The Handbook of Project Management_9 doc

The PST can impose variance limits to show on the diagram, beyond which any project must be alerted for management decisions. On Figure 9.13 the inner grey area marked at the 10 per cent point indicates that any project moving beyond this area is alerted to the PST. Projects running well ahead of schedule may be using resources that could be transferred to others not doing so well. Projects running over budget and behind sched- ule may need to be carefully reviewed for possible scope reduction. Accurate cost control is the most effective way to control a project, as variance to the project baseline schedule and budget is rapidly evident. If any project changes are approved that revise the balance between sched- ule and cost then the impact must be incorporated into the cost control. It is advisable to always retain the baseline unchanged for reference. The only valid time for a baseline to be changed is when the customer makes a radical change to the scope, causing a full replan of the project and a significant revision of the business case. Executing the project work l 233 Cost variance Schedule variance PROJECT COSTS PROJECT TIME ACTUAL COST OF WORK PERFORMED (ACWP) BUDGETED COST OF WORK PERFORMED (BCWP) BUDGETED COST OF WORK SCHEDULED (BCWS) CUMULATIVE CURVE OF COST OF ALL PROJECT KEY STAGES – THE PROJECT OPERATING BUDGET BAC CURRENT DATE ACTUAL COST WORK DONE TO DATE TOTAL BUDGET COST WORK DONE TO DATE NOTE: 1. If BCWP continues with trend shown, project is expected to finish very late or budget is hugely overstated. 2. If ACWP continues with trend shown, project budget overspend is a certainty. BOTH SITUATIONS NEED INVESTIGATION Cost variance Schedule variance PROJECT COSTS PROJECT TIME ACTUAL COST OF WORK PERFORMED (ACWP) BUDGETED COST OF WORK PERFORMED (BCWP) BUDGETED COST OF WORK SCHEDULED (BCWS) CUMULATIVE CURVE OF COST OF ALL PROJECT KEY STAGES – THE PROJECT OPERATING BUDGET BAC CURRENT DATE ACTUAL COST WORK DONE TO DATE TOTAL BUDGET COST WORK DONE TO DATE NOTE: 1. If BCWP continues with trend shown, project is expected to finish very late or budget is hugely overstated. 2. If ACWP continues with trend shown, project budget overspend is a certainty. BOTH SITUATIONS NEED INVESTIGATION Figure 9.12 Cost control diagram 234 l The programme and project processes and techniques BALANCING THE PROJECT As we have seen, the primary driver of every project is the scope. You have used the detailed work of definition and planning to arrive at a balance of time, cost and quality – the three major constraints on the project that together or independently impact on performance. The art of balancing is the skill of keeping the project on track for the cost, schedule and quality of the deliverables agreed and approved by the 0. 3 0.2 0.1 0 –0.1 –0.2 –0.3 – 0.3 – 0.2 – 0.1 0 0.1 0.2 0.3 UNDER BUDGET AHEAD OF SCHEDULE UNDER BUDGET BEHIND SCHEDULE OVER BUDGET AHEAD OF SCHEDULE OVER BUDGET BEHIND SCHEDULE (-)COSTVARIANCE Cv%= CV/BCW P (+) (–) SCHEDULE VARIANCE SV% = SV/BCW S (+) P1 P2 P3 P4 P5 SP1/1 SP1/2 SP3/2 1 SV% CV% P1 + 0.17 0.10 17% ahead of schedule, 10% under budget P2 + 0.09 + + 0.07 9% ahead of schedule, 7% under budget P3 – 0.05 + 0.03 5% behind schedule, 3% under budget P4 – 0.13 – 0.04 13% behind schedule, 4% over budget P5 + 0.11 – 0.13 11% ahead of schedule, 13% over budget STATUS UNDER BUDGET AHEAD OF SCHEDULE UNDER BUDGET BEHIND SCHEDULE OVER BUDGET AHEAD OF SCHEDULE OVER BUDGET BEHIND SCHEDULE (-)COSTVARIANCE Cv%=CV/BCWP (+) (–) SCHEDULE VARIANCE SV% = SV/BCWS (+) SP3/1 A Figure 9.13 Cost and schedule performance chart PST at the end of the planning phase and the launch of the project work. Before arriving at this launch point it is probable that you have had to conduct several optimization exercises to derive an acceptable balance of cost schedule and performance. Balancing the project as the work proceeds is merely the process of conducting further optimization exer- cises as necessary. There are generally three levels of balancing. Balancing at the organization level Every organization has to make choices and, as we discussed in Chapter 3, the process of selecting which projects to pursue for the benefit of the organization must be based on sound principles and selection criteria. Balancing at this level is mainly focused on analysing the key constraints of cost, resources and equipment or facilities to do the work. Project management processes and techniques are essential tools to derive accurate estimates of cost, time and resources required to achieve the expected outcomes. If the organization does not arrive at a balance and tries to work on too many projects the result is that none are completed successfully and people become demotivated. There are always more opportunities for projects than the money or people to do the work. Attempts at balancing at the business case or project level can never succeed if too many projects are approved to start in a haphazard