Priyanka Bhadani6/10/2022What is Time And On Budget ?? Time and on budget is a business term that refers to the completion of a project or task within the allotted time frame and within the allocated budget.
Let's begin with a case study.
In 1999, McDonald's, an already giant player in the fast-food industry, was aspirational. It tried to bring transformation in running its global business with an innovative IT solution. The food conglomerate tried to create a real-time global network to link its stores with headquarters.
"Innovate" was a $1 billion project to link 31,000 stores in 121 countries to the headquarters by Intranet. It would collect real-time information from every store and then deliver it to the headquarters' executives to enable them to effectively and consistently manage and operate their stores moment by moment. The project started in 1999 and had a five-year plan. Unfortunately, in late 2002, McDonald's canceled Innovate and lost the money they had already spent on the project; between 100 and 200 contractors and McDonald's employees working on the project were dismissed or reassigned.
Where did it go wrong? Like most failed projects, even this had multiple pain points.
Scope of the project- The company didn't take the time to consider whether its goals were possible. Years of research into this mega project have shown that enough precautions were not taken during its analysis. For example, establishing a real-time global network was impossible because individual countries had different IT infrastructures. In addition, the company should have defined the project's scope more carefully to identify its viability.
Competent project manager- An inexperienced project manager can be the downfall of a large-scale project such as this. If the project had a competent manager, they would have told executives that the Innovate Project was impossible, illustrating the need to examine its feasibility thoroughly.
Collaborating with stakeholders- The project team should have gathered sufficient information from store managers globally to identify project feasibility and determine its scope. Had the team asked whether or not they could address current challenges through this solution, they would have discovered the loopholes in the beginning.
Overall understanding of the goal- The executives understood the importance of the Innovate Project to improve daily operations, but they did not understand that it needed to be run by people with high technology expertise. They also had unrealistic expectations about how quickly the project would yield results, ultimately losing money on it.
More than two decades have passed, and in the meantime, the Information and Communication Technologies have become an essential need of organizations to ensure that they have adequate systems and practices that can enable them to understand their own business, allowing them to monitor the performance of individuals and branches and continuous monitoring of the systemall of which help in effective management of processes.
Several news reports about huge investments by organizations into process automation systems, investments in enterprise application systems and information system architecture, and other such critical functionalities have hit the headlines. The successful ones have had a critical and analytical approach in the planning stage. And McDonald's has been at the forefront of some of these innovations. But unfortunately, the ones that have failedhave had a lack of approach or structure. And such instances, too, have been many.
The Standish Group's 2015 CHAOS Report found that, out of the 50,000 projects under study, only 3% met all three criteriaon time, on budget, and with satisfactory results. The success rate was even lower for big projects- medium-sized projects failed at 91%, large projects at 94%.
Other studies conducted by management consulting firms such as McKinsey & Company, Gallup, and PMI have found abysmal technology project success rates. For instance, a survey by McKinsey found that 17% of tech projects go so badly that they threaten the company's existence. Likewise, a Gallup poll found that only 2.5% of companies complete 100% of their projects.
The circumstances may vary, but the reasons for failure tend to revolve around just two factors- time and money. These factors can make or break any project. It's often a dilemma for companies to provide extra funds or delay a project until the budget improves. If you pump in extra funds, there will be cost overruns. If you delay the project, you might miss your deadline. What do you do?
Research results may be stark, but there's hope if a proper approach is taken. Here are the basics-
Define the project scope and objective- This involves project planning to determine and document a list of specific project goals, tasks, deliverables, costs and deadlines. This "scope statement" or "terms of reference" explains the project's boundaries and establishes the responsibilities of each team member. It also sets up procedures for verification and approval of work after project completion. A clear goal lets everyone know what they're supposed to do and helps them know when they're finished. In addition, this documentation helps the project team remain focused and provides guidelines for making decisions about change requests during the project.
Communicate and collaborate- Communication is the lubricant that keeps a project running smoothly. It helps iron out any unwanted disruption and internal conflicts and ensures that everyone works out the best possible solution for the project. To avoid miscommunication and ensure everyone is on the same page, you need to have frequent status meetings with your team and stakeholders about important milestones, preempted risks, estimated delivery time and updated budget. If the goals of your project are ambiguous or not communicated properly, then the result will be misalignment and a failure in stakeholders' eyes.
Assess risks- Risk management is about looking at your project objectives and figuring out how to address the risks to those objectives from the beginning. A risk is a future occurrence that may or may not happen, but if it does happen, it will impact the objectives of your project. So while project managers or those tasked with overseeing a project may view risks exclusively as threats, they could be positivean opportunity, or negativea threat.
