Validate project status with periodic audits

Author: Tom Mochal

If you're working on a large project, it's a good idea to get an auditor involved to make sure the project is progressing as expected. Tom Mochal lists the seven steps that you can expect during the audit process.

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Editor's note: This article was originally published October 16, 2006.

The project manager is responsible for establishing a viable project workplan (schedule) and making sure that the project is progressing appropriately against this schedule. However, in many cases it makes sense to have an outside party double-check to make sure the project is progressing as expected. This is especially true with large, critical projects. If you have a two-month project that takes twice as long as expected, you may be upset, but it won't materially effect your organization. On the other hand, if a two-year program budgeted at 100 million dollars takes twice as long and double the budget to complete, it could have a devastating impact on your organization.

It's not unusual for larger projects to be subject to periodic audits. The sponsor might call for a project audit if there's a concern about the state of the project. In some cases, periodic audits may be called for as a part of the overall charter. (In some organizations, these audits are referred to as Internal Verification and Validation or IV&V.)

For larger projects, the person performing the audit should be an experienced project auditor — either internal of external to the company. A project audit focuses on quality assurance — asking questions about the processes used to manage the project and build the deliverables. The audit can follow this process:

1. Notify the parties. The auditor notifies the project manager of the upcoming audit and schedules a convenient time and place.
2. Prepare for the audit. The auditor may request certain information upfront or ask the project manager to be prepared to discuss certain aspects of the project. This ensures that the actual meeting time is as productive as possible.
3. Initial meeting. The auditor asks questions to ensure the project is on track. These questions are quality assurance related, verifying that good processes are being used, and then checking some of the outcomes of those processes. For instance, after verifying that the project manager is using good processes to update an accurate schedule, the auditor could review the actual schedule to validate the current project status against the schedule.
4. Further analysis. On many projects, the investigative aspect of the audit might culminate after one meeting with the project manager. If the project is large or complex, the auditor might need to meet with other team members and clients and review further project documentation.
5. Document the findings. The auditor documents the status of the project and the processes used on this project. The auditor should also make recommendations on areas that can be improved to provide more effective and proactive management of the project.
6. Review draft audit report. The auditor and the project manager should meet again to go over the initial findings. This auditor describes any deficiencies and recommendations for changes. This review also provides an opportunity for the project manager to provide a rebuttal when necessary. In many cases, the initial findings of the auditor might be modified based on specific, targeted feedback from the project manager.
7. Issue final report. The auditor issues a final report of findings and recommendations. The project manager may also issue a formal response to the audit. In the formal response, the project manager can accept points and discuss plans to implement them. The project manager may also voice his or her disagreement with certain audit points and explain his or her reason why.

Project audits are very helpful to get an outside opinion on the status of a larger project. In many cases, experienced auditors can point out potential problems with projects much quicker than the project manager might communicate them.

Use this process to estimate a project's effort hours

Author: Tom Mochal

Once you understand the effort that's required for a project, you can assign resources to determine how long the project will take and estimate labor and non-labor costs. Here's a process you can use to estimate the total effort required for your project.

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Editor's note: This article was originally published December 11, 2006.

There are three early estimates that are needed for a project: effort, duration, and cost. Of the three, you must estimate effort hours first. Once you understand the effort that's required, you can assign resources to determine how long the project will take (duration), and then you can estimate labor and non-labor costs.

Use the following process to estimate the total effort required for your project:

