Voices on Project Management

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Voices on Project Management offers insights, tips, advice and personal stories from project managers in different regions and industries. The goal is to get you thinking, and spark a discussion. So, if you read something that you agree with - or even disagree with - leave a comment.

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6 Obvious Budget Overruns to Avoid

Categories: Project Planning

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Nowadays, we rarely hear about projects that finish below a given budget. On the contrary, we hear about projects that need more people, more material resources and more time, which ultimately translates into additional costs that strain the project budget.

Although it is clear that project costs can be influenced by external factors beyond the project manager's control, there are at least as many factors that can be controlled from within the project, through appropriate project cost planning.

Here are six simple reasons that projects incur cost overruns -- and how to prevent them:

1. Underfinancing. You've probably heard about projects that start with an undersized budget ("We could only allocate that much for this project..."). Such projects will have a high risk of overrunning the initial budget, as well as a high risk of failure. 

Mitigation: Clarify with the project sponsor from the very beginning how cost overruns, which are very likely to occur, will be handled -- for example, through scope reduction or additional funding.

2. Unrealistic costs estimates. Projects that have costs estimated based on gut feelings or inexperienced personnel are poised to face budget overruns. Biased and inaccurate cost estimates are likely to look unrealistic at a later stage in the project.

Mitigation: Break down the work into smaller and more assessable packages. Get help from subject matter experts and experienced personnel when estimating costs. Make the cost estimations comprehensible, by applying different estimation techniques (e.g., three-point estimates, parametric estimating or bottom-up). 

3. Underestimated complexity. Many projects nowadays, especially larger ones, have constantly growing complexity. The Berlin Brandenburg Airport and Terminal 1 of Munich Airport, for example, were quite similar in scope, but conducted at different times (25 years apart). Yet Berlin Airport, the more recent project, continues to have considerable budget overruns and delays. One of the reasons: the underestimated complexity concerning the financing of the project, the construction of futuristically designed facilities and newer regulations.

Mitigation: Split the project in smaller work packages or phases. Avoid planning everything extensively from the very beginning (the planning alone of the Berlin airport project took 15 years). Plan iteratively -- per work package or phase -- and throughout the project.

4. Extended project schedule. Just because the project schedule is met doesn't necessarily mean the budget will be met as well. On the other hand, it is highly likely that if the project schedule is not met (for example, due to a project time extension), then the project budget will be blown thanks to additional costs that may pile up, since the project team and resources will be needed for longer. 

Mitigation: Manage the project time and schedule well. Focus especially on the tasks on the critical path, which can have the most impact on both project schedule and costs. If you get asked to extend the project time, explain to your stakeholders that this probably will cost more. Remember the scope-time-budget project triangle. Time is money!

5. Improper buffer planning. If you don't plan (or plan improperly) for a budget buffer, the smallest deviation in scope or schedule will cause an overrun. 

Mitigation: A budget comprises estimated cost and some contingency. Plan the contingency for unexpected scope changes, unusual weather changes or possible problems with suppliers. Consider a buffer for the costs that cannot be accurately or predictably estimated. Some of the cost estimates will be more accurate than others -- for example, commodity prices will be more predictable than labor costs for a specific service.

6. Improper resource planning. Labor resource costs could be one of the project's biggest expenses. If the project lacks labor resources, a later labor force acquisition will be an unexpected project cost. It can also mean a higher cost since the contracting conditions might not be the same as when initially planning the project. Similarly, resources allocated in excess will mean unnecessary allocated costs, plus unnecessary blocked resources that could have been useful on other projects.  

Mitigation: First plan the scope, then the required work to be done, and then the related assumptions, dependencies and risks. This will facilitate a better understanding of the work needed to be done and hence will help better assess the right equipment, amount of resources and required skill sets.

How do you manage costs on your projects, and which measures do you apply to avoid cost overruns?

Posted by Marian Haus on: August 04, 2014 09:59 AM | Permalink | Comments (0)

Great Time Management Is in the Details

Categories: Project Planning

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Bringing together all the aspects of a project -- including stakeholders, team members, software tools and project requirements -- is just the beginning. Once we gather all the pieces of the project, we cannot sit back and relax. Properly controlling a project hinges on using time management skills to see it through to the end. And those skills consist of these three types of actions:

Reactive. There will always be an aspect of the project that needs to be tended to: risks and issues that may need near turnaround resolutions or disparate interests of team members and stakeholders that need addressing. But it's how we've set the stage for our project that will help us steer the project to the finish line, so allot some time to plan for issues to come up. Always be aware of how your surroundings and other resources may affect your project and how they can be of value at another point. For example, when your project is heading into a critical situation and you have no resources that can help, have a contact at the ready who may be able to get an immediate resolution.

