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When I was a student, I saw an
advert in my college magazinelooking for people to go on aroad trip. Eight of us wouldbuy an old minibus, drive itacross the continent, and sellit at the end for about the sameprice we paid for it. The ideawas immediately attractive companionship, new people, newplaces, new experiences, low
cost and we soon embarked onour adventure.It was a disaster. What
went wrong?: We were interested in different
things, some of us preferringmagnificent scenery, otherspreferring cities.
We had different personalities.For example, some were
punctual, others laid-back.Some were free-spending,some were careful with money.Some liked rock music, othersfolk music.
There were constant argumentsand discussions about whereto go, what routes to take,how long to spend in differentplaces. The discussions went
on and on because no-one feltable to take the lead. Costs spiralled because the
van broke down a few times.It sold for much less than wehad hoped.
We eventually discovered thatthe self-appointed map readerhad no sense of direction.
Delays meant that we couldnt
get to where most of usthought we were going.
Delays meant that I missed
my flight home, and I certainlydid not come back refreshedand enlightened.
This trip had many of thetypical features of a project, andhighlights many of the risks.In general, a project such asimplementing a new IT system has the following characteristics:
It is different to onesnormal activities. It has a start, an end, and
a duration. Often there is initial
enthusiasm about beingincluded in the project team;that is going to solve animportant problem and heraldin the splendid new IT system.
Often unique tasks andproblems are addressed. NewIT system implementation islikely to be rare.
Team members are drawnfrom many differentbackgrounds, each with theirown priorities, outlooks,skills and terminologies.The accounts department
wants certain reports, thesales department wantsothers, and IT wants highspecification equipment.
The team membersmight never have workedtogether before.
Often, no benefit is obtaineduntil the project is completed.Abandonment part way through
will have incurred costs withoutyielding benefits.
These characteristics should
scream danger, and manyprojects are much less successfulthan hoped, just as ourholiday was. If you are awarethat danger accompanies anundertaking, then it makes senseto understand the nature of theundertaking and how the dangercan be managed.
PROJECTS AND STRATEGYThe rational strategic planningmodel (Figure 1) is usuallypresented as three stages:analysis, strategic choice,and implementation. Oftenthese are set out as a linearsequence, but it is preferableto arrange them in a triangleto acknowledge that the three
stages inform one another. Forexample, when the organisationstarts implementation, it willundoubtedly discover informationwhich may make it reconsider itsanalysis and choice.
FIGURE 1: RATIONAL STRATEGICPLANNING MODEL
project
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RELEVANT TO PAPER P3
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Commercial feasibility will
the likely benefits exceedthe cost? Technical feasibility do we
think this project has a goodchance of working?
Operational feasibility willit help the organisation reachits objectives?
Social feasibility will ouremployees, customers and
other stakeholders tolerate it?
A feasibility report should beproduced and this will have tobe studied by senior managers,because if the project goes aheadsubstantial expenditure mightbe required.
Note that the feasibility reportdoes not merely have to present
management with simple yesor no options, but can set outa range of options, each withparticular benefits, costs andtime frames. Where there issome doubt as to the potentialbenefits that will arise from theproject, it is particularly valuableto offer a range of choices whichallow the organisation to first try
out a modest project and laterallow the project to be extended.This approach is a useful wayto reduce risk. If you are notsure about something, start ina small way and extend laterif worthwhile.
Whether shown linearly, or as
in Figure 1, strategic analysisand choice should be relativelyquick. Planning, of itself, neithermakes money nor improvesperformance. Some people thinkthat deciding on a plan is thesame as realising the plan, butit is only when the right plansare successfully implementedthat gains and improvements
are made and implementationis where the really hard worklies, with effort needed, possiblyfor years, long after the planwas agreed.
A strategic plan (typicallylong term and corporate-wide)can never be implemented asa single, monolithic task. Astrategy of expanding abroad,
for example, would consist ofa series of smaller tasks suchas finding premises, recruiting,training, equipping the factory,marketing, and establishinga distribution network. Eachof these smaller tasks canbe regarded as a project,with a start, end, objectives,deadline, budget, and required
deliverables. Realising a strategicplan therefore depends oncarrying out a complex jigsaw ofprojects, and if one piece goesmissing the whole strategic planwill be in jeopardy. Therefore,successful project managementis at the heart of successfulstrategic planning.
