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The Challenges of Proving the Value of Project Management
(part 2 of 2)


Last time, I described the challenges of trying to prove the value of project management. However, this does not mean we have to throw up our hands and give up. There are some ways to derive the value. 

Estimate benefits based on industry analysts

This is usually the place to start. Although you may have difficulty estimating the value of project management, other organizations have done detailed research. If you have nothing else, you can always take someone else’s word for it. There are reports from the Project Management Institute and some consultancy groups that show savings and project improvements associated with the use of project management. I have never seen a report that stated the use of project management practices was bad.  For example, if you find a report showing a 10% savings per project, you could apply this figure to your projects - assuming you are applying similar project management discipline.

Calculating detailed benefits per project management process

You can survey each project manager at the end of a project and ask questions about the specific value they observed, versus what would have happened if they did not use a specific process. This allows you to look at individual projects and project managers. Some project managers may think they managed projects well previously and do not see a lot of incremental value in a new common process. Other project managers may see tremendous value.

In this approach you look at all the specific benefits associated with standard project management and work with your project manager to place a value on them. Examples might be.

  • Savings in time and hassle associated with better managing client expectations.
  • Savings from scope change requests that are made but not approved. For example, the project manager may say that in old projects all scope change requests were included in project scope. Instead, using good scope change processes resulted in one-third of the requests being rejected. There are cost savings and accelerated schedules associated with not doing this work.
  • There is value associated with accurate estimating. As you do a better job planning and managing the work, you should find that your project estimates become more and more accurate. This allows the customer to better manage their financials and make better business decisions. You can agree with your customer on the value this better estimating provides to them.
  • If you managed risks well the project should have had fewer problems compared to the past. You can estimate the value of fewer problems on your schedule and budget.
You would need to define the detailed criteria that would be applied to each project. Then as each project completed, the project manager (and the sponsor) would sit
down and consider the value of the project management processes that were applied.


Consider the savings from projects cancelled

Planning projects more thoroughly and managing projects more closely may result in
some projects being cancelled that might have been executed before. This is the result of more information being available regarding the total cost of the project versus the
business benefit. If a project gets cancelled based on sound planning and management,
you should take credit for this as a win for the organization, and the budgeted money not
spent should go into the value side for project management.
At TenStep we are dedicated to helping organizations achieve their goals and strategies through the successful execution of critical business projects. We provide training, consulting and products for organizations to help them set up an environment where projects are successful. This includes help with strategic planning, portfolio management, program / project management, Project Management Offices (PMOs) and project lifecycles. For more information, visit www.TenStep.com or contact us at admin@TenStep.com
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this content is from the TenStep weekly "tips" email dated 2017.20.12

The Challenges of Proving the Value of Project Management
(part 1 of 2)


There are a number of factors that make it difficult to quantify the value of project management to an organization.

You can’t precisely compare projects before and after

One of the characteristics of projects is that they are all unique. Therefore, you
cannot make a direct apples-to-apples comparison of what projects looked like before the use of project management processes and after the fact. What you would like to say is that it took us X hours to do a project before, and now it takes Y. However, two projects are never exactly the same to make this comparison.


You don't have the baseline metrics

You may be able to make some general statements by comparing projects with similar characteristics. However, most companies don’t keep any historical records of project
characteristics and costs to use in this type of comparison. You can track the costs and durations of current projects, but how do you compare to the past when you weren't capturing any information.


There is a lot of other stuff going on

A project management initiative in a large company requires a fair amount of time to be successful. In fact, it may take a few years in a large company before everyone is trained and using the new methodology. Of course, no organization can stand still while a long culture-change initiative is going on. The problem is that it is hard to tell how much impact the project management initiative has on the organization versus the other factors that are coming into play at the same time. 

Things may be a little worse before they get better

Lastly, the introduction of structured processes in an organization that did not have them
before might well result in some short-term incremental costs before the long-term value comes in. For instance, you may need to invest in training and perhaps some ongoing coaching. In addition, there will probably be a learning curve. If the project is long enough, the long-term savings could outweigh the learning curve. However, if the project is short, the participants may tell you that it took longer than it would have if the methodology were not in place. This is not surprising. The overall value of the project management processes must be measured over time, since much of the value will kick in through the reuse of the common processes.


Stay Tuned

All that being said, there are some ways to show the value of project management. Look for these ideas in the next email.