and disorganized manner. Balancing at this level must be conducted as a continuous process using the PST where all ‘GO/NO GO’ decisions are taken on all active and proposed project activity in the organization. Balancing at the business case level If it becomes clear at any time as the work proceeds that the project clearly cannot achieve the approved targets of cost, time and resources without significant changes, the business case must be subject to a full review and re-evaluation. Changing the project deliverables, cost structure or exten- sions to the schedule must be referred to the sponsor for a decision to be taken on the next steps by invoking the change management process. The next steps will involve reviewing the approved business case to decide if a revision is to be proposed to the PST for approval. Changes to the cost targets will impact profit or other benefit deliver- ables which must be re-evaluated. The outcome could lead to the project viability coming under close scrutiny. Late delivery due to schedule over- runs impact on cost benefit but can also affect time to market, which may be a key constraint in a competitive environment. Any changes to the deliverables, their nature or features or quality impact on the value of the Executing the project work l 235 end results and may have serious consequences on market value. All these potential changes will be of concern to the stakeholders who will need to be brought up to date as soon as possible. Stakeholders’ inputs will be important to the decision processing when possible changes to the busi- ness case are considered. Some of the options include: • Reduce the project scope – particularly relevant if scope creep has occurred. Changes to scope may not be acceptable to some stakehold- ers, especially if the value is impacted. However, it is valid to review the business case statement of requirements to check if the original assessment was valid or is open to reduction with a review of the cost/benefit analysis. • Break the project into several projects in series – sometimes referred to as phased scheduling. This depends on the deliverables list and how they can be developed during the project. The risk is that work done in one phase or project is repeated and upgraded in the next phase or project. The longer-term effect is generally much higher project cost, resource issues with personnel changes and ongoing changes to the deliverables as stakeholders review the requirements and market needs. This approach can work for some projects such as software development. • Fast tracking (not crashing the schedule – see Chapter 7). This involves reviewing the schedule and resources employed on the work to assess which tasks can be overlapped without having to bring in additional resources. This can have a major impact on the schedule (30–40 per cent reduction) but carries much increased risks. The process requires work to be done when work in other parts of the project are still incomplete and could produce results that do not match the assump- tions made to allow the fast-tracked part of the schedule to proceed ahead of original planned time. The consequence of fast tracking can be a slowed-down project with much reworking and runaway costs well beyond the estimates. • Phased deliverables. When the project can clearly not deliver all the deliverables on time it is valid to assess whether partial completion in steps over a fixed period of time is acceptable to the stakeholders. This can be advantageous in certain types of projects such as information or business systems where something gets delivered fast and end-user feedback assists the development of the next phase of deliverables. Another benefit is that this approach may use less resources over the longer schedule time and reduce the cash flow needs of the project. • Reduce profit requirement. Obviously this reduces the project cost but is a strategic judgment call by the PST to accept a lower profit potential 236 l The programme and project processes and techniques in order to take a market benefit. If there is potential to use a follow-on project to reduce the cost of the delivered product or products, or increase the value and subsequently the profits, then an initial profit reduction may be acceptable to the stakeholders. Balancing at the project level We have discussed the process of optimization of the project in Chapter 7, where the objective is to meet the demands of cost, schedule and quality to satisfy stakeholder expectations. When you are faced with a balancing problem during the project execution some further options may be considered: • Review the task and work package estimates. Unless there is signifi- cant new information available do not feel tempted to reduce esti- mates. It is just wishful thinking that you can reduce your first estimates now there is additional pressure on the project! However, you can review your assumptions recorded at the time of making the first estimates and if