizational structures and workflow based on their clear understanding by all employees. In short, an organizational structure is the system of task and reporting relationships that control and motivate colleagues to achieve organizational goals. In discussing organizational structure, the following principles are important:

1. Authority is the ability to make decisions, issue orders, and allocate resources to achieve desired outcomes. This power is granted to individuals (possibly by the position) so that they can make full decisions.
2. Reliability is the degree to which the project team member can be dependent to ensure the success of the project with a sound and consistent effort.
3. Responsibility is an obligation incurred by individuals in their roles in the formal organization to effectively perform assignments or to work on the success of the project with or without guidance or authorization.
4. Accountability refers to the extent to which an individual or project team is answerable to the project stakeholders and provides visible evidence of action.

Authority and responsibility can be delegated to lower levels in the organization, whereas accountability usually rests with an individual at a higher level.

An organizational structure outlines the various roles within an organization, which positions report to specific individuals or departments, and how an organization segments its operations into a discrete department. An organizational structure is an arrangement of positions that is most appropriate for the company at a specific point in time. Given the rapidly changing environment in which organizations operate, a structure that works today might be outdated tomorrow. That's why we hear so often about organizations restructuring - altering existing organizational structures to become more competitive/efficient once conditions have changed.

Organizational structures can be categorized in terms of a spectrum of a project manager's authority. This spectrum includes three main types as below:

1. Functional (Centralized)
2. Matrix
3. Project-oriented / Projectized

As illustrated in Figure 3.5, the project manager's authority is none or little in a functional organization whereas it is high to almost total in a project-oriented organization. However, each of the organization types has advantages and disadvantages, and some organizations can even be a mix of multiple types.

A functional organization has workgroups arranged by the tasks and jobs being performed by specialized departments such as manufacturing, marketing and sales, human resources, and finance as seen in Figure 3.6. Since there is not any project management department or office, a project manager or a coordinator is generally selected from the department that is primarily responsible for conducting a given project. However, this person may not have a designated project manager or coordinator role, and their service in this role is often temporary until the project is completed. This department is generally the main beneficiary of the project or it is the implementing department. For example, if the project's goal is to improve customer service, a project manager can be selected from among senior or experienced employees, who is also considered as a subject matter expert in the topic of the project, from the "Customer Service" division under the "Marketing & Sales" department. This person may not work full time as a project manager as they may still carry out the routine tasks of their division and department. Additionally, this project manager would be under the supervision of the "Marketing & Sales" department manager. When they need human resources and other resources, they may not be able to directly obtain them but should negotiate with their manager (Marketing & Sales department in our case) and other department managers (e.g., Manufacturing, Finance). Thus, the project budget is managed by the functional manager, not the project manager. Moreover, the project team may not have administrative staff. Therefore, the project manager may use their department's administrative staff on a part-time basis. The main advantage of this organization type is that the project manager can acquire qualified and experienced human resources from other functional departments.

When we move to the right on the spectrum (Figure 3.5), we can arrive at a weak matrix organization where functional units still exist but the role of project manager also becomes more well-defined, and might even be its own role within the organization. In a weak matrix, the project manager still works part-time in their department while they have more authority than they have in a functional organization, but at a low level (Figure 3.7).

As we continue across the spectrum, we now have a balanced matrix organization type in which we may have a designated project manager with a higher authority. The project manager may manage the project budget to some extent, not completely, although the functional manager has still more say.

As illustrated in Figure 3.8, in a strong matrix organization type, a Project Management Office (PMO) or a designated program management office is added besides functional departments. This department employs full-time project managers with a designated job role. They manage the project budget, and their authority becomes moderate to high. They can also have a full-time administrative staff. This organizational structure may be preferred by many project managers since they can acquire qualified and experienced team members from functional departments inside the organization while they have higher levels of authority.

In a project-oriented or projectized organization type, tasks are arranged by projects, not functions (Figure 3.9). Project managers work independently with a very high authority having full-time designated job roles. However, they may have some challenges while acquiring human resources and other resources since the organization doesn't have specialized departments where skilled and experienced employees work.

Informal Subsystem

When working with internal stakeholders (those who are inside an organization) and external stakeholders (those who are outside an organization) on a project, it is essential to pay close attention to the hierarchy and authority relationships, relationships, context, history, and the corporate or organizational culture. Organizational (corporate) culture refers to the beliefs, attitudes, and values that the organization's members share and the behaviors consistent with them (which they give rise to). Organizational culture sets one organization apart from another and dictates how members of the organization will see you, interact with you, and sometimes judge you. Often, projects also have a specific culture, work norms, and social conventions.

