Use This Five Step Approach to Manage Project Finances

Some projects have a large budget and require rigorous management and tracking. Other projects don’t have a budget component at all. When you do have projectfinances to manage, think about these simple steps.

1. Estimate costs

The first step towards managing your project finances is to estimate the costs. This isn’t as easy as it sounds. You need to forecast the total amount of people, equipment, materials and other resources needed to complete the work. You then need to estimate the costs of these resources and when these expenses will take place.

2. Set the budget

Estimating the costs is not the same as setting your budget. The budget shows how the money is allocated according to your company’s financial rules. The budget shows the expense accounts, allocates capital versus expense dollars, shows when funds are allocated to your project, etc. Ultimately you need to manage project costs according to the budget.

3. Determine if you can get contingency funding

Project estimates are rarely 100% accurate. A contingency represents the estimating uncertainly. A contingency budget represents this estimating uncertainty. For example, if you estimated your project to be 100,000 with a 90% confidence, you could also ask for a 10,000 contingency budget to represent the uncertainty. This 10,000 is not used for risks or scope change requests. It can be tapped if it turns out you underestimated work on your project. Not all organizations allow contingency budgets. If you do not have this budget flexibility you can add the uncertainly factor back into your baseline estimate.

4. Track weekly

The next step is to start tracking your spending on the project. You need to track every expense – human resources and physical resources This could be a manual process but is usually handled by your accounting system. Ask your team to complete expense forms and submit them to you for approval when they spend money on behalf of the project.  You need to pre-approve any large expenses before they are incurred so you can more easily control expenditures on the project.

Cash flow management is about managing the cash needed to deliver your project. Make sure your Sponsor has approved the next 1-2 months of work ahead of time, and that the funds needed to manage the project have been made available. Then track the spending of that funding every week.

5. Manage expectations

Report the true status of your spending and your forecasted spending. If you are at risk of going under budget or over budget, be sure to manage expectations so that there are no surprises.

Managing costs on a project can be difficult. It is made more difficult if the project manager does not keep up on tracking and managing the budget. Use these five simple steps to stay in control.

Remember These Five Key Activities to Initiate a Project

Larger projects definitely need time up-front to define and plan the work. But there are some things to consider before you even start planning. These activities would be a part of project initiation and the work is often overlooked.

When you are assigned as a project manager on a project, don’t forget the following.
1. Gather baseline information

Look for all the information that may already be available for this project. This includes any previous project deliverables, memos, emails, etc. In many cases, before the project begins, the sponsor must complete a business case. The business case helps you understand the project benefits and alignment to goals and strategies. All of this information should be gathered as a starting point for understanding the work.

2. Determine the initial approval process

Work with your manager and the project sponsor to understand the approval process for the Project Charter and any other initial project deliverables. For instance, you can determine the people that have to approve the Project Charter versus those that should just receive a final copy.

3. Discover high-level requirements

The project manager needs to have some understanding of the high-level requirements of the project before he can even begin to plan the work. The project manager is getting the essence of the project during initiation. You are not uncovering the detailed product requirements at this time. The detailed requirements will be further defined as a part of the project lifecycle once the project is approved.

4. Identify the key stakeholders

Your manager and the sponsor should have a pretty good idea of the appropriate project stakeholders. These are people and groups with an interest in the project. You need to understand these people and their interests to be able to gather the correct information for project planning. If possible you should also meet or talk with the stakeholders at this time to start to get an understanding or their interest and attitude about the project.

5. Estimate the resources you need for planning

Depending on the size of the project, the planning process can be time consuming. The project manager needs to quickly understand the resources needed for planning. This might be a part-time or full-time project manager, and it may require other resources as well.

When a project manager gets assigned to a new project he needs a set of initial activities to get grounded and start to understand the nature of the project. These five activities will help you gain context and prepare you for the planning process.

……………………………………………………………………….

Project Quickstart – Another Way to Define your Project

TenStep can quickly guide you through the project definition process. In one facilitated sessions we uncover project objectives, scope, deliverables, risks, assumptions, constraints, organization, approach, etc. By the end of the session you will have:

Project Charter

Milestone schedule

Project Management Plan

Whether you are starting a crucial project, or just need general help with all projects, TenStep Consulting Services can help you get started right. Click here for more information.

Contact Tom Mochal to discuss further.

Two Quality Management Philosophies to Adopt Now

There are a lot of interesting processes and techniques associated with quality management. Here are two that approach the level of a philosophy.

Don’t “Goldplate”

The term goldplating refers to delivering more quality than what the customer requested. Even though it might seem that this is a good thing, it is wrong for two reasons. First, the primary focus of the project should be to make sure that you deliver what the customer wants – on time and within budget. By adding in additional work (to overdeliver), you increase the risk that the project will not meet its deadline or budget. If you end up missing your deadline date, you will not find sympathy if you explain that the date was missed because of adding more work than the customer requested.

Second, if you goldplate, you are taking it upon yourself to make a business decision on what is of most value to the customer. There may be some good reasons why the quality level was defined by the customer. There may be more value in having the solution completed early and for less cost.  The point is that this is a customer decision and not one that the project manager should make.

Goldplating does not mean you should not strive to be your best. Deliver early if you can. Deliver underbudget. Be extra-great in your customer service skills. Go over and above in your desire to help a colleague.

