project management

how to manage project budget

project management, tools, process, plans and project planning tips

Here are rules, processes and tools for project planning and project management.

Large or complex projects in big organizations often require some sort of executive 'sponsorship' or leadership. This is commonly termed 'project sponsorship' (see the separate section about project sponsorship ).

While project management skills are obviously important for project managers, interestingly the methods and tools that project managers use can be helpful for everyone.

A 'task' does not necessarily have to be called a 'project' in order for project management methods to be very useful in its planning and implementation. Even the smallest task can benefit from the use of a well-chosen project management technique or tool, especially in the planning stage.

Any task that requires some preparation to achieve a successful outcome, will probably be done better by using a few project management methods somewhere in the process. Project management methods can help in the planning and managing of all sorts of tasks, especially complex activities.

Project management is chiefly associated with planning and managing change in an organization, but a project can also be something unrelated to business - even a domestic situation, such as moving house, or planning a wedding.

Project management methods and tools can therefore be useful far more widely than people assume.

Project management techniques and project planning tools are useful for any tasks in which different outcomes are possible - where risks of problems and failures exist - and so require planning and assessing options, and organizing activities and resources to deliver a successful result.

Projects can be various shapes and sizes, from the small and straightforward to extremely large and highly complex.

In organizations and businesses, project management can be concerned with anything, particularly introducing or changing things, in any area or function, for example:

  • people, staffing and management
  • products and services
  • materials, manufacturing and production
  • IT and communications
  • plant, vehicles, equipment
  • storage, distribution, logistics
  • buildings and premises
  • finance, administration, acquisition and divestment
  • purchasing
  • sales, selling, marketing
  • human resources development and training
  • customer service and relations
  • quality, health and safety,
  • legal and professional
  • technical, scientific, research and development
  • new business development
  • and anything else which needs planning and managing within organizations.

Successful project management, for projects large or small, tends to follow the process outlined below.

The same principles, used selectively and appropriately, also apply to smaller tasks.

Project management techniques are not just for project managers - they are available for anyone to use.

project management process

1 - agree precise specification (terms of reference) for the project

Often called the project 'terms of reference', the project specification should be an accurate description of what the project aims to achieve, and the criteria and flexibilities involved, its parameters, scope, range, outputs, sources, participants, budgets and timescales (beware - see note below about planning timescales).

Typically and prior to the project's formal establishment the project 'terms of reference' are produced or at least drafted at a fundamental level by a 'project sponsor', or 'executive in charge' (of the project). Often such an initial top-level general project description (a 'business case' basically) is required for the project to be justified, approved, and funded at a corporate level, prior to the commencement of detailed project planning. The project manager, typically appointed by the 'project sponsor' or the 'executive in charge', may be involved to varying degrees in the drafting of the initial corporate project description or business case. It is not unusual for a project manager to first be unofficially appointed to the project management role, pending corporate approval of the project itself and the formal appointment of the project manager. The project sponsor is usually a more senior manager or executive than the project manager, although not necessarily the 'boss' or senior up-line manager to which the project manager normally reports. All substantial projects generally require a formal and senior 'project sponsor' or 'executive in charge', although minor projects forming part of a manager's conventional duties, and not requiring specific board or corporate approval, may not require a 'project sponsor' as such, in which case executive accountability for the project and the project manager belongs to the normal up-line reporting manager/executive.

Usually the project manager must consult with others (especially the project sponsor) and then agree the detailed project specification with superiors and/or relevant authorities. The specification may involve several drafts before it is agreed. A project specification is essential in that it creates a measurable accountability for anyone wishing at any time to assess how the project is going, or its success on completion. Project terms of reference also provide an essential discipline and framework to keep the project on track, and concerned with the original agreed aims and parameters. A properly formulated and agreed project specification also protects the project manager from being held to account for issues that are outside the original scope of the project or beyond the project manager's control.

This is the stage to agree special conditions or exceptions with those in authority. Once you've published the terms of reference you have created a very firm set of expectations by which you will be judged. So if you have any concerns, or want to renegotiate, now's the time to do it.

The largest projects can require several weeks to produce and agree project terms of reference. Most normal business projects however require a few days thinking and consulting to produce a suitable project specification. Establishing and agreeing a project specification is an important process even if your task is simple one.

A template for a project specification:

  1. Describe purpose, aims and deliverables.
  2. State parameters (timescales, budgets, range, scope, territory, authority).
  3. State people involved and the way the team will work (frequency of meetings, decision-making process).
  4. Establish 'break-points' at which to review and check progress, and how progress and results will be measured.