1. Determine how accurate your estimate needs to be. Typically, the more accurate the estimate, the more detail is needed, and the more time that is needed. If you are asked for a rough order of magnitude (ROM) estimate (-25% - +75%), you might be able to complete the work quickly, at a high-level, and with a minimum amount of detail. On the other hand, if you must provide an accurate estimate within 10%, you might need to spend quite a bit more time and understand the work at a low level of detail.
2. Create the initial estimate of effort hours for each activity and for the entire project. There are many techniques you can use to estimate effort including task decomposition (Work Breakdown Structure), expert opinion, analogy, Pert, etc.
3. Add specialist resource hours. Make sure you include hours for part-time and specialty resources. For instance, this could include freelance people, training specialists, procurement, legal, administrative, etc.
4. Consider rework (optional). In a perfect world, all project deliverables would be correct the first time. On real projects, that usually is not the case. Workplans that do not consider rework can easily end up underestimating the total effort involved with completing deliverables.
5. Add project management time. This is the effort required to successfully and proactively manage a project. In general, add 15% of the effort hours for project management. For instance, if a project estimate is 12,000 hours (7 - 8 people), a full-time project manager (1,800 hours) is needed. If the project estimate is 1,000 hours, the project management time would be 150 hours.
6. Add contingency hours. Contingency is used to reflect the uncertainty or risk associated with the estimate. If you're asked to estimate work that is not well defined, you may add 50%, 75%, or more to reflect the uncertainty. If you have done this project many times before, perhaps your contingency would be very small — perhaps 5%.
7. Calculate the total effort by adding up all the detailed work components.
8. Review and adjust as necessary. Sometimes when you add up all the components, the estimate seems obviously high or low. If your estimate doesn't look right, go back and make adjustments to your estimating assumptions to better reflect reality. I call this being able to take some initial pushback from your manager and sponsor. If your sponsor thinks the estimate is too high, and you don't feel comfortable to defend it, you have more work to do on the estimate. Make sure it seems reasonable to you and that you are prepared to defend it.
9. Document all assumptions. You will never know all the details of a project for certain. Therefore, it is important to document all the assumptions you are making along with the estimate.

This type of disciplined approach to estimating will help you to create as accurate an estimate as possible given the time and resources available to you.

Analyze your risks to determine which ones to manage

by Tom Mochal

Takeaway: Tips for determining project risks and their severity.

No project is without some risk. The best way to identify risks is through a combination of checklists and brainstorming. Checklists allow you to catch the typical risks that might be inherent in projects like yours. A team brainstorming session allows you to find risks that are specific to your particular project. You might end up identifying dozens of risks through a combination of checklists and brainstorming.

After you identify all the risks, you must figure out which ones are important enough for you to address (risk analysis). You want to classify each risk it in terms of high risk, medium risk, or low risk. You do that by looking at the likelihood that the risk will occur and the impact of the risk on the project if it does occur. For example, a risk that is highly likely to occur and has a high impact to the project would definitively be a high category risk. On the other hand, a risk that is not likely to occur and has a small impact to the project if it does occur would definitively be a low-level risk. All other combinations fall somewhere in the middle of this continuum. The following list gives you the various combinations based on the impact to the project (high, medium, low) and the likelihood of the risk occurring (high, medium, low)

Likelihood	Impact	Overall risk level
High	High	High
High	Medium	Medium
High	Low	Low
Medium	High	High
Medium	Medium	Medium
Medium	Low	Medium/Low
Low	High	Medium/Low
Low	Medium	Low
Low	Low	Low

This is one example of how you can categorize risks as being high, medium or low, based on the likelihood of occurrence and the impact. There are many other techniques as well. These high-level risks should be managed. The low level risks can be ignored. The medium-level risks should be evaluated individually. You might need to respond to some while others can be ignored for

Analyzing each risk allows you to determine which ones are important enough to manage. This analysis save you the wasted time associated with managing risks that are better documented, but ignored. 

Check your project for these four warning signs

by Tom Mochal

Takeaway: Sometimes a project that is on-schedule can still show warning signs that it is in jeopardy. Check for these warning signs to make sure that your seemingly perfect project isn't sidetracked down the road.

TechRepublic columnist Tom Mochal receives dozens of e-mails each week from members with questions about project management problems. He shares his tips on a host of project management issues in this Q&A format.

Question
I'm managing a project that's more or less on track after three months, with six months to go until the deadline date. Perhaps I'm just being nervous, but I have a feeling the project is going to start slipping in the coming months. One reason I'm nervous is that we padded some of the work at the beginning of the schedule so that we could try to get ahead. However, we're simply on schedule now, and that makes me think we're actually behind where we wanted to be. Are there some things we can look for to know if we're in trouble?

