The Project Notebook

Controlling Project Costs and Risks – Fall 2011

Course Code: BUSA-40358
Full Title: Controlling Project Costs and Risks
Primary Instructor: FROHNHOEFER, RAY

Term: FA11    Units: 3.00
Start Date: 09/19/2011   End Date: 11/27/2011

Contact: JeanMarie Bond   jebond@ucsd.edu

Since 2002 I’ve been offering Controlling Project Costs and Risks as part of the UCSD Extention Project Management Certificate Program.  For the past three years it has been online, and the next offering is scheduled for 10 weeks beginning September 19.  Each week offers a new lesson which you complete at your own pace over the course of a week — it’s a true anywhere, anytime learning course with a guided, asynchronous discussion.  I’ve had students that were able to access the course and materials on their SmartPhone, though a regular desktop or laptop computer is recommended.

The PMI Educational Foundation offers a number of scholarships for training and professional development programs.  Please visit their scholarship site at http://www.pmi.org/pmief/scholarship/scholarships-professional-development.asp for additional information.

Project management and control is simplified by good planning right from the start. The course, offered a limited number of times each year,  is totally online and includes 27 hours of instruction.  Topics include:

  • Introduction to the BlackBoard System and Course
  • Selecting and Planning Projects
  • Controlling Project Costs with Estimates and Contracts
  • Measuring Project Financial Progress
  • Controlling Project Scope and Changes
  • The Role of Communications in Controlling Costs and Risks
  • Controlling Project Risks
  • Risk Management Tools
  • Cost and Risk Case Studies
  • Miscellaneous Topics
    • Conducting Project Reviews
    • Relationship Between Schedules, Costs, and Risks
    • Managing Projects with Fixed Constraints
    • Why Do Managed Projects Fail?
    • The Relationship Between Projects and Products

More information and online enrollment is available from the course catalog at: Controlling Project Costs and Risks.

Here’s what learners had to say about the Spring 2011 edition:

“No doubt, Ray is the best instructor for this course!”

“Ray was informed and knowledgeable on the topic at hand and presented informative lectures. Participation was encouraged and the class responded to that expectation very well. One of the most participating classes I have participated in . It really aided in the delivering the intended lessons.”

“I only can say that I haven’t had an instructor whose knowledge on the matter and his ability to teach in an online environment was perfect as with Ray.”

“I thought this was a very well executed class. There were no surprises. I look forward to another class with Ray.”

Hope to see you online at UCSD Extension soon!

Managing a Project — When You’re not the Project Manager

By: Susan Peterson, M.B.A., PMP
Copyright 2010, Susan Peterson, All Rights Reserved

Many of us know the challenges related to being the manager of a project. Probably more of us know the challenges of working on a project that is not being managed effectively. A common question is, “What can I do to manage a project when I’m not the project manager?” The unspoken but clear implication is that there is a project manager who is not doing his/her job appropriately and that the team recognizes that they need to assume the project manager’s functions. This article will address some proactive measures that can be taken to rescue a project that is floundering because of the project manager.

The first principle to keep in mind is “Don’t be afraid to ask questions”. Team members have their own specialties, while the project manager tends to be a generalist. Asking questions is a powerful technique to prod the project manager to explain his/her strategies and actions. It can also be a less confrontational method of making the project manager aware that not everyone understands what is happening on the project or where the project is headed. Finally, asking questions that are rhetorical can lead the project manager to conclusions that the team feels are necessary for the project to proceed on a more effective course.

Some of you may be thinking at this point, “Asking questions is for timid people who have lots of time”. A more direct approach is to provide solutions to problems that the team has identified. For example, if the project has fallen behind schedule, the team may have specific recommendations that relate to activities that can be delayed or eliminated. Providing solutions with rationale allows the project manager to make decisions without having to put time and effort into analysis and alternative assessment. Of course, if the team can make the manager feel that the solution is his/her idea, so much the better.

Proactive risk management actions can also be addressed by project team members even if the project manager seems unable or unwilling to forecast the future. Some project managers do not learn from their previous projects or assume that “bad things” only happen once in a lifetime. A wise person once said “Those who do not learn from history are doomed to repeat it”. If the team knows that the project manager has a history of budget overruns, poor performance and/or time delays on his/her projects, the members can take it upon themselves to head off the actions that typically cause the problems. An example is a vendor who is notoriously late in delivering key components. Rather than the project manager’s waiting to see if “it happens again”, a team member can make phone calls, send emails or even make a visit to determine what needs to happen for on time vendor delivery.

The bottom line, as we all know, is that every project needs management. “Managing from below” as a team member is a challenge. If the team knows more than the project manager about how to manage the project, then they must take the actions necessary to produce a project worthy of their capabilities. The project management principles do not change. However, more tact, finesse and “soft” leadership are required when the team has to manage the project in the absence of true project management.

Susan Peterson, M.B.A., PMP, is a consultant who manages diverse programs and projects in both the private and public sectors for individual organizations and consortia. She also conducts enterprise assessments of project portfolio management practices. Prior to establishing her consulting practice Susan led major efforts for Fortune 100 organizations throughout the United States. She teaches the Project Management Simulation capstone course as well as the Project Portfolio Management course in the University of California, San Diego, Project Management certificate program and is a member of the curriculum committee. She can be contacted at susanada@aol.com.

Which One Came First — The Solution or the Problem?

By: Susan Peterson, M.B.A., PMP
Copyright 2010, Susan Peterson, All Rights Reserved
[Note: My continuing thanks to Susan for her monthly articles while I continue my blogging break.]

