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How project scope contributes to project success

According to PMBOK scope management includes”the processes required to ensure that the project includes all the work required, and only the work required, to complete the project successfully” i.e. what work is to be and what is not to be done in the project. Project scope management includes five areas these are: scope planning, scope definition, creation of a work breakdown structure (WBS), scope verification and scope control. These five areas contribute to the success of a project in different ways.

Scope planning helps to define what work is to be done by developing a broad definition of the work to be carried. It helps to provide a mental picture of what the project sponsors want accomplished and produces a document that acts as an agreement between the project sponsors and project manager on what the final deliverable will be. Scope planning aids in understanding of the project by developing a project scope management plan that details how the project scope will be defined, documented and managed by the project team (PMBOK) 

Scope definition involves stating in details the project requirements and deliverables by breaking down the scope statement into smaller understandable statements. It helps in identifying the constraints and assumptions associated with the project. It also defines the baseline for performance and this provides the project manager with a clear understanding of the requirements, constraints, risks, deliverables, cost estimates and approval requirements, thus help in the resource planning process of the project. It also aids in communicating clear work responsibilities.

Creation of a work breakdown structure acts as a communication tool, it aids in the accurate understanding of the work to be done and what is to be delivered. Work breakdown structure also helps in planning for costs, schedules and other resources that are needed. This is done by breaking down activities in smaller manageable tasks that can be easily monitored, controlled and allocated resources thus ensuring project success. Work breakdown structure is also used by project managers to measure performance. According to Rad”if the work breakdown structure is used as the common skeleton for the schedule and the estimate, it facilitates communication among professionals implementing the project.”

Scope verification according to PMBOK involves the formal acceptance of the completed project scope and deliverables by the stakeholders. It ensures project success by acting as a reference point of what is expected by the project stakeholders and how the project deliverables will be verified, approved and signed-off. It involves reviews where deliverables are inspected and examined to determine whether they conform to quality standards set by the project stakeholders and if they accomplish the requirements that the project stakeholders intended.

Scope control involves managing actual changes to the scope of the project. It ensures project success by monitoring and controlling changes to the scope of the project thus preventing scope creep that can cause budget overruns and delays in project delivery. It also ensures that any change to the scope of the project is beneficial to the project as a whole and do not affect the performance of the deliverables.

Reasons for decomposing a project

Projects large or small are normally broken down into smaller manageable phases and various techniques are used in the process. Some of these techniques include work breakdown structure (WBS), network diagram, PERT/CPM which are important to project success. The merits of breaking projects into phases and applying the techniques mentioned above are:

Project Coordination in that it activities or work to be carried out is clearly identified, the people responsible for the activity are also identified, thus the project is easily and properly coordinated.

Breaking a project into manageable phases also helps in allocation of resources. The project manager will be able to know what resources are available, how to allocate these resources to the different activities to ensure that the project is delivered on time, on budget and produces the desired results.

Communication within the project is another merit of breaking down a project into smaller more manageable phases. It helps in ensuring proper communication within the project by identifying the information needs of the of the different project activities, the job that needs to be done and duration  and who needs to do the work.

Performance measuring is another merit of breaking a project into smaller phases because the project manager and sponsors are able to indicate at what points do they need to see deliverables and what kind of deliverables and it also enables the project sponsors to create a performance baseline by which to rate the project status, project success and the project team.

Breaking a project into manageable phases also helps in project scheduling i.e managing project time by ensuring project activities are scheduled, sequenced, and controlled  manner so as to ensure the project stays on schedule.

This approach was helpful in the organization where I used to work because the organization was small and the  resources were very limited especially technical resources for IT projects. This technique allowed us to plan the work of the IT department on a day to day basis and also allowed us to handle incoming projects and complete them successfully.

Techniques such as work breakdown structure was also important in  our other departments e.g maintenance department since they were overburden by many projects being carried out simultaneously within the hotel, WBS enabled them to plan and know when to send their staff to what projects and what activities where to be handled within the projects.

