Use Cost Accounts to Manage Budgets with More Precision
Many projects have one overall budget that includes all of the project labor costs, equipment costs, materials costs, etc. This is fine for smaller and medium-sized projects. However, as a project gets larger it helps to have the overall budget broken down into smaller portions. This is a similar to the decomposition technique of breaking down project deliverables into smaller pieces using a Work Breakdown Structure (WBS). It is easier to understand and manage things that are smaller instead of things that are bigger. Having your budget allocated at a more granular level allows you to keep better control of the details and may point out potential budget trouble quicker than having everything rolled up into one consolidated project budget.
Cost accounts are used to allocate the budget at a lower level. Your budget is allocated in each detailed cost account and the actual project expenses are reported at that same level. The cost accounts can be established in a couple of ways.
- By resource type. One way is to create a cost account for each resource type. In this approach, you could have a cost account for internal labor, external labor, equipment, software, training, travel, etc.
- By WBS work package. Another way to set up the cost accounts is based on the WBS. You may set up a separate cost account and budget for each phase, milestone, deliverable or work package.
- By both WBS and resource type. If you set up cost accounts for work packages on the WBS, you can also track the resource types within each work package. these various resource types can be tracked with sub-account numbers within the cost account. Of course, the more detailed your cost accounts are, the more work you will have setting up, allocating and tracking the cost account budgets.
For example, let's say your estimated cost is one million dollars. You can allocate the budget into the different works packages on your WBS. For example:
· Work package A - $20,000
· Work package B - $50,000
· Work package C - $100,000
As the project progresses, it may turn out that Work Package A actually costs $40,000. Because your budget is allocated at this lower level, you can see immediately that you are trending over budget. This same $20,000 overage might be harder to detect of you only have one large one million dollar budget. You might end up catching this problem, but you may not see the trend early enough. Cost accounts give you a more detailed level of precision.
Conflict in project management is inevitable. In fact they say that the only way to not have a project management conflict is to have a one-person project. And even then, some people have a tendency to argue with themselves.
Karin Brünnemann (https://www.linkedin.com/in/karinbrunnemann) recently gave a presentation on the topic of Managing Conflict in Projects to the Project Management Institute (PMI)® Slovakia Chapter. And because it was such a success she suggested that we bring it to you as well!
Karin’s presentation and our interview is full of solid advice and best practices you can apply to the conflicts you will inevitably encounter. We will discuss: Definition & Characteristics of Conflict
- Conflict in the Context of Project Management
- How to Analyse a Conflict
- How to Manage Conflict
A big part of the interview is actually focused on that last part -- the actual project management conflict resolution. We are, however, not going to talk about conflict resolution on multicultural projects. That’s reserved for next week.
Use These Four Techniques for Managing Issues
Issues are problems that will impede the progress of your project, and are not within the control of the project team to resolve. They need outside help. Use these four issues management techniques on your projects.
Understand the Difference Between Issues Vs Action Items
In many cases, project managers are not using the Issues Log to identify and track true issues. Many items that are classified as issues are really risks (potential problems) or just action items. Action items are minor activities that must be followed-up on in the short-term. Action items often come out of meetings. They may not be problems at all. If you find that your Issues Log has dozens of items on it, you are probably tracking many action items. Because issues are large problems, there should not be many items open at any one time.
Ask Team Members to Identify Problems and Solutions
Issues can come from team members or any project stakeholder. It is a good practice to encourage people to help identify solutions along with the issues. When a team member identifies a potential issue, ask him to look for options to fix the issue, and to bring one or more possible solutions. This process will help build accountability among the team members, but it will also help determine possible courses of action. In fact, if a team member proposes one or more viable solutions, the problem may be able to be resolved with the help of the project manager and never reach the level of an issue at all.
Break Very Large Issues into Smaller Problems
If a large issue looks too difficult to be resolved in a timely manner, break it down into logical sub-issues. In many cases, the resolution of an initial sub-issue will drive the solution for the remainder of the issue. If it does not, it at least lets people understand the components of the issue, so that they can be attacked and resolved individually.
Create Guidelines for When Can Team Members Can Make Decisions?
Since issues require outside help they need to be raised to the project manager. Sometimes it might seem that team members do not have the ability to make any decisions at all. You definitely do not want to give that impression. As a project manager, you need to encourage people to accept responsibility and make decisions when appropriate. This helps the team run more efficiently and allows individuals to grow professionally.
Team members can handle all the day-to-day problems and only bring items to you on an exception basis. Team members need to ask themselves some key questions before deciding if they need help or if they can make a decision themselves.
- Is there an impact to effort, duration or cost? If there is, the project manager must be involved.
- Will the decision require you to go out of scope or deviate from previously agreed upon specifications? If so, the project manager must be involved.
- Is the decision politically sensitive? If so, the project manager must be involved.
- Will the decision require you to miss a previously agreed upon commitment? If so, the project manager must be involved.
