Managing Project Costs and Duration
From time immemorial till present day, far so many projects have gone bust in their budgets and yet so few that you can recall come in well within budget and some few surprising cases succeed well below budget making some minimal savings within the scheduled time.
Common practice shows that most successful small firms run a project like kind of business managing new clients and contracts as independent projects and their large counterparts take all new products developments and launches , investments and acquisitions and systems implementation among other activities as independent projects making project management a vital part in running present day businesses .
Whereas projects have become a norm in present day business management form small firms to large corporations, common stories of cost overruns make you want to draw concussions that it’s normal for projects to go way above initial budget. Studies show that these cost overruns do occur in projects across all sectors and of all sizes though they are common in construction and technology projects which recorded more than 7 out of 10 projects going way beyond their initial budgets.
The most common and obvious causes of cost overruns include: poorly defined requirements and lack of consensus and prioritization, inappropriate designs, inadequate information at the start, uncontrolled addition of extra requirements, unforeseen problems, lack of control in spending (financial indiscipline), insufficient skills and resources, inadequate checks on agreed estimates and work itself and loss of direction during implementation. And some less obvious causes include; the absents of a sound business objective to be achieved and clear business case, not understanding the cost drivers, poorly estimating demands and revenue, failing to evaluate cheaper alternatives, delays, inadequate considerations of safety, legal, regulatory and environmental issues, lack of formal agreements where there could be dependence on third parties, fear of lack of approval from management, and in bigger projects existence of political pressure and vested interests, to successfully manege these then:
Acknowledge theses overruns may happen
The first step in controlling or preventing overruns is to acknowledge that they are likely to happen then the risk is managed by proper project set up, when all necessary information relevant to the project is collected and analyzed at the earliest stage then consensus can be drawn This also guides in the planning, technical designs and gives clear picture on requirements and possible setbacks, assessing impact of these possible problems then use this to build a contingency factor.
Making business sense
The desired objective(s) to be achieved as to be clear understandable and acceptable from the onset ensuring a sound business case with realistic costs and revenue estimates and drivers. As long as the project is viewed as a living model for delivering continuous value and benefits and thus used during project implementation and not just as a one off exercise for obtaining funding it will always go along way in controlling the parameters in which the project team works and in business and social spheres this becomes the biggest motivator to all stakeholders.
Identify low cost alternatives
In every project there will always be activities that are not critical yet costly, continually set to identifying these low cost activities that could reduce the projects duration and cost by exploring and assessing options such as using internal rather than external resources or a mix of the two to perform them.
Focusing on the most crucial activities
Critical path analysis (CPA) is one of the techniques that best suite this requirement. Used by mangers across all sectors and in all organization sizes to focus their effort on the most critical tasks, CPA can help in the following areas:
- Listing every activity that will be performed in the project
- Identify dependencies in these activities – ie, instances where certain activities can only occur once others have been completed or started.
- States the sequence in which these activities should be undertaken
- Identify which activities can be performed in parallel so as to reduce overall time to complete the project
- Specify when certain resources will be needed for smooth flow of project activities
The essential concept behind Critical Path Analysis is that you cannot start some activities until others are finished. These activities need to be completed in a sequence, with each stage being more-or-less completed before the next stage can begin. These are 'sequential' activities. Other activities are not dependent on completion of any other tasks. You can do these at any time before or after a particular stage is reached. These are non-dependent or 'parallel' tasks.
You then need to first identify all activities in the project, for each activity, show the earliest start date, estimated length of time it will take, and whether it is parallel or sequential. If tasks are sequential, show which stage they depend on. Any increase in time taken to complete any critical task will increase the overall duration of the project and possibly the cost, the activities on the critical path therefore offers the most potential for shortening the projects duration when alternative methods of delivering the same outcome is carful examined for each activity looking at reducing sub tasks, improving implementation processes and lead times reallocating of resources and skill to improve efficiency. This can also help look at stages with slack and you can switch some resources from them to help shorten time by critical activities at a lesser cost.
Software
Business and other organizations have depended on software such as Microsoft Project to help them conduct CPA and other project management tools, this helps in reducing management cost to the project and reducing uncertainty in implementation.
Manage the non technical aspects
At all stages project managers and those implementing need to keep in mind that projects are delivered by people so other non technical aspects such as stakeholder analysis, effective and consistent communication to provide an open and honest “the no surprise” environment, strong governance to ensure compliance with set guidelines and discipline. There are also many other complementary tools and techniques for managing project cost such as benchmarking that can useful to manage costs
By Analyst Project team
