Many companies, their departments and employees work as they have always done and as they see fit. Consider thinking about the implementation of project management processes and phases. Thereby it is not necessary to invent project management, proven systems and standards already exist.
What are Project Management Phases?
Your projects will typically undergo certain stadiums. Thereby it usually does not matter how big or small your project is and what the desired result of the project is. Implementation of project management processes and phases allows to proceed in a more organized and purposeful way. View such division of a project from different angles. On the one hand, you can subdivide it into certain product phases, such as foundations, structural works, interior and finishing works, etc.Process Groups and Project Management Processes According to PMBOK6(R) However, this article suggests the grouping of project management processes as per the following scheme:
Initiating,
Planning,
Executing,
Monitoring & Controlling,
Closing
All five together are also referred to as the project life cycle. Speaking of project phases, by the way, is not correct in the context and according to the underlying standard. An overview of the project phases and the respective processes contained therein is available for free download on this website.
Project Initiation
All projects start with this phase. During the initiation phase you will collect the ideas and requirements, determine the necessity of the project and ascertain the feasibility of the project. The output of the processes during the project initiation phase are typically the business case and a feasibility study. These two documents include details such as the justification of the project, projected investments, the expected return on investment, the anticipated time to completion, as well as environmental impacts, influences on the potentially affected people (stakeholder), and other intended outcomes, as well as potential risks. Project approval or rejection is based on the outcome of the initiation phase.
Project Planning
After the project approval, detailed planning begins. Planning is essentially about describing how best to achieve the project goal. Essentially, planning is always based on the three components
Scope,
Time, and
Cost.
These three basic items form the project’s boundary lines in the shape of a triangle. Any alteration requires prior approval. The detailed planning is about the following:
Scope
It is easier for you to manage the requirements and scope of the project after breaking them down into smaller packages and preparation of clear definitions for each package. Such definitions among others include things like specifications, quality features and so on. Further, these packages are broken down into individual tasks and activities, resulting into the so called Work Breakdown Structure (WBS).
Time
The result of this planning is a schedule. In the schedule you record all packages, tasks, activities in the right order and with their respective inter-dependencies. Estimate the duration as well as their time-dependencies for all activities. Thus you will get tentative start and completion dates for each activity. Ensure not to overlook that certain necessary waiting times between some activities must be implemented and explained. If possible implement and display necessary waiting times between activities as separate “waiting” activities. This ensures that you will not accidentally delete them during later revisions. Compile all activities with all their details in the project schedule.
Resources
Now that you know the individual activities and their duration, you may identify the necessary resources. These mainly consist of
Materials (or intermediate products),
Manpower, and
Tools, and machinery.
While the material is fairly easy to plan, this is a bit more difficult for human resources and equipment. The reason for this is that their production rates are usually variable and based on certain influences, which may change frequently in the course of the project life cycle. Create an organization chart for the human resources so that everyone knows exactly what her or his responsibilities are and to whom she or he reports.
Cost
Based on the previous steps, the calculation of direct costs should now be relatively simple and follows simple mathematical steps. Caution is required for the indirect costs. In many cases, you will only know the total sum, but not the details. You will than apply a certain percentage of the total sum and consider that as indirect project cost. The most important output of this planning is the budget. The budget, as far as possible, should reflect the individual work packages so as to allow for more accurate control later on.
Quality
The quality standards to be adhered to result from the project requirements, legal requirements and contractual conditions. The quality planning therefore primarily relates to determining in which intervals and methods tests shall be carried out and how to proceed in case of deviations. Although quality control costs money, repair costs and costs due to loss of reputation are usually higher.
Procurement
In the rarest cases, a project can be realized entirely without purchasing materials or services. It is therefore necessary to determine how decision shall be made whether to produce something in-house or to buy from someone else, from where to source material or services, how to do the purchase in detail, what type of contracts to use, etc.