Answer
Obviously your project is in trouble if you're missing deadlines and consistently exceeding the estimated effort and cost to get work done. However, your question provides a little twist. You have a project that actually appears to be on schedule, yet you're concerned about potential problems down the road.

I believe there are specific warning signs you can look for that will give some sense of potential risks. At this point, you can't really call them issues or problems, but they can be identified as risks that have the potential to throw off your project in the future.

Are you falling behind early in the project?
Many project managers fall prey to the belief that if they fall behind in a project early on, they can make up the time through the remainder of the project. I always looked at this the other way around. I think there's a natural tendency to fall behind as the project progresses. First of all, the farther out you plan, the less accurate you will be. Second, there are always things that come up on your project that you don't expect, and these last-minute surprises always take time to sort out.

I believe it is in your best interest to try to get ahead of schedule early on in a project. Don't do this with the expectation that you will actually finish ahead of schedule (although that would be nice). Do it with the expectation that you will need the extra time later on when things come up that you don't expect.

Your dilemma is based on this approach. It sounds like you purposely put some buffer in the schedule to try to get ahead early. Since you are still on schedule, and not ahead of schedule, this may be a sign that work is taking longer than you think. This, in turn, increases the risk that your team will fall behind schedule as you begin the more aggressively estimated work.

If you find that you're falling behind early in the project, your best remedy is to start putting corrective plans in place immediately. Don't sit back passively and hope you can make the time up later. Be proactive instead, and take action today to get back on schedule.

Are you identifying more and more risks?
In terms of this particular question, it appears that you don't have a multitude of issues that you are currently addressing, because, if you did, you probably would not still be on schedule. However, while you may be on schedule now, you could still face a number of identified risks in the future. Of course, all projects have some future risks, but if you see more and more risks as the project continues, your project could be in serious trouble.

If you face this risk, the good news is that you have identified it while there is still time to address it. Even if you have a greater-than-normal number of these risks, you may still be okay if you focus on managing them successfully.

Has client participation faded?
Your client needs to be actively engaged during the planning process and while you are gathering the business requirements. If you cannot get the client excited to participate during this timeframe, then you're in trouble. However, many times the client begins to get disengaged when the project is a third completed and the work starts to turn more toward the project team. This, too, can be a major risk factor for project success.

It's important to keep the client actively involved. The project manager needs to continue to communicate proactively, and seek the clients' input on all scope changes, issues resolution, and risk plans. The client absolutely needs to be actively involved in testing. The project manager needs to make sure that the client stays involved and enthusiastic. Otherwise, testing and implementation will be a problem down the road.

Is morale declining?
On the surface, if you're on schedule, there's no reason for morale to be going south. However, if you detect that morale is slipping, it could be a sign that your project is in trouble. Your next step is to determine the cause. Morale might be declining because people are being asked to work a lot of extra hours to keep the project on track. People on the team might also believe that the future schedule is unrealistic. Whatever the reasons for it, poor morale needs to investigated and combated. If morale is low early on in the project's timeframe, you should be concerned that the morale issue will continue to get worse as the project's deadline gets closer.

One of the important responsibilities of the project manager is to continually update the work plan, identify risks, and manage expectations. As you know, a project that seems on track today could have major problems tomorrow. So, keep your eyes open for the warning signs that things are worse than they appear. If you recognize them ahead of time, they can all be classified as project risks, and can be managed and controlled in a manner that will allow your project to succeed.

Managing project risk is easy with the right process

by Tom Mochal

Takeaway: A lot of project managers are intimidated by the notion of risk management. However, this simple five-step process will be more than adequate for most projects.

A reactive project manager tries to resolve issues when they occur. A proactive project manager tries to resolve problems before they occur. Here's a process you can use to identify risks before they occur:

1. Identify all risks

Perform a complete assessment of project risk. The purpose of this step is to cast a wide net to uncover as many potential risks as possible.

