The Money Files

It’s January: the time that we reflect on past achievements and future goals. So let’s take a moment to look back at how you did at work with your approaches to project cost management.

I know, I know… you followed your team’s methodology to the letter and did All The Things. But really – did you? I know that for me, with all the deadlines to hit and meetings, reports to prep and executives with unrealistic expectations… I didn’t do everything as well as I would have liked.

Let’s be a little bit honest here. Below, I’ve listed 10 things that you should be able to say that you did during 2018 that relate to how you should have handled your project finances. How many of these can you confidently say you did to the best of your ability?

1.I managed my project budget

It might seem odd to include this, but I still hear from project managers on an alarmingly regular basis, who say they don’t have any oversight or influence into the project budget. The financials are handled by other people. They only have to track and manage the project tasks.

This is wrong. So wrong, on so many levels. This attitude by management that implies project managers are not “good enough” to manage financial information undermines what we should be doing with the profession.

You should have access to the financial information relating to your project and you should be the person handling project finances. If you don’t do it personally, that could be because someone else in the project team does it, for example, if you are a project administrator and the project manager does it. Or you are the project manager and you have a project financial admin person on secondment from Finance who handles the tracking for you.

It should be someone on the immediate project team who you can talk to and who will tell you the truth about the numbers.

2.I set a project budget baseline

Did you set a baseline for project costs? A baseline is a snapshot in time that shows you the total of your project financials at a certain point.
You can see what should be included in your project budget in this article. All those items, added together, give you the total project budget. But they change over time. The baseline is a record of what your budget was at a given point.

It’s useful because you can use it to check how close you are to your original plans for spending.

3.I agreed a contingency amount with my sponsor

If you started a new project at some point in 2018, you should have had a conversation about contingency.

This is added to your budget (it’s part of your cost baseline). It’s a little cushion for emergencies, the amount of which you can make up based on your best guess or a standard % measure, or you can work it out more scientifically by looking at risks and calculating amount required to adequately address them.

Read more about the difference between management reserves and contingency reserves.

4.I tracked time

Project management time spent is an overhead for your project. You can work out the amount of time spent doing the managing if you track your time (as well as your team members). It’s tempting to log everything to a bucket task called ‘project management’ and book yourself at 100%. But that wouldn’t be accurate.

Try to track your own time a bit more realistically, splitting it down by work package, project stage, type of activity or something else.

It’s helpful to know how much effort it took to get a project off the ground, especially when you come to review benefits later. You can also include this information in the business case for future projects. It can help you better estimate the amount of management time required.

5.I celebrated success with my team

Hopefully you had something you could celebrate in 2018. And celebrating can be done on the cheap (read more about how to motivate your team with spending anything). But it’s nice to be able to reward your team with something that does cost money, however small.

Perhaps you took them out to lunch and the project paid. Or there was a launch event or something. Putting a small amount of money aside for celebrations is definitely a good thing.

6. I estimated accurately

Did you follow the estimating lifecycle?

While I’ve said in the title here: “I estimated…” I don’t actually mean you personally. I mean that you involved the right subject matter experts to get decent estimates. I mean that you used solid, robust estimating techniques to make good choices about how much your tasks were going to cost.

I hope you got support from your colleagues and created a budget built on estimates you could rely on.

7. I applied good governance

Governance for project budgets means you got approval to make changes, you understood and sought approval for spending management reserves and contingency funds as appropriate and you generally had good housekeeping for your financial records. Any changes that were made would most likely have downstream implications for other project documents, so hopefully you kept those up to date too.

8. I included financial data in project reports

Good governance can also cover proper reporting to your project board or steering committee.

I frequently talk to project managers who don’t put financial information into their project reports. I get it – it’s time consuming to update your financials (at least for me; we are between project management tools and have reverted to spreadsheets for budget management for now). But really, what exec isn’t interested in how much the project has spent to date and is forecasting to spend by completion?

Project financial information really should be in your monthly reports.

9. I worked with suppliers in a positive way

Hopefully, 2018 was not full of supplier disputes for you. Perhaps you formally closed some contracts. Perhaps you worked with your procurement teams to bring on board new suppliers. Perhaps there was a supplier selection exercise that you facilitated on behalf of your project customer.

There are lots of ways to work with suppliers – with any luck you built some positive working relationships that will carry you forward into 2019.

10. I had a risk budget and managed it

Risk budgets are a particular challenge for me. I don’t often have the luxury of time to properly work out what risk management actions should be taken and allocate the funding – at least not before we dive straight into the delivery.

However, if you can, calculating the risk budget is definitely worthwhile.

Can you say you hit all the points? And are you going to hit them again during 2019?

If some of these things weren’t on your personal achievements list, then that could be because they aren’t activities relevant to the role you are in, and that’s fine. However, I’d argue that most project managers should be able to say they did all of these. What else would you add? Let me know in the comments below!

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How do you define the right level of quality on your project? Your project sponsor probably has expectations you need to meet. Your team has a level to which they can deliver. You have to find a way to balance the competing needs and hit a quality level that suits as many people as you can.

At least, that’s a good approach if you want to avoid too many grumpy faces round the table at your project lessons learned meeting.

This infographic, inspired by a fantastic short little book on project management called Project-Driven Creation by Jo Bos, Ernst Harting and Marlet Hesslelink, sets out the three levels of project quality that you can reach for your deliverables.

