How Project Managers Manage Virtual Teams

managing virtual teams successfully — **Managing Virtual Teams**

With more companies expanding globally, the trend to work on projects with virtual team members who are remote workers, is growing. I have now worked on a project spanning three countries across three different time-zones. Despite having cloud-based tools for project plan sharing and logging test defects, the latest communication technology like Skype for Business in addition to everyday emails, it has been severely challenging.

Challenges in handling virtual teams

Project managers face a variety of challenges when handling virtual team members who work from different locations, who are permanent or freelance workers, who come from different backgrounds and cultures. It can be difficult to schedule a meeting with all members at a fixed time, especially with a 8 hour time-zone difference as was the case with my project. It impacts the decision-making process negatively.

It can be difficult to communicate a message correctly to remote workers. They may fail to understand the context or cannot grasp specific issues related to a project. They don’t always appreciate the consequences if they fail to have a same-day turnaround, that it can cause 2-3 days delays.

A risk I had to manage through-out was to keep team members aligned in terms of the project schedule, the latest decisions, new project baselines etc. Due to the fact that one team worked during another team’s night time and visa versa, it meant that any requests sent via email had to be very clear in terms of context and what was expected. If the receiver of the email had a question, they usually had to wait another day to receive an answer. This caused repeated delays in getting multiple requests fulfilled. As the project progressed, and especially during testing when team members in different time zones had to work together, we had to resort to different work hours to create more of an overlap between team members and to enhance the communication process and response times to issues and defects.

How to manage remote teams effectively

It’s important for project managers to effectively manage both remote and on-site team members to achieve project success. Have a look at the infographic below from Wrike Software, providing a checklist for managing Virtual Teams.

Infographic brought to you by Wrike

Another recommended resource for Virtual Teams:

“The Ultimate List of Virtual Team Building Activities”

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May 10, 2017 Linky

How to Use a WBS as a Team Build Event

Most project managers will know that compiling a Work Breakdown Structure (WBS) is one of the key activities of the Project Planning phase. To discover more about the benefits of a WBS, the different types of WBS and how much time is required to develop the WBS, read Project Planning – Work Breakdown Structure (WBS)

The purpose of this article is to show you how you can use the WBS as a team building exercise even though it’s considered to be a regular project activity.

Teamwork

As a best practice rule you don’t construct the WBS by yourself, you let the people who are doing the work define the work. Let them see how their deliverables begin to translate to assignable activities. This is an excellent opportunity for building trust and relationships through teamwork.

Invite the appropriate participants. This means someone from each group participating in the project. Since this could be a very long work session or a series of work sessions, try to schedule them with an awareness of your team members’ availability and other work commitments. It is recommended to have refreshments that will fuel the brain power!

Review the scope. If this is the first time the team is hearing the formal scope, this will result in lively discussion. Encourage questions and ‘what-if’ scenarios. Have open discussions about the scope to strengthen communications and achieve alignment among team members.

WBS and Deliverables

Ask individuals to work together to identify the key deliverables. Use the ‘sticky note’ approach. This means that you will give the team post-it notes or similar pieces of paper that can be written on and moved around. This allows the team to write deliverables (and next activities) on paper and position them at various locations on the proposed WBS.

Once the deliverables seem firm, have the team work on the lower levels. Have the group or groups that own each deliverable (or a portion thereof) break the work down further. Encourage detail. You want the end result to be assignable and measurable work.

Make sure that good notes are taken during this session. What we construct during one meeting makes perfect sense at the time. Later, details may be forgotten.

Take some time away from the WBS and then revisit it. Walk through it again and make sure it still makes sense. Have team members present their sections to the rest of the team for review and discussion. This helps build an understanding of the entire work effort.

Now you have built a traditional work breakdown structure that the team understands and through your work together you have a built a stronger team. That is why WBS can also mean We Build Strength!

If you are starting with a new project and you have a WBS coming up as part of the project planning, I strongly recommend you look into WBS Coach from PMStudent. What to expect from this course:

You will end with a proven and repeatable approach to planning and controlling your projects;
You’ll be able to translate what your project sponsor wants into what you and your team must do to meet project objectives
You’ll discover how to structure every project so it’s clearly defined.
It will make creating your schedule and budget straightforward.

