Projects
involve uncertainty. At the beginning of a project, the exact amount of
time
that will be needed is not known, nor is the precise amount that the project
will
eventually cost. For some projects, it is even uncertain whether the intended
goal
will be reached at all. In a world of fast-paced change, the foundations of a
project
have sometimes already changed before the project is completed. This
sometimes
occurs because of technological developments or developments in the
market
or political arena.
When
preparing project plans, project leaders can only estimate the control
factors
(i.e. time, money, team, quality goals and necessary information) of the
project.
As the project proceeds, more knowledge emerges about the project itself.
In the initiation
phase, only an idea exists. In the definition phase, the idea is
refined
according to requirements. In the design phase, possible designs are
examined
and developed, providing even more clarity. In the development phase,
it
becomes clear how the design should be realised. In the implementation phase,
the
actual project result is built, and in the follow-up phase, all of the loose
ends
are
tied together.
Clarity
increases as a project progresses. It is therefore pointless to make a
detailed
budget for the follow-up phase (which will take place later) during the
initiation
phase. At this stage, it is still possible for the project to proceed in any of
a
number of possible directions. The idea has yet to be elaborated. The exact
form
of the
follow-up phase is probably also known only in the broadest terms. This is
too
little information upon which to base a realistic, detailed estimate for the
follow-up
phase. A broad outline of a budget is the most that can be expected at
this
stage.
Project
plans therefore work as follows: a global budget is made for the entire
project,
along with a concrete budget for the next subsequent phase. For example,
if a
project team is preparing to enter the implementation phase (after the
development
phase), they are well aware of what must happen. At that point, it is
possible
to make a detailed budget for the implementation phase.
(this article which
originally written by me when I was giving lectures in my institute for the students
of project
management certification will continue in parts on my
blog).