2. Analyze the risks

In the prior step, you uncovered as many risks as possible. You'll find there are usually too many potential risks to manage successfully. In fact, many of them don't need to be managed since they have a low probability of occurring or they would have a low impact on your project. In this step, group the identified risks into high, medium, or low categories. For most projects this can be a subjective assignment based on your best estimates. On some projects, this would be based on rigorous risk models, simulations, and quantitative techniques.

3. Respond to the high risks

Create a response plan for each high-level risk that you identified to ensure the risk is managed successfully. This plan should include activities to manage the risk, as well as the people assigned, completion dates, and periodic dates to monitor progress. There are five major responses to a risk -- leave it, monitor it, avoid it, move it to a third party, or mitigate it. The risk plan activities should be moved to your project schedule. You should also evaluate the medium-level risks to determine if the impact is severe enough that they should have a risk response plan created for them as well.

4. Create a Contingency Plan (optional)

A Contingency Plan describes the consequences to the project if the risk plan fails and the risk actually occurs. In other words, identify what would happen to the project if the future risk turns into a current issue. This helps you ensure that the effort associated with the risk plan is proportional to the potential consequences. For instance, if the consequence of a potential risk occurring is that the project will need to be stopped, this should be a strong indication that the risk plan must be aggressive and comprehensive to ensure that the risk is managed successfully.

5. Monitor risks

You need to monitor the risks to ensure they are being executed successfully. You should add new risk plan activities if it looks like the risk is not being managed successfully.

You also need to periodically evaluate risks throughout the project based on current circumstances. New risks may arise as the project is unfolding and some risks that were not identified early may become visible at a later date. You should perform this ongoing risk evaluation on a regular basis – say, monthly or at the completion of major milestones.

10 things you should do to successfully manage your workplan

• Author: Tom Mochal

Like much of project management, updating the workplan requires discipline and habit. See how these steps can help you stay on top of the process.

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Project managers are sometimes diligent about creating an initial workplan (schedule), but then they don't manage it during the project. Although the initial workplan will help you launch your project, issues will come up that require the workplan to be modified and updated. On most projects, you can follow this simple 10-step process to manage the workplan. If you do this weekly, you'll probably find it takes less than one hour per week-maybe only 30 minutes or so.

Note: This list is based on the article "Proactively manage your workplan using this ten step process." It's also available as a PDF download.

1: Update and review the workplan with progress to-date

This is probably a weekly process. For larger projects, the frequency might be every two weeks. A simple routine is to have the team members send you status updates on Friday with progress on the activities assigned to them during the week. The project manager then updates the workplan on Monday morning to reflect the current status.

2: Capture and update actual hours (optional)

If you're capturing actual effort hours and costs, update the workplan with this information.

3: Reschedule the project

Run your scheduling tool to see if the project will be completed within the original effort, cost, and duration estimates.

4: Review your schedule situation

See if you're trending past your due date. If you are, you will need to determine how you can get back on schedule.

5: Review your budget situation

Review how your project is performing against your budget. Because of the way financial reporting is done, you may need to manage the budget on a monthly basis.

6: Look for other signs that the project may be in trouble

These trouble signs could include team morale problems, quality problems, a pattern of late work, etc. Look for ways to remedy these problems once you discover them.

7: Adjust the workplan and add more details to future work

When the workplan was created, many of the activities that are further into the future may have been vague and placed into the workplan at a high level. On a monthly basis, this work needs to be defined in greater detail. You should always maintain a rolling three months of detailed activities on your workplan.

8: Evaluate the critical path of the project and then keep your eye on it

It's possible for the critical path to change during the project.

9: Update your project forecast

After you've updated your workplan to reflect the work remaining to complete the project, you should also estimate the cost of the remaining work. This is usually referred to as "forecasting."

10: Communicate any schedule and budget risk

If you're at risk of missing your budget or deadline, communicate this risk to the sponsor and management stakeholders. You don't have to state that you will miss your estimates for sure. However, you should start to communicate the risk while you implement actions to try to get the project back on track.