Project Management: The Gap Between Want & Get
A dodgy specification combined with a fixed price is every project managers worst nightmare, yet despite us all being in agreement on this there is still often a huge gapm between a projects needs and the assigned budget/resource.
The main issue here is the question of risk and who is willing to take it. In cases of fixed price projects the risk is with the supplier, whereas with T&M it is the customer who bears the risk. Overrunning is the most common risk, and the cost of any extra time, work or resource has to be absorbed by wither the customer or the supplier.
In the fixed price scenario, theoretically the supplier would be happy to shoulder the risk as it is he (or she) who has set the timeline and decided on the price. If it comes in early they make a profit and if it comes in late they are usually covered by the extra they put in the estimate for accepting the project on a fixed price contract. Everybody ends up satisfied, except for in cases where the project comes in very late, taking the profit and contingency with it, but surely that’s the suppliers own fault anyway- or is it?
In most cases it is unlikely that the supplier has had compete say over the cost and timescales as it is a very naive customer who doesn’t negotiate the estimates they are given. And of course suppliers are aware of this, and know that if they don’t come to an agreement with the client there are plenty of competitors willing to. This leads to them accepting fixed price projects scoped with very little margin for movement, which is definitely a risk.
Even when the deficit is entirely the fault of the supplier, they still need to stay in business and running unprofitable projects is not the way to do it! So to overcome this supplier’s will often scale back the project and under deliver, then hit back with the dreaded “change request”- and once you’re into this territory, then no one wins!
One potentially effective way out of the problem is to assess what the initial needs were, rather than how they are to be fulfilled or what the cost implication is. Then we can ascertain the difference between what the customer wants and what they are going to get.
A possible resolution is to go back to the initial requirements of the project, rather than the cost and how they will be achieved. From here the gap can be ascertained and the client can see earlier the difference between what they want and what they will get.
A good Project Manager can reduce the stress in the project by revealing the gap to a customer as early on in the process as possible, so the battle can be reached and resolved sooner allowing the project to continue more efficiently. This can be achieved by allowing the customer to see small sections of the work as they are completed.
We call this procedure “Minding the Gap” and it can save hours of time and stress in the long run. It can be further enhanced by implementing project management software, as this can alert a project manager sooner rather than later to any issues or bugs which may affect the project.
Want to find out more about project management software, then visit Countersoft’s site to see howagile project management can help you in your projects.