Don’t delay, try it out today!

April 19, 2017February 23, 2018 Linky

Project Success Story: Implementing a Customer-Centric Strategic Project the Agile Way

This story from Lance Hamel, is about a complex Customer-centric strategic project to improve customer experience in the Retail Industry that took 7 months to complete. The complexity was due to having to implement an unknown cloud-based solution using an agile approach in a traditional waterfall environment, with an unknown vendor. The systems integrator promised technical skills some of which they didn’t have, and subsequently had to be outsourced. That delay caused increased pressure towards the end of the project.

Going Agile

After less successful prior attempts, the team was mobilised quickly and was able to deliver a minimum viable product (MVP) after 6 months. This was an early win for the business and it took about one third of the time it normally takes to implement a new solution.

The Business had an active and involved project sponsor who was also the product owner. Through-out the life-cycle of project, following an Agile approach, the project team was aligned on a daily basis. The Sponsor had a briefing 2-3 times a week, when she did regular prioritisation with her team; therefore there was a close alignment between business and the project team.

The vendor was leading the agile process. They had a very transparent way of working between IT and Business,. The right stakeholders were involved with sprint planning, backlog grooming, reviews and briefings. They also attended sprint reviews/retrospectives in a continuous improvement process.

New way to manage projects

There was a complete shift in the way they managed the project. Instead of …..

Read more ….. for many lessons learned and key take-aways for future projects.

April 3, 2017March 31, 2019 Linky

Certifications for Professional Project Managers

By Linky van der Merwe

In a previous article about being a professional project manager, we explained the characteristics of a professional, the type of qualifications within the profession as well as the benefits to the individual and the organisation. This article will explain the main project management bodies, as well as the certifications on offer.

Who are the recognised Project Management Bodies?

There are three main recognised bodies for project management who provide a range of project management best-practice methodology, principles, qualifications, certifications and professional membership.

There is considerable overlap with what each of the three Bodies considers as best-practice project management. The differences tends to be more related to the level, focus, breadth and depth of project management principles, processes, techniques and methods rather than there being any fundamentally conflicting views about best-practice project management.

The three main recognised project management bodies are:

Project Management Institute (PMI) – The PMI is the largest global membership association for project management professionals. At the heart of the PMI philosophy is ‘A Guide to the Project Management Body of Knowledge (PMBOK Guide)’, comprising of core project management processes and techniques. Training is delivered through PMI Registered Education Providers (REP). PMI is headquartered in the USA.
Association for Project Management (APM) – The APM’s mission statement is to develop and promote the professional disciplines of project and programme management for the public benefit across all sectors of industry. At the heart of APM ethos is the APM Body of Knowledge (APM BoK), comprising fifty-two knowledge areas required to manage any successful project. APM BoK provides a framework and key principles for managing projects. Training and examinations are delivered through APM Accredited Training Providers. APM is headquartered in the UK.
Association for Project Management Group (APMG) – The APMG is the registered examination institute and administer qualifications, certifications and accreditations for Axelos on behalf of The Cabinet Office. The Cabinet Office is the owner of the PRINCE2 method for managing projects and MSP for managing programmes. PRINCE2 is an acronym for Projects In Controlled Environments. MSP is an acronym for Managing Successful Programmes.PRINCE2 is a structured process-based method for effective project management and a de facto standard used extensively by the UK Government and is increasingly used in the private sector.

Certifications offered

The most well-known certifications in the project management marketplace today are awarded by these three institutions.

1. PMI®: Project Management Institute

PMI is the world’s leading not-for-profit membership association for the project management profession, with more than half a million members and credential holders in 185 countries. Their worldwide advocacy for project management is supported by a globally-recognized standards and credentials, an extensive research program, and professional development opportunities.

CAPM^®– Certified Associate in Project Management
PMP^® – Project Management Professional
PgMP^® – Program Management Professional
PMI-RMP^® – Risk Management Professional
PMI-SP^® – Scheduling Professional

2. APM: Association for Project Management

As the largest independent professional body of its kind in Europe, their membership extends to more than 20 000 individual and 500 corporate members throughout the UK and abroad.