 

How project management translates to project success

Project management does contribute to project success by clearly identifying project goals, requirements, deliverables or milestones and this helps the project team to know what work is to be done and what work is not to be done.

Project management also contributes to the success of a project by providing project planning tools that  help in allocation of resources, scheduling of activities and help in communication within the project.

Project management provides a structure or framework on how the progress of the project is to be monitored, controlled and reported to project stakeholders thus keeping project sponsors in the picture and ensures their support and participation in the project.

Project management provides for risk management and this helps project managers to identify project risks early in the project’s life and thus project managers are able to devise ways on how to monitor, control, and reduce those risks thus ensuring project success.

Project management ensures that the project deliverables whether products or services are of high quality by instituting quality test and procedures within project activities. This ensures that the quality standards set by the organization or the project sponsor are met.

Project management ensures the projects is delivered on time and on budget by providing tools that can be used by the project manager to schedule, monitor and control project activities, resources and deliverables e.g. Gantt charts, activity diagrams etc.

Reason for imposing the degree of rigor and discipline in project management

When it comes to project management, it is necessary to impose the degree of rigor and discipline implied by nine functional areas of project management so as to:

• Control the cost of the project and ensure it’s on budget and resources are utilized properly. This is accomplished through cost estimates, cost budgeting and cost control and by analyzing the project’s costs data, monitoring resource usage and taking corrective action to prevent budget overruns.
• Ensure the project is coordinated in a proper manner to ensure project success. This is done by identifying areas within the project were resources are needed and assigning those resources to that area. It helps to keep the project on schedule and on budget because resources are not tightly controlled and thus can be moved as needed by the project manager and the project teams interact and coordinate their activities to ensure project success.
• Control scope of the project by dictating what work is to be done and what is not to be done. This helps the project team to remain focused and on track by defining in detail the activities that need to be accomplished for the project to succeed, the roles, responsibilities and deliverables of the project. It also helps to define how changes to the project scope will be handled and approved and who will sign off on delivered deliverables.
• Ensure proper procurement practices within the project by identifying what products or services need to be procured from a third party, if the organization’s procurement process is adhered to and if the products and services acquired meet the project standards and requirements. Substandard procurement practices can lead to future high maintenance costs of the project. Eg acquiring cheap construction materials during a road construction might save project costs and keep the project under budget, but it  can lead to future high maintenance costs because the road  will need constant repairs
• Enable proper allocation of human resources to the project. This is accomplished by identifying and documenting the roles, responsibilities, performance and interaction of the project team and ensuring only competent and experienced staff are involved in the project thus ensuring its success.
• Control risks within the project by identifying, monitoring and seeing how risks can be reduced or controlled in such a way that they don’t impact the project negatively.
• Ensure proper communication within the project by identifying the information needs of the project stakeholders, how that information can be presented to them in a timely manner and how performance can be measured, documented and reported within the project.
• Manage project time by ensuring project activities are scheduled, sequenced, controlled and allocated resources in a timely manner so as to ensure the project stays on schedule and project deliverables are met.
• Deliver a quality product or services by ensuring the project deliverables adhere to the project standards set by the organization or by the project sponsors. This is done by ensuring the quality standards are followed in all phases of the project.

how changes in duration and scope can directly impact project cost

Scope changes in a project can happen for different reasons for example a change in business requirements can necessitate a change in project scope especially if those business requirements affect the project e.g. tax code changes, technical issues, external business influences etc.

Changes in project duration  brings corresponding changes in resource expenditure in that if  a  the project manager decides to implement project techniques like crashing which normally reduces project duration but increases project costs because the project manager will have to have additional staff, work overtime or have additional shifts so as to reduce the project duration using crashing technique.

Changes in project scope might affect the work that has already been done by the project team and it might necessitate a rework according to the scope changes and thus increase the cost of the project since the team will be redoing some project work.

Scope changes can also affect the cost of the project since having additional objectives or requirements might mean that the additional work and thus additional cost to the project. If the scope changes lead to a reduction in project objectives then it might mean a reduction in cost since less work will be done.