Make Sure Quality Management Focuses on Processes, Not People

The focus of quality management is to build the right processes so that the entire team can produce the deliverables that meet the customer’s expectations. Therefore, if a particular deliverable has a quality problem, the project manager and project team should focus on how the project work processes can be improved – not on trying to determine who is to blame.

Most problems with quality are the result of poor or inadequate work processes, not because of the malicious act of a particular person. In fact, it is thought that at least 80% of quality problems can be resolved by changing and strengthening business processes. Less than 20% of problems are under a team member’s control. Furthermore, the processes that your organization utilizes are largely determined by management. So, when workers or team members have quality problems, it is important for managers to identify the weak or broken processes involved and fix them. Of course, everyone can be responsible for their own work, but when there are problems, first check out the work processes that allowed the problem to occur. 

Contact us today to discuss how we can help you strengthen your project, portfolio and PMO processes.

Be Effective with The Four Communication Basics

There’s not one ‘best’ way to communicate with your project team, but rather a number of different ways. That being said, there are some fundamental communication options that are applied to most projects. Before you get too sophisticated with your communication approach, make sure you are very effective with these fundamentals.

1. Status meetings

There’s nothing like a status meeting to communicate effectively with your project team. The best time for a group meeting is early in the week, preferably Monday or Tuesday.  The purpose of this meeting is to make sure that everyone is aligned, expectations for the week are set, and any issues or obstacles are addressed and resolved. This is your opportunity as a Project Manager to address the needs of the group and make sure everyone is on the same page.

2. One-on-one meetings

Another great opportunity to manage your project teams are the one-on-one conversations you have with individual team members. This type of conversation can take various forms. A regular weekly or bi-weekly meeting can be set up to coach/mentor team members that may be new or have minimal experience. for experienced team members, perhaps once or twice a month would be appropriate.

These one-on-one meetings are a chance to keep your pulse on team members and allow for a more confidential discussion that would not be appropriate at a team status meeting.

3. E-Mail

Maybe in ten years email will be obsolete. However, for now it is indispensable for most teams. There are lots of uses for emails – one-on-one discussions, group discussions, one-way notifications, fyi’s, decision making, problem solving, etc. If you are weak at email communication it can dramatically impact your ability to manage staff and engage stakeholders.

Be mindful to not let email take the place of face-to-face meetings when you have the personal meeting as a viable alternative. It’s easy to go down this path feeling that it’s faster or less complicated than talking in person. Email should always be in addition to, not instead of, talking to your team in person.

4. Reports

Reports cover a lot off ground – status reports, performance reports, issues reports, safety reports, etc. You may not typically think about reports as a way to manage your project team, but if you create your reports in the right way you will find they can be a useful tool.

What is the right way to create reports that can help manage your team? Make them actionable. Making a report actionable means that someone can read the report and then know what needs to be done next. The report will not be muddled with a lot of unnecessary details or information that could lead to confusion.

………………………………………
The four fundamental communication mediums above are practical ways you can communicate with and manage your project team. The spirit of managing your team can be summed up in two words… be available. Your staff will do well if your team knows they can reach you at any time with questions, issues, or suggestions and feel comfortable in doing so. Your group meetings, one-on-one conversations, email, and actionable reports will keep you in that position of availability.

Agile 101 – Estimating Work with Story Points

In each iteration, Agile project teams  implement a set of user stories pulled from the product Backlog in priority order. These stories make up the iteration backlog. The number of stories implemented in each iteration depends on the amount of effort it takes to fully implement each story, as well as the capacity of the team.

The question – how do Agile teams estimate the size of each user story? Although estimating by effort hours is very common in traditional projects, it is actually not used very often on Agile projects. A more common approach is to use a technique called “story points”. Story points are an abstract method of estimating the relative complexity of implementing a user story.

Each project team can establish their own story point scale. For example, let’s say user story A is estimated to be 5 story points (whatever this means). If the team thinks user story B will take twice as many hours to implement, the team would assign 10 story points to user story B. There is nothing magical about the use of 5 story points or 10. Another team might scale these same two user stories at 25 and 50 story points respectively. Even though the numbers are different, the key is that the story points represent relative sizing of the user stories. In both examples user story B will take twice as much effort to implement as user story A.

Once the relative size of a story point is set for an Agile team, the team can estimate how many story points they can deliver in an iteration. Again this is relative based on the scaling process used for the story points themselves. Using the above example, the team that estimated stories A and B to be 5 and 10 story points might be able to implement 45 story points in an iteration. On the other hand the team that estimated those two stories at 25 and 50 story points might be able to implement 225 story points in an iteration.

The general characteristics of story points include:

• Story points represent the work required to fully implement a user story.
• The stories are estimated independently by team members and then the team collaborates toward a consensus opinion.
• If a user story is too large to be implemented in one iteration it needs to be broken down into two or more smaller stories that can fit within an iteration.
• Many of the estimating models are designed as games that are interesting and engaging for the project team. This includes planning poker and animal points.

Over the course of a few iterations the Agile team quickly understands how many story points can be completely implemented in one iteration. This is known as the team “velocity”.

Summary

Agile projects have a number of unique techniques that are not easily transferable to traditional waterfall projects. One of these techniques is the estimation of user stories using abstract story points, and the use of story points to determine how much work can be completed in an iteration (velocity). These are simple yet very effective techniques that are the hallmark of an Agile project.