Five critical choices must be made throughout the course of a project; these decision points correlate to the conclusion of each project phase and require the recording of the project’s present state and the creation of an interim report. They also offer a chance to evaluate next project stages.
At all these decision points, project leaders should communicate with their customers about the project’s direction and, if required, modify the control variables.
For instance, if many new and unexpected needs arise during the defining process, significantly increasing the expenses, proceeding with the initial budget is pointless.
The decision points at the conclusion of the stages are often referred to as ‘go/no-go moments’; they need a determination of whether to continue with the project or to terminate it.
In organizations that do not follow project management stages, the following scenario often occurs: a project plan is first created, in which the control elements are specified. A schedule (Time) and budget (Money) are established, a team (Organization) is created, a goal is defined (Quality), and the tools for information services associated with the project are decided (Information). Throughout the course of a project, the project leader checks to ensure that the project stays within the overall budget and schedule, but makes no significant changes. Near the conclusion of a project, it is discovered that the project will cost more or take longer than anticipated. After then, the project is trimmed down to prevent further cost overruns or delays. Regrettably, the project’s outcome suffers.
If the project leader had used the six-phase model in this instance, the team would have realized during the design phase, or maybe even during the definition phase, that the initial schedule and budget were inadequate. If the project leader had made changes at that point, a simpler design that was less costly and time-consuming to execute might have been selected. Alternatively, the customer might have been asked for more time, money, or both. In any case, the project’s condition would have been known months earlier, and it would have been able to guide it meaningfully.
Uncertainty is inherent in projects. At the start of a project, neither the length of time required nor the final cost are known. In other cases, it is even unclear if the project’s desired outcome will be achieved at all. In a world of rapid change, the underpinnings of a project may alter even before it is finished. This sometimes happens as a result of technical advancements or changes in the commercial or political arena.
When developing project plans, project directors can only make educated guesses about the project’s control variables (i.e. time, money, team, quality objectives, and required information). As the project progresses, more information on the project becomes available.
Only a concept exists at the beginning phase. The defining phase is when the concept is developed to meet the criteria. The design phase examines and develops potential designs, giving more clarity. It becomes apparent throughout the development process how the design should be realized. The implementation phase is when the project’s real outcome is created, while the follow-up phase is where all loose ends are tied up.
Clarity improves as a project advances. Therefore, developing a comprehensive budget for the follow-up phase (which will occur later) during the start phase is superfluous. At this point, the project may go any of a number of different paths. The concept has not yet been developed. The precise nature of the follow-up phase is probably likewise unknown save in broad strokes. This is insufficient information to provide a reasonable, comprehensive estimate for the follow-up phase. At this point, the most that can be anticipated is a rough sketch of a budget.
Thus, project plans operate as follows: a global budget for the whole project is established, coupled with a detailed budget for each following phase. For instance, if a project team is ready to enter the implementation phase (after the development phase), they are well aware of the procedures that must be followed. At that time, a comprehensive budget for the implementation phase may be created.
After each phase, the global budget projections for the whole project must be modified. Following each step, additional information is gained and choices are made that enable the global budget to be completed in more detail. Thus, as the project progresses through each phase, the estimated overall cost of the project becomes more accurate.
Creating a global budget for the whole project and a detailed budget for each phase is critical, and not only for financial management. It is critical to move from the broad to the specific for the remaining variables as well.
Project budget estimation may be summarized as follows:
Budgeting in this manner (especially in terms of time and money) is a practical approach to deal with uncertainty, which is higher at the start of the project than at the conclusion. However, it poses a difficulty for organizations that get funding from the government, social foundations, or both. This is especially true for organizations that undertake novel, and therefore risky, initiatives.
Before releasing money for a project, the majority of foundations and grant makers demand a project proposal that contains a detailed and well-established budget.
Therefore, an organization seeking funding for a project must create a comprehensive, concrete budget at an early stage. However, since the project is still in the conceptual stage, it is difficult to provide an accurate cost estimate or timeframe at the outset. Only after the design phase, when the concept has been developed and a design selected, is sufficient information available to estimate the project’s cost and duration. This step does not occur until many months after the deadline for submitting the grant application.
As a consequence of the way grant makers and foundations often operate, many organizations seek sums based on educated guesses about the project’s expenses. Subsequently, project activities are scaled to the available budget. This puts the project team in a bind from the outset, despite the fact that the greatest flexibility is required during the early phases.
As a result, the process of conceptualization throughout the definition and design stages often shows that the timeframe specified in the grant application is not realistic. Additionally, the budget may be insufficient, with too much money allocated to certain things and insufficient funds allocated to others. Any extra criteria from the grant maker (e.g., no item may vary by more than 5%) put an enormous amount of pressure on the project team. Matters must be completed in an insufficient amount of time and on an insufficient budget. This scenario often results in significant budgetary reorganization. The project statement will then need much language and analysis to show why the intended outcome was not attained.
The situation might improve if grant makers allocated funding to the different stages rather than giving money in advance. The first funding would then be used for the phase of definition and design. The requirements would be analyzed, and a number of potential designs would be developed within the constraints of this restricted budget. A second application would be filed for execution and follow-up based on these ideas. This would allow for the avoidance of undue strain on projects. Additionally, the participating parties’ expectations would be more reasonable, saving time, money, and disappointment.
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