Lesson 04: What if Something Goes Wrong?
Let’s say, we forecast a 12 month project to be finished 6 months later than expected. What should we do?
Based on AXELOS PRINCE2® material. Reproduced under licence from AXELOS. All rights reserved.
Note: PRINCE2 2017 edition is now called PRINCE2 6th edition.
- 00:10 – So what happens if something goes wrong during a project stage?
- 00:13 – So what do we need to do? Or do we just panic?
- 00:18 – Well, remember where we were in the project overview so far
- 00:22 – So we have just finished stage 2 and we are asking the Project Board to allow us to continue on to the next stage
- 00:29 – So they have to make their next decision
- 00:31 – Well, so the Project Board reviewed the documents from the stage boundary process
- 00:36 – And let’s say they said yes to allow us to continue
- 00:39 – And this is called Authorized Stage, so this decision is called Authorized Stage
- 00:46 – So now the Project Manager can start the next stage
- 00:49 – And they will use the Stage Plan to help them to do this
- 00:52 – As the Stage Plan is a plan that they can use each day
- 00:56 – So how do they use it?
- 00:58 – Well, they will start by choosing product descriptions from the Stage Plan and handing these out to the teams to perform the work
- 01:06 – And they discuss then each work package with the team manager
- 01:11 – The work package contains one or more product descriptions
- 01:15 – So they continue to hand out more work as it is completed
- 01:19 – And they check, of course, that when they receive the finished products back
- 01:24 – They check that these products have been completed and signed off and quality tested
- 01:31 – Depending on the size of the project, of course, the Project Manager can deal with one or more teams
- 01:36 – It can actually be several teams
- 01:38 – And the Project Manager hopes that everything will go as planned, according to the Stage Plan
- 01:45 – But what happens if we hit a big problem or if the Project Manager hits a big problem?
- 01:52 – Let’s say that Product X was supposed to take 10 days
- 01:57 – And now we find out during this stage that it’s going to take 30 days
- 02:02 – So, this is a big issue
- 02:04 – And actually, it can put the stage into real trouble or danger
- 02:09 – So what should the Project Manager do?
- 02:11 – Panic? Find someone to blame? Hide it? Sign off or pretend to get it signed off and everything is okay?
- 02:19 – No. All of these are wrong
- 02:22 – So, what does PRINCE2 say? What does PRINCE2 offer here to help deal with these situations?
- 02:29 – Well, PRINCE2 employs something called Tolerances or uses something called Tolerances
- 02:36 – So what are Tolerances?
- 02:37 – Well, let me explain in a very, very simple way
- 02:40 – Just imagine if I work for an insurance company and I deal with claims from 1 to 500 Euro
- 02:47 – So, that’s my tolerance, up to 500 Euro
- 02:50 – If a claim comes in for 600 Euro, then this is escalated to my boss because my boss deals with claims from 500 to 5000
- 03:02 – And if a claim comes in above 5000, then this is escalated to their boss as they deal with 5000 to above
- 03:11 – So each level has its own level of tolerance
- 03:16 – So, tolerances, or we have tolerances for Time, Costs, and Benefits
- 03:21 – There are 3 more as well, but these are much less common
- 03:24 – So, Time, Costs, and Benefits are the most common
- 03:27 – And the Project Board will set tolerances for the stage for time, costs, and benefits
- 03:34 – For example, they can set cost tolerances for 10%
- 03:37 – So if costs stay below 10%, like say they increase only by 8%
- 03:44 – Then the Project Manager can take action and spend money to deal with these tolerances or these issues, I mean
- 03:52 – So, if the costs go above 20% and the tolerance is only 10%
- 03:58 – Then the Project Manager cannot deal with this
- 04:01 – This is outside the Project Manager’s tolerance
- 04:05 – This is how we say it. You remain inside your tolerance or you go outside your tolerance
- 04:12 – So the Project Manager must then notify the level above
- 04:16 – So they must escalate this issue
- 04:20 – This issue then that brings us out of tolerance is called an Exception
- 04:25 – The Project Manager can deal with most issues because they remain small
- 04:29 – But some issues are big and are exceptions
- 04:34 – Let’s say then that during this stage, our cost tolerance was 10%
- 04:40 – And we have now an issue which will bring the costs up to 20%
- 04:45 – So, how will the Project Manager respond?
