How to define Budget in Project Charter when Cost is unknown?

Question

I need to write a Project Charter for an IT Project. The work will be completed by external consultants. The technology being implemented is cutting edge and therefore we have no previous projects to use as a basis for estimating budget.

I am told that correct PM process means I cannot go out and get some quotes until the Project Charter is in place (because in order to get quotes we would have to commit a lot of resource to define the detailed requirements that the consultants would need to quote against).

I have no idea if they charge £1000/day or £10,000/day and I have no idea what the timelines would be. Surely I need to get some quotes before I write the Project Charter?

So the question is: How to define Budget in Project Charter when Cost is unknown?

Answer 1

You cannot know the exact cost until you have your quotes from your vendors and you have chosen your vendor. In fact, unless you go with a firm price, you won't know your exact cost until the project is over. In the project charter, the cost projection is a ROM (rough order of magnitude). If you are unable to arrive at your ROM without external input, then you need to obtain the external inputs. You have to ask. One way of doing it formally is putting out a request for information, in which you can ask several questions about your possible project including costs. The responses would give you a nice range that you can choose where you wish to commit your ROM within the charter.

Often times, the charter is updated several time as more information is known. So you may get an initial charter approval in your firm with a TBD for costs but are required to update that piece when you get smarter with the unknowns.