This article is reprinted from The Consulting Journal
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Methods: Project styles (2)
by David Blakey
The second article looks at the implications of different project styles.
[Monday 14 July 2003]
In the previous article, we saw two different companies who have time as a major constraint on their projects to bring new services to market. We saw how one company has a sequential style, building each new service component in turn, while the second company has an iterative style, building prototypes of all new components and then developing all these components in several stages. We saw how the first company will allow its budgets to overrun if projects may not be completed in time, and how the second will accept lower quality, going to market with services that are functional but incomplete.
In this article, we shall look at the effects that these differing styles can have on consulting assignments. We shall consider only those projects in which time is a major constraint.
We shall consider project management assignments first. These are often not true consulting assignments, but many consultants do work as project managers. Before beginning a project, it is useful for a project manager to understand the approach that the client will take if the project gets into trouble. It is unlikely that the project manager will be allowed any extra time in which to finish the project, so either quality will fall or the budget will rise. The project manager should know not only which of these the client would choose but also what the consequences of that choice will be.
In consulting assignments, we may plan projects rather than manage them. It is useful that we are able to consider all the results of our planning. We shall look at each of the two styles of project.
If the client is prepared to terminate a project that runs into trouble and to accept the products that it has produced so far, then we should set up projects so that they can produce a complete set of products, even if the quality of those products is below our expectations.
This means that we should consider setting up projects that work in an iterative manner, so that we develop working products early in the projects and then continue to add quality to those products throughout the projects. If the client terminates a project early, then there will be a complete set of products, even though those products may be expensive to operate. If the products are computer-based, then the human-machine interfaces may not work smoothly and may require more human intervention than was planned. Nevertheless, those products can be made to work.
Consultants need to consider the costs of making the products work. In some cases, this may mean using more staff than intended or providing more training to fill the gaps in the functions of the products. In terms of an overall programme to change business processes, consultants need to consider the costs of:
All of this means that there must be a finance plan for getting the products to market if the development project fails. It may be possible to finance the improvement project from revenues from initial sales of the product. All of this will need to be agreed with the client's marketing division, so that the objectives for the new project are known.
If the client prefers to increase the project budget in order to get the planned quality, then our considerations need to be different. The possibility of a series of budget increases, leading to a runaway project, is greater with this approach than with the approach of terminating the development project and then initiating an improvement project.
Consider this. A client has a project with a budget of $1 million that is expected to yield $2 million of value. Whatever the value is, it will have to be greater than $1 million in order for the client to consider doing the project. If the project cannot be completed within that budget, the $1 million has been sunk. If the project is terminated, the client will receive zero additional value. If it continues, the client will get $2 million of additional value. So increasing the budget to $1.2 million means that the client will get $2 million of value that they would not otherwise get, for $200,000.
This is a valid way of looking at the project budget, provided that the $2 million of value - or, at least, more than $1.2 million - will be gained by completing the project. Often, however, the estimate of the value is optimistic.
Consultants should take a cautious view of such estimates.
It should be noted that a client who prefers to increase the project budget may use an iterative project style. The budget increase approach will always be the result of a sequential style and a constraint of time, but it is not exclusive to that style.
There are opportunities here for consultants to advise clients on a strategy for projects. Many consulting assignments involve consultants widening their clients' vision, by describing the options available and the likely outcomes of those options. This applies to project management. Many clients set up their projects in exactly the same way, every time. Many clients do not seem to be aware that there are alternative styles and methods.
The opinions expressed are solely those of the author.
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