Category Archives: Project Benefits

Project Planning – the 4th Dimension

Project plans are often thought of has having three key parameters:

  • Scope – what you plan to do and the standard you intend to meet
  • Cost / Budget – How much you intend to spend [taking all resources into account] and
  • Time/ schedule – How long you expect the project to take.

Different project types / styles and levels complexity require different levels of sophistication but the basic principles remain the same.

What I’ve noticed in many major projects that the proposed method of implementing the project is less well defined than the other aspects at sanction. This is a major error – not only to do the three elements mentioned above depend on the assumed approach but it is crucial that they are all mutually compatible and consistent. The four elements are in tension with each other, so altering one will affect all the others.

Tensions between elements of the project plan

There is a severe risk that the budget will be based on one implementation approach whilst the schedule is based on another. Simple examples of this can often be seen in TV property development programmes where, for example, – the budget is based on the developer doing the work whilst the schedule [and anticipated quality] is based on employing professionals. These assumptions are incompatible and problems are likely to surface as the work proceeds.

In professional circles, the risk of major discrepancies of this type is lower but can still exist, particularly if the development stages have not been based on effective dialogue [see an earlier post in this series – Make sure everyone is doing the same project.] This risk is heightened if the various elements of the plan are put together by separate teams with inadequate attention to communication. Similarly, there is a danger that the implementation approach will be changed late in the definition phase with assumptions being made on the likely impact on other aspects of the project. The nuances of assumed changes of approach can easily be missed and the implications of, for example, undertaking design work in-house rather than contracting it out can be underestimated.

Difficulties of this type can surface on seemingly minor sub-projects which become more important as work proceeds. There is a natural tendency to focus on major and critical items. This can lead to the team being blindsided when a significant minor but sub-critical element, which may have received only scant attention in the development phase, is delayed or cannot be sourced.

It is critical that the:

  • Budget
  • Scope / Standard
  • Schedule and
  • Implementation approach

Are all congruent with each other and prepared to an equivalent level of detail / sophistication. Saying “we’ll cross that bridge when we come to it” is unlikely to be good enough and is often a reliable predictor of problems ahead!

Getting the right budget – its more than just cost cutting

A few days ago, I got a reminder about what seems to be a very useful meeting being run by my engineering institution [Institution of Chemical Engineers] and the Association of Project Managers entitled “Budget, what Budget”[http://www.icheme.org/pdfs/BudgetWhatBudget2PMSGAPM10Dec2010.pdf] in London on 10th December. This focuses on the issues around getting the best budget for your project.

Whilst this is critical, I think it only tells part of the story.

I’ve worked on the front end of projects for many years and know that the initial budget is usually considered to be too high – the costs outweigh the benefits.

So it tends to get reviewed downward thorough a cost cutting exercise – Balancing the costs and benefits by reducing the costsI also know that much of the scope removed in this process tends to creep back in during or after the project – suggesting that it was really needed.

This got me thinking about whether projects are too costly or whether there is just not enough effort put into the justification process.

Balancing the costs and benefits by making the benefits more overt.There needs to be a balance between the two. Here are 10 tips to help you get the right budget for your project by paying attention to the justification process.

1.    It’s all about business

However technologically based the company is they only do projects to gain a business advantage. It may be to cope with changes in the business environment, to respond to competitor action or to meet their own objectives. If you are going to win support, it will be because of the strength of your business case, not the technological.

2.    Understand the process

Your business will have a set of policies, rules and procedures to authorise projects. These are designed to make sure that the right projects get approved and the right ones get rejected. If you don’t understand [and are not prepared to criticise] the process then you will struggle to make a winning case.

3.    Yours is not the only view

Projects involve many different groups, operations, maintenance, marketing, engineering etc. Each has a different perspective on what is important. If you are to win the support of others, you need to understand their perspective.

4.    See the big picture

Your project will be designed to contribute to one or more strategic objectives but may also contribute to other objectives. This may be intended or may be unintended. Make sure that all of the benefits of the project are allowed for in the analysis.

5.    Check sensitivity / assumptions

Virtually every project goes through a cost cutting stage in the justification phase but it is important to note that other assumptions contribute to the assessment of the feasibility of the project. Make sure you understand the contribution to each assumption on the feasibility of the project. Then concentrate your efforts on the right parameters.

6.    Understand the risks

Projects convey us from the present to the future; as a consequence they all involve risks. How you allow for the uncertainties has a big bearing on the outcome of the project. What you know is not that important, it is critical to understand what you don’t know and allow for that. Ideally, you should be using a structured risk identification and management technique.

7.     Don’t open the bidding too low

When the opportunity for a project opens up in our area of interest we naturally want to do all we can to ensure that it is approved and the investment comes our way. This tendency can lead us to suggest a low initial figure for the capital cost. The danger is that this will be cast in stone particular as the “± 30%” caveat we add is missed. It would be better to quote a higher figure and point out that there will be opportunities to reduce the costs. That way you are not painted into a corner.

8.     Value not cost

It is easy to focus on the cost of the various features of the proposed future asset and it is very easy to be drawn into drastic cost reductions to meet the approval hurdles. It is however much more important to concentrate on value and using creative approaches to achieve the desired results more economically.

9.    Market your ideas

However good your ideas are, they will only be accepted if you sell them to the other interested parties. This means spelling out the benefits in business terms [Tip 1] and tailoring your message to the audience[s]. You may need to use a different approach for each group. [Tip 3] You need to lobby for your ideas to be adopted; it won’t happen unless you take action.

10.   Don’t forget WIIFM

The easiest way to get people’s attention is to show them what is in it for them, so make sure that your message to each person or group is focused on “What’s in it for me”