The stage of preparation of the project in theory
This article discusses the theoretical foundations of the most important stage in project management - namely, its preparation. This should be interesting both for beginners in such a difficult task as project management, as well as novice startups, and possibly experienced managers.
What is a project?
The project is a one-time, non-recurring activity or a set of actions, as a result of which clearly set goals are achieved over a certain period of time.
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In a sense, all projects are the same. Everyone has consumer (s) and / or patron (s) who are waiting for results from the project to be achieved at a specific time. Projects are often implemented with the goal of creating something new or making big changes that can be considered as a completed activity. The project may arise based on the new requests of consumers or users of services, or from the possibility to get benefits for the organization, or based on the new needs of the organization.
A project is a practical activity that is carried out in a specific context and is subject to its influence. General characteristics of the projects:
Each project has 3 key dimensions - budget, time and quality , which must be balanced for successful project management. Therefore, the main task in project management is precisely the balance of these measurements - to meet the allocated budget, while not going beyond the time constraints and to ensure an acceptable quality. From here also 3 basic signs of failure of projects follow:
There is no one “right” way to manage a project. Traditional project management approaches are focused on technical aspects, and less attention is often paid to the influence of people on project implementation. However, it is people who order and support projects, so the leadership, motivation and management of people involved in a project is as important as the use of appropriate planning, control and monitoring methods.
Common deficiencies in project implementation :
Based on their research, Elbeyk and Thomas identified 10 factors that many identify as critical to the success of the project (arranged according to priorities):
The project begins with an idea and arises in order to meet human needs. The idea is to do something that seems necessary. Transforming ideas into a project begins with an understanding of the nature of need as a driving force. Therefore, needs are the main driving force behind the project.
3 phases in determining needs :
Problems of not accurately determining needs:
In order to understand the scope of the project it is necessary to have the following information:
The most important ES for the project:
Depending on the specifics of the project, many other groups or individuals may be interested in it:
After the main ES are established, this information should be used in order to provide the project with the greatest possible support. It is imperative to check how people react to the project before other options for its implementation are excluded from the planning process. If this opportunity is fully exploited, the project team will find out about many potential obstacles and will be well informed about the priorities of each group. One of the ways to understand the reactions of different stakeholders is to analyze their points of view on each of the key dimensions of the project - budget, time and quality.
The purpose of the project is a broad concept and can be correlated with the mission and values ​​of the organization, while the goals of the project define more precisely what they strive to achieve by implementing the project and how its success can be determined.
Goals must meet SMART criteria:
The goals set provide an opportunity to determine the steps by which the project’s purpose can be realized and not allow one to stray from the right path; used to ensure that the project fits well with the organization’s activities.
Clarity of purpose is important for understanding what needs to be done. If clear goals are set, it means that there is a definite system of views on the final result. Based on the goals set, the project is structured so that it can be effectively monitored and managed. However, sometimes there is a need to revise the objectives, because in the process of project implementation there may be new circumstances unknown at the planning stage. Therefore, the goals should not be "stone".
The study of opportunities and threats at the initial stage of a project may be important to determine its scale. Regular discussions with stakeholders can reveal many potential opportunities and threats associated with the project. Risk management (possible threats to the project) will be discussed below.
The purpose of the feasibility test is to determine whether the required outputs or results will be achieved using the available resources. The verification process considers the following aspects:
The following questions will help determine the value of the project for the organization:
To draft a budget, financial costs are divided into two main categories:
Benefits in project management are divided in the same way as in financial accounting for:
Your ratings should include:
Project evaluation provides an opportunity to clarify whether the cost of project results will exceed the cost of resources used for the project. Nevertheless, it is very important to evaluate the project not only from an economic point of view. - the project should be considered in the context of the organization’s mission, its political and social responsibilities and concerns, its strategic direction and how the market or public opinion will respond to the organization’s decision to launch the project.
