Project Management: Costs and Values

Introduction

The challenges that lie ahead of a project participant or, worse yet, a project leader, are numerous and unpredictable. However, the ones related to the identification of the future expenses and the corresponding allocation of the company’s finances are by far the most complicated ones. The complexities are a part and parcel of the twofold nature of the project. Detailing the phenomenon above, one must address the necessity to both reduce costs and enhance value (Wu & Low, 2013). Unless an elaborate framework that serves as the basis for the future decision-making process is provided, the opportunities for reducing costs are going to shrink greatly.

A range of tools for managing the cost-and-value related issues of a project have been designed, yet the Work Breakdown Structure (WBS) has been lauded as the most efficient one so far. Although being rather basic, WBS provides the project manager with a clear overview of the key stages to be completed and, therefore, serves as the crucial instrument in identifying the approaches to achieve the essential objectives. WBS is represented by a chart that contains a list of the critical items that the project consists of and details the information regarding the steps to be completed, such as the deadline, the relationships between the elements, etc. (Shang, 2013).

After managing the project related to marketing a new mobile application, I must admit that, being admittedly complicated, the project management process can be improved significantly by introducing WBS into it. Helping reduce costs and avoid expenses, WBS serves as a perfect tool for managing the financial aspects of the project. Thus, the packages that provide tools for designing WBS play a big part in the project design.

Work Packages and WBS

The phenomenon of WBS is linked closely to the concept of a work package. The latter is typically viewed as an element of WBS and defined as the means of locating the essential stages of the project. Differently put, work Package is the set of tools that serve the course of detailing the objectives to be completed in order to finish the project and retrieve the necessary results (Ren, Cao, & Hau, 2015).

It would be wrong to assume that a Work Package merely provides a list of objectives. Instead, it serves as the platform for linking the goals of the project, the methods that will have to be used in the process, and the following measurement and evaluation of the project outcomes. It should be borne in mind that a Work Package delineates the objectives, methods, and assessment tools for both separate stage and the entire project, in general.

Herein lies the importance of applying Work Packages to the design of a project; they serve as the tools for identifying the connection between different aspects of the task and allowing viewing it as a whole. For instance, in the project that I managed, the Work Package was used actively to create the environment, in which the actions of the participants could be coordinated. As a result, the results of the target audience analysis were linked to the target market identification immediately to work on the brand image and the tools that it could be designed with.

Therefore, the importance of a Work Package in the creation and use of WBS cannot possibly be underrated. The Work Package serves as a building block for creating the WBS since it provides ample opportunities for planning the concept of the project to be completed. Being an essential part of the WBS construction, Work Package must be identified carefully and detailed to the participants so that the corresponding roles and responsibilities could be assigned to each and clarified properly.

Establishing a Cost and Schedule Performance Measurement Baseline

The concept of the Performance Measurement Baseline (PMB), in fact, incorporates three essential elements, which are technical issues, the schedule, and the costs to be taken in the course of the project completion (Gharaibeh, 2014). In other words, PMB is a combination of work packages that are linked to the financial processes related to the project (Mulenburg, 2011).

In my experience, the process of establishing a cost-and-schedule PMB was fraught with numerous difficulties as I did not have a proper forecasting strategy at the time and, therefore, could not predict the financial impediments to the success of the project. Therefore, a range of obstacles emerging on the way of the project participants were rather unexpected and often required that the key resources should be used to ensure the safety of the project and completion of its goals.

In hindsight, as a project manager, I should have arranged the work packages used in the process in the order that they had to be. Instead, I laid out the key objectives and listed the tools that could be used to attain them without arranging the tasks correspondingly. In other words, I mistakenly assumed that the participants were aware of the expectations that I had for the end results, whereas, in reality, each of the members should have been assigned with the task that had to be completed by a specific deadline.

EMV as the Means of Understanding the Project Status: Examples

Apart from spelling out the goals of the project, one should also consider the tools that will help track the completion of the crucial objectives and, therefore, evaluate the overall progress of the work. For these purposes, the Earned Value Management (EMV) tools are used. Helping identify the financial success of the project and the amount of revenues received so far, EMV has to be incorporated into the framework of a project so that the manager could make sure that no significant expenses are taken and that the organizational resources are used in a sustainable manner.

