PMI-ACP Study Notes: Project Justification

Project Justification

[PMI-ACP® Exam Study Notes] Project justification looks at how to determine whether a project would be carried out or not while chartering is the formal begin of any projects. These processes apply to both traditional waterfall project management and Agile project management.

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Project Justification

The following are a number of concepts/terms used in evaluating a given project:

  • Value-based Prioritization – when given a number of proposed projects, assign a financial value in terms of money to every project and choose the one with the best return
  • Present Value (PV) vs Net Present Value (NPV)
    • a dollar today worths more than a dollar tomorrow (owing to inflation, etc.)
    • Present Value (PV) indicates the actual value a project worth at present, the larger the better
    • Net Present Value (NPV) is the PV minus the cost
  • Internal Rate of Return (IRR) – express the project’s projected return as an interest rate (in %) based on the cost, the larger IRR the better
  • Return on Investment (ROI)
    • the return (expressed in percentage) based on the investment
    • (benefit – cost) / benefit * 100%
    • the larger the better (note: the contesting projects need to have comparable scope)
  • Compliance – the project would be given high (if not top) priority if it is carried out to meet regulatory requirements


If a “GO” is received for a project after the project justification process, the performing organization needs to create a project charter through the chartering process.

  • Creating the charter is IMPORTANT and necessary even in Agile project environment
  • A charter is the formal document that authorize a project (names the project manager, gives the resources and authority, etc.)

Facts about Project Charter for Agile Projects

  • As part of Iteration Zero before the actual project work has begun
  • To be signed by senior management to give official authority for the project manager and resource allocation
  • Names the project manager (if applicable)
  • Addresses the 5W1H (What, Why, Who, When, Where and How) of the project
  • Similar to “Develop Project Charter” defined in the PMBOK® Guide but the level of details and assumptions are different: Agile project charters are less detailed and focus on How since Agile projects are progressively elaborated
  • Includes high-level requirements, critical success factors, milestones (schedule), and preliminary budget
  • Authority must be given to the team to carry out defined Agile processes that may be different from organizational practices (e.g. change management)
  • The project charter must be created


This piece of study notes on PMI-ACP® Exam examines the very first steps in carrying out a project in both Agile or traditional waterfall project management. The project benefit must be evaluated using project justification techniques and the project charter must be created.

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Edward Chung

Edward Chung aspires to become a full-stack web developer and project manager. In the quest to become a more competent professional, Edward studied for and passed the PMP Certification, ITIL v3 Foundation Certification, PMI-ACP Certification and Zend PHP Certification. Edward shares his certification experience and resources here in the hope of helping others who are pursuing these certification exams to achieve exam success.

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