Despite the fact that projects have certain unique characteristics, most of them have a similar financial structure - the cost of development must be paid before receipt of revenue, i.e. need a temporary source of money. In short-term projects, the issue of costs and benefits is solved quite simply. In cases of more complex, especially in the presence of intangible benefits, it is necessary to make judgments based on the comparison of values. Many projects have either a large interval between payments and receipts, or the need for a large advance payment, or both. From financial tz. money, more precisely the capital that needs to be invested in a project to pay for the cost of development, can be established, since it is usually attracted from external or internal sources. Its cost is included in project feasibility assessments, as well as in project budgets and reports. To assess the financial value of the project there is no need to distinguish between profit and cash flows, you can concentrate only on the analysis of cash flows.
There are several methods for estimating the cash flows for a project (they will not be discussed in detail here):
Risk - the possibility of an adverse impact on the project, OR an event or situation that could jeopardize the entire project or part of it. Risks can be internal, i.e. arising within the project, and external, emerging from the context or environment of the project.
There are 4 stages of risk management:
The main categories of risk are:
There are several ways to identify risk. This is primarily a discussion of the project with the AP and consideration of various perspectives, during which individual APs can see threats to their interests. It is very important to assess the risk at each stage of project implementation and plan possible ways to reduce its effects. Where the risk can be foreseen, it is necessary to develop a situational plan that can be applied if the risk situation is implemented.
Risk assessment - measuring the likelihood of risk becoming a reality; Impact analysis - measuring the sensitivity of a project to each specific risk. Key questions are as follows:
Risk management strategies:
At the initial stage of the project, it is necessary to create a risk register in which you need to specify a description of the risk, the degree of its influence (strong, weak), the likelihood of occurrence (high, medium, low) and the action to be taken when the risk occurs.
The situational plan is just necessary in order to foresee the response to potential crisis situations. Its goal is to ensure that the budget balance, timeliness and quality of work on the project.
After the purpose and objectives of the project have been reviewed and discussed, and after checking its feasibility, it is necessary to develop a document that is the basis for the project's actions. This document should indicate the starting point of all future work on the project, and it will be the basis for conclusions about whether the project was successful in the end or not. Sometimes this document is called the project agreement, but often it contains specific information in the form of a project summary. It is usually created by the project manager, but it is very important that it is discussed with the project patrons and all the major stakeholders. It should fix the agreed point of view on the key characteristics of the project:
A typical project summary provides a detailed description of both the project objectives and practical recommendations for achieving its results. It should summarize the agreements on which the project is based, and thus, it offers a rationale for spending time and effort.
List of summary titles:
In this article, as briefly and concretely as possible, the theoretical foundations of the project preparation stage were considered. For this, the literature of the MIM LINK School of Business was used, the alumnus of which is the author. The six-stage model of project management is studied in detail in this school’s training course, and if there is interest on the part of the community, it will be possible to continue a series of articles on this topic.
What is a project?
The project is a one-time, non-recurring activity or a set of actions, as a result of which clearly set goals are achieved over a certain period of time.
')
In a sense, all projects are the same. Everyone has consumer (s) and / or patron (s) who are waiting for results from the project to be achieved at a specific time. Projects are often implemented with the goal of creating something new or making big changes that can be considered as a completed activity. The project may arise based on the new requests of consumers or users of services, or from the possibility to get benefits for the organization, or based on the new needs of the organization.
A project is a practical activity that is carried out in a specific context and is subject to its influence. General characteristics of the projects:
- they are targeted, i.e. all activities are aimed at achieving certain results or outcomes;
- they have a clear beginning and end;
- they have certain limitations that limit and define the process;
- Results achieved can be measured using agreed indicators.
Each project has 3 key dimensions - budget, time and quality , which must be balanced for successful project management. Therefore, the main task in project management is precisely the balance of these measurements - to meet the allocated budget, while not going beyond the time constraints and to ensure an acceptable quality. From here also 3 basic signs of failure of projects follow:
- the project did not fit into the budget;
- the project took longer than planned;
- The project is completed within budget and time, but does not satisfy the quality.
