Key Differences Between Business Case and Project Charter

When you’re embarking on a new project, two essential documents that will come up during the project initiation are the business case and the project charter.

While both documents are necessary, they serve different purposes and contain different information.

Business case vs project charter. What are the differences? This blog post will discuss the differences between a business case and a project charter, their key elements, and when to use each document.

What is a Business Case?

A business case is a document that justifies why a project is necessary. Any project that a business undertakes is bound to have an impact on the business.

The business case outlines the benefits, costs, and risks associated with the project to determine whether it’s worth pursuing and aligns with the organization’s goals and objectives.

Key Elements of a Business Case

• Executive Summary: A brief summary of the entire business case.
• Problem Statement: A description of the problem or opportunity the project aims to solve or exploit.
• Objectives: The goals and objectives of the project.
• Benefits: The expected benefits that the project will deliver.
• Costs: A detailed breakdown of the estimated costs of the project, including potential risks and contingencies.
• Stakeholder Analysis: An analysis of the project’s stakeholders and their needs and expectations.
• Risk Analysis: A comprehensive assessment of the risks associated with the project and how they will be managed.

When to Use a Business Case

The business case is used to evaluate the feasibility of a project before approving it. The document is presented to senior management or a project sponsor to secure funding and resources.

It can also be used during a project to assess whether the project should be continued or terminated.

What is a Project Charter?

A project charter is a document that officially initiates and authorizes a project. It outlines the project’s scope, objectives, and stakeholders.

Without a project charter, the project doesn’t officially exist. It designates the project manager, and gives the project manager the authority to utilize resources.

It also provides a high-level overview of the project and serves as a reference point throughout the project’s lifecycle.

The project charter’s purpose is to define the project scope, establish its objectives, and provide a roadmap for the project team.

The responsibility of drafting a project charter lies on the project sponsor although the sponsor may choose to delegate the drafting.

Key Elements of a Project Charter

• Project Title and Description: The project’s title and a brief description of its purpose.
• Project Objectives: The project’s specific, measurable, achievable, relevant, and time-bound objectives.
• Scope: The project’s boundaries and what it will and will not deliver.
• Stakeholder Analysis: An analysis of the project stakeholders, their needs, and expectations.
• Assumptions: Any assumptions made about the project.
• Risks and Mitigation Strategies: A comprehensive assessment of the risks associated with the project and how they will be managed.
• Project Timeline: A high-level timeline of the project’s major milestones and deliverables.

When to Use a Project Charter

The project charter is used at the start of the project to initiate it formally and establish its objectives and scope.

The document is created by the project sponsor or manager and used as a reference point throughout the project’s lifecycle.

A project charter is typically created before the project plan and used to ensure that everyone involved in the project has a common understanding of its scope and objectives.

Business Case vs Project Charter: 5 Key Differences

1. Purpose

A business case assesses the feasibility of a project idea in order to determine its feasibility, viability, and adherence to the business need, while a project charter formally initiates the project and establishes its scope and objectives.

2. Focus

A business case focuses on the benefits, costs, and risks associated with the project, while a project charter focuses on the project’s scope, objectives, and stakeholders.

3. Timing

A business case is created before a project is approved, while a project charter is created after a project is approved and is used to initiate the project formally.

4. Level of Detail

A business case requires a high level of detail as a comprehensive analysis of the project’s feasibility, while a project charter provides a high-level overview of the project’s scope and objectives.

5. Audience

While a business case is typically presented to senior management or a project sponsor to secure funding and resources, a project charter is shared with the project team and used as a reference point throughout the project’s lifecycle.

Using a Business Case and Project Charter Together

While a business case and a project charter serve different purposes, they are often used together to initiate and manage a project.

A business case provides the justification for the project, while a project charter establishes the project’s scope, objectives, and stakeholders.

Once a project is approved, the project team can use the project charter as a reference point throughout the project’s lifecycle to ensure that they are on track to deliver the project’s objectives.

Conclusion

So there you have it. A business case and a project charter are crucial documents in project management.

They both serve different purposes but are often used together to initiate and manage a project successfully.

By understanding the differences between them, you can ensure that you have the right documents in place for your project’s success.

Always remember to assess the feasibility of your project and provide a comprehensive analysis of its benefits, costs, and risks with a business case.

And, formally initiate your project and establish its scope, objectives, and stakeholders with a project charter.

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