Changes in project scope can also cause conflicting project requirements causing additional time to be spent trying to sort out these conflicting requirements thus causing additional project costs and project duration slippage

To prevent scope creep, the project manager and the project stakeholders need to put in place a change control system. This system should be used to review all the scope changes requests and identify the impact of these changes to the project’s budget, schedule and performance. According to Mantel (2005) change control systems should also identify and evaluate alternative solutions that might accomplish the same objectives other than the requested project changes.

Critical chain method is a system that can be put in place to prevent duration slippage by creating additional duration buffers that can be used by the project manager if an activity is behind schedule. According to Kerzner (2006) the system identifies the critical chain and uses it as a leverage point for reducing project duration.

 

Bibliography

Samuel J, Meredith J, Shafer S Suttton M (2005) Project management in Practice. John Wiley and Sons

Kerzner, Harold (2006). Project management a systems approach to planning, scheduling, and controlling,

Objectives of a Progress monitoring system

Progress monitoring system is a system used to measure   the practical progress of a project. It is a system that is used to provide project stakeholders with indications of how the project is achieving the desired project goals. 

The main objectives of these progress monitoring systems are to be able to identify real progress Vs planned progress on a project. The project manager is able to see where the project is Vs what was planned in the early stages of the project. This enables the project manager to be able to accurately report the status of the project to the project stakeholders.

A second objective of progress monitoring system is to identify corrective actions to address the variances in the project scope, cost and schedule. The project manager will be able to what kind of corrective action to take.  Some of the corrective actions that can be taken if the project is behind schedule are adding additional staff or having additional shifts and overtime.

The third objective of a progress monitoring system is monitoring various project variables. These variables are important to the success of the project and are used to control the project. Some of these variables like costs, time, money and risks are used by the project manager as a way to measure and control the project as its being carried out.

The project manager has a variety of tools that he/she can use to measure the progress of a project. One of the tools used is earned value management system which indicates what work is supposed to be done, what work has actually been done and the effort and costs used to do the work.

 For example earned value management system might indicate that the scheduled variance is -$10,000 meaning that the project is behind schedule to the tune of $10,000. Knowing this value the project manager will be able to take corrective action to ensure that the project is on schedule and as indicated earlier he/ she might increase the number of shifts on the project, use overtime or employ more people to work on the project.

Reasons for project Estimation

Project estimation is important to project management because it helps in planning. Since we might not have the whole picture of what the project requires in terms of cost and duration, estimation comes in handy by providing an accurate picture of what will be needed by the project.

Project estimation helps in cost control in that the project manager will have funds based on his estimates and is expected to perform the work with those cost estimates and not going over budget. Thus cost estimates help the project manager control the cost of the project knowing where to use more resources and where to take resources from.

There are various estimation techniques. Activity and cost estimation techniques involve PERT (3 point estimates), Expert Judgment, Parametric estimating, Analogous estimating, bottom up estimating, vendor bid analysis and resource cost rates.

Analogous estimating (top down): This method uses actual duration or cost of a previous project with a similar task or activity to make estimation on the activity duration or cost of a current project. This method is used in circumstances where  past and current projects are similar in activities to be carried out and when there is limited amount of detailed information about the current project.

Parametric Estimating: Parametric estimation is the use of independent variables like project specification, deliverables, project features to determine activity duration and cost. According to PMBOK, this method involves estimating activity duration by multiplying the quantity of work to be performed by the productivity rate. e.g. using labor hours to quantify productivity rate and multiplying it by the total resource quantities and dividing that by the number of those resources applied. This method is widely used in situations where a quick estimate is needed.

Bottom up estimating: It is used in circumstances where definitive detailed estimates of effort and costs are required. This involves breaking up the projects into the smallest work components or activities and estimating the cost and duration of these activities and then aggregating the cost with higher level activity costs until the full estimate of the project is done. According to Schwalbe (2004) this estimate technique provides more accurate estimates, but requires more data and well broken down activities of a project. it is also time intensive and expensive to develop.

