It’s easy (kind of) to plan the project financial provision and contracts when you’ve got lots of time and plenty of opportunity to research the market. But what about when you are up against it? That’s when you might rush into a decision and only find out afterwards that it’s not the right approach.
Stephen Wearne and Keith White-Hunt have reviewed 12 urgent and unplanned projects (from dealing with local flooding to the 9/11 pile removal project) in their book Managing the Urgent and Unexpected. As you can imagine, the cost implications for each were unique to the situation, but there are some lessons that we can take away from those major pieces of work. Here’s what I can summarise:
“In all the cases of employing contractors for construction work, the terms of the contract chosen were those already approved by the sponsors.”
In other words, even when a new contractor is required, go for contract terms that your management team is familiar with. This isn’t the time to be trying to ask for waivers to the rules or to get round procedures. If you want to be fast, make the decision easy.
“Contractor and consultant teams already employed for longer-term programmes were switched to the urgent and unexpected work under cost-plus payment terms.”
Make the most of the people you already have working for you. Divert them on to the priority projects and update your contracts accordingly. If you can, add the new work into an existing contract – several of the projects in the book did this under cost-reimbursable terms.
“In the 9/11 pile removal case the contracts were made orally, for later confirmation.”
When you’re working in a real emergency, you might not have the time to draw up legally binding paperwork. When you know that you need to get started, get started on the basis of a gentleman’s agreement. You need to have confidence in the supplier to do this, so if the situation itself doesn’t bind you together somehow, work with suppliers that have a similar outlook and values to you.
“Terms adapted from previous contracts for emergency repair of a city stadium were used.”
Reuse, reuse, reuse! Don’t start from scratch. Get your contracted work up and running more quickly by adapting documentation that you already have.
“Contractors previously shown trust when employed on normal projects were reported as responding particularly well to these unexpected demands.”
For example, they made their best staff available and supported the projects through all-hours working. The lesson here is that the more of a partnership approach you take, and the better the working relationships with the suppliers you use, the more they will help you step up when you need it. That applies outside of a crisis as well – good working relationships with all your project stakeholders will help you move projects forward in non-emergency times as well.
The overall message from the book is that when you are dealing with an emergency, you need to cut out the bureaucracy and get going. Actually, this is what you should be doing on all projects: simplification is a good thing where you can do it. In the case of an urgent project, it’s essential.
The book mentioned in this article is:
Wearne, S. and K. White-Hunt. (2014). Managing the Urgent and Unexpected. Farham: Gower.
Cesar Abeid has a new book out, called Project Management for You, and it’s a step by step guide to everything you need to get started with managing a project. You may feel that you have enough experience to not need a beginners guide to project management, and you may be right. Still, it doesn’t hurt to refresh ourselves on the basics every so often, and that’s never more true that on topics relating to project budgets. Because if you mess up your project’s finances it is very difficult to recover your credibility and the lost cash!
Here’s what Cesar has to say about project estimating for budgets.
Estimating a Work Package
Cesar breaks down estimating the cost of a work package into three areas: people, tools and materials.
People: “Estimate how many hours/days will be required by the person responsible for the work package, and calculate how much that will cost,” he writes. This, he says, is the best way to go if you are paying your team members for their time and they are billing you in hours or days. If you plan to pay them a flat rate for the task, then he points out you’ll need a quote to use as a estimate.
Tools: Think about the tools you need to complete the work package. “This determination will include actual tools, equipment, and software that you might have to purchase to enable your team to do the work,” he writes. Many of these you may already have but you might need additional tools in order to deliver this particular project.
Materials: If tools are what you need to do the project management, materials are what you need to do the work. Small projects, digital projects and other types of project may have very little here. “If you are building a deck or a garage, then materials might be the largest part of your estimate,” Cesar writes.
These three mini-estimates make up the components of the budget estimate for your work package. Add them up and that’s the total cost for the work package.
Estimating Your Project
“Once you have the estimate for each work package, add them up,” Cesar writes. “The resulting number will be the cost estimate for your project.”
This isn’t rocket science but you’d be surprised how often elements get left out. Check that you’ve included all your work packages in your overall estimate.
Then check your workings the other way. If it’s a budget item that you know needs to be spent but there is no work package that goes along side it, should you be creating a work package to cover that element? If not, how are you going to track and monitor that expenditure as the project goes along? Don’t make it easy to trip yourself up later.
Work with Ranges
I am a big fan of working with ranges because they help set expectations for project stakeholders and provide you with a bit of leeway. Cesar says the same. He advises estimating twice for each element. The first estimate is based on the best case scenario (say, $100) and the second on the worst case (say, $200). Together they give you a range of financial confidence (the task will cost between $100 and $200).
It can be difficult to convince your sponsor to understand ranges. There’s a good range (ha ha!) of comments on this article about how challenging it can be to talk to your project sponsors about why this way of thinking is beneficial when it comes to project finances. Sponsors like hard, precise numbers and with many projects that have an uncertain outcome that isn’t as easy as they’d like.
Plan with Confidence
Cesar concludes by saying that your estimating gives you the data you need to plan with confidence. If you’ve done the same for duration estimates as well you are in a good position to know how long your project will take and what you need to pay for it. With this information, you can make decisions about tasks and expenditure as well as the people you need to involve.
“If you can estimate your cost and time based on the requirements of your project, the constraints that are present, and the resources available to you, you can plan with confidence and make promises that you know you can deliver on.”
How do you plan with confidence? Let me know your tips for estimating and planning in the comments below.
Cesar Abeid’s book, Project Management for You, is available in print and ebook. Find out more on Cesar’s website.
7 Books to Improve Your Projects
Looking for something to read over the summer? I’ve picked six of my top choices from this blog and one bonus review so that you can choose the right book to improve your projects over the summer holidays.