There is no one “right” way to manage a project. Traditional project management approaches are focused on technical aspects, and less attention is often paid to the influence of people on project implementation. However, it is people who order and support projects, so the leadership, motivation and management of people involved in a project is as important as the use of appropriate planning, control and monitoring methods.
Common deficiencies in project implementation :
- the team had doubts about the objectives of the project;
- the team was not sure what should be done;
- by the end of the project, the goals were only partially achieved;
- the works were performed later than the dates indicated in the schedule;
- the planned budget has been exceeded;
Based on their research, Elbeyk and Thomas identified 10 factors that many identify as critical to the success of the project (arranged according to priorities):
- clear goals;
- accurate planning and control;
- high qualification of the project manager;
- good administrative support;
- sufficient amount of time and resources;
- fulfillment of their obligations by all participants;
- widespread consumer engagement;
- good communication;
- good organization and structure of the project;
- opportunity to terminate the project.
Defining project boundaries
The project begins with an idea and arises in order to meet human needs. The idea is to do something that seems necessary. Transforming ideas into a project begins with an understanding of the nature of need as a driving force. Therefore, needs are the main driving force behind the project.
3 phases in determining needs :
- Emergence of needs - all interested parties should warn and anticipate needs, responding to them proactively;
- Needs recognition - needs awareness based on information gathering and discussion with AP. The main task at this stage is to transform the emerging need for goals, which will begin to determine the results of the project;
- Needs formulation - clarifying the understanding of needs through a more accurate description of its characteristic features. The wording of what should be done, i.e. definition of boundaries, the wording of the project.
Problems of not accurately determining needs:
- fuzzy targets;
- unrealistic wide scale;
- solving incorrectly posed problems;
- conflicting change goals for people, systems, organizations;
- loss of time to perform tasks that are not part of the responsibilities of people, optional or impossible.
In order to understand the scope of the project it is necessary to have the following information:
- Who are the stakeholders (AP) and what are their needs for the project?
- What are the goals and objectives of the project and how are they going to be implemented within the appropriate resource and time constraints? (purpose and purpose)
- What are the project opportunities and threats for its successful implementation?
AP and their needs
The most important ES for the project:
- Project promoter - a person or a group of people who initiate and support a project, provide resources and charge you with its implementation;
- The project team is a group of people willing to carry out the tasks and carry out the necessary activities; 3. Functional managers and other people who manage the resources you need and have useful experience and knowledge for you;
- Influential people or groups likely to be affected by the project or its results
Depending on the specifics of the project, many other groups or individuals may be interested in it:
- consumers, buyers, users of goods and services;
- other employees of the organization (from this or another unit);
- managers and staff of partner organizations;
- top management of your organization;
- shareholders and their representatives;
- MASS MEDIA;
- competitors;
- public and state figures, if the project is of wide public interest.
After the main ES are established, this information should be used in order to provide the project with the greatest possible support. It is imperative to check how people react to the project before other options for its implementation are excluded from the planning process. If this opportunity is fully exploited, the project team will find out about many potential obstacles and will be well informed about the priorities of each group. One of the ways to understand the reactions of different stakeholders is to analyze their points of view on each of the key dimensions of the project - budget, time and quality.
Definition of the purpose and objectives of the project
The purpose of the project is a broad concept and can be correlated with the mission and values ​​of the organization, while the goals of the project define more precisely what they strive to achieve by implementing the project and how its success can be determined.
Goals must meet SMART criteria:
- specific You must be clear about what you want to achieve;
- Measurable (measurable) - You must develop criteria for measuring the process of achieving goals;
- achievable (achievable) - i.e. You must be confident in achieving your goals in the existing environment and with the available resources;
- realistic (i.e.) You should not try to achieve the impossible;
- time-bound — i.e. deadlines for achieving goals should be dictated by real needs
The goals set provide an opportunity to determine the steps by which the project’s purpose can be realized and not allow one to stray from the right path; used to ensure that the project fits well with the organization’s activities.
Clarity of purpose is important for understanding what needs to be done. If clear goals are set, it means that there is a definite system of views on the final result. Based on the goals set, the project is structured so that it can be effectively monitored and managed. However, sometimes there is a need to revise the objectives, because in the process of project implementation there may be new circumstances unknown at the planning stage. Therefore, the goals should not be "stone".