- 04:49 – Well, the Project Manager must first examine this issue, like creating like an Issue Report
- 04:55 – They will first consider this issue on the impact on costs and on the benefits and on the time of the project
- 05:02 – They will perhaps work with the team manager to suggest how to deal with this issue
- 05:07 – And write a report that’s easy to understand how they’re going to deal with this issue
- 05:13 – So this report is known as the Exception Report
- 05:16 – It’s like an Issue Report, but because it deals with an issue which brings the stage out of tolerance, it’s known as an Exception Report
- 05:26 – And this report provides all the information that is needed to get a good overview on the impact of this issue on the project and how we can perhaps deal with this
- 05:38 – This report then is escalated to the Project Board and the Project Board will come together to discuss this Exception Report
- 05:48 – The Project Manager then waits for the Project Board to respond
- 05:51 – So, how do you think they can respond?
- 05:55 – The Project Board can decide, stop the project
- 05:58 – For example, if there are lots of issues like this happening, they might say, “Okay, enough is enough. This project is not going well.”
- 06:04 – Or they can ask for a new Stage Plan
- 06:07 – So, the Project Manager will start a Stage Boundary Process because they have to create a new Stage Plan to complete the current stage
- 06:16 – And where do we create Stage Plans? Well, in the Stage Boundary Process
- 06:21 – So, what are the two documents which are updated in the Stage Boundary Process?
- 06:26 – Well, we have the Business Case and the Project Plan
- 06:30 – So in the Project Plan, let’s say what do we update?
- 06:33 – Well, the first thing we update is the status of the products we have so far completed in the current stage
- 06:39 – Because remember, we are only halfway during the current stage for the moment
- 06:43 – So we will say in the Project Plan, these or 50% of our products, let’s say, have been completed
- 06:49 – And we will update the end date of the current Stage Plan as this will now be further forward than before
- 06:57 – We will update the Business Case as well because the costs will increase due to this exception
- 07:03 – And we may even update the return on investment calculation
- 07:08 – You can see then that the Project Plan and the Business Case give an up-to-date picture of the project at the end of each stage
- 07:16 – Because these are living documents and these are very important then for the Project Board
- 07:22 – Then the Project Manager works on this new Stage Plan to deal with this exception
- 07:27 – And that’s why this new Stage Plan is called the Exception Plan because we only need to create it when we’re dealing with an exception
- 07:37 – Reminder, exceptions are out of tolerance issues
- 07:41 – The Exception Plan is focused on completing the current stage and fixing the issue
- 07:47 – So, continuing from where we left off and getting to the end of the stage
- 07:53 – The team manager can help the Project Manager with this Exception Plan
- 07:59 – Now let’s say that the Exception Plan is complete
- 08:02 – The Project Manager will ask the Project Board, “Can we complete this stage? So can we continue?
- 08:08 – The Project Board will then consider this request and make a decision
- 08:14 – The name of this decision will be Authorize an Exception Plan
- 08:18 – So before we had Authorize Stage Plan, but this is called Authorize Exception Plan
- 08:23 – It basically says you can continue with the stage
- 08:26 – So if yes, the Project Manager will use the Exception Plan to complete the current stage, so from where they left off
- 08:34 – So that is how the escalation process works within a PRINCE2 project
- 08:40 – We set a tolerance; if you go above tolerance, then you escalate to the level above using an Exception Report
- 08:49 – We create a new plan to complete the current stage and this new plan is called an Exception Plan
- 08:56 – So that is how PRINCE2 handles if something goes badly wrong during the project
Good, we’re almost done with the first iteration. In the next lesson, we’ll talk about closing the project. What do you think we should do to close the project?
Quiz
- When do we have an exception?
- Name 3 of the 6 project variables.
- Explain the steps involved when a project variable is an outside tolerance.
- When one of the project variables is outside the tolerance.
- Time, Cost, Benefits (there are 3 more, and we will talk about them later).
- First we prepare an exception report to inform the Project Board. They decide how to overcome the problem and then we will run the Managing a Stage Boundary process to create the Exception Plan. We send the Exception Plan to the Project Board, and when they authorize it, we will continue the stage with the new plan.
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