ThE PROJECT LIFECYCLE
There are a number of differentversions of the project lifecycle,perhaps using slightly differentterminology and dividing up eachstage differently. Sometimesthe differences are there justto differentiate a commercialproduct such as projectmanagement software. Despitedifferences in detail, all project
lifecycles can be depicted as inFigure 2.
FIGURE 2: STAGES OF ThEPROJECT LIFECYCLE
All projects will start from an
initial idea, perhaps embeddedin the strategic plan. A projectwill then progress to the initiationstage when a project managerwill be appointed. The projectmanager will choose a projectteam and they will carry out afeasibility study. The feasibilitystudy is necessary to establishthe following:
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Studying Paper P3?Performance ojectives 7, 8 and 9 are lined
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ThE PROJECTINITIATION DOCUMENTOne of the main outputs of theinitiation stage should be theproject initiation document, orPID. The term is poor because itimplies that the PID is used onlyat the start of a project, whenthe project is being proposed,and document might suggesta couple of pages only. In fact,the PID is of key importanceboth initially and throughout theduration of the project. It shouldaddress the following questions:
What should the projectachieve? What are itsdeliverables? These should bespecified in detail so that theproject and its scope are welldefined from the outset.
Why is the project isneeded (including a costbenefit analysis)?
How will the quality or
acceptability of outputsbe assessed? Who will lead the project? Who will be on the project
team and what will be the roleand responsibility of eachteam member?
What are the risks? Howhave they been assessed andprioritised, and how will they
be managed? Who will carry out the work onthe project? Which actions willbe assigned to in-house staffand which to sub-contractors?
By when should the projectand its various stagesbe completed?
What are the constraints onthe project?
What are the assumptions onwhich the project depends? How much budget has been
allocated to the project? ONEO
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What other resources areneeded by the project, andhave been allocated to it?
Who sponsors or ownsthe project? (generally thedepartment or client whois paying)
What are the reportingarrangements?
As this shows, the PID is the keyreference document and it will beextensive and detailed, containingall the planning informationrequired about the project.
whAT DETERMINES RISk?Project risk can be said todepend on three variables:(i) How well defined is the
project? A well-definedproject will set out in detailexactly what the project is toaccomplish (the deliverables),when each stage should be
completed, and how eachstage will be appraised(quality). These qualities canbe summed up in the phraseproject scope. Additionally,it is important to set a costbudget in advance. We willsee later that there can betensions between cost, time,quality and scope, but if
these have not been definedin the first place, the projectwill run into difficultiesquickly as each member ofthe project team is likely tobe pursuing different goals.A poorly defined project willbe short on detail but long ongrand ambition.
For example, statingthat the new IT systemwill improve inventorymanagement is almostuseless. Is the firm movingto just-in-time? Is it goingto develop sophisticateddemand-forecastingalgorithms? Is the warehouseto be automated? Will labourand machine use be part ofthe system?
In addition, if the projectis not well defined, even ifmost participants happen to
have a similar vision initially,the project will be susceptibleto drift. This means thatas the project progresses,ideas change and the projectdeliverables change. Tosome extent, project driftis inevitable because as theproject is worked on, moreinformation is discovered
and it would be foolish notto take note and alter theproject where necessary.However, altering projectspart way through is usuallyexpensive in terms of timeand money if work has to beredone or abandoned. Whatmust be avoided is ongoing,nice-to-have project drift,
in which new features areadded little by little withoutproper evaluation of costsand benefits. By defining theproject in detail at the start,the firm will have thoughtcarefully about deliverablesand the need for subsequentamendments shouldbe minimised.
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(ii) The size of the project. Itis pretty obvious that therewill be more risk associatedwith large projects. Morestakeholders will be involved,possibly including customersand suppliers. There will bemore coordination problemsand the financial investmentwill be greater. Projectfailure, will cause greatdisruption and many peoplewill be affected. By contrast,small projects will be easierto control and if they go
wrong, damage is likely to beconfined to a smaller numberof stakeholders.
(iii)The technical sophisticationof the project. A projectwhich depends on wellunderstood solutions is muchless likely to go wrong than aproject which is attemptingto use cutting edge,
experimental technology.
So, if you are put in chargeof a large, poorly defined,sophisticated project, you mightlike to look round for another job,as if the project fails to deliver(and it probably will) you couldbe the number one scapegoat.