Risk
Each project can be exposed to a variety of risks. Risks can come from changes in legislation, unforeseen events, environmental influences, and many more. Once a list of potential risks has been compiled, their probability and impact must be assessed. Subsequently, a corresponding contingency must be included in the cost planning and it is to be planned in which way the risk is to be countered.
Communications
Much in project management is about effective communication. This includes regular meetings as well as daily, weekly and monthly reports, formal notification of any problems, invoicing and much more. The project and the project management team will face difficulties without regular and honest communication. Equally important is the arrangement of communication channels. Communication is quicker and better when subjects are informed through the right channel to the correct recipient and by using the right mode of communication.
Stakeholder
Stakeholders are all those people and organizations who can be influenced by a project or can influence it. Planning how to deal with such stakeholders and their demands based on their influence level is important, to ensure a smooth project flow and, on the other hand, to consider their legitimate needs. The identification of stakeholders is an important activity during the initial project phase. All that has been planned in this project phase is to be written down and recorded in planning documents. An extensive collection of free templates is available on this website.
Project Execution
Works implementation happens during this phase. This means in particular the execution of the actual works in accordance with the respective plans also the following:
Developing knowledge,
Managing the quality of the processes and their outputs,
Acquiring, developing and managing resources,
Hold meetings, and prepare and send reports,
Implementing risk responses,
Conducting procurement, and
Managing stakeholder engagement.
Project Monitoring and Controlling
In monitoring and controlling, the primary concern is to ensure that the execution of the project is in line with the planning. Similar to the planning, monitoring and controlling takes place in all subareas and first and foremost means:
Measuring project progress, and tracking delays and their root causes,
Monitoring scope and controlling changes,
Measuring results and monitoring the quality of works implementation,
Controlling expenses,
Monitoring development of risks.
Implementation of approved corrections starts after the analysis of all deviations, whether cost, schedule, quality, or whatever. Root cause analysis is very important prior to the implementation of corrections and reasons e.g. for slow works implementation can vary. Number of resources or their output may vary from the anticipation, external influences can impact and many more reasons. Avoidance of continued further deviation must be ensured. Deviations almost always require an adjustment of the underlying planning, or a subsidiary plan on how the deviation can be corrected quickly. This makes it clear that planning, execution and monitoring blend into one another, are repetitive and take place continuously until the implementation of the project is complete.
Project Closure
Upon completion of the project product the project is not yet over. The last phase of the project is closing it out. Activities in this phase among others include
Final acceptance of all deliverables,
Completion of hand-over documents,
Handing over the product,
Repairing defects that occur during the defects liability phase,
This blog post is about a situation that is common for many projects and project managers especially in the construction industry. An organization signed a contract for fulfilling a client’s need and engages a project manager to deliver the project. This project manager was not necessarily involved in the project initiation phase. Sometimes the project manager is even entirely new to the contractor’s organization. In order to succeed, the project manager has to prepare himself/herself and has to follow 9 Steps How to Start a New Project.
Primarily the below considerations focus on the contractor and its organization, not necessarily on the client in the first place.
It is important for the new project manager to understand the contractor’s organization, existing standards and procedures prior to engaging further in the project. It is also important for him or her to get access to a complete set of documents and to evaluate them as far as possible.
The project manager schedules an internal kick-off meeting at the earliest after his/her document review. He shares the agenda in advance to give participants a fair chance to prepare and understand expectations.
The most important one out of the 9 Steps How to Start a New Project is in my opinion to sign a project charter as early as possible. Find a template HERE. The project charter nominates the project manager and gives him or her authority. It also provides clarity to the structure of the team.
2. Business Case
Sometimes company leaders can not give clear answers to the following questions:
Why did we sign this contract?
Why did the client choose us over others?
What went well and what did not go so well in previous projects for the same client?
What are the success factors?
Who are nominated project partners?
The whole project team needs to know exactly why a project contract was signed.
3. Scope of Work Statement (Scope Baseline)
Someone with involvement in pre-contractual communications explains the scope of works. He emphasizes on scope inclusions and specific scope exclusions. He also explains assumptions, which are not yet finalized.
