Category Archives: Project Management Consulting

Budgeting Best Practices Part 6 of 6

Part 6: Wrap-up

Background

Determining your project budget has been discussed several times on this website. The reason is that many projects experience budget overruns. Many project managers are still having problems determining a good project budget. Based on these facts, I decided to run a series on budgeting best practices.

 Wrap-up

In part 1 to 4 we went through the steps to develop a project budget, going from project scope to project budget.

The main thing to remember is that developing a project budget is not a stand alone process. Developing a budget involves the scope, the WBS, the schedule and finally the budget. It is a stepwise process as depicted in the following chart.

project scope to budget
From Project Scope to Project Budget

 

I know that in real life we often do not want to go through all the steps. What to do when you are in a hurry, is to work fast, maybe using a preliminary scope and go through the steps to develop a preliminary budget, since it was based on a preliminary scope. However, you should never skip a step.

Also realize that there are also other methods to come up with a preliminary budget, such as parametric estimating. However for project approval you need a good budget, not a preliminary budget.

Yes, good project management, requires some self discipline!

 

Related References

Budgeting Best Practices Part 5 of 6

Budgeting Best Practices Part 4 of 6

Budgeting Best Practices Part 3 of 6

Budgeting Best Practices Part 2 of 6

Budgeting Best Practices Part 1 of 6

Determining Your Project Budget

Scope Control Best Practices

Project Management Quick Start

 

 

Budgeting Best Practices Part 5 of 6

Part 5: Develop Budget

Background

Determining your project budget has been discussed several times on this website. The reason is that many projects experience budget overruns. Many project managers are still having problems determining a good project budget. Based on these facts, I decided to run a series on budgeting best practices.

Interested?

If you are interested in knowing more about budgeting best practices,  SIGN UP on this blog (to the right, if you have not already done so)  to have all the blog posts of this series delivered to your inbox.

Step 5: Develop Budget

In part 4 of this series we developed our schedule. Many project managers think that budgeting is a stand alone process. It is not. Your budget depends on your schedule. Remember that time is money!

What you do when developing your budget is cost each one of the activities you came up with when determining your schedule. The cost of an activity is usually composed of labor, material and equipment. We use a spread sheet to calculate the cost of each activity. You then get your budget by adding up the costs of all the activities.

Budgeting Best Practices

  • Make sure your scope has been verified
  • Make sure your WBS corresponds with your scope
  • Make sure your schedule corresponds with your WBS
  • Make sure your budget is in line with your schedule.

Related References

Budgeting Best Practices Part 4 of 6

Budgeting Best Practices Part 3 of 6

Budgeting Best Practices Part 2 of 6

Budgeting Best Practices Part 1 of 6

Determining Your Project Budget

Scope Control Best Practices

Project Management Quick Start

Budgeting Best Practices Part 4 of 6

Part 4: Develop Schedule

Background

Determining your project budget has been discussed several times on this website. The reason is that many projects experience budget overruns. Many project managers are still having problems determining a good project budget. Based on these facts, I decided to run a series on budgeting best practices for the rest of this year.

Interested?

If you are interested in knowing more about budgeting best practices,  SIGN UP on this blog (to the right, if you have not already done so)  to have all the blog posts of this series delivered to your inbox.

Step 4: Develop Schedule

In the previous step we developed the WBS. The next step in getting our budget is to develop the schedule. You do this by scheduling each activity you have in the WBS.

To schedule an activity you have to determine the duration of the activity and the dependencies of the activities. Dependencies are needed because some activities cannot start before other activities are finished.

 

Scheduling Best Practices

  • Make sure to use all the WBS elements as activities in your schedule. A schedule is not a stand alone activity: it is derived from your WBS which in turn is derived from your scope.
  • Use realistic durations for your activities. We are often tempted to deliver a schedule with short durations. Be aware of this, and make sure your durations are realistic.
  • Add dependencies to complete your schedule. Visualize in what sequence the activities have to take place and then add the dependencies accordingly.

Next Steps

In Part 5 of this series (Determine Budget) we will cost each of the activities we scheduled in this part of the series.

 

Related References

Budgeting Best Practices Part 3 of 6

Budgeting Best Practices Part 2 of 6

Budgeting Best Practices Part 1 of 6

Determining Your Project Budget

Scope Control Best Practices

Project Management Quick Start

Budgeting Best Practices Part 3 of 6

Part 3: Create WBS

Background

Determining your project budget has been discussed several times on this website. The reason is that many projects experience budget overruns. Many project managers are still having problems determining a good project budget. Based on these facts, I decided to run a series on budgeting best practices for the rest of this year.

Interested?

