Lesson 05: Project variables
Video edition:
Subtitle:
- 00:05 - Project Variables
- 00:07 - So, here I’m going to give you an introduction into Project Variables
- 00:11 - So, let’s say you are the Project Manager and I am the CEO
- 00:16 - And I’ve asked you to tell me about the status of the project
- 00:21 - What would you tell me?
- 00:23 - Well, one thing you’ll probably tell me is when the project is going to be finished
- 00:28 - And that’s good because that’s important for many reasons
- 00:32 - First of all, if it’s going to be finished late, we may lose some opportunities
- 00:38 - And second I am waiting for you to finish the project, release the team members, so that they can work on other projects
- 00:47 - So, these are some reasons why actually it’s important to monitor and control time
- 00:53 - So, we will consider time as one project variable to monitor
- 00:58 - Now, what else would you tell me? Because I like to know stuff, and remember, I’m the CEO
- 01:04 - So, I would like to know, well, how much it’s going to cost me to finish the project
- 01:10 - So, maybe we start the project with an estimate of 200,000
- 01:15 - But now your latest forecast is that it could cost me 500,000. Oops!
- 01:22 - And I may not want to continue with the project then
- 01:25 - So, cost is another project variable to keep an eye on
- 01:31 - Now let’s play with that scenario we just discussed
- 01:35 - So, when we started the project, we said it would cost 200,000
- 01:39 - And we would generate 80,000 profit per year, so that’s good
- 01:44 - But now the forecast is more than twice that, it’s 500,000
- 01:48 - But we can generate 400,000 profit per year, so the return on investment is much higher
- 01:56 - So, now I am a happy CEO, so I would like this project to continue
- 02:02 - Then this desirable return, like the 400,000 per year is what we refer to as benefits
- 02:10 - And benefits can be monetary or non-monetary but they always should be quantified and measurable
- 02:19 - So, benefit is another thing that I would like you to keep telling me about, so another project variable
- 02:28 - Is there anything else you want to tell me?
- 02:31 - Sure. What about the product that you’re going to create, so the total product from the project
- 02:37 - Well, some projects will have a fixed product but some will have a more dynamic one that emerges through the project
- 02:45 - So, it’s important for you to tell me about this as well
- 02:48 - Now the formation of the product is what we describe as the scope. Okay?
- 02:56 - So, I want you to consider scope as another project variable
- 03:00 - You may have heard someone say, well, what’s within scope or outside scope and what is the project going to deliver
- 03:07 - That’s what we refer to as scope
- 03:10 - Now when we talk about scope, we learn a lot about the product of the project, but not everything
- 03:18 - We don’t actually learn how the product works and how it satisfied the needs
- 03:24 - When I say needs, I mean user needs
- 03:27 - For example, if the product is going to work for a year before it breaks
- 03:32 - Or does it even have to work for 50 years before breaking
- 03:37 - And these type of things are covered in quality
- 03:41 - And that’s why we would consider quality as another project variable
- 03:46 - Now, all of these variables we talked about are uncertain
- 03:52 - So, we may express them in a single number, but in reality they have a range
- 03:58 - Let’s say from optimistic to pessimistic
- 04:02 - And these ranges reflect the uncertainties of the project and we usually refer to them as risk
- 04:11 - Now, the overall risk of the project is important
- 04:15 - Because while the most likely values of the variables may be acceptable
- 04:20 - The far end of the range of value may not be
- 04:25 - And that’s why overall risk is another project variable that you have to keep an eye on
- 04:33 - Something else?
- 04:35 - Yeah. Well, in the previous version of PRINCE2 we had six project variables or six variables
- 04:42 - And the new version has added a new one and this is sustainability
- 04:47 - So, in other words, the latest version of PRINCE2 believes sustainability is a defining parameter in the project
- 04:55 - That has to be monitored and controlled just like time and cost
- 05:00 - So, now the main question is why do we need all these variables?
- 05:05 - Why do we … why am I paying so much attention to them?
- 05:08 - Well, we spoke about one purpose which is reporting
- 05:12 - And reporting actually is an extension of a more fundamental concept which we refer to as monitoring
- 05:21 - So, we need to monitor the project to know where it is and where it’s going to be
- 05:27 - And to monitor the project properly and correctly, we need to measure all these variables
- 05:35 - And after monitoring then, we may need to control the project
- 05:39 - For example, make small adjustments to get the project back on track
- 05:43 - So, again we will be working with these seven variables
- 05:48 - Now there’s even more. So, you as Project Manager know that micro-management is not a very good idea
- 05:55 - So, instead of making all the decisions for the team leaders and the project team members
- 06:01 - You let them make certain decisions
- 06:05 - But how are you going to do that? What’s the best way to do that?
- 06:09 - Well, a good idea is to use thresholds or to set thresholds
- 06:14 - So, for example, you may let them make a decision up to €10,000
- 06:20 - But not more than that, so that’s the limit of their threshold
- 06:24 - And in that case, you can agree on that threshold of €10,000
- 06:28 - And then things become clear between you and the team leader and how they work
- 06:34 - But wait. Is it enough to set a threshold for cost?
- 06:38 - How about time and quality and so on?
- 06:41 - Well, in fact, you need to set thresholds for all project variables
- 06:48 - Now I have a question for you based on what I just said
- 06:52 - Do you think we can use these variables when we discover a new issue? When we come across a new issue?
- 07:00 - And the answer is yes, so when you discover a new issue
- 07:03 - The first thing you can ask is what is the impact of this issue on the seven variables
- 07:09 - So, what’s the impact on time, what’s the impact on cost, what’s the impact on quality and so on
- 07:15 - And this information then will give you a very good idea on how important and sensitive the issue is
- 07:22 - So, if it’s not sensitive, you don’t have to spend too much time on it
- 07:26 - But if it is sensitive and the impact is going to be high
- 07:29 - Then you’ve got to spend more time and get help from people
- 07:33 - Now, what happens if the issue is really big and passes the threshold?
- 07:39 - Then you will just escalate the issue to higher level management
- 07:43 - So, that’s how we can use project variables
- 07:46 - And that’s why it’s important then to keep these variables in mind
- 07:50 - So, they are used almost in everything that we do
- 07:53 - In our plans, in delegation, in escalation, in monitoring and reporting
- 07:59 - So, now I think I’ve given you a very good overview on why we use variables and how they are used as well
Quiz
- Why is time one of the variables monitored in a project?
- Why is cost one of the variables monitored in a project?
- What are benefits?
- What is the scope, and why is it monitored?
- Why is quality monitored?
- Why do we need these variables in a project?
- How are the seven project variables used when discovering a new issue?
- The end date of the project is essential for a few reasons:
- Know when the final project output will be available.
- Know when resources can be released for another project.
- The cost of the project should be continually monitored:
- I need to know the cost of the project.
- The cost value is essential for checking the business justification.
- The cost will also affect the benefits.
- Benefits are the desirable return of the project, and they should be quantified and measurable.
- E.g., a 20% reduction in cost for the next three years.
- Scope is the sum of the products delivered by the project. Some projects can start with a clear overview of what the project will deliver but can expand due to a lack of control. It is a good idea to clarify what is within and outside scope at the start of the project.
- Projects produce products that users use. Quality is about meeting user needs so the products can be used as expected.
- The seven project variables are used to monitor and report the project status.
- While analyzing an issue, the project manager can ask: What impact does the issue have on time, cost, benefits, quality, etc? The answer to this question helps the project manager understand how sensitive the issue is for the project.