The Project Management Institute defines a project as “a temporary group activity designed to produce a unique product, service or result.” This distinction separates a project from recurring business activities such as sales, marketing, finance, engineering, etc. A project has a distinct beginning and end.
Some projects are simple and do not require much formality in terms of up-front documentation and approval. For example, moving a purchased product from one supplier to another fits the definition of a project, but is so simple that it can be handled without formal approvals in most cases. Large projects, however, require a clear set of objectives along with anticipated benefits, risks, and required resources to get the job done. For these projects, an up-front project definition helps get the entire team literally on the same page, preventing chaos and false expectations as the project progresses.
The project definition is an overall plan for the execution of a project, which is documented by the project manager before the start of a project. Although the project manager writes the project definition, a sponsor is typically required to approve the document before beginning the project. Having both the sponsor, project manager, and key stakeholders on the same page is important in order to avoid any issues throughout the course of the project.
The following elements are typically found in a project definition (see the Excel template for an actual example)-
1. Project Description – A clear, concise summary of the project’s goals. Using the SMART goals approach will help ensure a clear, concise project description statement.
2. Business Need – Some projects will not produce measurable results, but are nonetheless important to the organization. Having a separate business need statement will help justify the project in these cases. An example might be, “Upgrading our MRP software will ensure that we continue receiving support and updates over the next five years, which is necessary since our current software package is being discontinued.”
3. Project Ownership/Approval – There are typically the names associated with project ownership and approval, including the project manager’s name, along with key stakeholders and business leaders who must approve the project prior to its initiation. Project team members can also be included in this section.
4. Financial and Project Timing Goals – In cases where the project will delivers tangible financial benefits, a summary of these benefits, along with the anticipated timing, should be included in the project definition. Measures such as incremental sales dollars, profitability, and internal rate of return (IRR) are just of few of the items that can be included in this section.
5. Resources and Project Risks – Resources and risks are sometimes combined into one section, and can also be divided into two sections. Resources typically include internal support and contracted labor, along with expenses that are above and beyond the normal operating budget. Discussions with key stakeholders, project team members, customers, and functional business leaders are essential for understanding and documenting project risks.