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CHAPTER 1

INTRODUCTION

The reason most often cited for project failure is that requirements are not clearly defined or stated or that they are misinterpreted. Consequently, every study of schedule and cost control typically begins by describing needs and requirements and how to ensure they are accurately presented and interpreted. In that regard, this book is similar. What is different about this book is that, in addition to describing requirements and requirements analyses in detail, it discusses how to incorporate these requirements into a project plan and how to set up and implement a monitoring and control system to ensure that projects are successfully completed on time and on budget.

This book describes processes, tools, and techniques necessary and available to manage any project. The terminology, tools, and techniques generally will not be new to someone who has any project management experience, but they are presented so that the members of a project team — even those who have little experience — can apply them immediately to better implement, monitor, and control their projects.

THE NATURE OF SCHEDULE AND COST CONTROL

Before describing ways of monitoring and controlling projects, there are two questions about schedule and cost control that need to be asked and answered:

1. What is schedule and cost control?

2. Why do we need schedule and cost control?

What Is Schedule and Cost Control?

Schedule and cost control encompasses four aspects or elements of project work that are primary concerns for the project manager and his or her team:

* Directing progress

* Directing actions

* Controlling results

* Conserving resources

Directing Progress

This element of project management refers to the efforts involved in directing the progress of a project against the project plan, particularly in regard to those efforts that impact the cost, schedule, and scope. Almost everything the project team does — every decision that is made — potentially affects one or all of these three components. Cost, for example, affects both schedule and scope, schedule affects cost and scope, and scope affects cost and schedule. Accordingly, if the schedule slips, then it costs more to bring the project back to its original planned timeline, or if the schedule must be met, the customer may prefer to modify the scope by eliminating some of the functionality of the product. Simply stated, directing progress in a way that minimizes negative impacts or directing progress to take advantage of positive impacts is the key to successful project management.

Directing Actions

Directing actions involves taking the proper action to minimize the variances between the planned and actual progress. If, for example, a project is determined to be over budget, then some action is required to bring the spending back into line with the planned budget. Sometimes the action will require some adjustment to the schedule or to the scope, but every action will have a ripple effect; other components of the project will be affected, requiring additional action.

Controlling Results

Controlling results means being cognizant of the fact that any action taken must have a strategy or tactic to control the impact to the project as a whole and to the other components of schedule, cost, and scope. There is no gain if an action taken pushes the project in an unchecked direction. Being able to predict and control the results of the actions taken will ultimately move the project back to its planned track if it is determined that there is some variance from the original plan.

Conserving Resources

Conserving or controlling resources is the one element of project management that causes the project manager the most grief. There almost never are enough resources available to implement and run a project properly. Therefore, the project manager is responsible for apportioning and conserving resources in the most optimal way possible. Otherwise, the project is doomed before it ever begins.

Why Do We Need Schedule and Cost Control?

The problems of keeping a project on track by directing and controlling the impacts to scope (deliverables, quality), cost (resources, budget), and schedule (activities, time) were mentioned in the previous section. These three elements make up what is known as the triple constraint, shown in Figure 1.1. The triple constraint typically is shown as a triangle because each facet is critical; none is more important than the others, at least in terms of project control. When one component of the triangle is changed, almost invariably one or both of the others changes.

The triple constraint is a useful view of important components of project management. It is often referred to as the project management triple constraint. The three elements encapsulate a total project. If one of them is changed, then at least one of the others is affected; often both are. For example, if a project goes over budget, scope may have to be decreased to get the project back on the budget plan. If a project is behind schedule (time), more resources may have to be added to get it back on schedule, but adding resources means added costs. These change effects are illustrated in Figure 1.2.

In the left triangle in Figure 1.2, it is clear that if the schedule increases, then the costs must increase because of the additional resources to accommodate or reduce the schedule overrun. Often the reverse is true: if there is an increase in costs, the schedule must be extended to reduce the number of resources needed. The right triangle shows that to reduce the schedule and the costs back to the original estimates, the scope of the project must be reduced.