Co-active. This element entails taking collective action toward correcting an off-schedule project. While we set out to have a process for every action, somewhere along the line, the schedule starts slipping or team members aren't reporting bottlenecks or bad news in a timely fashion. In these instances, reset the tone of your project control. My technique is to keep the scope constantly visible, usually by making sure the agenda has it displayed. However, I didn't do this on a project years ago. The developers were making ongoing enhancements to the software, ones that would be very useful at a future point. Yet they were very off-scope. The co-active measure was to pull back on the enhancements and redefine the scope to get it to what the sponsor originally requested. I did so by meeting with the sponsor and development team manager and reviewing requirements from the standpoint of: 

  • Which elements are most important
  • What doesn't have to be implemented immediately
  • What has been designed that can be kept 
  • What can be released in a quick turnaround
Proactive. But what if a project has components that are not fully defined yet? This is a situation in which we're not reacting to the existing project or controlling project issues, but instead considering the future: possible risks, another project's potential impact or information a stakeholder may want. Here I would recommend actively anticipating what may be helpful that has not yet been discussed. And this consideration can be addressed perhaps as an earned value chart, a report outlining project enhancements for future work or something as simple as organizing a meeting with sponsors to ensure there are no new impacts on the rise.

Are there any aspects to managing your time in a project that you see as helping to bring the project to a smooth close?

Posted by Bernadine Douglas on: June 06, 2014 05:00 PM | Permalink | Comments (1)

What Race Cars Can Teach Us About Projects

Categories: Project Planning

My last post on when to pull over a project to the side of the road generated much action on the Voices on Project Management Twitter feed. Here, I'll expand on that theme by highlighting the similarities in the makings of a race car and a successful project.

Today's race cars are a marvel of engineering and performance. They achieve these results while being extremely complicated and operating in harsh environments. However, to the spectator, racing appears to happen easily and naturally. When we see a race car whiz by, we don't see the many hours of planning that go into achieving both high speed and durability. 

Therein lies the parallel between race cars and projects. As project practitioners, we need to consistently ask ourselves whether our "project race car" is ready and able to win the race. This includes design and preparations before the race as well as vigilant monitoring of performance. 
 
Here are four essential components of a "project race car" that have to be well engineered and constantly monitored for your project to be a success: 

  1. Engine: At the heart of any race car is its engine. The engine provides the power to move the car down the road to the finish line. Great effort goes into the design, operation and monitoring of the engine to extract the maximum horsepower. The engine is similar to the project's business case. It also serves as the "horsepower" to drive the project to its desired outcome. If your project business case experiences events such as new or changed assumptions that cause it to lose momentum, then your project will start to fall behind and potentially stop. As with an engine, good business case design and constant attention to its performance is essential to project success. 
  2. Chassis: The power from the engine of a race car is transferred to its chassis, or structural framework, to propel it safely down the racetrack. The enabling infrastructure of the frame, wheels, suspension, steering and aerodynamic body all contribute to a smooth, fast ride. The same can be said of the methods, processes and tools that are a critical part of any project. These project management essentials must all be employed to work together in harmony for the project to move down the road. Could one imagine starting a race without all of the wheels on the car? Unfortunately, many projects do so without having the right fundamental elements in place. 
  3. Fuel: On a race car, the amount, type and consumption of fuel is a key factor in its ability to win a race. Each year the governing bodies of racing organizations work to tighten regulations around fuel to both achieve higher engineering performance and reduce environmental impact. Failure to select the proper type and amount of fuel can prevent a car from making it across the finish line. Many times I have seen project reports in which the overall status looks favorable but there are unstaffed roles. This lack of resource "fuel" can also prevent a project from getting to the finish line.    
  4. Driver: Even with the most advanced race car, it takes someone to help start it and confidently move it forward at the fastest but safest speed. In addition, the driver must also constantly monitor engine, chassis and fuel state as well as external conditions that will affect the pace of the race car. For projects, the driver is the project manager. The project manager must effectively start and guide the project, while also monitoring and adapting to external conditions such as other project dependencies and risks. 
How many times have you started a project "race" though one of the previously mentioned components was missing? What is the most frequently omitted element in the "project race car"?