these are clearly wrong then a change to some estimates may be justifiable. • Change task assignments. You can consider moving resources on to critical activities to get them done quicker provided there is enough schedule float available on the non-critical activities losing their resource temporarily. Recognize the risks associated with this action are that: – the non-critical activities may turn critical; – the resource you move must have appropriate skills; – increasing resources on the critical tasks must realistically reduce the schedule overall. Carefully review the cost effect of these actions before you get trapped into a rapid rise in project cost. • Get the customer more involved. The customer is a key stakeholder and rather than lose the benefits of on-time delivery may be prepared to take on some of the work to help maintain the schedules without directly impacting your project costs. This is fine if the customer has the skilled resources but if the customer has to bring resources from outside its organization costs could rise, with a consequential claim on your budget. • Add more resources. This may seem an obvious way to reduce the schedule and improve task productivity. Adding people has a nega- tive impact requiring more teamwork, team co-ordination and communication. Asking for more people does not necessarily get the right or best skills for the work and bodies do not compensate for lack Executing the project work l 237 of skills. Too many people without the right skills will increase the costs and probably create schedule drag. Bringing in contract resources is an option if the skill set is appropriate and experience proven, although this will place more demands on your role as project manager to maintain standards and common working practices. If you use the project optimization techniques during planning, problems occurring during execution that need the same techniques should not be a problem to you. The balancing process enables you to involve the stake- holders and help them understand how effective application of project management processes has benefits for everyone. APPROACHING THE CLOSURE PHASE The day you never dared to expect will eventually arrive – when you realize that the work of your project is almost at an end. You can now look back over the many weeks and months of trials, tribulations, changes and successes and start to assimilate just what you have achieved. The team has worked well and can also recognize that the end is in sight – but it’s not quite over yet. You cannot enter the final phase of the project until you have convinced the PST that you have satisfied the requirements set out in the current version of the business case. Provided you have kept the busi- ness case up to date with all changes approved during the project, the final step in this phase should be straightforward. To prepare for the presenta- tion of your project to the PST, ask: • Have all the requirements in the business case been met in full? • Are any dependent projects/sub-projects/tasks incomplete? • Are any unresolved issues outstanding that could affect closure? • Are any action plans outstanding that could hold up closure? • Are the cost records and variances to budget up to date? • Has any revenue been generated to date? • Have you lost any key resources needed for the next phase? • Is the project documentation up to date? • Are there any significant risks that could still hit your project? • Is there anything you are aware of that could delay final closure and handover to your customer? When you are satisfied you have everything under control and you have fulfilled the project’s objectives, you can prepare a full presentation for the PST. 238 l The programme and project processes and techniques Prepare your PST presentation The focus now will primarily be on the results achieved: • objectives achieved; • objectives not achieved, with reasons why; • review of expected benefits; • current state of the project budget; • forecast project cost at completion; • risks that could occur before closure; • issues outstanding; • summary of agreed revisions to the original business case. The approval of the entry to the closure phase is an important and signifi- cant step. The PST must be satisfied that the project has generated the desired results and benefits, and that no rework or additional work is needed. Additional activities are better saved for a further, new project, even though there is a temptation to keep the team together and carry on. There is a risk of costs escalating, and careful control is essential. When you are ready to present your project to the PST, inform the PST adminis- trator and fix the date. PST approval Before you make your presentation to the PST, ensure that your sponsor is fully appraised of the project’s status; you do not want to find yourself without support in the meeting! Keep your presentation focused on facts. The PST is just as anxious as you to chalk up a successful