Introductory Certificate in Project Management
APMP
APM Practitioner
CPM: Certificated Project Manager
APM Risk Certificate – Level 1
APM Risk Certificate – Level 2
Registered Project Professional (RPP)

3. APMG-UK:

APMG-UK is the United Kingdom arm of APMG-International, a global Examination Institute accredited by The APM Group. APMG-UK specialises in the accreditation and certification of organisations, processes and people, within a range of industries and management disciplines and is currently the Official Accreditor of the Office of Government Commerce (OGC).

Agile Project Management
APMP Foundation, Practitioner, Professional Bid & Proposal Management
CHAMPS2 – Change Management Foundation
CHAMPS2 – Change Management Practitioner
Earned Value Management (EVM) Certification
PRINCE2® Foundation
PRINCE2® Practitioner
PPS – Programme and Project Sponsorship
M_o_R® Foundation and Practitioner (Management of Risk)
MSP® Foundation, Practitioner, Advanced Practitioner Managing Successful Programmes

4. IPMA®: International Project Management Association

The IPMA® is a world leading, non-profit making project management organisation which represents more than 50 project management associations from all continents of the world. The organisation actively promotes project management to businesses and organisations around the world in order to increase the recognition of the profession.

IPMA: International Project Management Association
Level A – Certified Projects Director
Level B – Certified Senior Project Manager
Level C – Certified Project Manager
Level D – Certified Project Manager Associate

5. Six Sigma

Six Sigma is a business management strategy originally developed by Motorola, USA in 1981. (Unfortunately, there is no recognised Six Sigma accreditation body or single organization which oversees a standard body of knowledge or standardized Six Sigma tests and certification).

Six Sigma Certifications
Yellow Belt Certification
Green Belt Certification
Black Belt Certification
Master Black Belt Certification

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March 29, 2017 Linky

Are you a Professional Project Manager?

By Linky van der Merwe

What does a professional project manager really mean? Defined simply it means the level of excellence or competence that is expected of a professional.

Next you want to know what are the characteristics of a professional project manager.

Characteristics of a Professional

In a profession, people would be expected to have characteristics like:

Advanced education and expertise
Membership to professional bodies
Implicit adoption of that organisation’s ethics
Commitment to continual professional development and learning
Sense of responsibility to the wider public
Consistent exercise of discretion and judgement

Qualified or not

Professionals would have a qualification, an accreditation and/or certification. Let’s look at the definitions to be clear:

Qualification – A learning outcome as a result of formal tuition. Diplomas, Degrees and post-graduate degrees in Project Management are available from Training Institutions or at Universities and Business Schools nationally in your country or even internationally.

Accreditation – Recognition provided to a candidate in accordance with the criteria of a specific organisation or institution typically based on a combination of knowledge and demonstrated ability.

Certification – Certification is often needed to work in some trades. It usually means an individual has passed a trade test administered by a recognised authority. Possessing a certificate of completion of a course is typically not the same as being certified. Examples of popular certifications are PMP, Prince2 and Agile Practitioner.

Registration – A Professional Registration gives a license to operate and to practice within a scope of operation and to take responsibility for the work. It provides authority to perform a certain scope of work without supervision. The registration is typically a statutory requirement.

Designation – In some countries a designation is a job title. It’s the title conferred by a recognised professional body that could be statutory or non-statutory, based on certain criteria defined by the professional body.

What are the benefits of achieving a qualification or certification?

Both an individual and the organisation they work for should benefit from an individual achieving a project management qualification or certification. Dependent upon the nature of the organisation and its business, some of the key potential benefits are as follows:

Benefits to the organisation:

Best-practice knowledge, skills, tools and techniques acquired through the training necessary to achieve a qualification are deployed back in the work place.
Improved capability and competence to deliver an organisation’s programmes or projects, resulting in increasing customer satisfaction and reputation, saving costs, utilising resources more effectively and positively impacting morale.
Supports individuals with their personal and career development planning. This in turn can result in increased appreciation of, and commitment to the organisation, by the individual.
Catalyses improvements to an organisation’s own project or programme management methods and processes through gaining an understanding of best-practice.
Enhances the credibility of the organisation to own clients and customers through having project or programme staff that have achieved externally recognised certification or qualification.
External recognition of an individual’s project management knowledge and capabilities indicating a core level of embedded understanding, which is then likely to be applied back in the work place.