Opportunities and threats
The study of opportunities and threats at the initial stage of a project may be important to determine its scale. Regular discussions with stakeholders can reveal many potential opportunities and threats associated with the project. Risk management (possible threats to the project) will be discussed below.
Check the feasibility of the project
The purpose of the feasibility test is to determine whether the required outputs or results will be achieved using the available resources. The verification process considers the following aspects:
- financial - carrying out a comparative analysis of the project's resource costs together with the estimated profit and costs that may arise if the project is not implemented;
- technical - determining how the new system will be connected to existing systems, whether the organization and employees will be prepared to work with the new technology and how to manage the transition process;
- Impact of the external environment and society - the concern of the AP regarding the impact of the external environment, the project's impact on the internal environment and local social conditions;
- managerial - research of resources for new practical activities, including the need for new employees or training existing staff, changing the terms and conditions of work, as well as the principle of equal opportunities;
- value - the study of motivational and cultural issues to ensure that the project
The following questions will help determine the value of the project for the organization:
- What is the business reason for the project?
- What will the project contribute to achieving the overall goals of the organization?
Costs and benefits for project evaluation
To draft a budget, financial costs are divided into two main categories:
- development cost - costs arising between the start of the project and the moment when production begins. They are common to all projects and usually include the costs of the project team.
- Operational costs - costs arising from the beginning of production and ensuring the maintenance of this process (for example, daily consumables, capital used). They do not occur in a project in which the product is sold once immediately after the completion of the project.
Benefits in project management are divided in the same way as in financial accounting for:
- tangible benefits - direct, visible and measurable benefits, usually based on cash flows that flow into the organization or no longer leave the organization;
- intangible benefits - indirect, indefinite and less easily measurable from a financial point of view benefits (higher quality of service, increased range).
Your ratings should include:
- costs and revenues that entail a monetary exchange;
- alternative income and costs, such as selling assets that could generate a certain income;
- loss of income or increase in costs due to distraction of the state or consumers of the service, which appeared in connection with the project;
- savings resulting from the replacement of less efficient systems with new ones that are provided by the project.
Project evaluation provides an opportunity to clarify whether the cost of project results will exceed the cost of resources used for the project. Nevertheless, it is very important to evaluate the project not only from an economic point of view. - the project should be considered in the context of the organization’s mission, its political and social responsibilities and concerns, its strategic direction and how the market or public opinion will respond to the organization’s decision to launch the project.
Despite the fact that projects have certain unique characteristics, most of them have a similar financial structure - the cost of development must be paid before receipt of revenue, i.e. need a temporary source of money. In short-term projects, the issue of costs and benefits is solved quite simply. In cases of more complex, especially in the presence of intangible benefits, it is necessary to make judgments based on the comparison of values. Many projects have either a large interval between payments and receipts, or the need for a large advance payment, or both. From financial tz. money, more precisely the capital that needs to be invested in a project to pay for the cost of development, can be established, since it is usually attracted from external or internal sources. Its cost is included in project feasibility assessments, as well as in project budgets and reports. To assess the financial value of the project there is no need to distinguish between profit and cash flows, you can concentrate only on the analysis of cash flows.
There are several methods for estimating the cash flows for a project (they will not be discussed in detail here):
- Net present value (Net Present Value - NPV);
- Internal rate of return (internal rate of return - IRR);
- Payback period;
- Cost effectiveness analysis.
Risks and situational planning
Risk - the possibility of an adverse impact on the project, OR an event or situation that could jeopardize the entire project or part of it. Risks can be internal, i.e. arising within the project, and external, emerging from the context or environment of the project.
There are 4 stages of risk management:
- Identifying risk - determining which risks may affect a project, and describing the characteristics of each one.
- Impact assessment is a risk assessment in terms of the range of possible outcomes related to projects and the potential impact of each.
- Planning backup options to reduce the impact of the most likely risks.