Three Point estimates (PERT): This method is used in large and complex projects because it can incorporate uncertainty by making it possible to schedule projects while not knowing the details of the activity. Estimates in this technique are based on three types of estimates,

Most likely: i.e. schedule duration given the resources assigned, dependencies on other activities and interruptions, productivity and realistic expectations of availability for the schedule activity.

Optimistic: the best case scenario of the durations of the activity

Pessimistic: the worst case scenario of the duration of the activity

A formula is used to compute the most accurate activity duration.

E= (o+4m+p)/6

Determine Resource Cost rates: This is used when products or services  are obtained under contract.

This technique depends on the knowledge of the unit costs for each resource e.g. labor costs per hour, material costs per unit. After determining the unit costs you can then expand and accurately estimate the activity costs.

Vendor Bid Analysis: This is used in situations where projects are done under competitive bid process. Competitive bids and having different vendors bid on the project helps to derive a cost estimate of the project. According to PMBOK (2004) this involves obtaining vendor bid analysis documents showing what the project would cost.

Outsourcing Contracts

In recent years organizations have undertaken to focus more on their core business functions.  This has led to more and more organizations outsourcing other parts of their organizations. Contracts are a key component in outsourcing since they act as a guide between both the seller and the buyer.  Outsourcing contracts should include four key issues, these are scope of services, performance standard, pricing schedule and terms and conditions.

Scope of services describes the statement of work (SOW) that will be performed by the seller. The SOW can be detailed, performance based or level of effort. A detailed statement of work describes how the work will be done exactly and the seller will follow the SOW as described by the buyer. A detailed statement of work will prevent the seller from coming up with creative and beneficial solutions to solve the buyers problem. A level of effort SOW “describes the general nature, scope or complexity of the products or services to be provided over a given period of time.” (Chen 2006)Performance based statement of work give the seller the flexibility in terms of how best to do the work. It does not dictate how the work will be done and thus the seller can come up with innovative ways to solve the buyer problem. The seller is judged by their performance, technical ability and quality of work.

Performance standards describe how the seller’s work or the contract will be judged. It describes the minimum services levels that the seller will perform, what criteria will be used to measure their performance and what are consequences of failure on the seller’s part. (Greaver II 1999)

Pricing schedules describes what the buyer will pay for the services of the seller and how this will be done. Some long term contracts might have a monthly payment schedule while others might pay per deliverable produced or at the end of the contract.

Terms and conditions describe the legal and business issues that the buyer and the seller should abide by. It deals with contract terms, billing terms, termination terms, and transition procedures. (Greaver II 1999)

There are different types of contracts and the buyer needs to know which contracts tend to expose him/her to risks and thus be able to introduce policies that will prevent exposure in terms of cost. Firm Fixed price contract allows for the seller and buyer to agree on the price of the project or service in advance. The seller must do the work for the agreed price. It tends to protect the buyer from cost overruns because the seller will have to absorb the cost overruns if they occur.

Time and materials contract involves the buyer being billed by the seller for labor and materials. “Time and material contracts provide for payment of direct labor hours at an hourly rate that includes direct labor costs, indirect costs and profit.” (Chen 2006).

Cost plus contracts are contracts where the buyer reimburses the seller for allowable expenses incurred on top of the final cost of the project.  Cost plus contract are suited for projects that are not well defined or risky ventures where there is no performance track record. (Chen 2006). Cost plus fixed fee contract, Cost plus incentive fee contract and Cost plus award fee contract are some of the types of Cost plus contract.

Contract Risks

A contract is an agreement between two or more people or organizations to carry out a particular task in exchange of money or something of value. Contracts can be used to mitigate risk such as financial risks, marketing risks, legal risks and confidentiality issues through various means.  

Contracts can be used to reduce any performance risks within a project. An organization can use performance guarantees in contracts to ensure that they get the promised levels of service.  Contracts should therefore indicate the work to be done by the outsourcing provider also it should indicate the deliverables that the organization expects from the seller and explain in detail what is to be measured, when is it to be measured and how performance is to be measured, basically what, why, who, where, when and how it is to be measured.