Keeping the three elements of the triple constraint in balance is one of the aims of a project manager and team; doing so is a juggling act that is sometimes very difficult and requires a good grasp of a number of management skills, such as communication, risk management, contracting, reporting, team building, selling, and many others.

To summarize the three aspects of the triple constraint triangle, the following may be useful in understanding the exact meaning of each of the sides:

* Scope — The PMBOK® Guide defines scope as the sum of the products and services to be provided. In other words, project scope is the work to be done in a project to meet project requirements.

* Cost — The money, labor, equipment, and other resources needed to complete a project.

* Schedule — The time it takes to complete a project or to reach intermediate points or milestones within an overall project.

The concept of the triple constraint is used early in the planning stages of a project to understand the customer's needs and to consider how each factor interacts with the others and how together they contribute to the whole project. The triple constraint is also useful during the course of a project in dealing with changes, contingencies, risks, assumptions, replanning, and issues that may arise. In short, every process, every phase, and every activity of project management are all performed against the backdrop of the triple constraint.

THE PROJECT LIFE CYCLE

Every project has a life cycle that is comparable to a biological life cycle in that it begins slowly and quickly builds as the project work starts to produce deliverables. As a project reaches its final days, activity slows down and tapers off. A project life cycle shows the project effort (and costs) as the work takes place and maps this over time, often shown as a graphic.

There are no standard life cycle models. Each industry uses its own model, and variations of the model are found even within an industry. Moreover, the names used for the phases in each model are not always the same; the names differ from industry to industry or even according to an organization's preference. For example, one organization may refer to the first phase as the initiation phase whereas another may call it the concept phase; some industries use four life cycle phases for their projects, whereas others use seven or more phases. Regardless of what the phases are named or how many exist, the project management activities and the tools and techniques available are generally very much the same across all industries.

In the life cycle model in Figure 1.3, the five phases are concept, planning, design and development, implementation, and closeout. Each of these phases has its own subphases, steps, or stages, and these usually are defined by an organization to suit the way it defines and develops its projects. Generally, the activities for each phase can be described as:

* Concept

* Planning

* Design and development

* Implementation

* Closeout

Concept

This is the data-gathering phase. The project is just beginning, and who the project manager and team members are has not yet been determined. (Note that there has usually been a previous phase to select the project; in almost every case, a project manager is not involved in project selection. Rather, a project is handed to the project manager after decisions have been made to pursue the project and for what purposes.) During the concept phase, the project manager will determine, to the best extent possible, what the requirements are and what the resource commitment needs to be.

Planning

The planning phase takes the concept phase into the details of planning, where the requirements definition is more specifically developed, a work breakdown structure is prepared, schedule and cost estimates are developed, and the project plan is written. It is also the phase during which the project team is organized.

Design and Development

Blueprinting of the project occurs in this phase. The project manager conducts design meetings as needed to gather all information necessary to create the design documents. The project manager, subject matter experts, and other stakeholders must review and approve the design document before development begins. The actual work on the project deliverables, or project products, starts and takes place during this phase. The key functions of scheduling and cost control occur here, inasmuch as variances from the plan (or baseline) are measured and control strategies are implemented to keep actual progress as close to the plan as practical.

Implementation

The implementation of the project deliverables, or project products, takes place during this phase. The project manager continues to monitor variances from the plan and implement strategies to keep the project on course. Any problems need to be resolved in order to achieve a successful closeout.

Closeout

This is often the most difficult phase because a project manager loses team members to other projects as the current project in seen to be winding down. Furthermore, many organizations do not support the activities of this phase as strongly as they should because they are moving on to other projects. Yet this phase is critical to the success of a project in a way different from all other phases: this is the phase that delivers the final efforts to customers. It is concerned with conducting a scope review to determine that everything planned (or promised) has been accomplished and delivered, obtaining customer acceptance of deliverables, and closing out administrative and contractual paperwork. It is also the time to develop lessons learned documentation, without which process improvement is made less effective.