The team members review the deliverable list and decompose them into smaller better manageable packages and further into activities and tasks. The result is the work breakdown structure document. Often a work breakdown structure is provided by the client to fit into their planning. In that case it must be checked if it is complete and reasonably detailed. Other documents and structures such as the time schedule and, ideally, the budget are based on it.
Experiences from previous comparable projects serve as lessons learned.
4. Resource and Duration Estimates (Schedule Baseline)
The company committed to deliver a certain product or service within a certain time limit. The time limit estimate is based on factors such as resources and duration estimates. The planner who has prepared this initial planning explains his estimation approach and based on which considerations he came to his conclusion.
Were public holidays, leave entitlements and seasonal influences sufficiently accounted for?
How solid is the plan?
Are the resources readily available or shared with other projects?
What other inter-project dependencies exist?
What is the commencement date and milestones?
The project manager works out a detailed schedule with his team soonest possible.
5. Budget Breakdown (Cost Baseline)
I wrote about cost control in my previous post. Unfortunately, many only have cost control in mind. I’m certainly not against cost control, but the better approach is focusing on cost management, keeping in mind that other management areas are equally important.
The organization has committed itself to delivery a product or service at a certain price. The estimator, who calculated this price, explains his calculations in detail and the budget preparation methodology. Because here’s the catch. As described, the contract is signed, the basic planning is done with more or less care and the project manager – you – mainly only carries out the work and monitors and controls it. On the cost calculation and the resulting budget, he has virtually no more influence.
The estimator therefore shares his estimation sheet with the project manager and explains the used:
Estimation methods,
Resource loading,
Duration estimates,
Considered overheads and risk contingencies.
What are the funding requirements and what is the expected return of the investment?
6. Team Structure
The project manager considers the preparation of the project organization chart as a high priority. During the internal kick-off meeting all key players and functions are geared towards the same common goal. Therefore through their participation in the meeting, colleagues understand that they belong to the team. The project manager observes the level of influence and relationships among colleagues and watches out for internal politics.
He also uses the meeting to clarify reporting structures. There will be colleagues who only work a certain part of their time for the particular project. For this proportion of time they are answerable to the project manager. Therefore the project manager ensures to make everybody aware of this.
7. Technologies Needed
I talked about resources above. Those resources are primarily human resources, machinery and tools, as well as material. Because construction projects are usually not done from the main office, in most cases a construction site office with communication and other facilities is needed. Data access and data backup is a topic in this context. The establishment of such a bureau is often insufficiently considered in the pricing, if this is not expressly mentioned in the deliverables.
8. Initial Risk Register
The estimator must introduce the initial risk register, which he or she had taken into account in the pricing. This is actually very important, but often neglected. The risk contingency instead is often only assumed as a certain percentage. I am convinced that poor risk management will cost some companies their ISO 9001 certification this year. But that is not up for debate here.
In many cases, the only risk considered is a possible price increase for steel or cement.
Feel free to download my risk register HERE. It already includes many common construction related risks to give you an idea to start with.
9. Current Status
The project manager and large parts of the team are only hired after the organization having signed a contract with the client. As much as this is understandable, the disadvantage is that this easily and quickly leads to an initial time delay. Thereby the team and the company lose precious time for mobilization and kicking-off the works. That’s why it’s important to evaluate the current progress and status of the project.
Questions that are urgent to answer:
What are the works enablers?
Is the notice to proceed received?
Is the design complete and approved?
Are licenses and permits in place?
What is the mobilization status?
Are urgent materials and other resources ordered or organized?
The team agrees on an action list and a short-term planning for the transitional period, to get out of the current situation.
A remark at the end. Action lists are for some a bit outdated and unfortunately often a document that snoozes in the email inbox until 5 minutes before the next meeting. Consider dividing a large whiteboard into a parking-like structure. Assign a parking space to every individual and post tasks in it as sticky notes. Everyone moves notes from their parking space towards the exit upon task completion. Tasks than exit the parking after review during the next meeting.