- Ensuring that risks are always in sight.
The main categories of risk are:
- Material risks - the possibility of loss or damage to information, equipment or buildings due to an accident, fire or natural disaster;
- technical risks arising when systems do not work or do not work well enough to produce the desired results;
- personnel risks - the likelihood of non-participation of key workers in the project or lack of qualified personnel;
- social and political risks arising when the project is deprived of support due to a change of power, changes in the policy of the organization’s top management or protests by the public, the media, users of the service or staff;
- legal risks - the threat of legal action due to the fact that some aspects of the project may be considered illegal.
There are several ways to identify risk. This is primarily a discussion of the project with the AP and consideration of various perspectives, during which individual APs can see threats to their interests. It is very important to assess the risk at each stage of project implementation and plan possible ways to reduce its effects. Where the risk can be foreseen, it is necessary to develop a situational plan that can be applied if the risk situation is implemented.
Risk assessment and impact analysis: key questions
Risk assessment - measuring the likelihood of risk becoming a reality; Impact analysis - measuring the sensitivity of a project to each specific risk. Key questions are as follows:
- What is a risk - how will I know if it occurs?
- What is the probability of its implementation - high, medium or low? How serious is the threat to a project - high, medium or low?
- What are the signs or causes of risk that we should look for?
Risk management strategies:
- Avoidance of risk - for example, withdrawal from a contract;
- Reducing risk — for example, regular inspections can reduce the likelihood of producing a low-quality product;
- Protection against risk - for example, insurance against possible accidents;
- Risk management - for example, the use of written agreements in areas of disagreement;
- Relocation of risk - for example, the transfer of responsibility for the execution of a risky assignment under a project to another organization that has more experience
At the initial stage of the project, it is necessary to create a risk register in which you need to specify a description of the risk, the degree of its influence (strong, weak), the likelihood of occurrence (high, medium, low) and the action to be taken when the risk occurs.
The situational plan is just necessary in order to foresee the response to potential crisis situations. Its goal is to ensure that the budget balance, timeliness and quality of work on the project.
Basis for project action
After the purpose and objectives of the project have been reviewed and discussed, and after checking its feasibility, it is necessary to develop a document that is the basis for the project's actions. This document should indicate the starting point of all future work on the project, and it will be the basis for conclusions about whether the project was successful in the end or not. Sometimes this document is called the project agreement, but often it contains specific information in the form of a project summary. It is usually created by the project manager, but it is very important that it is discussed with the project patrons and all the major stakeholders. It should fix the agreed point of view on the key characteristics of the project:
- expected results;
- the resources that will be invested to achieve these results;
- time required to achieve these results.
A typical project summary provides a detailed description of both the project objectives and practical recommendations for achieving its results. It should summarize the agreements on which the project is based, and thus, it offers a rationale for spending time and effort.
List of summary titles:
- Project name;
- Project promoter;
- Location - patron address, project location, contact addresses;
- The name of the project manager and the name of his organization, if it is different from the organization sponsoring the project;
- Date of approval of the resume with the patron of the project;
- Date of commencement and completion of the project;
- Justification and purpose of the project with an overview of the main ideas;
- Key objectives with criteria for quality and success;
- A detailed description of how achieving these goals will bring benefits to the business or organization sponsoring the project;
- Scale and boundaries of the project;
- Restrictions;
- Assumptions;
- Project schedule;
- Main results and corresponding dates (project milestones);
- Cost estimation;
- Resourcing mechanisms;
- Reporting and monitoring mechanisms;
- Decision making mechanisms - authority and accountability of the project manager and renegotiation;
- Mechanisms and channels of communication;
- The signature of the patron of the project with the date, title and position
Conclusion
In this article, as briefly and concretely as possible, the theoretical foundations of the project preparation stage were considered. For this, the literature of the MIM LINK School of Business was used, the alumnus of which is the author. The six-stage model of project management is studied in detail in this school’s training course, and if there is interest on the part of the community, it will be possible to continue a series of articles on this topic.
Source: https://habr.com/ru/post/111482/
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