If you are interested in knowing more about budgeting best practices,  SIGN UP on this blog (to the right, if you have not already done so)  to have all the blog posts of this series delivered to your inbox.

Step 3: Create WBS

In step 2 you defined your scope. The scope can be just one paragraph saying what has to be done. a one paragraph statement can be difficult to schedule and cost. So for practical reasons you have to breakdown your scope into smaller steps, you have to create a WBS (Work Breakdown Structure).

For example if you have to build a highway. What steps do you have to take to complete this project? Steps in building a highway could be:

  • Preparation Work
    • Survey
    • Clearing
    • Leveling
  • Construction
    • Gravel layer
    • Sand layer
    • Asphalt layer
  • Finishing
    • Lights

Note: this highway example is taken from my eBook Project Management Quick Start

WBS Best Practices

  • Your WBS elements should be tangible deliverables. Tangible deliverables are easy to schedule and to cost and will help you when doing your Earned Value Management later in your project.
  • The best way to create a WBS is to take your scope and then do a “mental work through” of all the things (tangible deliverables) you need to do to realize the project.

Next Steps

In Part 4 and 5 of this series (Schedule and Budget) you will then be able to schedule and cost each of the activities you have described in your WBS.

 

Related References

Budgeting Best Practices Part 2 of 6

Budgeting Best Practices Part 1 of 6

Determining Your Project Budget

Scope Control Best Practices

Project Management Quick Start

Budgeting Best Practices Part 2 of 6

Part 2: Define Scope

Background

Determining your project budget has been discussed several times on this website. The reason is that many projects experience budget overruns. Many project managers are still having problems determining a good project budget. Based on these facts, I decided to run a series on budgeting best practices for the rest of this year.

Interested?

If you are interested in knowing more about budgeting best practices,  SIGN UP on this blog (to the right, if you have not already done so)  to have all the blog posts of this series delivered to your inbox.

Step 1: Define Scope

As mentioned in part 1 of this series, determining you project budget is a four step process:

project scope to budget
From Project Scope to Project Budget

The first step is to define your scope. Can you get a good budget if you do not have a good scope?

Defining your scope does not consist of collecting requirements alone. A very important part of defining your scope is verifying you scope with ALL stakeholders.

Who are ALL stakeholders?

When identifying stakeholders look at your project sponsor, the end user(s) and all that could be effected by the execution of the project. Collect requirements from all your stakeholders, include the requirements in your scope and then go back to the stake holders to verify your scope. I know, this can be a lengthy and repetitive process, but it has to be done. If not, you run the risk of creating a product or service that will be rejected.

A Practical Tip

In real project life you sometimes have end users who give their input while you defining your scope, and during the execution of the project they have additional wishes (gold plating)

Other end users see the execution phase as the time to give input, not the scoping phase.

The way to handle these end users during the execution phase is to use judgment (interest of the sponsor and interest of the end user) and assertiveness (know when and how to say no). For more on how to handle these end users see

Next Step

Only after you have verified your scope, you are ready to proceed to the next step: Create WBS.

Related References

Budgeting Best Practices Part 1 of 6

Determining Your Project Budget

Scope Control Best Practices

Project Management Quick Start

 

Budgeting Best Practices Part 1 of 6

 

Part 1: Introduction

Here I am after a good summer vacation. As promised in July, after my vacation I would start our “Back-to-Work” series discussing budgeting good practices.

Determining your project budget has been discussed several times on this website. The reason is that many projects experience budget overruns. Many project managers are still having problems determining a good project budget. Based on these facts, I decided to run a series on budgeting best practices for the rest of this year.

Interested?

If you are interested in knowing more about budgeting best practices,  SIGN UP on this blog (to the right, if you have not already done so)  to have all the blog posts of this series delivered to your inbox.

Ok, let’s get started.

 

A Four Step Process

When asked to make a budget, many people start by making a budget, only to find out further down the road, that what they budgeted is not what the client wanted. Can you make a budget if you do not know what is needed?

Another often heard scenario is that “I have so much money to  do this project”.  Do you really know what is needed in this case?

Budgeting is not a stand alone activity. Budgeting is actually a four step process as shown here.

project scope to budget
From Project Scope to Project Budget

 

In this series we will discuss best practices of each of the steps needed to get a good project budget.

 

Related References

Determining Your Project Budget

Project Management Quick Start

 

 

The Importance of Good Project Budgets

Background

Determining a project budget is sometimes not taken serious. You will hear people say: Let’s get the project going, people want to see action. I have even heard someone say that budgeting is for sissies.

Another thing we often see or hear about is that some project managers/companies only use cost-reimbursable contracts because they do not determine budgets for their projects.

All those who are involved in the above practices are overlooking the reason project budgeting exists as a project management knowledge area.