outcome. Be prepared to recommend resolution actions for any outstanding issues and explain any potential risks remaining that you identified in your risk review. The PST may give you a ‘GO’ decision, a conditional ‘GO’ decision or, more rarely, a ‘NO GO’ decision requiring more work to be done. Provided the decision is ‘GO’, you have approval to pass Phase Gate Four and enter the final phase of closure. The PST administrator will record the decision on the programme register and inform stakeholders. SUMMARY Figure 9.14 summarizes the key steps you repeatedly go through during project execution. Checklist 25 identifies some key leadership actions during this phase. Executing the project work l 239 240 l The programme and project processes and techniques ISSUE REVISEDISSUE REVISED PROJECT EXECUTION PROJECT LAUNCH MEETING no DERIVE KEY STAGE WORK PLANS ISSUE WORK PLANS MONITOR TO CHECK PROGRESS IS EVERYTHING GOING TO PLAN? IS PROJECT COMPLETE? RECEIVE LOCAL PROGRESS REPORTS UPDATE PLAN RECORDS/CHARTS REVIEW RISKS ISSUE STATUS REPORTS CONTINUE TO LAYER THE PLAN yes no ESCALATE ISSUE? PROBLEM- SOLVING PROCESS ARE MAJOR CHANGES REQUIRED? yes yes no REVIEW RISKS FOR SELECTED SOLUTION no ASSIGN RESPONSIBILITIES AGREE ACTION PLANS IMPLEMENT PLANS AGREE ACTIONS TO RESOLVE COMPLETE ISSUE MANAGEMENT FORM RESOLVE RESOURCE CONFLICTS REVIEW & AMEND SCHEDULE REVIEW & AMEND PROJECT BRIEF IF NECESSARY SUBMIT CHANGES FOR KEY STAKEHOLDER APPROVAL yes SCHEDULE PREPARE FOR PST SUBMISSION SUBMIT TO PST RECORD ON PROGRAMME REGISTER ‘GO’ DECISION 4 REWORK & RESUBMIT ‘NO GO’ DECISION PROJECT CLOSURE PHASE PROJECT EXECUTION PROJECT LAUNCH MEETING no DERIVE KEY STAGE WORK PLANS ISSUE WORK PLANS MONITOR TO CHECK PROGRESS IS EVERYTHING GOING TO PLAN? IS PROJECT COMPLETE? RECEIVE LOCAL PROGRESS REPORTS UPDATE PLAN RECORDS/CHARTS REVIEW RISKS ISSUE STATUS REPORTS CONTINUE TO LAYER THE PLAN yes no ESCALATE ISSUE? PROBLEM- SOLVING PROCESS ARE MAJOR CHANGES REQUIRED? yes yes no REVIEW RISKS FOR SELECTED SOLUTION no ASSIGN RESPONSIBILITIES AGREE ACTION PLANS IMPLEMENT PLANS AGREE ACTIONS TO RESOLVE COMPLETE ISSUE MANAGEMENT FORM RESOLVE RESOURCE CONFLICTS REVIEW & AMEND SCHEDULE REVIEW & AMEND PROJECT BRIEF IF NECESSARY SUBMIT CHANGES FOR KEY STAKEHOLDER APPROVAL yes SCHEDULE PREPARE FOR PST SUBMISSION PREPARE FOR PST SUBMISSION SUBMIT TO PST RECORD ON PROGRAMME REGISTER ‘GO’ DECISION 44 REWORK & RESUBMIT ‘NO GO’ DECISION PROJECT CLOSURE PHASE Figure 9.14 Process flow diagram: project execution CHECKLIST 25: KEY LEADERSHIP ACTIONS DURING PROJECT EXECUTION • The stakeholders: – Report regularly on progress. – Are involved in problem solving. – Maintain commitment with regular contact. – Encourage feedback of changing needs. – Regulate plan changes. – Seek approval of major changes. • Project tasks: – Confirm resource commitments. – Continue to layer the plan detail. – Derive and sign off work plans as work progresses. – Modify the plan as appropriate. – Review progress against the project brief. – Track and record progress against the plan baseline. – Keep updated records of all cost information. • Project team: – Co-ordinate team working. – Encourage participation of extended team members. – Involve everyone in replanning activities. – Resolve conflict and issues promptly. – Actively support team efforts with guidance and assistance. • Team members: – Advise and coach when opportune. – Hold regular one-to-ones to discuss performance. – Stress priorities. – Recognize and praise effort. – Encourage participation in teamwork. – React positively to performance issues. Executing the project work l 241 242 10 Closing your project All good things must end – even your project! You have diligently nursed your project through the earlier phases and experienced the excitement of achieving the desired deliverables. You have overcome the trials and tribu- lations of the issues that seemed like ‘mission impossible’ at the time to emerge within sight of the finishing line. This final phase of your project still has all the potential for success or failure. Many issues can still occur and you must continue to monitor carefully to ensure a successful outcome. Closure of a project does not just happen; you must plan it with care. As the project approaches the end it is easy for senior management to appear to lose interest. They are looking ahead to the next project, and this can be perceived as a lack of commitment. Your communication processes must keep them involved right up to the celebration of completion. The last thing you want is to become infected with a common virus: ‘project drift’. Project drift Project drift occurs when you let the pressure off the control system as the end approaches. It is easy for the customer or any stakeholder to throw in a few add-ons: ‘Just before you finish the project will you have a look at this modification?’ This is the first sounding of the death knell! Control of late changes of mind adds significant extra work just as you are tidying up to prepare for handover to the customer. These extras are not budgeted, and can add considerable costs to the project and seriously affect the schedule. Any significant changes at this stage are best treated as a follow- on project after closing the current project. [...]... with the checklist, you are ready to implement the final stages of the project You can then set up the close-out meeting THE CLOSE-OUT MEETING Prepare the team well for this important meeting It is the culmination of all your efforts over many weeks or months Hold a team meeting to review: • • • • • • • • the project WBS; the project brief; the key stage Gantt chart; the project risk log; the project. .. review the project and identify what went well and what went badly, and then ask, ‘Why?’ Question: Answer: What is evaluated? The technical work, achievements, the project processes and the management of the project Evaluation of projects normally has two modes: • • active – a continuous process throughout the project s life, with occasional specific reviews or ‘audits’; post -project – after the project. .. post -project evaluation asking in-depth and searching questions about each dimension of the project manager’s role: • • • managing the project stakeholders; managing the project s life cycle; managing performance of the stakeholders, yourself and the team In all areas when questions are asked, there are inevitably consequent questions of cause and effect to be answered by the project team as a means of. .. your project l 243 Life after closure There is also another consequence of add-ons: their effect on the motivation of your team You are concerned about what happens next, and so are the members of your team They are concerned about their next assignment, and this may show as a reduced motivation The impact on remaining tasks is a possible slowing-down of effort and lack of commitment You must keep the. .. auditing the project accounts; the final project cost, paying all outstanding invoices and closing down the accounts; updating the project file and documentation; if required, preparing a final summary report of the project s performance 244 l The programme and project processes and techniques Failure to formally close a project has been known to leave people still working on activities they think... talking to other project managers about events that have occurred and how they were resolved They may show only a casual interest since they are similarly focused on their projects Suggest to your sponsor that a forum of project managers meet occasionally to share learning from their project activities Particularly important events and the resulting improvements in project process could be the 252 l The programme... l The programme and project processes and techniques subject of a special presentation An alternative approach is to start a project newsletter for your project community This has the additional benefit of giving publicity and recognition to particular projects, project teams and the results achieved The newsletter takes some of the mystery and secrecy out of the organization’s project activities Checklist... have: • • • • • • • met the requirements of the business case; obtained the expected benefits; evaluated the project performance for lessons learnt; shut down all work other than those activities essential to handover to the customer; transferred responsibilities where necessary; prepared the ground for the transfer of the team to other activities; prepared a final report on the project ESTABLISHING COMPLETION... if your project is signed off But you have not quite finished yet! So, delay the final celebrations for a few days, because now you must carry out an evaluation of the project Closing your project l 249 CLOSE-OUT MEETING AGENDA DATE: VENUE: PROGRAMME /PROJECT NO: PROGRAMME /PROJECT SPONSOR: PROGRAMME /PROJECT MANAGER: WELCOME BY THE SPONSOR 1 DELIVERABLES Confirm that the list of deliverables in the business... customer, the sponsor, key stakeholders and the core team For programmes, ensure that the project managers of all dependent projects are also invited to attend the meeting A typical agenda for the meeting is shown in Figure 10.1 At this meeting your objective is to get agreement for the sponsor to formally close the project To achieve this objective, you: • • • • • • • • • • • review the project results . constraints on the project that together or independently impact on performance. The art of balancing is the skill of keeping the project on track for the cost, schedule and quality of the deliverables. or increase the value and subsequently the profits, then an initial profit reduction may be acceptable to the stakeholders. Balancing at the project level We have discussed the process of optimization of. change to the scope, causing a full replan of the project and a significant revision of the business case. Executing the project work l 233 Cost variance Schedule variance PROJECT COSTS PROJECT