Benefits to the individual:

Provides the individual with additional and portable knowledge, skills, tools and techniques in order to be more successful in managing and delivering projects or programmes.
Enhances career development prospects through having achieved an externally recognized qualification or certification.
Demonstrates to the employer, the individual’s desire, commitment and capabilities to learn and improve themselves, and thus improving an individual’s reputation within the organisation.
Provides an external industry-wide benchmark of an individual’s project management knowledge and competence.

One of the biggest compliments a professional project manager can receive, is when stakeholders (customers) call you back by name to do additional projects for them.

It is my belief that you are only as good as your last project; therefore project managers should always strive to be professional and competent on every project, since you never know if it is your last…

Please comment and share if you have had good experiences with ‘last’ projects.

March 15, 2017 Linky

Project Managers Discover Top Time Management Tips and Techniques

An important responsibility of a project manager is to manage time as a constraint which involves keeping an eye on the project schedule, ensuring team members are delivering on milestones, while having to keep track of your own time spent as well.

While your role is varied since you need to cater for every aspect of the project from cost management to human resource management, you are accountable for the overall delivery including all tasks tied to the project. This does not mean that the project manager must micro-manage everyone on the team as individuals are primarily responsible for various aspects of the project.

However, we find that a number of project managers spend time doing too much management and fire-fighting and then they are left with little or no time to work on strategy, leading the team and focusing on tasks that only they can perform. An efficient project manager, therefore, should be able to effectively develop strategies for his/her team and perform oversight functions effectively all while being on schedule.

To support you to be more professional as a project manager, here is an infographic with very helpful time management tips with complements from Nutcache.

http://www.nutcache.com/blog/time-management-prerequisite-great-project-managers-infographic/

February 13, 2017April 11, 2022 Linky

Is Project Management Success on the Rise?

The more mature companies are with project management, the more likely they are to achieve their goals of adding value, advancing strategies and to increase competitive advantage.

This is according to the PMI Pulse of the Profession Report for 2017, a global survey of project management practitioners that charts the major trends for project management now and in the future.

The results in the Pulse of the Profession indicates that more organizations recognize the strategic value of projects and programs. There’s a growing focus on talent management, executive sponsorship, and benefits realization management. At the same time, organizations are searching for ways to be more agile, customer focused, and competitive and this is a big driver for executive leaders, PMO directors and project teams.

There’s a growing need for a culture of engagement, learning, and innovation. To make progress the focus should remain on developing project management talent, managing project benefits, establishing PMO’s, driving executive sponsorship and by addressing agile approaches.

To read the full Report Pulse of the Profession 2017: Success rates rise, visit PMI.org.

February 7, 2017 Linky

Looking for a Project Management Training Service Provider?

Review Article

In the dynamic world we live in today, learning policies within organisations are evolving at rapid speed in response to emerging technologies. Traditional, formal and scheduled training methods have given way to more informal and on-demand forms of learning, with an increasing accent on blended and e-learning delivery modes. Continuous training and collaboration helps organizations stay at the cutting-edge of change.

Global Training Provider

KnowledgeHut is a Global leader in online and classroom training for on-demand certifications like PMP, PMI-ACP, MS Project, PRINCE2 and more. As an industry-leading training company operating across 70 countries and 6 continents, their courses are aimed at delivering measurable improvements in business performance and productivity. Training is delivered across the US, Canada , Germany, Sweden, Netherlands, UK, Ireland, APAC and SE Asia.

Training with KnowledgeHut — Agile and Scrum training in Sydney on 1st February’17

Professionals who have completed their courses are equipped with state-of-the-art knowledge and technical skills that enable them to stay at the forefront of their careers.