Controlling costs surely is a very important process in project management and one of the first responses when asking people’s opinion about a project manager’s role. While cost control certainly indeed is very important, it is only a part of cost management. Without other management areas not equally taken care of, cost management will never succeed. This article is about how to manage project cost the right way and covers the following processes:
People’s response what a Project Manager is engaged with
Knowledge Areas in Project Management
The image shows the knowledge areas covered by Project Managers. The percentages are a result of a small assessment among website visitors. It presents their opinion about the daily activities carried out by project managers. It is difficult to classify whether cost management is the most important part of project management. This entirely depends to individual projects and their objectives. Further are the different processes across all knowledge areas linked too close to make such a differentiation.
Project manager as a prisoner in a triangle
Project managers are often prisoners in a triangle of scope, time and cost. This symbolization makes it clear that all management areas are fundamentally related and cannot function individually. Neither side of the triangle can be changed without affecting the others. Therefore, this symbolization also illustrates the importance of treating all management areas equally important.
According to own observations and exchange of experiences among colleagues, the actual cause of cost overruns are often:
Insufficient scope elaboration, which may include quality and other requirements,
Creating schedules not detailed enough and not according to best practices, and
Incorrect resource estimates.
Please share your experience and leave a comment below.
Problems in Cost Management
One problem in the construction industry results from the fact that many companies are getting the project manager on board too late. I assert this based on the observation that construction companies often have very little involvement in the initiation phase. Instead, they offer for a job and usually do not take any further action, including the engagement of a project manager, until contract award. The almost immediate start of construction activities is expected often directly after contract award. Consequently the planning phase comes up short. Especially since the project manager and his team are often still not on board at this time. Also read my article about common problems in construction projects. Construction companies that quote for certain projects are very much focused on making offers and securing a contract. Such offers are often based on
Mountains of assumptions,
Historical and/or unverified data from previous projects, and
Missing project detail knowledge.
In this way, an offer can never come about, which in relation to the cost estimate even comes close to the later actual costs.
1. Planning Project Cost Management
Many project managers create a schedule and look at it as “the planning”. That is of course wrong and insufficient. A project manager covers 10+ management areas, depending on the industry. Each area requires a thorough planning, this of course also applies to cost management.
Planning cost management is therefore mainly concerned with
Setting the framework for each of the cost management processes so that performance of the processes will be efficient and coordinated, and
Describing the cost management processes in the project cost management plan, which becomes a component of the overall project management plan.
Management plans and other documents are reusable with some adaptation for several projects. Therefore I cannot accept a common project manager’s answer, that there would be more important things to do, and that there is no time for plan preparation. So, use your plan from your last project, or wasn’t there enough time? In that case check out this link, I share my templates with you for free.
2. Estimating Project Cost
No way to get cost right if ignoring the rest
Many construction companies are focused on pricing a particular project. Although other processes are a basis for this, they are often not worked on or postponed until afterwards. These processes include:
Collecting and understanding stakeholder requirements,
Decomposing scope into manageable packages,
Estimating resources,
Estimating durations, and
Evaluating risks.
How can you get the cost estimate right, if you miss out these important processes? If you get this wrong, there is little to control later. Maybe only frustration…
Something that you may hear over and over again on construction projects are statements like “The crazy HSE officers hinder us from doing our work and cost us too much time and money with their overblown requirements.” Well, probably most of these requirements were even documented before bid submission and should have been considered in calculations.
Another common mistake is the inadequate consideration of time and resources. Jobs are often priced according to following sample formula:
Finish concrete wall = x m3 reinforced concrete + y m2 plaster + y m2 wall paint.
This initially looks relatively logical even so I did not include formworks. However, it must be remembered that between concreting and plastering, as well as between plastering and painting up to 28 days have to pass to allow for curing. Curing by the way is an activity and requires resources. But if you price a bill of quantities (BoQ) you will usually not find this item. In other words, without decomposing the scope into manageable packages, estimating resources for each and every activity and task, and estimating their duration, there is great possibility of forgetting it.