At TenStep we are dedicated to helping organizations achieve their goals and strategies through the successful execution of critical business projects. We provide training, consulting and products for organizations to help them set up an environment where projects are successful. This includes help with strategic planning, portfolio management, program / project management, Project Management Offices (PMOs) and project lifecycles. For more information, visit www.TenStep.com or contact us at admin@TenStep.com
Monday, 04 December 2017 15:06

Estimate Project Costs Across Three Main Categories

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this content is from the TenStep weekly "tips" email dated 2017.13.12

Estimate Project Costs Across Three Main Categories


Once you understand the work of the project you can estimate the resources that will be required to complete the work. Knowing the resources allows you to estimate the costs of the resources to the project. There are three main areas where costs come into play.

Labor costs

The cost of labor is derived by looking at the effort hours of each resource and multiplying by the hourly (or daily) cost of each resource. In many companies, estimated labor costs for internal employees are assumed to be zero, since their costs are already accounted for in a departmental budget. This does not imply there is no cost. Rather, it assumes there are no incremental costs over and above what the company is already paying for.

If you are using external contract or consulting resources, their costs always need to be estimated and budgeted. You have to determine the type of external resources you need and the hourly rate of the resources and how many hours you need. If you are not sure of the actual resource cost, you need to make some assumptions based on the general type of resource. For instance, there may be a standard hourly cost for accounting contractors or programming contractors.

Non-labor costs

Non-labor expenses include all resource costs not directly related to salary and human contractor costs. Some of these costs, like training and team-building expenses, are related to people. However, they are still considered non-labor since they are not related to employee salary or contractor hours. Non-labor costs include:

  • Hardware and software
  • Travel expenses
  • Training 
  • Facilities
  • Equipment
  • Material and supplies
  • Depreciation
  • ... more
Each project manager must be aware of the accounting rules in his own company to make sure the labor and non-labor costs are allocated correctly.

Outsourced costs

This is a third category of costs. For practical purposes this is considered non-labor costs. However, it is a cost that is provided to you by a vendor to complete some pre-specified piece of work. As a project manager, you don't need to determine resources and the costs of resources. This is the vendor's responsibility. You just need to understand the scope of work to be completed and the cost of that work. In some projects, especially construction and engineering, the vast majority of the work may be outsourced to vendors. On those projects it is important to provide clear scope of work feedback to the vendors and then aggregate that costs of all vendors to come up with final project cost estimates.  

Document all assumptions

Don't forget. You will never have all the information you need with 100% certainty. Therefore, it is important to document all the assumptions you are making along with the estimate. If you change your assumptions, it is likely to change your estimates.

At TenStep we are dedicated to helping organizations achieve their goals and strategies through the successful execution of critical business projects. We provide training, consulting and products for organizations to help them set up an environment where projects are successful. This includes help with strategic planning, portfolio management, program / project management, Project Management Offices (PMOs) and project lifecycles. For more information, visit www.TenStep.com or contact us at admin@TenStep.com
Last modified on Thursday, 21 December 2017 02:48
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406Click Here to Listen to the interview: http://bit.ly/PMPodcast406
Read More: http://bit.ly/PMPodcast_406

You've been there, right? You've managed a project where nobody on the team reported to you. But what can a project manager do to succeed other than beg borrow or steal in this situation?

This interview with Jeff Kissinger (LinkedIn Profile) was recorded at the superb Project Management Institute (PMI)® Global Conference 2017 in Chicago, Illinois. It is based on his presentation "Leading Without Authority: The Project Manager's Dilemma" and looks at what project managers can do to successfully deliver their projects even in situations where they have little or no authority at all over the people on their project. Here is what Jeff wrote about his presentation:

Leading project teams without direct authority is a dilemma that many project leaders face. Doing this well is an art. And, like art, it’s often practiced using a mixture of skills, techniques, and tools. Attendees will learn how to identify and resolve authority issues quickly that adversely affect their projects and learn how to lead their project teams successfully without direct authority.

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405.2Click Here to Listen to the interview: http://bit.ly/PMPodcast405_2
Read More: http://bit.ly/PMPodcast_405_2

The Agile Practice Guide was released together with A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition in September 2017. As a result the Project Management Institute (PMI)® wil implement a "lexicon update" to the PMI Agile Certified Practitioner (PMI-ACP)® exam om 26 March 2018. This is to ensure that exam lexicon is consistent with the new guide.

This interview with Alicia Burke (LinkedIn Profile) was not recorded at the grand PMI Global Conference 2017 in Chicago, Illinois because we had scheduling conflicts. So we recorded it via Skype after the Conference. We discuss the how, what, why and when of the changes that are coming to the PMI-ACP exam.

Although the PMI-ACP is not a test of the Agile Practice Guide, it will become one of the references for the exam. This means that students preparing to take the exam after the change can expect to see lexicon changes and terminology used within the exam to be consistent with the guide. Students planning to take the exam after the change are advised to use PMI-ACP exam prep materials that are updated to the new guide.

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