Of course, there can be a goodbusiness case for embarking onlarge sophisticated projects, asthese can allow companies todifferentiate their products andservices. If standard, hesitant,safe solutions are always usedthen more ordinary performancewill result. It might be partof a businesss strategy toadopt radical solutions to gaincompetitive advantage. However,there can never be any excusefor a project being ill defined atthe start.
Risks must be managed andthe following approach canbe used:1 Define the risks. What could
go wrong?2 Assess the risks. This will be a
combination of estimating thefinancial effect if the risk eventoccurs, and the probabilityof the risk occurring. Some
risks would have large financialconsequences but couldbe very unlikely to happen.Others might have trivialfinancial consequences.
3 Prioritise the risks. What arethe really serious events thatneed to be addressed first?
4 Deal with the risks. Generally,there are four approaches:
Tolerate the risk, eitherbecause the event isunlikely to happen and/or the consequences willbe immaterial.
Treat the risk, or dosomething to ameliorateit. For example, if theconsequences of missinga deadline are serious,
have additional resourcesavailable that can be usedto speed up the processif necessary.
Transfer the risk. Insuranceis a form of risk transfer,as is sub-contracting. So ifyou are worried about an ITproject missing importantdeliverables, considersub-contracting part of itand build in penalty clauses.
Terminate the risk. In otherwords, the event would beso serious that you do notwant to risk it occurring atall. For example, if there werea security breach during aproject that requires sensitive
data to be held, this could bedevastating to a company, sothe company might decidenot to hold that data, despiteit possibly yielding goodmarketing information.
ThE PROJECT MANAGERYou will see from the contents ofthe PID that there are a number
of classes of stakeholder inprojects, typically: the sponsor the project team other employees,
sub-contractors and regulatoryauthorities, such as health andsafety inspectors.
Funds from the sponsor flow
through the project team andon to other departments andsub-contractors. In return, projectdeliverables should flow backtowards the sponsor.
The project team will often bemulti-disciplinary and it will beled by a project manager. Theproject manager is enormouslyinfluential as to whether or not
the project ends in success, andhe or she must combine technicalknowledge, leadership ability, andproject management skills.T
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The tasks of the project managercan be summarised as: Ensuring that the PID is
comprehensive. This can
be a complex task becauseit will mean ensuring thatdeliverables, budget, resources,project team, deadlines andso on have been determined.As was emphasised earlier,there is no point embarkingon a semi-defined project, sothe project manager shouldbe strong enough to resist
management pressure to beseen to be doing something. Ifthe project is started before thePID is complete, things will bedone but they will probably bethe wrong things.
FIGURE 3: RELATIONShIPS bETwEEN PROJECT MANAGERAND STAkEhOLDERS
Sponsor
RegulatorsProject team
Sub-contractorsEmployees
Project manager
Communication with thesponsors. Even when projectsrun smoothly, sponsors willexpect updates on progress.
Often, however, even in wellplanned projects, problemswill be encountered and it isthen that communication withthe sponsors is particularlyimportant. This will keep thesponsors informed but will alsogive the sponsors opportunitiesto make choices, for exampleto spend more or to cut back
on deliverables. Team leading. The projectteam is likely to consist ofpeople from a number ofdepartments with differentskills and priorities. Theproject manager should becapable of creating a cohesive,well motivated team whereparticipants work well together.
Communication withsub-contractors andregulatory authorities.
Technical appreciationof project issues. Forexample, someone runninga construction project willneed to understand relevanttechnical issues when these areraised in meetings.
Organisational ability,including the ability todelegate tasks.
Technical competence inproject management. Forexample, an understandingof critical path analysis(to monitor and controlprogress through time), andcost reports to monitor andcontrol expenditure.
An ability to balance projectcost, time, scope, and quality.
ThE CONTROL STAGE: COST,TIME, SCOPE, AND QUALITYAll projects have targets relatingto cost, time, scope, and quality;these should be defined inthe PID.
FIGURE 4: ThE CONTROL STAGE
Quality
Time Cost
Scope
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However, certain priorities orpressures are likely to applyto each variable, depending onthe nature of the project. Forexample, a project involvingsafety-critical systems will rightlyput great emphasis on qualitybecause the consequence oftechnical failure will be veryserious. However, managers needto be aware of the impact of thefollowing compromises: Increased emphasis on quality
places the project in danger oftaking longer and costing more.
Increased emphasis onmeeting the cost budgetmay compromise quality, theproject may take longer, or thescope could be narrowed.
