Crucial decisions must be taken at five points during a project; these decision
points correspond to the end of each project phase, and they call for recording the
project’s current status and writing an intermediate report. They also provide the
opportunity to reconsider the project phases that are yet to come.
At these decision points, project leaders should consult with their clients
regarding decisions about the project and adjust the control factors, if necessary.
For example, if many new and unexpected requirements have emerged during the
definition phase that could increase the costs considerably, it is useless to proceed
with the original budget.
The decision points at the end of the phases are often ‘go/no-go moments’;
they call for decisions regarding whether to proceed with the project or whether it
should be discontinued.
The following situation often occurs in organisations that do not work according to
project phases: a project plan is initially written, in which the control factors are
described. A timeline (Time) is specified, and a budget (Money) is prepared, a team
is formed (Organisation), a goal is described (Quality) and the tools for information
services surrounding the project are determined (Information). During a project,
the project leader continues to make sure that the project remains somewhat
within the total budget and the timeline, but makes no real adjustments. Near the
end of a project, the project proves to cost more or to take longer than originally
expected. The project is then scaled back to avoid further cost over-runs or delays.
Unfortunately, the project result suffers.
Had the project leader in such a case worked with the six-phase model, the
team would probably have already concluded in the design phase or perhaps even
in the definition phase that the original timeline and budget were insufficient. If the
project leader had made adjustments at that time, a simpler design could have
been chosen that would have been less expensive and time-consuming to
implement. Alternatively, more time, money or both could have been requested
from the client. At any rate, the status of the project would have been clear months
earlier, and it would have been possible to steer the project in a meaningful way.
Uncertainty in project plans
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
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.
The global budget estimates for the total project must be adjusted after each
phase. After each phase, there is more knowledge and decisions have been taken
that allow the global budget to be completed in more detail. In this way, estimates
of the total costs of the project become increasingly accurate after each phase.
Making a global budget for the entire project and a concrete budget for the
next phase is important, and not only for the control factor of money. It is
important to work from global to concrete for the other factors as well.
The process of making budget estimates can be summarised as follows:
Budgeting should occur before each phase.
Make or adjust the global budget for the entire project.
Make a concrete budget for the next phase.
All control factors should be reconsidered and re-estimated for each new
Budgeting in this way (particularly with regard to time and money) is a realistic
manner of coping with uncertainty, which is greater at the beginning of the project
than it is at the end. It creates a problem, however, for organisations that are
financed by government subsidies, social foundations or both. This is particularly
true for organisations that conduct innovative, and thus uncertain, projects.
Most foundations and grant makers require a project proposal that includes a
complete and firmly established budget before they will release funds for a project.
An organisation that seeks financing for a project must therefore develop a
complete, concrete budget at a very early stage. In the beginning, however, the
project is still in the conceptual phase, and it is thus impossible to make a realistic
cost estimate or timeline. Only after the design phase, when the idea has been
elaborated and a design has been chosen, is there sufficient information to say how
much the project will cost and how much time its implementation will take. This
stage does not occur until several months after the grant application must be
One result of the way in which grant makers and foundations tend to work is
that many organisations request amounts that are based on rough estimates of the
project costs. Project activities are subsequently fitted to the budget that has been
made available. This puts the project team in a tight position from the start, even
though the most flexibility is needed in the early stages.
The process of elaborating concepts during the definition and design phases,
therefore, often reveals that the timeline that was proposed in the grant application
is not feasible. The budget may also prove inadequate, including too much for
some items and not enough for others. Any additional requirements from the grant
maker (e.g. no item may deviate more than five per cent) place the project team
under immense pressure. Matters must be implemented in too little time and within
a budget that is too tight. This situation often leads to considerable shuffling among
the various items in the budget. Considerable text and analysis is then necessary in
the project statement to explain why the desired result was not achieved.
The situation would improve if grant makers were to couple their financing onto
the various phases instead of providing funds at one time in advance. The initial
financing would then be intended for the definition and the design phases. The
requirements would be investigated and a number of alternative designs would be
prepared within this limited budget. A subsequent application based on these
designs would then be submitted for implementation and follow-up. This would
allow projects to avoid unnecessary pressure. An additional advantage would be
that the expectations of the involved parties would be more realistic, saving time,
money and disappointment.
Crucial decisions must be taken at five points during a project; these decision