Most of them are available as ebooks so you don’t need to worry about weighing your suitcase down!
Roger H. Davies and Adam J. Davies
This book will help you answer questions from the executive group about how projects are adding value to the bottom line. They define value as ‘outcomes minus inputs’ so it’s a broad-ranging approach to working out how you are contributing, and applicable whatever ‘value’ means to you and your stakeholders.
It’s not an easy read but there are plenty of anecdotes, tables and graphs that explain the core concepts and help you get the most out of every project and programme that you do.
Business Case Essentials: A Guide to Structure and Content
Marty J. Schmidt
This is another of my favourites (I know, I have a lot!) because it is so practical. If you are preparing a project business case for the first time then this will really help you get your ideas clear and your figures in order.
Math for Grown-Ups
I read this a long time ago but it’s still one of my all-time favourite books. I did OK at Maths (as we call it over here) at school but only because I really worked at it. It never came naturally to me.
As project managers we need to be confident dealing with numbers because they are everywhere: estimates, schedule variances, earned value, the budget, risk assessments – lots of project management techniques involve processing data and crunching it until the numbers look right. This book will help build your confidence and learn what ‘looks right’ and how to handle things if they don’t.
Tame, Messy and Wicked Risk Leadership
Hancock explains that the equation risk = likelihood x consequence only works when the risk is as a result of a knowledge gap and you can easily plug it. That isn’t the case in real life, where most risks are complex and you can’t easily control exactly what the outcome will be, even if you work meticulously through your risk management plan.
If you work on large or complex projects this will help you take risk management to the next level.
Make Every Second Count:Time Management Tips and Techniques for More Success with Less Stress
Robert R. Bly
Struggling to fit everything in to your working day? The strategies in here will help you get a grip on the time available and deal with your To Do list in a more productive way.
Essentially, he asks: “Do you want to be productive?” If you do, then get on and do the work. As a professional project manager you might not find any brand new tools in here, but you will get a dose of motivation to not complain that you can’t get anything done when in reality you surf the internet for a few hours a day.
Get-It-Done Guy’s 9 Steps to Work Less and Do More
This is another great book about time management (and if I had to choose between the previous book and this one, I’d go for this one although they both have their merits). In fact, I still get the email updates I subscribed to when I first read this book, and I unsubscribe from a lot of things.
I like the style of this book so if you are looking for something that isn’t dry reading and that still offers you practical tips for eking out a few more hours in the day, this is it.
If I remember rightly, there might even be zombies.
The Power of Project Leadership
Finally, here’s a book about soft skills that is not at all soft in nature. This leadership primer from Susanne Madsen will have you reaching for a notebook and pen to make copious lists about what you can be doing differently to drive success on your projects.
I think many guides about leadership talk about it in an abstract way. This is a concrete look at what ‘doing leadership’ actually means, with exercises and tools to help you on the way – things you can implement tomorrow, if you wanted.
What will you be packing or reading over the summer? Let us know in the comments.
In his book, Project Management for Musicians Jonathan Feist talks about several ways to mitigate risk, and they aren’t the ‘avoid, mitigate, reduce, transfer’ approaches that you are used to. Those are good, but they are approaches, they aren’t actual measures that you can take to mitigate a risk. Here are the 7 ways that Feist suggests you can reduce the likelihood that something will become a project issue.
1. Good project management
Yep, following good project management principles is top of the list. Of course, having a lovely Gantt chart and an up-to-date risk register won’t guarantee project success but it does give you the best chance of putting in place plans to mitigate that risk.
Make sure your risk management processes are up to scratch and that you are able to easily follow through on mitigation actions. Good project management also helps manage against risks of going over budget or missing milestones, because you’ll naturally be doing the things to stop these becoming a massive problem.
2. Written agreements
While you always have to factor in how someone else will interpret your written communications, putting things in writing can limit misunderstandings. It also gives you a sense of formality when it comes to contracts and agreements. Getting it all down on paper increases the chance that nothing is being missed.
I love checklists and I use them all the time. As Feist says, “Checklists help you remember important details: procedures, gear items, points for conversations, people who need certain information, and more. Checklists are among the most effective tools used to reduce risk.” I have recently written a peer review checklist for my team – one of the many ways you can use checklists on a project to look at potential areas of concern and do something about them.
This means calculating data in several directions to confirm that it’s correct. You add rows as well as columns on your spreadsheet, or check the data in a dashboard as well as a tabular report. Find different ways to double-check your maths or working, even if this is as simple as having someone else check for you.
5. Empowering competent people
If something does go wrong, you want your project team to be able to act appropriately and make decisions quickly, not sit around wringing their hands until you come in to the office to sort it all out. If you have competent people on your project team (and I hope you do) instil a culture where they can make their own decisions. Set levels to their decision-making power as appropriate so that they aren’t deciding to spending another million dollars on the project without anyone else approving it, but give them the freedom they need to do the right thing.
Feist says that the higher the risk, the more you want to make sure that if you are delegating tasks they go to someone who is a safe pair of hands. This isn’t the time to be delegating work to a junior colleague as a ‘learning opportunity’!
6. Developing emergency plans
Having a Plan B is important, and a traditional risk management technique that you are probably familiar with. Sometimes just having a back up plan is enough to make sure that the risk doesn’t happen. However, in case you do need another approach to dealing with a problem, it is useful to have already thought through what you will need to do in the emergency. Get everyone involved so that they can swing into action if and when they are required.
7. Written instructions
Like checklists, these are a great help if you need to distribute detailed instructions or have tasks that need to be done over and over again. Written instructions can also help clarify expectations. For example, on an IT project with a testing element, written instructions for the testers will help get standardised results and ensure consistency across several testers.
Have you used any of these methods on your projects? Let us know in the comments.