An organization's culture is defined by the shared values and meanings its members hold in common and that is articulated and practiced by an organization's leaders. Purpose, embodied in corporate culture, is embedded in and helps define organizations. Ed Schein, one of the most influential experts on culture, also defined organizational corporate culture as "a pattern of shared tacit assumptions learned or developed by a group as it solves its problems of external adaptation and internal integration that have worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems". Some aspects of organizational culture are easily observed; others are more difficult to discern. We can easily observe the office environment and how people dress and speak. In one company, individuals work separately in closed offices; in another, teams may work in a shared environment. The subtler components of organizational culture, such as the values and overarching business philosophy, may not be readily apparent, but they are reflected in member behaviors, symbols, and conventions used. Organizational culture can give coworkers a sense of identity through which they feel they are an indispensable component of a larger and strong structure.

Some cultures are more conducive to project success than others. As a project leader, it is very important to understand the unique nature of the corporate culture that we operate in. This understanding allows us to put in place the processes and systems most likely to lead to project success.

Organizational culture is considered one of the most important internal dimensions of an organization's effectiveness criteria. Peter Drucker, an influential management guru, once stated, "Culture eats strategy for breakfast". He meant that corporate culture is more influential than strategy in terms of motivating employees' beliefs, behaviors, relationships, and ways they work since culture is based on values. Strategy and other internal dimensions of an organization are also very important, but organizational culture serves two crucial purposes: First, culture helps an organization adapt to and integrate with its external environment by adopting the right values to respond to external threats and opportunities. Secondly, culture creates internal unity by bringing members together so they work more cohesively to achieve common goals. Culture is both the personality and glue that binds an organization. It is also important to note that organizational cultures are generally framed and influenced by the top-level leader or founder. This individual's vision, values, and mission set the "tone at the top," which influences both the ethics and legal foundations, modeling how other officers and employees work and behave. A framework used to study how an organization and its culture fit with the environment is offered in the Competing Values Framework (Figure 3.10).

Assume that you are leading a project in an organization with a hierarchical culture. Projects are about changing the way an organization operates. Introducing change in an organization with this type of culture can be very challenging because they value caution, conservative approaches, and careful decision-making. If the project you are leading involves the introduction of innovative practices and technologies, it may be very difficult and time-consuming to get the approvals required to proceed with the project at its various stages. Innovative practices are not guaranteed to work; success requires a high degree of risk tolerance in decision-making processes. This may be difficult to achieve in organizations with this type of culture. Furthermore, the already aggressive schedule of employees in hierarchal organizations may not be able to accommodate the potential numerous and lengthy deliverable reviews required for innovative projects, causing project success to be viewed as unachievable. Project leaders in this type of culture are wise to speak openly and candidly about the project's risks and plan for additional deliverable reviews as a way of setting the project up for success. If this very same innovative project was being delivered in an organization with a market culture, the decision-making approach and the schedule are likely to be fundamentally different.

Project Management Office (PMO)

A project management office (PMO) is an organizational structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques. The responsibilities of a PMO can range from providing project management support functions to the direct management of one or more projects.

Many large and even medium-sized organizations have created a department to oversee and support projects throughout the organization. This is an attempt to reduce the high number of failed projects. These offices are usually called PMO. The PMO may be the home of all the project managers in an organization, or it may simply be a resource for all project managers, who report to their line areas. PMBOK Guide 6th Edition categorizes PMOs as supportive, controlling, and directive. Supportive PMOs provide a consultative role while controlling PMOs provide support and require compliance through various means. Directive PMOs have full-time project managers who participate in the projects and manage directly by taking full control of the projects.

In general, PMOs help ensure that projects are aligned with organizational objectives, provide templates and procedures for use by project managers, provide training and mentorship, provide facilitation, stay abreast of the latest trends in project management, and serve as a repository for project reports and lessons learned.

Key Takeaways

• The official selection of a project based on the alignment of its business case with project selection criteria is followed by the development of a project charter that authorizes the project manager to apply organizational resources in order to achieve the project's objectives.
• A project charter consists of high-level content about a project such as a project purpose, measurable project objectives, high-level requirements, key deliverables, constraints, assumptions, overall project risks, summary milestone schedule, preapproved financial resources, key stakeholder list, project approval requirements, project exit criteria, project team members, and the information regarding the sponsor. A project charter provides the project manager with the authority to apply organizational resources to project activities. It is signed off by the project sponsor.
• A project is significantly affected by the environment comprised of internal and external factors. These factors should be taken into account while developing a business case, and while initiating, planning, executing and closing a project.
• Organizational structure, as an internal environmental factor, plays a critical role in projects as they are an indispensable part of the organization they belong to. The formal subsystem of the organizational structure consists of three main organization types, that are functional, matrix, and project-oriented. The informal subsystem includes the organizational culture which sets one organization apart from another with the beliefs, attitudes, and values the organization's members share.