KnowledgeHut works with the Global Blended Model of Approach (GBMA), an effective method that makes training and learning easier for individuals and organizations in the industry. This methodology works through a blend of extensive online training in tandem with traditional classroom based learning. Participants have consistently achieved positive training results, with a shorter learning curve and significantly higher retention of the subject matter.

Specialties

KnowledgeHut is a registered Education Provider (REP) of Scrum Alliance, PMI and IIBA. It’s also an ATP of EC-Council, CompTIA, APMG for PRINCE2 training, as well as a certified partner of AXELOS and the disciplined Agile consortium and Scaled Agile Inc.

KnowledgeHut offers an extensive selection of vendor-authorized training and certifications for PMI, Microsoft, APMG, CompTIA, and Scrum Alliance among many others.

Close the skills gap

They specialize in training, consulting, Scrum Master Training, Certification courses as well as e-Learning. Have a look at their Infographic on the Future of IT.

If you want to train with a company whose mission it is to empower human capital through industry accredited, nationally and internationally recognized courses to close the skill gap, visit KnowledgeHut and find the course that will make you more successful in 2017 and beyond.

November 24, 2016December 22, 2018 Linky

Innovation in Project Management

By Linky van der Merwe

According to Forbes.com innovation needs to be seen as a discipline of learning to use the right methods, tools and approaches at the right times, in other words: “learning to harness innovation”.

Harnessing the Power of Innovation was the theme of the latest Project Management South Africa (PMSA) National Conference that was held from 9-11 November in Johannesburg. The call is often for creativity and a shift in culture which will enable leaders and employees to optimize change. The question on how to achieve this was answered by a number of excellent speakers on the topic of Innovation!

Project management often provides the ideal environment in which to harness innovation. It requires project managers’ skills sets to include the ability to encourage and develop creative thinking to achieve results.

The keynote speaker, Vasitha Pather, set out to demystify innovation by presenting a view of the bigger picture thinking required to integrate innovation into our projects. She helped project managers to think how we create an environment for innovation to take root and flourish.

Listening

According to Vasitha listening creates a safe space and increases trust. In the context of listening we enter in a psychological state where we are more receptive to be creative. A key ingredient of innovation is to slow down in order to move fast.

Find your flow

In sport they talk about getting into the zone, where they describe an altered state of consciousness, an increased mental state and even a heightened state of enjoyment.

We need to be in environments that are fun and innovative. As project managers and change managers we need to enable that through conversation, having fun and giving meaning to work. Let people engage all their senses, because we think with our whole body. We’ll immerse ourselves in a state of productivity that can increase our productivity by up to 60%.

Social sensitivity

Diversity is a core aspect of innovation. It helps to have different perspectives, to care about each other and to have authentic leaders.

Vasitha also referred to the work of Peter Block, called Social Fabric which is centered around the need to belong. He believes in building a community that gives a sense of connectedness, where collaboration is a choice and people realise that they can create more together than on their own.

For project managers who value high-performing teams it’s good to encourage a culture of appreciation. Reward and acknowledge people by their name, give empathy that will increase the feeling of connectedness and will contribute to people feeling safe and connected.

Where projects often consist of self-organising teams, project managers need to build resilience in the system to handle the uncertainty. It’s important to remember that you cannot innovate without disruption. Where people play, insights and knowledge come out, because you give people a higher experience, while staying productive.
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October 24, 2016December 22, 2018 Linky

How to Structure and Build a Project Team

By Linky van der Merwe

New project managers will find it challenging to organize, manage and lead a project team. The project team consists of people with assigned roles and responsibilities for completing the project. Project team members have varied skill sets and they may be assigned full or part-time. Team members may be on-site, or co-located as it’s called, or remote in which case the project manager needs to know how to deal with a virtual team.

It’s key for project team members to be involved in decision making and project planning as that will add their expertise to the process and strengthen their commitment to the project.

Project Roles

The various roles in a team will depend on the nature of a project. Normally there will be core team involved through-out a project, but the team structure will change at each stage to meet the evolving nature of a project. Roles may include examples like Business Analysts, Designers, Developers, Application Specialists (IT context), Testers and more.