Increased emphasis onmeeting time deadlines mayalso compromise quality,cost over-runs are more likely(perhaps because overtimehas to be paid), or scope couldbe narrowed.
If the emphasis is to ensurethat the project scope is notreduced, then cost and timemight increase, and quality
might decrease. Naturally, ifscope is increased, whetherthrough project drift orthrough more pre-meditatedchanges to the project, costs,time and quality will all beseverely jeopardised.
None of these compromises isbound to happen, but projectmanagers should be aware thatsuch tensions exist and that abalance has to be maintainedby management action, ifnecessary negotiating with theproject sponsors to gain approvalfor changes.
PROJECT PLANNING ANDMANAGEMENT TOOLSTypically, projects consist of anumber of separately identifiablesteps which can be broken down,hierarchically, until manageablework packages are producedwhich can be assigned to theappropriate people. This is theprocess of deriving the workbreakdown structure for the
project. Each work package, ortask, will have four components: task name and description costs, both marginal and any
fixed element duration who is responsible and, in
particular, whether the workwill be carried out internallyor externally.
So now the project managerknows who is doing what andhow much each element shouldcost. Using a relatively simplecost accounting system, material,labour, overheads and thirdparty costs can be coded tothe work packages, hence tothe project, and actual costs
can be compared to budget forcontrol purposes.
Still to be taken into account isthe time that each work packagewill take, but whereas costs arecumulative, times need not beas often several tasks can beundertaken simultaneously. Amore sophisticated approachis needed which sets outthe relationship of the tasksor activities to one another,identifying those tasks whichcan be concurrent and thosewhich can only be consecutive.For example, if the project wasto set up a new website for thecompany, the task of choosingthe internet service providerto host the website can beundertaken at the same time asdesigning the graphics and layoutof the web pages. However, the
layout and graphics couldnt befinalised before the company hasdecided what information theweb pages should show. Thesethree tasks could be set out in anetwork diagram, or critical pathanalysis, as shown in Figure 5over the page.
TYPIC
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The numbers represent the timethat each activity takes (letssay in days). The project cannotproceed further until bothcontent and layout have beendecided. These are consecutivesteps, one taking eight days andthe next five days, so this smallpart of the project cannot beaccomplished in less than 13days. It does not matter that ittakes only nine days to choosethe ISP: everything has to waitfor the content and designactivities to be completed.These are critical activities, andif either were to take anotherday, completion of the wholeproject would be delayed bya day. Therefore, the projectmanager has to monitor critical
activities very carefully. Choosingthe ISP is a non-critical activityand it could be delayed by up tofour days before impacting onproject completion.
Once project slippage islikely, the project manager hasa number of choices, all ofwhich should be discussed andperhaps negotiated with the
project sponsor: live with the slippage reduce project scope reduce project quality
FIGURE 5: NETwORk DIAGRAM / CRITICAL PATh ANALYSIS
B
CA
Decide on web pagecontent
Design layout andgraphics
Choose ISPTowards
implementation etc
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bring in more resources, suchas hiring sub-contractors tohelp out (which will, of course,increase costs)
move resources fromnon-critical to critical activitiesif skills are interchangeable.
Even small projects can bebroken down into many tasks,each with its own definition,personnel assigned, costs, starttime, finish time and definedrelationships with other tasks.Controlling this manually canbe very arduous and projectmanagement software can bevery useful in tracking eachactivity and, therefore, theprogress of the project asa whole.
CLOSUREThis is the stage at which thefinished project is handed overto the project sponsor whetherin-house or external customer.The sponsor needs to checkthat the agreed deliverableshave been provided and thatthe project has been successfulin that respect. There mightbe some negotiation of overcosts, for example if deadlineshad been missed. The sponsorshould formally sign-off theproject to provide evidence thatthe project is concluded.
A post-implementation reviewshould also be carried out,ideally involving the sponsor, theproject team and some of thoseaffected by the project. Thiswill identify: what went well what didnt go so well if the expected benefits had
been forthcoming if cost and time budgets
were met if anything needs to be done to
improve the outcome.
The last question is why we talkabout a project managementlifecycle. Successful projectswill spur people on to haveideas about how matters canbe further improved and sothe process starts again.Unsuccessful projects will resultin lessons worth learning suchas be careful with whom you go
on holiday.
Ken Garrett is a freelance writerand lecturerC
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