For an insider look at car racing, read about a recent keynote speech on Formula One by Mark Gallagher at PMI® Global Congress 2014 -- EMEA.
Posted by Kevin Korterud on: May 23, 2014 10:38 AM | Permalink | Comments (3)

Getting Documentation Right

Categories: Project Planning

Documentation is an important aspect of a project manager's job. We document to keep us aware of status on projects. We use it to stabilize spending and keep a paper trail of events and circumstances. So, what should you capture and how should it be maintained? Here are a few tips to make sure you're capturing usable documentation.

  • Know your source. Having the information helps, but being able to backtrack to determine who provided it -- and thus its worthiness and validity -- is even better. This is important in the case that information comes into question later. For instance, if you receive a pre-defined budget for your project but then are given another amount, a senior source with oversight over your project can help validate the original amount. Be sure to have that contact's information and even a backup source in case that source moved on.

  • Have clear, concise information. Lessons learned will tell you that communication is key to getting information correct. As much as possible, try to make documentation clear, so the knowledge transfer process goes smoothly and you, team members and stakeholders are able to follow it. Include wording that easily links to follow-up information or shows there is a continuation to a document.  

  • Use a repository. Make sure to keep documents in a secure location to be able to recall them when needed. Whether you file documents by projects, size or funding amount, at the very least have a system for filing. Have some type of dated system for knowing what is the most current file or selected information. This will help to determine if the information is no longer useful.

Now that you know how to maintain documentation, we'll review which documents should be retained in my next post.

 What are your must-have tips for documentation on projects?
Posted by Bernadine Douglas on: May 04, 2014 01:29 PM | Permalink | Comments (1)

Why Realistic Goals Matter — and How to Set Them

Categories: Project Planning

One of the regular challenges I hear coming from the project management community is the idea that our organizations are setting unrealistic goals. This is a tremendous challenge because setting unobtainable goals can lead to project failure, low morale and a culture of insecurity. 

It's vitally important to spend time working with our project management offices (PMOs) and sponsors to develop realistic timelines and goals that are achievable in the short- and long-term. Why? Because this is going to help maintain motivation throughout the project as each milestone is obtained. Additionally, it will help you communicate progress more effectively to your sponsors and gives you the capability to set clear, reasonable expectations at the start of the project. Here are three ways you can set better goals that motivate your teams, sponsors and stakeholders:

  1. Ensure clarity of project goal. To effectively set proper goals for your team, you need to make sure that your goals are in line with the project's objectives. Too often projects go astray because the project's goals aren't clear or don't align with the business objectives of the parent organization. This can be managed by making sure that you clarify the project's goals at the very start. For example, set up a meeting with your sponsor or executives to talk about project objectives, how they will be measured, and the sponsor's role and responsibilities. This simple step ensures that you have clarification and can work with your team to set goals that are in line with sponsor expectations. 
  2. Take a short and long view of the project. It's often too easy to look at the end result of a project and say that is the only goal that matters. This can throw off your team and demoralize everyone involved, because if you are dealing with a project that can take years to complete, there is no sense of accomplishment, even when you have completed a major milestone in the project's life cycle. That's why you need to set short- and long-term goals. The short-term goals will do two things: First, they help your team members stay motivated and drive progress by giving them an occasional sense of accomplishment. Second, they give good insights on whether the project is on- or off-course, making it much easier to adjust the schedule and plan accordingly. 
  3. Communicate. Everything in project management comes down to communication. In setting goals for your team, you need to communicate consistently. A successful communication strategy focuses on clearly relaying the project's objectives and goals and how those support the organization's mission; explains how the short- and long-term goals relate to each other; and allows you to maintain control over expectations. 
While it isn't possible to control every variable on every project, a project manager can make great strides in team performance by using goals to set proper expectations. 

What helped you set proper goals in a recent project?

Read more about PMOs and their impact on strategy implementation in PMI's Strategic Initiative Management: The PMO Imperative.

Posted by David Wakeman on: April 28, 2014 10:04 AM | Permalink | Comments (0)
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