Contracts should have confidentiality and privacy clauses that protect the buyer, buyer’s data, strategies and employees. Any business or trade secret that is being used by the organization and is known to many people outside the organization exposes it to loss of business dealings, competitive edge and financial standing. The buyer thus needs to ensure that trade secrets and competitive strategies are kept confidential through clauses in the contract and having confidentiality agreements between the two parties.

Different contract types expose the buyer to different risks. A firm fixed contract can be used by the buyer to reduce risk especially cost overruns in projects. In a firm fixed contract the seller assumes all the risk such as if the project experiences any cost overrun and thus it’s a good contract type for a buyer.  (Chen 2006)

Contracts can also be used to reduce legal risk though policies within the contract that protects the buyer. The buyer can be protected from being sued in case of injury, death or loss of property especially in construction projects. The buyer can also be protected from legal risk by having penalties in contracts for late delivery of the project.  Late delivery of projects can cause loss of business opportunity, delay in planned cost saving, delay in anticipated product innovations and launches and thus affect the buyer’s profits.

Contracts are also used to mitigate marketing risks especially in agricultural industries where farmers plant crops knowing the established selling price for those crops. After harvesting and due to market price volatility and  other factors such as demand, crop quality and crop quantity the price the farmer gets is normally lower than they expected. Contracts are normally used by crop producers wishing to avoid these market risks because the contracts indicate the minimum and maximum price, price adjustments for missing delivery, quality of crops to be delivered etc.   

Operational risk in outsourcing is another key issue that the buyer needs to reduce or avoid altogether. These risks occur when the buyer is transitioning into a new relationship with the seller. The buyer needs to communicate effectively with the employees who would be affected by this new relationship either those who will lose their jobs or those who will be reassigned to other departments and other duties.

Centralized Vs Decentralized Purchasing

Centralized purchasing involves having a central location within the organization to buy goods and services for the organization. An organization has a central procurement department with specialized buyers, project managers would then request certain purchases to be done for their project needs and the procurement department carries out those purchase requests. The centralized purchasing department has individuals who handle bids, quotes and ensure that the corporate purchasing standards are met during a purchasing process. For example, the organization where I used to work the procurement department purchased everything from computers, pens, mineral water to fruits and company cars. They selected the suppliers and providers of services to the company.

Centralized purchasing provides for less duplication because of fewer orders thus less processing, receiving, inspection and accounts payable. (Project management Institute 1997) Centralized purchasing also provides for efficiency and effectiveness in contracting or purchasing because the organization’s procurement department has more management control and are more specialized and they tend to have proper understanding of market conditions. Centralized purchasing also brings about major bulk discounts because of volume purchases for the organization and other benefits that they might get from economies of scale.

The disadvantage of centralized purchasing is that the central office lacks the technical skills or expertise to purchase service or goods that require a person with technical skills e.g. purchasing electronic parts, computer equipment etc.

Decentralized purchasing involves having the project managers, subsidiary, office or departments purchasing their own products or services. Decentralized purchasing normally has individuals attached to the project manager or office responsible for the purchasing needs of the project or office.

The advantage of decentralized purchasing is that it provides for less bureaucracy since the project manager has an individual dedicated to his purchasing needs and thus quick buy decisions can be made. If a manager needs to have software or stationery for his department, he can easily go online and purchase what he needs within no time or he can buy from any office mart just as quickly as he needs it unlike centralized  purchasing that needs paperwork to be filled and passed up to the necessary office. Decentralized purchasing also provides for a closer knowledge of requirements since the dedicated buyer has the knowledge of the project needs.

One of the major disadvantages of decentralized purchasing is that there is a lot of duplication of effort in buying, receiving, inspection and accounts payable (Project management Institute 1997). Also decentralized purchasing causes less buyer specialization thus the organization cannot take advantage of discounts from volume buys, negotiations etc.

Some organizations adopt a hybrid system that combines both centralized and decentralized purchasing. They use centralized purchasing for larger organization-wide contracts, but give individual business units autonomy to make small purchases for their departments or subsidiaries.

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