For instance, when heading the marketing project mentioned above, I promoted the decision tree framework as the way of reducing waste and using the available resources in a sensible manner. Particularly, the array of possible solutions was identified and then followed by a detailed analysis of the estimated value that each of the choices will bring. The option that promised the greatest returns and permitted avoiding the largest number of threats was chosen as the route to be taken. The identified forecasting technique worked rather well in the context of the marketing project mentioned above, thus, safeguarding the participants from making the choices that would ultimately lead to a failure. Therefore, the EMV tools must be viewed as a crucial addition to the chosen framework.

Project Control Charts as the Means of Locating the Project Status and Present Value

Apart from striving to reduce expenses, a project manager must maintain control over the process and supervise it closely. This is the point at which Project Control Charts (PCC) factor in. PCC can be interpreted as the key diagnosing tools since they serve the purpose of identifying the current status of the project and reporting about the costs taken so far, as well as the number of resources at the participants’ disposal.

As a former manager of a project, I must admit that the application of project control charts does help pinpoint the current stage of its completion and, therefore, receive instructions concerning the further course to be taken. Although PCC should not be viewed as a silver bullet against possible expenses, they, nevertheless, allows for a rapid location of the objectives that have been completed so far, as well as the next goals to strive toward. As a result, unnecessary spending of resources can be prevented successfully. More importantly, the current trends in the project spending can be identified. As a result, the factors affecting the changes in the cost management can be isolated and either enhanced (if positive) or eradicated (if negative).

Change Management Process for a Successful Project

As the information above shows, the members of a project have to be ready to a rapid change that may alter the strategy currently used by the participants. Consequently, the manager of a project should design the change management strategy that will serve as the coping mechanism that will help the participants adjust to the new environment and deliver the performance of the same quality as before the change. In order to keep the workflow uninterrupted and encourage the staff members to view the change process as a gateway to new opportunities, one should consider applying Kotter’s eight-step change model to the project (Lanning, 2014). Allowing for a rapid reduction of waste and, therefore, costs, the identified approach serves as a perfect foil for increasing quality and reducing waste (see Fig. 1).

Kotter’s Eight-Step Change Model
Figure 1. Kotter’s Eight-Step Change Model (Lanning, 2014).

The tool depicted above can be considered one of the most common yet also the most effective means of managing change in the context of a project. The framework was used successfully when managing the process of marketing and branding a new product. Going into detail, one should bring up the fact that the model served as a perfect method of introducing the change gradually so that the target audience could evaluate the change and appreciate the effort made by the organization.

Conclusion

As both my personal experience and an overview of the recent studies on the subject matter have shown, managing cost and reducing the expenses taken when completing a project is one of the most difficult tasks that the members thereof face; however, the application of WBS as the means of outlining the essential project stages and detailing the objectives to be met in the process is likely to serve as the means of simplifying the task.

Providing the project manager with a substantial number of tools that rationalize the processes, reducing costs and promoting a cost-efficient approach, WBS should be viewed as an integral part of planning the task and locating the roles and responsibilities to be taken by the participants. Therefore, WBS should be promoted actively as one of the crucial concepts to be incorporated into the project management.

Reference List

Gharaibeh, H. M. (2014) Developing a scoring model to evaluate project management software packages based on ISO/IEC software evaluation criterion. Journal of Software Engineering and Applications, 7(1), 27-41.

Lanning, H. (2014). Planning and implementing change in organizations. New York, NY: GRIN Verlag.

Mulenburg, G. (2011). Work breakdown structures: The foundation for project management excellence by Eric S.Norman, Shelly A. Brotherton, and Robert T. Fried. Journal of Product Innovation Management, 27(5), 779-781.

Ren, N., Cao,M., & Han, B. (2015). Research on shipbuilding project WBS optimization based on DSM. Journal of Coastal Research, Special Issue, 73(1), 647-651.

Shang, S. (2013). Incomplete decomposition and optimal partition in WBS. International Journal of Advancements in Computing Technology(IJACT), 5(4), 907=912.

Wu, P., & Low, S. P. (2013). Lean and cleaner production: Applications in prefabrication to reduce carbon emissions. New York, NY: Springer Science & Business Media.