- Will the decision open the project to future risk? If so, the project manager must be involved.
Practice Five Parts of Configuration Management
Configuration management is one of the many aspects of project management. It is applicable to certain projects that need to track components. There are two major types of configuration management.
- Identification, tracking and managing of all the assets of a project. This definition would be especially relevant on software development projects where the “configuration” refers to the collection of artifacts, code components, executables, etc.
- Identification, tracking and managing of the metadata that describes the products that the project is creating. In this definition, the configuration is basically the detailed specifications of the product. For example, if you are manufacturing a laptop computer, the configuration would refer to the size of the hard drive, speed, DVD specifications, etc.
- Planning. You need to plan ahead to create the processes, procedures, tools, files and databases to manage the configuration. You also may need to gain an agreement on exactly what assets are important, how you will define them, how they will be categorized, classified, numbered, reported, etc. The results of this up-front planning are documented in a Configuration Management Plan.
- Tracking. You need processes and systems to identify when assets are assigned to your project, where they go, what becomes of them, who is responsible for them and how they are disposed. Since a project has a concrete beginning and end, ultimately all the assets need to go somewhere. This could be in a final deliverable, into the operations/support area, scrapped, etc. You should be able to dissect each major deliverable of the project and show where all the pieces and parts came from, and where they reside after the project ends.
- Managing. Managing assets means they are secure, protected and used for the right purposes. For example, it doesn’t do any good to track purchased assets that your project does not need in the first place. Also, your tracking system may show expensive components sitting in an unsecured storage room, but is that really the proper place for them? Managing assets has to do with acquiring what you need and only what you need.
- Reporting. You need to be able to report on the configuration, usually in terms of what you have and where they are, as well as financial reporting that can show cost, budget, depreciation, etc. If you are tracking configuration metadata you should be able to report out a complete set of the current product specifications.
- Auditing. It is important that the integrity of the configuration process be validated periodically through audits of the status of configuration items. This can include physically inspecting or counting these items and comparing them against the expected results of your configuration management system. You will also want to audit the configuration change process to endure that the appropriate processes are being followed.
Five Key Benefits of Project Management
Every once in a while it is worth reminding ourselves of the value of project management. For us that are in the project management field, there should be no question that project management provides value to an organization. However, when you meet skeptics, are you able to articulate the benefits? Here are five key benefits.
Better Planning Helps Set Better Expectations
How many times have you heard about or been involved in a project that was not as successful as it needed to be. Did you ever spend time looking back to see what caused the project to go wrong? If you did, chances are that you said, "You know, we should have spent more time planning."
Project management focuses first on planning the work. This is a vital discipline, and allows the project team and the customer to have common perceptions of what the project is going to deliver, when it will be complete, what it will cost, who will do the work and how the work will be done.
Value statement: Project planning helps sets realistic expectations, establishes the path to success and makes sure that the right work gets done.
Save Time with Standard Processes and Templates
People intuitively understand that it is faster and cheaper to reuse something that already exists rather than to build something similar from scratch. If your organization creates a set of project management processes and templates that are used consistently from project to project, each instance represents a savings of time that would otherwise have been spent on building the processes from scratch.
Value statement: Utilizing common project management processes and templates saves the cost and time associated with having to develop them from scratch on each project.
Utilize Proactive Project Management Processes
People who complain that project management is a lot of 'overhead' forget the alternative. Your project is going to face issues. The question is whether you will proactively resolve them or figure them out as you go. Your project will face potential risks. Will you try to resolve them before they happen, or wait until the problems arise? Are you going to communicate proactively or deal with misunderstandings caused by lack of project information?
The characteristics of the project are not all going to change whether you use a formal project management process. What changes is how the events are dealt with when the project is in progress. Are they dealt with haphazardly and reactively, or proactively with a smoothly running process?
Value statement: Having proactive project management processes in place allows you to anticipate what will happen on the project and be prepared for various contingencies. This will ultimately help projects run faster, cheaper and at a higher quality level.
Avoid Surprises with More Effective Communication
If stakeholders are not kept informed of the project status, there is a much greater chance of confusion due to differing expectations. In fact, in many cases where conflicts arise, it is not because of the actual problem, but because people were surprised. Project management provides a structure and a vocabulary to communicate what is going on.
Value statement: Proactive communication allows you to better manage expectations, avoid misunderstandings and conflict, and provides better information for decision-making.
Build a Higher Quality Product the First Time
Practicing simple quality management helps you deliver to a higher level of quality and avoid the expense and time of having to fix things after the fact. This helps avoid quality problems and rework that surface toward the end of the project. The entire project can be completed better, faster and cheaper.
Value statement: Quality management helps you build your deliverables correctly the first time and saves time and costs by discovering problems as early in the project as possible.
It is not possible to give an exact set of arguments that will convince executives at every company. The arguments you use for one company might fall completely flat at another company. However, regardless of your situation today, the basic value points above probably hold true in every company.