More Project Management Best Practice Tips
For the last two weeks, we looked at two different ways to evaluate project selections to determine which to work on. This type of activity is often carried out by senior management and not the project manager. The project manager is usually involved once the project charter has been developed. A special form of project charter is the Statement of Work or SOW. Its often associated with a contract and describes in detail the work or services to be performed. I always use a SOW on a consulting engagement.
I almost called this post “where’s the contract?” I sometimes hear “I didn’t know I bought that” — well the good project manager always checks the contract and SOW first to understand the project and what is involved. If you’ve been “knighted” as the project manager, the SOW is a good document to request.
The SOW can also be a tool to set expectations. There is always a great deal of uncertainty when projects start. Sales...
Last week we looked at the BCR -- Benefit-Cost Ratio as a way of evaluating a project. This week I'd like to look at a related technique -- Total Cost of Ownership (TCO). The purpose of many projects is to introduce a new product or service. Often this new product or service has a later ongoing operation. For example, if you have installed Oracle Financials, there is a need to develop the customized software and populate the initial data, but once that is complete, there are expenses associated with rolling out the project, paying the maintenance fees, hiring the staff to keep the data current, etc. Similarly if you project is to construct a housing development, there are ongoing expenses after the homes are built to sell them and get the buyers moved in.
Total Cost of Ownership goes beyond BCR in that it looks at the ongoing expenses associated with a project and let's you know more about what it will really cost to keep things going once the project has ended. This is an important...
For the next few weeks I'd like to take a closer look at initiating projects, with special attention to costs. This is an area of weakness for many who jump in to do work before looking at the consequences or rewards. Rather than use a microscope, you need a telescope to see to the far and of the project. We'll focus on costs, but once again, there are many other factors which must be analyzed.
There are many different methods and techniques, but one easy one is to determine the ratio of benefits to costs, starting with the "hard dollars" -- the real cash to be spent and saved. This is also a good sales tool since it shows the tangible benefit of buying the project, product, or services. One easy illustration can be found in imaging systems.
Let's looks at the hypothetical costs of the imaging system -- a small server ($5,000), software ($100,000 -- its a high end package), and a high speed scanner ($10,000). We may also need to pay someone to install the system ($20,000) and...
In general, I recommend checking in on project status no less than once a week. If you wait longer, say two weeks, by the time you find out an issue, get it solved, confirm the solution, and make sure things are on track, you can lose up to six weeks. Serious issues may require more frequent meetings than weekly so you can stay on top of the solution. The key is both flexibility and good judgement.
When it comes to controlling project costs, the timing may be even more important. The timing of money commitment, the actual expenditure,the arrival of the bill, and the payment of that bill may occur at drastically different times. To be sure things are appropriately tracked, you should:
- develop a budget
- have an appropriate change control method in place to manage scope and finances
- take note of when the expense was incurred
- promptly forward bills for payment
- carefully monitor the budget
- take action in a prompt and timely manner if financial targets aren't being met.