For example, you may have a high-powered team to define the business solution, followed by a broader team, including virtual team members, to deliver it, then a smaller operational team to operate it.

Team Structure

Quite often, especially on complex projects, there are different work-streams or sub-projects happening in parallel. For example, on a new website project (or replacement of an existing), a website designer might be working with business managers and network specialists to create a storefront, another website designer is working with different business managers and developers on an intranet application to present management information on sales. This is where you end up with a project team as a matrix where various resource types need to work together to share knowledge and to create a consistent solution. Each of the sub-teams will need a leader and team members need to understand their individual roles.

When you structure the team consider the importance of generating collaboration, knowledge sharing and skills transfer. In the example below, the team would have a mix of people so that all the necessary skills, knowledge and understanding are collectively within that team, subject to any further specialised support that is needed.

Source: www.epmbook.com

Team Build

The team development is equally important. This is the process of improving competencies, team member interaction and the overall team environment to enhance project performance.

The team needs to be organized in order to maximize the team effectiveness. The project manager will foster good work relationships and motivate team members to complete quality work on time.

It’s good to be aware of the team development model, called the Tuckman ladder, which includes five stages of development that teams may go through:

Forming: team meets and learns about the project and their formal roles and responsibilities
Storming: team begins to address project work, technical decisions and need to be collaborative and open to different ideas; else the environment become counterproductive
Norming: team members begin to work together and learn to trust each other
Performing: team is a well-organised unit who work through issues smoothly
Adjourning: team completes the work and moves on from the project

Barriers to effective team development

Many barriers can be in the way of effective team development. For example, if team members have disjointed priorities, it may cause conflict within the team. Communication gaps originate if a project team doesn’t stay aligned, or there could be misunderstandings. Lastly, a team member may show a lack of commitment to a project especially if the person is working on several projects at the same time or is over-allocated in terms of project and operational responsibilities.

You will find that each project team’s dynamics are different. As long as you lead the team to a place of synergy where the combined effect is more than the individual contributions.

For more on Virtual Teams, read the article series:

Virtual Teams – 6 Lessons for success

Working with Virtual Teams – Useful Tools

Working with Virtual Teams – Techniques for maximum efficiency

Working with Virtual Teams – Critical Success Factors

Virtual Teams Communication challenges:

Communication challenges for Virtual Project Teams Part 1

Communication challenges for Virtual Project Teams Part 2

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October 17, 2016February 14, 2022 Linky

Project Management: Harnessing the Power of Innovation

The speed of change is increasing exponentially. Organisations struggle to determine which change is applicable and how to manage it to their benefit. There’s a call for creativity and a shift in culture which will enable leaders and employees to optimise change. Many see “innovation” as the solution.

INNOVATION is a Discipline

According to forbes.com, innovation needs to be seen as a discipline – learning to use the right methods, tools and approaches at the right times. In other words: learning to harness innovation.

Creativity is about individuals coming up with ideas. Innovation is about “bringing ideas to life.” For example, we use creativity in our project teams to come up with the ideas. Then we use innovation to move these ideas from vision to reality.

Enabling Creative Thinking

Project management often provides the ideal environment in which to harness innovation. It requires project managers’ skills sets to include the ability and know-how to encourage and develop creative thinking to achieve results within the parameters set by the project. It’s about developing the ability to marry the traditionally structured, output-driven project management approach with “out-of-the-box thinking.

Innovation is a collaborative process; where people in many fields contribute to the implementation of new ideas. This occurs throughout the execution of a project.

Method and Practice

This means learning, practising and honing innovation skills including what the various methods are and how they are applied in different contexts, as well as measuring the methods and their results, determining what works and what doesn’t.

Creative Project Management

According to Business Improvement Architects (bia.ca) creative Project Management requires that the Project Manager will create a project team. This will begin the process of engagement and commitment. The team will collectively develop their team’s roles and responsibilities – so that everyone knows who’s involved in project success and what skills, knowledge and experience each of them adds to the overall team.

