There are several factors that can influence the decisions of a project manager that have little or nothing to do with the project itself. Examples of such factors include structure,culture, or even a political climate in an organization. This article looks at challenges that Justin, a newly appointed project manager faces at the General Sensor Company
Justins’ dilemma
Justin (a newly named project
manager of a new sensor manufacturing process project) is faced with a dilemma;
to construct a budget that accurately reflects the costs of the proposed new
process project. Justin is experienced, however recent firing of his colleague
because of overestimating the budget has made him feel uneasy. While Justin has
the detailed cost information about the majority of the process, the costs for
the new modified process stage are yet to be clearly identified. He is
confident that the modifications will cause minor changes however there is
still uncertainty as potential changes have not been clearly identified. Guy
(the company president) has canceled several projects that appeared
marginal during their feasibility stages and recently fired a project manager
for overestimating project costs on a new model sensor" (Portny et al,
2013).
Questions
Under these circumstances,
would Justin be wise to pursue a top down or bottom up budgeting approaching?
Why?
Under the circumstances my
first instinct was to recommend Justin to pursue a top down approach to
budgeting that is based on collective judgments and experiences of top and
middle managers concerning similar projects.
Why? At times in organizations
you need to manage organizational politics. One of the ways to do this is to
get buy in from stakeholders by making them be part of a solution. A top down
approach allows for estimates of the overall project costs by estimating the
costs of major tasks. Justin could express (based on his experience) a
tentative amount based on his analysis. Since his initial estimate show that
the change may cause minor changes, the change may not cause serious budgetary
problems.
However, the top down approach
may have major disadvantages such as allowing budgets to be controlled by
people who play little role in designing and doing the actual work required by
the project (Portney, et. al., 2008, p. 123).
In view of that, I strongly
recommend for Justin to use his experience and use a bottom up approach to get
more accurate estimates. He may run a risk of overlooking some small but costly
tasks but with a strong supporting case, Guy will have to understand. I want to
believe that since a competitor introduced a similar sensor that has become
highly successful, there is more pressure to the president.
On a separate note, as an
organization, they should allow a margin for errors especially when careful
analysis has been made and you already have a benchmark of a similar product,
otherwise the people in the organization will never be able to learn. This made
me think of the project closure where we also do lessons learnt sessions. Part
of being in a project is also to discover new ways of doing things, along the
way we make mistakes (wrong decisions) or do better whichever the case
is, we document key learning to ensure they do not happen again, they are
reduced or we apply the better way.
What factors are most relevant
in terms of creating a budget in this situation?
Laureate, 2012 identifies five
elements that can affect a project. These are time, money, people, quality and
scope. In this case money and quality seem to be the most relevant. From
the case, it is stated that ‘’sensors are extremely price sensitive’’ and
depend on volumes. He can look at direct and indirect costs of manufacturing
sensors, the volumes required for the new line, run a comparison with what is
existing and come up with estimates.
How can this
type of situation apply to an education or training project environment?
In an education or training
project environment, this kind of dilemma can happen when deciding on having a
program delivered online, distance learning or classroom. At least in corporate return on investment is key. As an ID project manager, you may find
that a certain way of delivering the course may provide more value and returns
only to find out the SME and business does not agree on the mode of delivery.
In addition, within the ID team, there are preferences, one could opt to use ADDIE
as a systematic approach to compete a project while another may prefer a
combination of GAGNEs and ARCS
Reference
Portny, S. E., Mantel, S. J., Meredith, J. R., Shafer, S. M.,
Sutton, M. M., & Kramer, B. E. (2008). Project management planning, scheduling,
and controlling projects. Hoboken, NJ: Wiley Pathways.