I hope that sounds logic, right? I can tell you, the reality is often different.
Please share your point of view below.
3. Determine the Project Budget
Budget Preparation
The reality in many construction companies is as follows:
Budget preparation is a project manager’s task. In order to perform this task he or she must be involved early enough in the process. If the PM gets engaged after the contractor signed a contract and consequently committed himself to a price and duration, it is very difficult to get this project back on track.
That means in summary the PM’s starting position is as follows:
Weeks time delay at the time of engagement,
Scope and requirements possibly not evaluated thoroughly,
Time and resources possibly estimated wrongly or incomplete,
A so-called budget is grabbed out of thin air and is a “done deal”.
What could be the likelihood that this project will finally become a success? I’m looking forward to your comments.
The more correct and far more promising way would be:
Estimate thoroughly the cost per each activity bottom-up including resource and duration estimates as described above,
Aggregate the activity costs to figure out the cost per work package and consequently for each deliverable,
Add the risk contingency.
4. Control Project Cost
As long as above processes are not performed correctly, not much is left to control.
Otherwise controlling cost is about:
Ensuring that no money is expensed without the budget owner’s approval,
Preventing that expenditure exceed the individual budget per activity, work-package, and deliverable without authorization,
Monitoring cost and work performance and analyzing variances,
Managing overruns and ensure that overall project budget is maintained,
Influencing factors (such as scope changes etc.) that may result in a change to approved baselines,
Updating the budget to accommodate approved changes and keep budget changes within acceptable limits.
Please feel free to share your opinion with me. I would be very happy if you prove me wrong.
How to make good decisions is subject to many books, articles and guidelines. We are taking decisions probably every single minute during the day. Nonetheless, the process of good decision making often still seems difficult and intuitive. This is especially true when all alternatives have a catch. Below method can help you to make the right decision – in your project as well as in private.
Collecting All Facts
One does not need more than a sheet of paper and a pencil to write down everything that may be relevant to a decision. That’s why the method is also called Consider All Facts (CAF). List all influencing factors in one column. In a second column, sort all factors into three groups according to their meaning with the most important ones on top of the list. Another column is for notes and ideas. The method provides an overview of open questions, however, does not give usually answers.
Pro and Cons List
Collect all pros and cons in a table with three columns. List in the first column everything that speaks in favor of a decision. Counter arguments go to the second column, and arrange ideas and questions in the third column.
Decision Matrix
The easiest way to compare alternatives is again a tabular overview. Provide a separate column for each alternative and write them one by one in the column headers beginning from the second column. Then determine evaluation criteria for options and include a short option description in the first column, each option in a separate row. Note points or grades in the columns how well each criterion is met. Aggregating all values gives an overall grade for each decision alternative.
Cost-Benefit Analysis
This analysis is a decision matrix in which a weighting is given to the individual evaluation criteria – depending on their importance. List mandatory criteria at the top of the list. Eliminate all options that do not meet one or more disqualifier criterion. The other criteria are weighted with percentages. Then multiply the points by the weight and sum them for each alternative.
Decision Tree
With a classic decision tree the results of different decision alternatives can be evaluated according to their statistical probability. The basic question is always: what happens if …?
One can also create a set of questions that have to be answered “yes” or “no” for each individual option. As soon as one “no” is recorded, the specific option is ruled out.
Scenario Analysis
The scenario analysis attempts to forecast future developments. At first the best and the worst case scenarios are developed. In between, a small number further scenarios with average values make sense. In this way, a picture of the future can be developed quite well.
Many companies, their departments and employees work as they have always done and as they see fit. Consider thinking about the implementation of project management processes and phases. Thereby it is not necessary to invent project management, proven systems and standards already exist.
5. Budget Breakdown (Cost Baseline)
6. Team Structure