Measure Your Money
Your Project Budget

Why do we Determine Budgets?

 

 

 

The reason we determine project budgets is embedded in the reason we manage projects: NOT TO LOSE MONEY

If your budget is not good or if you do not have a budget at all, you will end up losing money one way or the other.

Why will you lose money?

If you do not have a good budget, you cannot judge contract proposals. You will always leave money on the table if you do not come to the table equipped with a good budget.

Not having a good budget also upsets the project sponsors because you have to go to them every time you realize your need more money, which is usually the case or not?

Here is another scenario where we need a good budget: imagine starting a MEGA project without having a good budget. This will probable result in this project not being completed: MEGA money down the drain.

Good News

The good news is that good budgets can easily be determined. All you have to do is discipline yourself to follow the steps depicted below.

From Project Scope to Project Budget
From Project Scope to Project Budget

Yes, I have seen budgets that even did not have a scope properly defined.

Believe me, good budgets can be determined if you follow the steps above.

Having a good budget is very important for every project. I will spend the rest of this year (after the summer recess), September through December, discussing the importance of the steps shown above. Let’s call it our back to work series.

I also realize that many project managers are not given the time or resources to determine a good budget. I encourage those of you who are in such a situation to join this discussion so that we can address these issues and help each other.

 

Related References

Determining Your Project Budget

Scope Control Best Practices

Project Management Quick Start

 

 

 

 

Cost and Schedule Control Best Practices

Introduction

A few weeks ago I received a request to write something about cost and schedule best practices. Thank you Edward for the (very educative) request. I honored the request because scheduling and budgeting are fundamental to project management. This request also relates to several of my blog posts and gives me the opportunity to discuss a fundamental rule in project management.

Cost and Schedule Best Practices

In order to discuss cost (budget) and schedule, you have to understand how a project budget and schedule are made. Both your budget and schedule originate from your project scope:

From Project Scope to Project Budget
From Project Scope to Project Budget

So in order to have a good schedule, you must apply scoping and WBS best practices. The same goes for budgeting best practices: it is based on scheduling best practices. And scheduling best practices is based on……….

So it is not that scheduling best practices is one thing and budgeting best practices is something else. The are all tied together as illustrated in the graphic above. In order to have a good budget, you need to have a good schedule, a good WBS and a good scope. This is a FUNDAMENTAL PROJECT MANAGEMENT RULE!!

So the title of this blog post is not correct: you cannot have cost and schedule control best practice by them selves. They are all linked to scope and WBS best practices.

 Best Practices

Best practices for scope control to budget control are all available in the related resources listed below.

I encourage you to comment. This is a very  important (fundamental) aspect in project management.

 

 

Related Resources

From Space Shuttle Project to Wedding Planning

Background

During my recent interview on Blog Talk Radio . I was asked what my favorite industry is. My answer was: project management is about applying project management processes to go from project initiation to project closing. This approach is the same for any project. So I do not have a favorite industry. For me project management is project management. Note that PMI’s PMBOK® does talk about specific industries, but about project management processes. For me doing a Space Shuttle project or planning a wedding is the same. Let me show you how I would approach both projects if I was asked to manage them.

Space Shuttle Project

Managing a Space Shuttle project sounds extreme, but we have the technology and there are project managers that have managed Space Shuttle projects. So I would start by contacting such a project manager and including him or her on my team. Next we would plan, execute and close the project. Sounds simple, but those are the main steps that have to be taken.

Wedding Project

My approach to managing a wedding project would be the same: I have a friend who plans weddings for tourists that want to get married on Aruba. I would get her on my team to plan the wedding for me. Once we reach to an agreement, we plan, execute and close out the wedding project.

 Conclusion

The approach is the same for projects in different industries. Managing projects is about the process, not the industry (content).

You may be thinking: doesn’t the Space Shuttle project have more risks than a wedding? Well, messing up a bride’s wedding can be risky also.

I have the confidence that i can handle both projects. I hope that my recent eBook Project Management Quick Start will help you start building that confidence also.

Sincerely.

 

Scope Control Best Practices Part 6 of 6

Part 6 of 6: Wrap Up

In this last part of this series on scope control best practices, we will review the major points to remember.

Scope Control and Scope Creep

Scope control is defined as:

“The process of monitoring the status of the project scope and managing changes to the scope baseline”

and scope creep as:

“The uncontrolled expansion to project scope without adjustments to time, costs and resources”

So scope changes are OK, as long as they are managed. Scope creep however is a no no for us.

Scope Control and Scope Creep
Scope Control and Scope Creep

 

Control Scope Throughout All Project Phases

For scope control to be effective, it must be applied throughout all phases of a project. Scope control starts in the initiation phase and should be applied all the way to the closing phase of a project.