Let’s say that you’re faced with a complex problem, and there appears to be no answer. Then someone comes along and gives you an answer to the problem. Is this a miracle or what? Actually, this situation is a trap that ensnares many project managers and at the worst can be the “kiss of death” to their project management careers.

Answers do not equal solutions. Many project managers are assigned to projects and told to implement a pre-determined “answer” to a problem. For example, an organization decides to install an enterprise-wide software package. Does anybody ask why the organization has chosen this answer? And even more remarkably, does anybody ask what the problem is that generated this answer? Another situation occurs when a company decides that it needs to relocate one of its facilities. Does anybody dare to ask why this decision is necessary?

Organizations are perpetually in a rush to make decisions. Information (good, bad and not relevant) is available somewhere in cyberspace for the asking. The media is crammed with “30-second sound bite fixes” to any problem that troubles this planet. As project managers we face these challenges every time that we begin a project. Everyone has an answer, but few have a solution. The following sample situations outline some techniques to use in determining whether your project is implementing a solution or just an answer.

Let’s start with the software implementation situation. So often, installing a software package is deemed to be a quick answer to improve productivity, enhance customer service, or reduce labor costs. A project manager assigned to manage the software installation needs to ask these questions in the initiation phase:
• What is the true problem that is being addressed? Beware of symptoms that masquerade as problems.
• What needs to be done to address the problem that does not require external intervention?
• What viable alternatives exist that do address the problem?

Let’s move to the relocation situation. It is critical that companies know what is motivating them to move facilities. Cost reduction is typically a major reason that is given. However, if the same ineffective management philosophies and operational processes are also being relocated, all that has possibly been reduced is the facility cost. Some questions to ask in this situation are the following:
• What are the true causes and forces that are mandating the relocation?
• Does relocation truly address the problems that have been identified?
• What (processes, job skills, etc.) needs to be eliminated or modified before the relocation?

As young children we all asked those questions that frustrate every parent and teacher: why? what? how? As project managers we need to continue not only to ask the questions but to look beneath the surface of the answers to find the true solutions.

Susan Peterson, M.B.A., PMP, is a consultant who manages diverse programs and projects in both the private and public sectors for individual organizations and consortia. She also conducts enterprise assessments of project portfolio management practices. Prior to establishing her consulting practice Susan led major efforts for Fortune 100 organizations throughout the United States. She teaches the Project Management Simulation capstone course as well as the Project Portfolio Management course in the University of California, San Diego, Project Management certificate program and is a member of the curriculum committee. She can be contacted at susanada@aol.com.

Accepting Risks — It Happens in Projects All the Time

By: Susan Peterson, M.B.A., PMP
Copyright 2010, Susan Peterson, All Rights Reserved

There are a variety of methods to deal with risk either proactively or reactively. However, the one method that may actually be the riskiest is to simply accept that a particular risk or set of interrelated risks may occur during a project. There may be a number of seemingly valid reasons that are used to justify risk acceptance ranging from “It’ll never happen, so why worry?” to “Dealing with challenges builds character”. Regardless of the rationale that is used, it is the project manager who ultimately bears the responsibility when a risk occurrence threatens to derail a project. In this column we look at some useful tactics for dealing with those situations where the prevailing attitude is “If it happens, the project manager will take care of it.”

“A ‘good’ project manager would just deal with it.”

This statement is a thinly veiled attempt to discredit a project manager who requests resources, time, and effort to address a potential risk. It presupposes that a “good” project manager demonstrates his/her skills by waiting for catastrophes to happen and then handling them. While some people seem to enjoy operating in a perpetual state of crisis, this type of atmosphere tends to have everyone working frantically in a state of panic. A possible answer to the statement might be to identify other projects where the risk actually occurred and the negative impacts on interim or final outcomes. Another response could identify the costs of dealing with a risk that occurs versus the costs of advance preparation.

“An effective project team is always lean and mean.”

Human beings can exist only so long when deprived of sufficient food and water. So too projects that are consciously “deprived” of adequate funding, appropriate team members, and/or other requirements can end in early termination. Projects typically face enough “character-building” challenges without deliberately setting them up for failure. In this situation the project manager has to apply a huge “dose of reality” in order to convince stakeholders that “lean and mean” only applies to fitness training. For example, the project manager can provide specific examples of the impact of underfunding, such as being forced to use inferior materials that can lead to failures in the field. Another common occurrence, the unavailability of critical team members with relevant expertise levels, can result in costly delays.

“If we had only known!”

Sometimes risks are accepted unconsciously because there was no upfront risk assessment and management or because the risk was never identified. Some possible indicators of “unknown” risks could include the following:
• Budget constraints that were set before the project was initiated
• Key project resources that are spread across many simultaneous projects
• A schedule that is “too optimistic to be true”
• One vendor’s bid that is substantially lower than other bids
The above situations are common and often occur over and over in an organization’s projects. Rather than just acknowledging that “all of our projects face the same problems”, the project manager needs to remind stakeholders of the actual outcomes in previous projects when warning signs were ignored. Typically, there are major impacts on deliverables and milestones.

Project managers are often the only stakeholders who recognize the value of proactive risk management. It is their challenging responsibility to convince other key individuals of its importance on project success.

Susan Peterson, M.B.A., PMP, is a consultant who manages diverse programs and projects in both the private and public sectors for individual organizations and consortia. She also conducts enterprise assessments of project portfolio management practices. Prior to establishing her consulting practice Susan led major efforts for Fortune 100 organizations throughout the United States. She teaches the Project Management Simulation capstone course as well as the Project Portfolio Management course in the University of California, San Diego, Project Management certificate program and is a member of the curriculum committee. She can be contacted at susanada@aol.com.

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© 2010-2012 Ray W. Frohnhoefer, MBA, PMP, CCP