By Dada Adefolami
Project management is the discipline of initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals and meet specific success criteria.
Projects And Strategy Application
The rational strategic planning model is usually presented as three stages: analysis, strategic choice, and implementation. Often these are set out as a linear sequence, but it is preferable to arrange them in a triangle to acknowledge that the three stages inform one another. For example, when the organization starts implementation, it will undoubtedly discover information which may make it reconsider its analysis and choice.
Whether shown linearly, or as in strategic analysis and choice should be relatively quick. Planning, of itself, neither makes money nor improves performance. Some people think that deciding on a plan is the same as realizing the plan, but it is only when the right plans are successfully implemented that gains and improvements are made and implementation is where the really hard work lies, with effort needed, possibly for years, long after the plan was agreed.
A strategic plan typically long term and corporate-wide can never be implemented as a single, colossal task. A strategy of expanding the branch, for example, would consist of a series of smaller tasks such as finding premises, recruiting, training, equipping the factory, marketing, and establishing a distribution network. Each of these smaller tasks can be regarded as a project, with a start, end, objectives, deadline, budget, and required deliverables. Realizing a strategic plan therefore depends on carrying out a complex jigsaw of projects, and if one piece goes missing the whole strategic plan will be in jeopardy. Therefore, successful project management is at the heart of successful strategic planning.
PROJECT PLANNIING AND LIFECYCLE
Projectplanning. Projectplanning is part of project management, which relates to the use of schedules such as Gantt charts to plan and subsequently report progress within the project environment. Initially, the project scope is defined and the appropriate methods for completing the project are determined.
There are a number of different versions of the project lifecycle, perhaps using slightly different terminology and dividing up each stage differently. Sometimes the differences are there just to differentiate a commercial product such as project management software. Despite differences in detail, all project lifecycles can be depicted as follow:
All projects will start from an initial idea, perhaps embedded in the strategic plan. A project will then progress to the initiation stage when a project manager will be appointed. The project manager will choose a project team and they will carry out a feasibility study. The feasibility study is necessary to establish the following:
1. Commercial feasibility – will the likely benefits exceed the cost?
2. Technical feasibility – do we think this project has a good chance of working?
3. Operational feasibility – will it help the organization reach its objectives?
4. Social feasibility – will our employees, customers and other stakeholders tolerate it?
A feasibility report should be produced and this will have to be studied by senior Management, because if the project goes ahead substantial expenditure might be required.
Note that the feasibility report does not merely have to present management with simple ‘yes’ or ‘no’ options, but can set out a range of options, each with particular benefits, costs and time frames. Where there is some doubt as to the potential benefits that will arise from the project, it is particularly valuable to offer a range of choices which allow the organization to first try out a modest project and later allow the project to be extended. This approach is a useful way to reduce risk. If you are not sure about something, start in a small way and extend later if worthwhile.
INITIATION DOCUMENT
One of the main outputs of the initiation stage should be the project initiation document, or PID. The term is poor because it implies that the PID is used only at the start of a project, when the project is being proposed, and ‘document’ might suggest a couple of pages only. the PID is of key importance both initially and throughout the duration of the project. It should address the following questions:
1. What should the project achieve? What are its deliverables? These should be specified in detail so that the project and its scope are well defined from the outset.
2. Why is the project is needed (including a cost benefit analysis)?
3. How will the quality or acceptability of outputs be assessed?
4. Who will lead the project?
5. Who will be on the project team and what will be the role and responsibility of each team member?
6. What are the risks? How have they been assessed and prioritized, and how will they be managed?
7. Who will carry out the work on the project? Which actions will be assigned to in-house staff and which to sub-contractors?
8. By when should the project and its various stages be completed?
9. What are the constraints on the project?
10. What are the assumptions on which the project depends?
11. How much budget has been allocated to the project?
12. What other resources are needed by the project, and have been allocated to it?
13. Who sponsors or owns the project? generally, the department or client who is paying
14. What are the reporting arrangements?
This shows, the PID is the key reference document and it will be extensive and detailed, containing all the planning information required about the project.
Risk determinations
Project risk can be said to depend on three variables:
1. How well defined is the project? A well-defined project will set out in detail exactly what the project is to accomplish the deliverables, when each stage should be completed, and how each stage will be appraised quality. These qualities can be summed up in the phrase ‘project scope’. Additionally, it is important to set a cost budget in advance. We will see later that there can be tensions between cost, time, quality and scope, but if these have not been defined in the first place, the project will run into difficulties quickly as each member of the project team is likely to be pursuing different goals. A poorly defined project will be short on detail but long on grand ambition.
