Consulting Journal: Techniques - Simple project management

Techniques: Simple project management

by David Blakey

Is project management often too complex and expensive? Are there some tasks that your client needs done?

[Monday 10 March 2003]

I have never seen a need to impose a complex and expensive regime of project management onto projects that do not really need it

The three traditional measures

As an example, consider the three traditional measures of a successful project: time, budget and quality. Imagine a project that shows little risk of running past its planned completion date. Imagine also that there is little risk of it exceeding its budget. Imagine also that, given these two factors, there is also little risk of failing to meet its quality requirements. There is no need to apply complex project management methods to a project like this.

On a building project, it is usual for the purchaser to contract out the entire process of building and fitting out. The contractor will employ a project manager. If you were the purchaser, there would be no need for you to employ your own project manager. Provided that the contract project manager was honest, you would be informed if the building would be within budget and would meet all its quality requirements but would be handed over later than planned. This should not be a problem if you have performed your own simple management for this possibility.

If the building is going to be late, and you had planned to use it immediately, then you should have plans for alternative facilities. You should have a contract that allows you and the contractor to negotiate.

If the building is not going to meet your requirements, you should have a way of ensuring that the contractor will deliver what you want. If there is some outside influence that has caused the problem, then your contract should allow you and the contractor to deal with the situation.

If the building will cost the contractor more than planned, then, again, your contract should allow you to negotiate.

In many cases, rather than having a good project manager throughout the project, you need a good contract negotiator before it starts. As your negotiator shifts an increasing number of risks away from you, so you have less need of a project manager to manage the remaining risks. You may not have no risks at all, but you will have a plan for dealing with them. With full planning in place, you even less need of a project manager.

The importance of risk

The single biggest influence on a project is risk. There are the risks that could affect the budget; risks that could affect the timing; and risks that could affect the quality. Anyone who wants to manage projects has to be a risk manager. Indeed, there are consultants who specialize in project risk management. I consider that project risk management is the one essential skill for project management.

Unfortunately, the emphasis in project management software has been on monitoring. In particular, time has been the main element that has been monitored. Monitoring the budget has been secondary. Monitoring the quality has hardly featured at all. It is hardly surprising then, with project management software lagging so far behind project management techniques, that the analysis and management of risk has not been included in most project management software. The delay is so great that I believe that developers have no intention of including risk in their project management software. A glance at my own bookshelf tells me that my first copy of The Handbook of Project-based Management, by J Rodney Turner, which includes a chapter on managing risk, was published in 1993. My copy of Project Risk Management, by Chris Chapman and Stephen Ward, was published in 1997.

The importance of payment

I have a simple rule about payments on projects. During development, you should only pay costs. At handover, you should pay the contractor's margins. This does not mean that you should withhold the contractor's margins until the end of the project. Consider a building project again. While the contractor is clearing the ground, you should pay the costs of doing this. Once the ground is cleared, you should pay the contractor's margins. The whole project should be broken down into a series of stages. Each stage should be of short duration and should deliver a tangible result. Clearing the ground may take a week. If it takes a month or even longer, then you should consider breaking the stage down further. Find when a tangible result will appear and plan your payments accordingly.

The technique of using short stages is based upon recognition that contractors should make a profit when they perform well.

Where consultants fit

Consultants fit into either the purchaser or the contractor.

For the purchaser, you can provide advice on whether a project manager is needed, in addition to the contractor's project manager. You can also advise on risk analysis and management, especially when this area has not been adequately covered by the contractor's project manager. You can also work on contract negotiation and development at the beginning of a project, to make sure that staged payments are managed fairly.

For the contractor, you can work as a project manager or as a project risk manager. You can advise on contract development and negotiation.

The role of contract development and negotiation should produce a result that works well for the purchaser and the contractor. Although usually appointed by the purchaser, I make sure that my brief for this kind of assignment includes keeping the interests of the contractor in mind.

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