Separately the acronym BOSCARDET provides a useful example structure for Terms of Reference headings/sections:

Background, Objectives, Scope, Constraints, Assumptions, Reporting, Dependencies, Estimates, Timescales. This structure contains no specific heading for costs/budgets - these considerations can be included within 'Constraints' or 'Estimates'.

Since projects (and other activities requiring Terms of Reference) vary considerably there is no standard universal structure for a Terms of Reference document. The responsibility lies with the project manager or leader to ensure all relevant and necessary issues are included, and this local interpretation tends to imply TOR headings and document structure. Brainstorming can be a helpful process by which all relevant Terms of Reference criteria can be indentified and structured.

Organizations may have standard TOR structures, such as the BOSCARDET example, which it is sensible to use where applicable, mindful of risks of omission or over-complication that can arise when following standard practice. See also Terms of Reference in the business dictionary section.

2 - plan the project

Plan the various stages and activities of the project. Where possible (and certainly where necessary) involve your team in the planning. A useful tip is to work backwards from the end aim, identifying all the things that need to be put in place and done, in reverse order. Additionally, from the bare beginnings of the project, use brainstorming (noting ideas and points at random - typically with a project team), to help gather points and issues and to explore innovations and ideas. Fishbone diagrams are also useful for brainstorming and identifying causal factors which might otherwise be forgotten. For complex projects, or when you lack experience of the issues, involve others in the brainstorming process. Thereafter it's a question of putting the issues in the right order, and establishing relationships and links between each issue. Complex projects will have a number of activities running in parallel. Some parts of the project will need other parts of the project to be completed before they can begin or progress. Such 'interdependent' parts of a project need particularly careful consideration and planning. Some projects will require a feasibility stage before the completion of a detailed plan. Gantt Charts and Critical Path Analysis Flow Diagrams are two commonly used tools for detailed project management planning, enabling scheduling, costing and budgeting and other financials, and project management and reporting. See also project sponsorship to understand how project sponsorship may be integrated with the project manager's responsibilities for planning.

project timescales and costs

Most projects come in late - that's just the way it is - so don't plan a timescale that is over-ambitious. Ideally plan for some slippage. If you have been given an fixed deadline, plan to meet it earlier, and work back from that earlier date. Build some slippage or leeway into each phase of the project. Err on the side of caution where you can. Projects which slip back and are delivered late, or which run over budget or fail to meet other financial requirements often cause significant problems. Many planners are put under pressure to deliver projects sooner and more cost-effectively than is realistic. Ambition and aiming high are good attitudes, but planning without proper prudence and responsibility is daft. Investors and executives tend rarely to question an over-ambitious plan, but they will quickly make very ruthless decisions when any overly ambitious project starts to fail. Exercising a little realism at the outset of a project regarding financials and timescales can save an enormous amount of trouble later.

the project team

Another important part of the planning stage is picking your team. Take great care, especially if you have team-members imposed on you by the project brief. Selecting and gaining commitment from the best team members - whether directly employed, freelance, contractors, suppliers, consultants or other partners - is crucial to the quality of the project, and the ease with which you are able to manage it. Generally try to establish your team as soon as possible. Identifying or appointing one or two people even during the terms of reference stage is possible sometimes. Appointing the team early maximises their ownership and buy-in to the project, and maximises what they can contribute. But be very wary of appointing people before you are sure how good they are, and not until they have committed themselves to the project upon terms that are clearly understood and acceptable. Don't imagine that teams need to be full of paid and official project team members. Some of the most valuable team members are informal advisors, mentors, helpers, who want nothing other than to be involved and a few words of thanks. Project management on a tight budget can be a lonely business - get some help from good people you can trust, whatever the budget.

To plan and manage large complex projects with various parallel and dependent activities you will need to put together a 'Critical Path Analysis' and a spreadsheet on MS Excel or equivalent. Critical Path Analysis will show you the order in which tasks must be performed, and the relative importance of tasks. Some tasks can appear small and insignificant when they might actually be hugely influential in enabling much bigger activities to proceed or give best results. A Gantt chart is a useful way of showing blocks of activities over time and at a given cost and for managing the project and its costs along the way.

Various project management software is available, much of which is useful, but before trying it you should understand and concentrate on developing the pure project management skills, which are described in this process. The best software in the world will not help you if you can't do the basic things.

See also project sponsorship for detailed explanation of how the project sponsor role may be involved with the project team.

project management tools

Here are examples and explanations of four commonly used tools in project planning and project management, namely: Brainstorming, Fishbone Diagrams, Critical Path Analysis Flow Diagrams, and Gantt Charts. Additionally and separately see business process modelling and quality management. which contain related tools and methods aside from the main project management models shown below.

The tools here each have their strengths and particular purposes, summarised as a basic guide in the matrix below.


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