A project schedule is a timetable that shows you're serious about completing your project on time. It organizes resources, tasks and due dates in an ideal sequence to ensure project completion within the deadline. Created during the planning phase, an efficient project schedule includes-
A project budget is a big number for a big job. It includes the money needed to complete all the tasks, activities, and supplies related to one big project. It's a number that all participants, including the stakeholders, agree to stick to as they complete project deliverables. A project budget is also a document that outlines how to use the money. Managers can better track and control costs by identifying how the team will spend money on tasks and activities. Before initiating a project, it's essential to have an approved budget as there is little or no scope to increase the project budget unless requirements change.
In the budget-conscious world of project management, budget overruns have always been a litmus test for project success or failure. In 2020, the COVID-19 pandemic made staying within budget a challengebut those companies and project managers who prudently managed their financial resources amid massive uncertainty ultimately succeeded.
In this new normal, what's the trick to managing project budgets efficiently when uncertainty looms large? A couple of things can help-
Estimate the cost of your project- The overall budget for a project can be estimated in two ways- top-down and bottom-up. The top-down method sets a total sum for the project budget and breaks it down into tasks and activities. The bottom-up method estimates costs for each project task and adds them to find the total project budget. Then, choose an estimating technique for each task. You can use the same method for each project task or different methods based on the type of tasks you are budgeting. If you're using a project management tool, create a budget column to record your estimate for each task or activity.
Know the stake- Most times, stakeholders' expectations may be as clear as mud, often leading to not fully defined goals. Knowing the stake helps you understand what is expected from the project. This way, you can ensure everything is defined by the stakeholder's expectation, including the budget.
Track and monitor project budget- To monitor and manage your project budget, create a budget tracker in your project management system. Despite the importance of regular budget tracking, many project managers (47 per cent) don't have KPIs at their fingertips. Fifty per cent spend more than a day manually aggregating data to get their information. Measuring actual costs against estimated costs will give you an insight into problems like overspend early on, giving you enough room to change course without disruption.
Be flexible and leave room for the unexpected- Consider the wind and weather when deciding on a course of action. When something unexpected happens, get input from all stakeholders involved. And remember always to build a contingency plan. This step is essential to avoid getting caught up in a budgeting mess, as many companies did during the pandemic. Consider all factors, including the price of supplies, resources, labor and financing.
Revisit, review, and re-align- Change is the one constant in all projects. A project can quickly go off the rails when left to run without budget management and re-forecast. Overseeing the budget regularly is essential to prevent it from getting out of hand. Budget overruns are much easier to correct in the early stages of a project than when they become significant.
Global competition is heating up, and operating environments are getting more complex. Technology project leaders are responsible for ensuring that the project development aligns with the company's vision and strategy. To ensure success, projects must be aligned with business strategy. The best way to ensure it is to have a strong project team. If you want to win the race, get a good crew, set a clear course and stay on track. A team that follows a few basic rules-
To succeed, one must have a strong project team that makes sure all decisions are based on openly shared information and that any team member's expertise is not questioned.
To ensure this alignment, it is pertinent to introduce quality software tools from the very beginning of the project.
It is also important to avoid imposing an artificial hierarchy on your project team; remember that you can move faster through your project if everyone works together as equals.
No longer relegated to advanced IT and technology applications, artificial intelligence has made its way into more traditional settings. For example, AI-powered tools can efficiently take over administrative tasks for project managers. Functions like meeting planning, reminders and other administrative tasks that used to plague project managers are now handled by technology. And they do it all without complaining. It gives project managers and team members the time to focus on higher-level tasks that require human intelligence like planning without spending time on tasks that don't.
Three ways in which AI can help project teams-
1. Improved Productivity- Organizations with investment and implementation of artificial intelligence have seen, on average, a 15 per cent improvement in productivity as per a report, AI Transforming the Enterprise (KPMG). In addition, in PMI's AI@Work report, project leaders at the leading edge of artificial intelligence and other technologies frequently report that AI has cut down on time spent monitoring progress, managing documentation, and activity planning.
2. Data Analysis- Data analysis, in addition to estimating costs and schedules, can help project managers steer projects through difficult decisions and unexpected obstacles. Instead of relying on their judgment, managers can use artificial intelligence tools that crunch the data from previous and current projects to provide insights. The real value of artificial intelligence is in the algorithms that support decision making and deliver better results.
3. Ensures Consistency- AI also helps create a knowledge management ecosystem, which helps store what workers know and can be used when they leave or quit their jobs. In addition, AI promotes consistency and quality in project management by centralizing workplace behavioral patterns.
The enterprise requires a holistic approach with true syncing and alignment. Project management, specifically, is a multi-dimensional challenge. It requires teams to align their goals, schedules, and execution. Teams and leaders must coordinate and establish the desired outcome for their part and understand the outcome for the business. That's a lot of moving parts. Companies fail in project execution because they neglect one or more of these parts.
The stakes are high for technology projects, as they're often costly endeavors. Make sure you're using the right approaches to ensure your projects are on time and within budget by syncing all parties involved in your project.
