When you start a project, you must define what needs to be accomplished and decide how the project is going to proceed. Each project begins with an idea, a vision, or a business opportunity--and that is the starting point that must be associated with your organization’s business objectives.
The project charter is that starting point. The charter lays the foundation of the project. It includes a statement of your business's needs. What is the history that has led to the need? How was it recognized, and why is it planned now?
Next, you must stipulate the project's purpose. How will you reach your goals? What deliverables can you promise? What are the risks? You must identify your project resources and technologies, and reflect on task dependencies. It's also important to define your indicators of success.
Last, you must tie in to all this the roles and responsibilities of your project team. You must define resources--both human and material--and specify who or what will fill them. The charter forms a contract with all stakeholders involved in the project.
The project charter is a single, consolidated source of information about the project in terms of initiation and planning. Basically, the project charter defines the boundaries of the project, no matter what type of project management methodology you are using. It is much more than an effective planning tool. It serves both as anchor, holding you to your objectives, and as navigator, guiding you through the milestones that will mark your progress. The original project charter will not change throughout your project's life cycle. Once it is approved by the stakeholders, you cannot modify or change the original charter without agreement by all parties involved.