The project team will scope out the project to ensure there is a common understanding and agreement of scope. By engaging the entire team in the process it will be done faster, with more comprehension and complete team buy-in. The project team will then develop a detailed project plan. Research has shown that by creating the entire plan with the full team, teams will get a plan that has four (4) times the detail. And they will accomplish this in about one-quarter of the amount of time it takes compared to the project manager creating the plan on their own.

Project Management South Africa National Conference

In South Africa, the PMSA is hosting the National 2016 Conference with the Theme: “Harnessing the Power of Innovation”. The aim is to aid project managers in developing their own innovative skills which they can apply to their teams, as well as to intrinsically innovative projects that they have to manage.

The 2016 Conference Programme consist of keynote sessions, plenary sessions presented by experts and thought leaders, case studies, academic research presentations, master classes, an expo with interactive exhibits as well as plenty of networking opportunities.

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October 6, 2016December 22, 2018 Linky

Project Basics – Cost Estimation and Budget Development

By Linky van der Merwe

During the Planning Phase of a project an important responsibility for a project manager is to plan cost management, to estimate costs and to determine the project budget. When I work with new project managers, budget development is an area where they need most help. This article aims to give standard practice guidance to project managers who have not done budgeting before.

Cost Management

Part of cost management is to establish the policies, procedures and documentation to be used for planning, managing, expending and controlling project costs. The PM needs to have the scope and schedule baseline and understand what financial controls the organization is using. The cost management plan is part of the project management plan and will describe how project costs are planned, structured and controlled.

Refer back to the article about the Work Breakdown Structure (WBS) as a planning tool. Once you’ve defined all the lower level tasks and you allocated resources to the tasks, you are ready to develop the project schedule and project budget.

Time estimate

Normally you will work on deriving the work effort estimates for each of the tasks using various techniques like bottom-up estimating, top-down estimating, phased estimating and so forth. Then the duration of the tasks is dependent on factors like the assumptions made, availability of resources (are they full-time or shared between project and operational work), risks and historically how long the tasks would typically take to complete.

Cost estimates

Next you can estimate costs after you assigned your resources. There are different types of resources that will make up the costs of the projects. They include direct costs:

Labour (People)
Consultant fees
Equipment or hardware
Software licenses
Expenses like travel
Training, team building

Then there are indirect costs including:

Facilities
Materials
Overhead costs such as rent and phone bills

To estimate the labour costs you should know the resources and the cost of the resources. The non-labour expenses include all costs not directly related to salary and contractor costs.

Supporting data

It’s important to document supporting data for all the cost estimates. This includes a description of the scope of the work for which cost estimates were calculated. You need to describe how the estimates were calculated for each work package. Mention the techniques used to estimate the costs, for example expert judgement, if reference was made to any historical data to make the cost estimates and vendor/supplier proposals. Document all of the assumptions made when creating the estimates.

Contingency reserve

A contingency reserve or buffer is added to projects (usually a percentage of the total project cost and time) to cover risk. This fund is used when encountering unexpected events during the project. You should adjust your contingency reserve to the risk level identified for the project. If there are many risks or unknowns, the contingency fund will be higher.

Monitoring the budget

Once the budget is determined your project has a cost baseline. The PM is responsible to monitor and control the project costs by regularly checking actual spending against budget estimates by using a spreadsheet. This will tell you whether the project is progressing as planned or if corrective action is needed.

Calculations/budget tracking

There are various calculations that need to be made through-out project execution. A sample of a Budget sheet can be seen below. To the left are the task descriptions, as per the WBS. Then you see a break-down of the budget and actual hours, then to the right is the break-down of the budget and actual costs. Using these numbers, calculations are made, including:

Estimate at completion (EAC)
Budget at completion (BAC)
Variance at completion (VAC)

Source: Cioarchives.ca.gov

Budgeting is a team effort and cannot be done in isolation. It’s important to obtain buy-in on the budget from the people who will actually perform the work. This participation gives people a stake in the success of the project and fosters accountability.

A project manager needs to monitor the budget and manage the expenses in order to finish the project under budget. This will reflect well on your ability to create an accurate budget and stick to it. Therefore, it’s important to review it often and make sure that you stay on track.

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