Does every entrepreneur have to deliver goods and services to a schedule, at a managed cost, and minimize risk while doing it? Well, of course! Hey, according to the definition, that’s a project!
Successful project managers achieve their objectives (SCOPE), on time (SCHEDULE), and within budget (COST) while mitigating unforeseen disruptions (RISK). They tell you that all they think about during the day is the project scope, schedule, cost, and risk. That seems simple enough, right?
In fact, many managers won’t even discuss an idea if the following items haven’t been thought through and documented.
Let’s break those four things down into their important parts:
Description of Overview: This is usually a fairly high level and short description of the purpose and outcome of the project.
Scope of Work (SOW): The SOW is detailed breakdown of the project into logical and discrete sections. There should be a cross-reference with the WBS.
Work Breakdown Structure (WBS): The WBS is a decomposition of the project scope with an orientation on the work required for discrete deliverables.
Assumptions Made: Everybody makes assumptions. It can be about the availability of a facility or key people to participate in the project. Good managers document their assumptions.
Deliverables: What will be delivered as a result of this project? When will it be delivered? To whom? How?
Requirements Document: A requirements document focuses on the required performance of the finished product, resulting from the work scope. In tech terms it is the requirements that must be achieved to satisfy the internal or external customer. It is here that the tech terms are quantified both in what must be achieved and how to validate that achievement.
Suppliers and Subcontractors: Will suppliers or subcontractors be used? For what?
NOTE: In the defense industry, the Earned Value Management System (EVMS) is used with primary orientation on schedule and cost.
Time-Phased: A schedule is a depiction of the work to be done, related to time. PERT or GANTT format can be used, depending on the culture of the organization.
Inter-Dependencies: Very frequently, the ability to start one task is dependent on the completion of the previous task. These need to be shown on the schedule.
Receipt of Deliveries from Suppliers and Subcontractors: The receipt of purchased items, whether raw materials or purchased finished, are required to start work, in many cases.
Critical Reviews: When will the project team and key leaders pause to look at how the project is proceeding? These reviews are project milestones that are scheduled and occur as needed; each is a stepping-stone to success.
Deliveries: Put milestones on the schedule to indicate key deliveries.
Reference to the WBS: Every item on the schedule or logic diagram should be cross-referenced to the WBS.
Resources Required: Including labor (by SOW item; by work unit); Material; Equipment; Travel; Facilities; Consumables; Overhead (e.g. Material Related Overhead)
Cost of the Resources: The most obvious part of cost is to assign a dollar value to each resource used. Labor hours get converted to dollars using labor rates. Consult with your financial department since labor rates carry the burden of benefits and a whole range of related costs.
Cost Performance: Measure periodically the ratio of actual cost divided by planned cost. The more that the ratio is less than 1, requires a resolution process.
Likelihood of Occurrence: Lots of things could happen. We need to focus our efforts on identifying the ones that are most likely to happen. This includes risk items from suppliers and subcontractors.
Severity of Consequences: The other things on which to focus on are the risk items that have the most severe consequences. If there is something that is fairly likely to happen and could have a devastating effect on the success of the project, actions should be taken to avoid or mitigate it. Consequences can be the inability to meet required products performance, schedule slip, and cost overruns.
Action(s) to be Taken: What needs to be done to deal with identified risk items?
Effect of the Actions: What will be the effects of the planned actions? Will the risk be maintained or reduced?
Steve Czerniak & Jim Ruma
About the Authors:
Steve Czerniak– Mr. Czerniak retired after a successful career that culminated in fifteen years of experience as an internal consultant and “change agent.” He is currently an Executive-in-Residence at the Macomb-Oakland University Incubator and a volunteer at the Troy Historic Village and Historical Society.
Jim Ruma– With more than 42 years of defense industry experience, Jim Ruma most recently served as Vice President of Engineering Programs. He is now a board member, and past President, of the Michigan National Defense Industrial Association (NDIA) Michigan chapter. He is also an Macomb-Oakland University Incubator Executive-in-Residence to benefit those clients needing engineering and program/project management support.