For example, stating that the new IT system will improve inventory management is almost useless. Is the firm moving to just-in time? Is it going to develop sophisticated demand forecasting algorithms? Is the warehouse to be automated? Will labor and machine use be part of the system? In addition, if the project is not well defined, even if most participants happen to have a similar vision initially, the project will be vulnerable to point. This means that as the project progresses, ideas change and the project deliverables change. To some extent, project drift is inevitable because as the project is worked on, more information is discovered and it would be foolish not to take note and alter the project where necessary. However, altering projects part way through is usually expensive in terms of time and money if work has to be redone or abandoned. What must be avoided is ongoing, ‘nice-to-have’ project drift, in which new features are added little by little without proper evaluation of costs and benefits. By defining the project in detail at the start, the firm will have thought carefully about deliverables and the need for subsequent amendments should be minimized.
2. Size of the project. It is pretty obvious that there will be more risk associated with large projects. More stakeholders will be involved, possibly including customers and suppliers. There will be more coordination problems and the financial investment will be greater. Project failure, will cause great disruption and many people will be affected. By contrast, small projects will be easier to control and if they go wrong, damage is likely to be confined to a smaller number of stakeholders.
3. Technical sophistication of the project. A project which depends on well understood solutions is much less likely to go wrong than a project which is attempting to use cutting edge, experimental technology.
However, if you are put in charge of a large, poorly defined, sophisticated project, you might like to look round for another job, if the project fails to deliver and it probably youmight be the number one victim.
There can be a good business case for embarking on large sophisticated projects, as these can allow companies to differentiate their products and services. If standard, hesitant, safe solutions are always used then more ordinary performance will result. It might be part of a business’s strategy to adopt radical solutions to gain competitive advantage. However, there can never be any excuse for a project being ill defined at the start.
Risks must be managed and the following approach can be used:
1. Define the risks. What could go wrong?
2. Assess the risks. This will be a combination of estimating the financial effect if the risk event occurs, and the probability of the risk occurring. Some risks would have large financial consequences but could be very unlikely to happen. Others might have trivial financial consequences.
3. Priorities the risks. What are the really serious events that need to be addressed first?
4. Deal with the risks. Generally, there are four approaches:
1. Tolerate the risk, either because the event is unlikely to happen and/or the consequences will be immaterial.
2. Treat the risk, or do something to ameliorate it. For example, if the consequences of missing a deadline are serious, have additional resources available that can be used to speed up the process if necessary.
3. Transfer the risk. Insurance is a form of risk transfer, as is sub-contracting. If you are worried about an IT project missing important deliverables, consider sub contracting part of it and build in penalty clauses.
4. Terminate the risk. In other words, the event would be so serious that you do not want to risk it occurring at all. For example, if there were a security breach during a project that requires sensitive data to be held, this could be devastating to a company, so the company might decide not to hold that data, despite it possibly yielding good marketing information.
FINALLY
Projectmanagers are the people in charge of a specific projects within a company. As the projectmanager, your job is to plan, budget, oversee and document all aspects of the specific project you are working on.
There are a number of classes of stakeholder in projects, typically:
1. The sponsor
2. The project teams
3. Other employees, sub contractors and regulatory authorities, such as health and safety inspectors.
Funds from the sponsor flow through the project team and on to other departments and sub contractors. In return, project deliverables should flow back towards the sponsor.
The project team will often be multi-disciplinary and it will be led by a project manager. The project manager is enormously influential as to whether or not the project ends in success, and he or she must combine technical knowledge, leadership ability, and project management skills.
The tasks of the project manager can be summarized as:
1. Ensuring that the PID is comprehensive. This can be a complex task because it will mean ensuring that deliverables, budget, resources, project team, deadlines and so on have been determined. As was emphasized earlier, there is no point embarking on a semi-defined project, so the project manager should be strong enough to resist management pressure to be seen to be doing something. If the project is started before the PID is complete, things will be done but they will probably be the wrong things.
2. Communication with the sponsors. Even when projects run smoothly, sponsors will expect updates on progress, however, even in well planned projects, problems will be encountered and it is then that communication with the sponsors is particularly important. This will keep the sponsors informed but will also give the sponsors opportunities to make choices, for example to spend more or to cut back on deliverables.
3. leading. The project team is likely to consist of people from a number of departments with different skills and priorities. The project manager should be capable of creating a cohesive, well-motivated team where participants work well together.
4. Communication with sub-contractors and regulatory authorities.
5. Technical appreciation of project issues. For example, someone running a construction project will need to understand relevant technical issues when these are raised in meetings.
6. Organizational ability, including the ability to delegate tasks.
7. Technical competence in project management. For example, an understanding of critical path analysis to monitor and control progress through time, and cost reports to monitor and control expenditure. also
8. An ability to balance project cost, time, scope, and quality.
Project risk management is an important aspect of project management. According to the Project Management Institute’s PMBOK, Risk management is one of the ten knowledge areas in which a project manager must be competent. However, Riskidentification is the process of determining risks that could potentially prevent the program, enterprise, or investment from achieving its objectives. It includes documenting and communicating the concern.
• Dada Suraju Adefolami, Professor of Finance, School of Business Administration, UNEM University Costa Rica, is a Finance / Management Consultant and Certified Forensic Accountant. You can reach him via: surajudada@yahoo.com; 08052043855