Have a Change Request Procedure in Place

During a project you will receive many change requests. Since any approved change request will usually effect your schedule and budget, it should be properly documented. A change request form should be used to properly and consistently document all change requests. A change request form should contain the following items:

  • CHANGE REQUEST N0.
  • CHANGE REQUEST DESCRIPTION
  • REQUESTED BY
  • EFFECT ON DOCUMENT(S)
  • EFFECT ON COMPLETION DATE
  • COST CONSEQUENCES
  • REQUESTOR’S SIGNATURE
  • PROJECT MANAGER’S SIGNATURE
  • DATE APPROVED

 Process Change Request ASAP

Change requests should be documented as soon as possible. Do this to avoid time and costs consequence surprises at the end of the project.

Document the Change Request Procedure in Your Contracts

The change request procedure should be an article in your contract stating that change requests should be requested making use of the included change request form and approved before the work is initiated.

Related Posts

Part 1 of 6

Part 2 of 6

Part  3 of 6

Part 4 of 6

Part 5 of 6

Project Management Processes

PMBOK 5th ed is Out

Determining Your Project Budget

Assertiveness in Project Management

Scope Control Best Practices Part 5 of 6

Part 5: Scope Control in the Closing Phase

The closing phase of your project is when you turn over  your project to the customer and close all contracts and generate your final documentation of your project.

Scope Control in the Closing Phase???

you may ask yourself if still have to do scope control in the closing phase of your project. The answer is yes.

Change Requests From Your Customer

your customer may have some change requests at turn over.  Do not get upset. Evaluate the requests just as you have done before and and make a decision on them: if the change request is valid, accept it and process it. If the change request is not valid, explain why and move on. Here is where assertiveness comes in a again. See related posts below.

Change Requests From Your Contractor

At the end of your project, a contractor may show up with a list of items they claim are extra works. The way to go about this is to judge the claims with integrity and honor the claim if indeed you have overlooked something. It is a best practice to document in the contract that change requests should be approved  before  the work is done, not after.  This is why you should always use Change Request Forms to document all change requests before the end of your project. See the related post where change request are discussed (Part 4 of 6) below.

 

In the next part of this series, we will wrap-up this series.

 

 

 

Related Posts

Part 1 of 6

Part 2 of 6

Part  3 of 6

Part 4 of 6

Project Management Quick Start

Project Management Processes

PMBOK 5th ed is Out

Determining Your Project Budget

Assertiveness in Project Management

Developing Assertiveness

 

Scope Control Best Practices Part 4 of 6

 Part 4: Scope Control in the Execution Phase

The execution phase of your project is when you start to produce the tangible deliverables of your project.

Assertiveness in Project Management

Many change requests are made during the execution phase of your project. Remember that Scope Control is the management of changes made to your project scope baseline. See part 1 0f 6 of this series. Managing of your scope baseline starts with judging if the change request is justified or not. Here is where assertiveness comes in. Assertiveness is saying no when you have to. See related posts below.

Change requests can come from any stakeholder. If the request is not beneficial to the project or sponsor, then you as project manager should explain why it is not. Many change requests come from contractors or other suppliers. If it is not justified, you should explain why.

  “Not Wrong is Good”

Sometimes a change request is a very good idea and may fall within the project budget, but there is not enough time to do it. In such case I apply what I call “not-wrong-is-good”: If what we have will work, then consider it good and do not change it.

The Reality of Changes

Reality has taught us that sometimes changes are needed. If a change request is justified, then you have to accept it and process it. Scope control is NOT denying change requests that are justified. Scope control is about properly managing and documenting the change request. See part 1 of 6 of this series.

A justified change request is easily managed by using a change request form

 Change Request Form

If the change request will improve the product or service you are creating and falls within your budget, then it can be accepted. Since any approved change request will usually effect your schedule and budget, it should be properly documented. A change request form should be used to properly and consistently document all change requests. A change request form should contain the following items:

  • CHANGE REQUEST N0.
  • CHANGE REQUEST DESCRIPTION
  • REQUESTED BY
  • EFFECT ON DOCUMENT(S)
  • EFFECT ON COMPLETION DATE
  • COST CONSEQUENCES
  • REQUESTOR’S SIGNATURE
  • PROJECT MANAGER’S SIGNATURE
  • DATE APPROVED

 

In the next post in this series, we will discuss scope control in the closing phase of a project. Yes, even in the closing phase stakeholders will come up change requests.

Related Posts

Part 1 of 6

Part 2 of 6

Part  3 of 6

Project Management Quick Start

Project Management Processes

PMBOK 5th ed is Out

Determining Your Project Budget

Assertiveness in Project Management

Developing Assertiveness