REQUIREMENTS REVIEW

Reviewing what is involved in developing requirements is important and adds value. A frequently mentioned reason for project failure is poorly stated or unclear requirements. Moreover, even with clearly stated requirements, the project team can misinterpret what the customer means or wants.

Writing clear requirements is truly an art. We can all think of the many instances when we thought we understood a person to say one thing when in fact he or she said or meant something else entirely. Therefore, it is always wise to list all the requirements as they are understood and then reexamine each one with the customer to ensure nothing has been missed and to get the customer's agreement that the requirements have been interpreted correctly.

The requirements review is also the time to identify the project stakeholders. Stakeholders are those people or organizations that have an interest in a project, are affected by some or all of a project's activities, or, by virtue of their positions, can make or break a project. A serious mistake that inexperienced project managers often make is overlooking those people or organizations that think they are stakeholders, even though they may not fit the strict definition of the term. If in doubt, it is far better to include a person or organization in the stakeholder analysis than to exclude a possible stakeholder that may have the power to negatively affect the project if they feel left out or snubbed.

Of course, the real reason for doing requirements analyses is to determine what needs to be accomplished. However, just as importantly, without a complete understanding of the requirements, it is impossible to develop the cost, time (schedule), and scope targets, which are the baselines against which project progress will be measured.

Finally, when performing a requirements review, it is imperative that the project manager includes acceptance criteria and obtains sign-off on these from the customer. Acceptance criteria are a statement of what will be used to conclude whether the project meets its desired outcomes or objectives. Without a mutual and agreed understanding of the "measuring sticks" for completion, the project manager cannot ascertain when the project activities are actually complete. As such, a project could easily become never-ending.

SCHEDULE AND COST CONTROL DOCUMENTATION

The basis for a solid scheduling and cost control system is to use some key tools. As with any aspect of project management, the development of good analyses, detailed documentation, and accurate estimates (to the extent possible) is key to successfully completing a project.

In the case of schedule and cost control, some particularly useful documentation tools can add good value and should be kept in mind for use throughout a project and especially during the planning process. These documents include:

* Project charter

* Scope statement

* Project requirements document

* Work breakdown structure

* Time and cost estimates

* Responsibility matrix

* Risk management plan

* Change control process plan

Project Charter

The project charter is signed by the senior manager who has functional authority over all the resources and organizations working on a project. The principal function of the project charter is to name the project manager and authorize him or her to lead the project. The project manager usually prepares the project charter because he or she knows more about the project than anyone else. However, a senior manager signs it, and usually all the functional managers who have joint responsibility for supporting a project also sign it. An example of a project charter format is depicted in Figure 1.4.

Scope Statement

The scope statement describes a project and its purpose. Depending upon what other documentation accompanies a project (such as a contract, specifications, and engineering drawings), the scope statement can range in detail from a high-level statement of the work to a complete description of the project requirements.

Project Requirements Document

The project requirements document or PRD (depicted in Figure 1.5) is a document used to identify each of the requirements, assumptions, deliverables, and constraints, as well as several other pertinent facts. Because senior managers also sign the PRD, many people are confused about why it is necessary to sign off on both the project charter and the PRD. To simplify this distinction, the project charter deals with people, that is, who is performing the project; the PRD, on the other hand, deals with what the project is about. Therefore, senior management should sign both documents to formalize the authority of the project manager and to indicate organizational commitment to performing the project.

Work Breakdown Structure

The work breakdown structure (WBS) is way to decompose a project into its lowest components and is the single most important tool in a project manager's tool kit. Decomposing a project into a WBS framework can be accomplished in two ways: the indented format and the graphic or tree format. These formats are depicted in Figures 3.2 and 3.3, respectively, where the WBS is discussed in detail.

With a fully developed and detailed WBS, every other tool can be developed and a project plan can be created. In short, the WBS is the basis for schedule and cost control. A WBS can be developed with either a product-oriented or a task-oriented focus, and one should be very careful about how each is used.

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Excerpted from "Project Scheduling and Cost Control"
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Copyright © 2008 J. Ross Publishing, Inc..
Excerpted by permission of J. Ross Publishing, Inc..
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