Project Administration Justification
Inadequate project administration can produce budget overruns and schedule slippages that increase project costs and affect the bottom line of the corporation. The following example illustrates the cumulative costs and benefits associated with a properly administered (in green) and an inadequately administered (in orange) project. Implementation of the properly administered project takes about 4 months and costs about $5M. After month 4 it starts producing a return on investment, breaking even month 12 and earning $7M profit by the end of its useful life around month 23.
The inadequately administered project finishes implementation one month later and costs an additional $1M. Thus it starts producing its return and breaks even one month later producing only $6M in profit, and the extra time and cost are never recovered.
Underlying causes of schedule slippage and cost overruns include project plans which may not:
Contain enough detail for participants to know when they are expected to perform their tasks. In a matrix management environment this can cause project delays and disrupt normal department operations. See the Project Administration Library page, item (4)
Properly reflect task interdependencies which results in tasks and their associated resources in the wrong place at the wrong time and schedule slippage.
Recognize resource overload which results in worker overtime, delayed execution of tasks, and overall schedule slippage.
Consider task or resource interdependencies with other plans which results tasks and their associated resources in the wrong place at the wrong time and schedule slippage.
Achieve the optimum level of parallelism which means the project could have completed earlier.
Identify the critical path. Lack of awareness that any slip on this task sequence delays the whole project can be costly.
Correctly forecast budget and schedule which means the project time and cash requirements could surprise management and result in cancellation or budget overrun.
Inadequate tracking and status reporting may not show:
Which tasks require more work than predicted. This causes unexpected worker overtime.
Which tasks will need additional resource to complete on time. This causes unexpected worker overtime.
Who owns the lateness. Lack of ownership can lead to lack of motivation.
What must be done to recover from delays which results in delays being propagated throughout the project.
Changes in the critical path which means the team is no longer focusing on the most critical tasks for schedule control.
When the project will complete and how much it will cost at completion which means time and cash requirements could surprise management and result in cancellation or budget overrun.
Without adequate plans and status reports project managers and executives cannot control their projects. For more information on plan construction and reporting metrics visit our Project Administration Process page, and see the Project Administration Library page, items (2) and (9).
You can probably benefit by improving your Project Administration capability:
Determine the initial and annual economic benefits of a Project Administration Service to your company by performing a PA Service Cost/Benefit Analysis.
Visit our PAI Services & Training page to select the service or training offering that will be most helpful.