Which one do you hit most often?

Read more about this topic in the article here.

Today’s deep dive into the PMBOK Guide®-- Sixth Edition is into the second part of Project Schedule Management: the Define Activities process. I’m going to call out the differences between this process and what we used to have in the PMBOK Guide® -- Fifth Edition.

The project schedule is the main output of the Project Schedule Management Knowledge Area (unsurprisingly) and the action really starts with Define Activities.

Define Activities Process

This is the second process in the Knowledge Area. We’re still in the Planning process group.

Basically, this process is about making an activity list, covering all the different activities that need to be done to complete the work of the project. There are some other outputs too – we’ll come to them in a minute. But think of this process as the creation of your master To Do list.

Inputs

There are some small changes to the Inputs between the PMBOK Guide® -- Fifth Edition and Sixth Edition. In the current edition, inputs are:

• Project management plan
• Enterprise environmental factors
• Organisational process assets.

The schedule management plan and scope baseline have been ditched. That makes sense: the project management plan is such a broad, wide-ranging document that you don’t really have to specify the component parts.

Tools & Techniques

The Tools and Techniques for this process have changed slightly – meetings has been added (and if you want to get picky, it looks to me like the order of tools and techniques has been shifted around), which makes no practical difference day to day.

The addition of meetings makes sense in the context of the Knowledge Area. You can’t decide on what needs to be done unless you talk to people who are going to be doing the work, and you’ll do that through a meeting. That meeting could be informal, formal, a phone call, with lots of people or with one person.

Frankly, I think adding meetings in is a little bit pointless as it should go without saying that you have to talk to an expert in order to use expert judgment as a technique. But the PMBOK Guide® -- Sixth Edition is nothing if not diligent in setting out the detail.

Outputs

There are two new outputs: Change requests and Project management plan updates.

The point of adding change requests in here is because you should already have a scope baseline in place. As you work through the activities, talk to the right people and so on, you may uncover extra work that needs to be done – or work that doesn’t need to be done. This would generate a change request to amend the baselined scope.

Project management plan updates is a generic catch-all type of output that is included as anything you might do to create a schedule may have some kind of impact on the plan. For example, you might need to update the schedule or cost baselines. Once a change is approved, you’ll have to make changes to those documents too.

Next time I’ll be looking at Sequence Activities.

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The people in the project team, and the processes they use, are a risk factor to your project.

You might not have them on your risk register, but they definitely add risk.

For example: if you end up working with an inexperienced team, you’re in a more risky situation than one that’s highly skilled at the required work.

Poor processes across your organisation, or just in your team (say, people don’t apply the processes properly) can also add risk. A particular challenge, I think, is when projects are forced to use processes that can’t be appropriately tailored for the size of project. You get small projects forced to jump through governance hoops because that’s the process – even when it’s a ridiculous admin overhead. That adds risk to the project too.

Lack of people on the team is also a risk (one that is more likely than the other two to find its way to the risk register, in my view). You’re going to struggle to hit deadlines and delivery quality work if you don’t have enough people.

The risk profile of your project is hugely affected by the project team and the context in which you work. Unfortunately, you don’t always have a lot of control over those elements. You might find yourself being given project team members, instead of being able to pick the most able.

I’ve summarised this in the quick video below, which sets out three of the ways your project team and project environment can influence the risks faced by your project. Enjoy!

Read more articles about risk.

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I'm not the best at making resolutions for the new year. Last year, for example, I vouched to spend more time on self-care and say no to too much work. That didn't work out so well.

Project managers sometimes ask me what I think they should be doing better or differently. We all seem to have the common goal of wanting to improve our skills and do better at our jobs. It's part of the challenge and the fun of project management - continuous improvement.

So this year I've put together a list of three simple things that you can easily do to improve your approach to project cost management. These resolutions will help you stay on top of your project budget and have more confidence dealing with the financial aspects of work.

They are easy to do. You just have to commit to do them.

Here they are:

Timesheets.

I don't know about you, but my time tracking is still quite spotty. I have had two main projects this year. I work out my hours on a monthly basis, using the average length of a working day and then broadly how many days/half days I spent on each project, looking at the meetings I had.

This is not scientific at all.

Luckily, we are an internal team and don't bill our colleagues or clients for our time, so in the grand scheme of things it doesn't much matter. But if you work in an agency setting, time tracking becomes essential. Do it properly and encourage your team to do the same.

Monthly Budget Reviews

If you don't do these already, you should. Right now I'm reviewing the budget almost daily to make sure we get everything accounted for before year end. The busy times for you will depend on your company's year end and how you account for multi-year projects.

Check through the budget every month. It will make your reporting better too.

Challenge Estimates

I don't really do this. I trust my colleagues to tell me the truth. I have no reason not to believe them when they tell me a task will take 72 days. But next year, I'm going to try to challenge appropriately. The question I'm going to use is: "What would it take to do it faster?"

That's not undermining their expertise. In fact, it's drawing it on even more. I'm asking for their expert input into how we could get the task done more quickly. I think this way of challenging could help us all get more delivered but with less conflict.

What are you going to try to do differently in 2019 to help your projects manage cost better? Or more generally? Do you set professional resolutions at all? Let me know in the comments!

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