Understanding the Terms of Reference

03 December 2010

The terms of reference as it is used in the business word is the backbone to many activities. This can be compared to a set of rules or regulations that all participants have agreed to follow. In the manufacture sector of business this TOR is more commonly called a project charter.

The terms of reference is a formal document that once it has been all laid out and reviewed by the participants, it then is approved. This procedure is required for it to have any implication on the project. With the approval, the document can then be referred to in nearly all other aspects of the project.

The project manager uses the approved terms of reference for very specific reasons. This is a set of goals and the scope that the project is to follow. The reason this document is so heavily relied on is that it sets forth what the stakeholders of the project are willing to pay for. If what they decided on is not followed it could cost the company the revenue to complete the project.

In every aspect of the project these terms of reference will be used and followed. This will include the planning of the deliverable. It is also where the specifications are derived from for the quality plan that is to monitor the project and the construction of the deliverable.

If at any time the deliverable varies away from what has been described in the terms of reference, the project could be in jeopardy of losing its funding. For this reason it is advisable that every member of the project team be aware of the exact terms of reference so any deviation from them can be noticed and corrected.

Items that many terms of reference include are the size of the deliverable along with its main function. There are also restrictions to how much the project should cost and the time for it to be delivered by. This will regulate the manufacturing process.

Understanding the terms of reference will help the manager better comply with them and contribute to the project being a success.