“Project Management” is often an overused and misunderstood term. A project is a body of work to be completed involving multiple people or departments, executed over some time, and for a price based on the amount of work. In project management terms, this translates to scope, schedule, and cost. This triad of project characteristics requires management. A Project Manager (PM) is a functional expert assigned to manage the project. This means completing the project on time, within cost, and to the customer’s satisfaction. PMs often have no direct supervisory relationship with the project team, yet still must ensure the project is completed. Another common occurrence is that PMs lack training or understanding in actual project management. Often, PMs are seen as the best technical resource and are assigned to bring a project across the finish line, even if they’re lacking true management know-how to make that happen.
The Project Management Triangle: Scope, Schedule, Cost
Scope, schedule, and cost are the three elements of project management. Each of these elements can be further broken down into various sub-elements. Scope defines what needs to be done. It refers to the deliverable(s), the quality of work, and the quantity of hours allotted for the work, among other things.
The schedule is when the work is due to be completed. Sometimes, there are several steps to get to the final deliverable that can be itemized within the scheduling timeline. Steps such as finalizing the approach, procuring materials, preparing the site, installing equipment, and verifying proper operation may each have their own place in the schedule. The timeline may also include preliminary or schematic design, detailed design, completed drawings, and field support for engineering projects. For a marketing project, the timeline may involve identifying a brand, creating messaging, determining messaging media, creating messaging copy, and implementing messaging through designated platforms. In these examples, multiple parts can be broken down into sub-projects, and individual scope, schedule, and cost can be managed for each.
In the context of project management, cost addresses the how much aspect of the project, detailing the financial resources needed to achieve the defined score within the specified schedule. Cost includes budgeting for labor, materials, equipment, overhead, and any other expenses associated with the project.
The Project Management Triangle: A Standardized Structure
The foundation of good project management is identifying these steps clearly and using them consistently throughout a project lifecycle. Your business should standardize this structure for your projects. All successful projects start with an estimate of costs to complete the anticipated steps within a realistic schedule. If you start with a solid estimate broken into common elements, you are far more likely to manage a project to a successful conclusion.
Avoid the One Big Number Pitfall
If you estimate costs using either “one big number” or various estimate pieces that don’t directly correlate with how you will execute the project, you are putting yourself at a disadvantage. For instance, if you have materials and supplies needed for various elements spread over multiple phases and you cannot break these out for each phase, you may limit the visibility of materials over each phase. This allows for misrepresentation of the necessary costs for these materials, thereby skewing your overall figures. If you use one big number and don’t break the total down between labor, materials, and support, you can’t measure each one along the way to see if the project is on track. The longer the project duration (schedule) and the bigger the workload (scope), the more important it is to break down cost estimations into as much detail as possible.
The Project Plan: A Baseline
Once you have estimated the cost of the project using the elements to be executed, you can set up a project with various budgets for anticipated efforts. By knowing what each phase or element is estimated to cost and how long it should take, you have a baseline for your project plan. This baseline allows you to compare real time project progress against the anticipated baseline progress, cost, and schedule. The sooner you see that a project varies from the project plan, the sooner you are able to take corrective action, significantly increasing your likelihood of success.
Causes of Variance: Inaccurate Estimates
Typically, there are three main causes when a project varies from the project plan. Either the estimate was inaccurate, the work is not being executed to plan, or there are changes made to the project scope. Each of these reasons can be identified and resolved through communication and collaboration. When PMs creates a project plan, they generally base their estimations on their own skills, experience, and knowledge. In reality, a project team likely comprises various levels of skill, experience, efficiency, and understanding. If you expect that every project team member will be able to accomplish their assigned tasks as quickly and with the same quality as your best team members, you are setting yourself up to be over budget and behind schedule. As a PM, if you find that your estimates are consistently under actuals, adjust your estimates to account for the abilities of your project team.
Causes of Variance: Quality of Execution
Another reason for variance is the quality of execution. Are team members with the right skills, experience, and abilities assigned to the project team? It could be that team members are not adequately trained, or that you don’t have the necessary resources assigned to the project to complete the scope of work. If your team has written standards, processes, and procedures, are they being followed? If you don’t have standard processes and procedures, how can we expect our team to achieve the intended results? If a successful project depends on any specific individual, your process is lacking. In this case, you need to develop standards that can be trained, followed, and verified to achieve consistent outcomes.
Causes of Variance: Scope Changes
The third most common cause of project overruns is changes to the project scope. Often, these changes come from well-meaning clients or team members who are not authorized to make these changes. Since most team members are conscientious and accommodating to clients, these changes often are not communicated to you as PM, inadvertently affecting your project plan. If any scope changes significantly impact the project, you must decide to either present an updated project plan (with new costs and schedule included) to your client or to absorb the changes, risking underpayment and employee burnout.
For PMs, the key here is to evaluate the changes, know their impacts, and make an informed decision about how to proceed. This may involve a trade-off by taking some other tasks off the table. You may also choose to execute the changes at the expense of the overall schedule. This choice is often the reason for less profitable projects, as additional work takes time and resources. If you choose to absorb the scope changes without changing the schedule or cost, the expenses for the scope change are taken directly from the estimated project profits.
Accountability, Accountability, Accountability
The final element of successful Project Management is accountability. It starts with executive management holding you as PM accountable for the project’s performance. It is up to you to plan, measure, and take corrective actions to ensure the project’s profitability. Project team members are also delegated accountability for their portion of the project and must do their part to keep the project on track. Having a well-structured project plan, communicating the project objectives and deliverables, and measuring the progress daily promotes project success and profitability.
Ensure Project Success
Projects are an agreed-upon body of work between your business and the client. If you have a structured and consistent estimating system, set up your projects with steps that can be measured, communicate these steps and progress to your team, hold individuals accountable for their work quality and output, and manage these steps as you go, you can accurately compare your actual performance with your anticipated project plan.
The sooner you identify any variation from your original project plan, the more options you have for course corrections. By understanding the sources of variance, you can take corrective actions to keep your project on track. The longer the project’s duration, the larger the number of individuals involved, or the higher the value of the project, the more important it is to follow these steps closely. Develop a thorough project plan, communicate clearly with your team, and compare actuals against your plan daily to ensure that projects are executed profitably for your company.