Tag: Budgets

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How Technology Has Changed Procurement in the Last 10 Years

How technology has changed procurement in the last 10 years

Over the past decade business procurement has experienced rapid technological upheaval that, in the main, has made life easier for everyone involved.

The first ever Global Procurement Technology Summit was held in March 2016. It shows the emphasis procurement is now putting on understanding and utilising new technologies, and that it’s clearly a huge talking point for professionals across the world.

Looking in greater detail: which technology has been responsible and what has the effect been on procurement and buying professionals?

1. More informed decisions are being made

The digitalisation of procurement processes and integration of data-sharing across buyer behaviour, ratings and history of purchases over extended periods of time, has made for smarter and more informed decisions.

Despite the greater insight into decision-making, a study of US procurement professionals still revealed accurate forecasting to be the biggest challenge, something that’s possibly down to the rise in budget responsibilities over the last ten years.

The Coupa ‘Top 5: Constants and Change in Cloud Procurement’ report revealed that in 2003, budgets were reported as an average of $31m, compared to $100m in 2013.

2. Response times have drastically reduced

Procurement solutions are now quicker and easier than ever thanks to new marketplace technologies.

Buyers can take advantage of online purchasing possibilities, using websites like Amazon to source, purchase and arrange delivery of items.

The speed of procurement reflects the new speed in which consumerism moves ’’ the integration of digital mediums with online shopping has made the process of deliberation through to transaction much easier, a trend which has been reflected in the world of procurement.

3. Integration has brought its own problems

Technological integration has created many positives for procurement, but it’s also created challenges.

Millennials will make up 40% of the workforce by 2020, which is great for improving current procurement solutions as younger generations have higher expectations for technology and are early adapters.

However, the average age of procurement professionals in the UK is currently 44 – much older than the next generation of workers, who fully understand the capabilities of technology, and who will be easier to train and able to work with increased speed and accuracy.

The gap will close in the coming years, but procurement faces a struggle as older workers need to ensure their skills are relevant to the changing world around them.

Additionally, Hays’ ‘Procurement Salary Guide’ revealed that demand for procurement professionals has increased at all levels within the public sector, pushing salaries up. This demand is the result of a squeeze on public finances and attempts to cut costs following the slowdown in the economy.

4, Technology and the future of procurement

To conclude, technology is clearly a powerful enabler that’s here to stay. Plenty of companies are now seeing the importance of procurement technology as a means to improve their bottom lines, which was reflected in the inaugural Global Procurement Technology Summit earlier this year.

Integration of contract management, risk management and supplier lifecycle systems through investment in improved systems with added capabilities, has ensured more accurate sourcing is possible and due to the skills involved in running these systems, has driven salaries up.

Sophia Chapman is a guest contributor from Portfolio Procurement, expert recruiters in the compensation, benefit and reward sector.

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66% of IT Projects Fail

Is Britain a nation of slient Christians?

Only one in three software projects will turn out to be successful. According to Standish Group’s 2015 Chaos report, 66% of technology projects (based on the analysis of 50,000 projects worldwide) end in partial or total failure. More surprisingly, these statistics have been the same for the last five years, the report shows. Furthermore, 17% of large IT projects go so badly that they can threaten the very existence of  a company.

On Average, Large It Projects Run 45% over Budget and 7% over Time, While Delivering 56% Less Value than Predicted

Despite such failures, huge sums continue to be invested in IT projects and written off. For example the cost of project failure across the European Union was ┚¬142 billion in 2004.

It Projects Always Come with an Element of Risk, but There Are Huge Gains to Be Had If We Can Just Avoid Some of the Factors That Contribute Frequently to Project Failure

What makes a IT project successful, though?

According to the Standish Group, a successful project is on time, on budget and has satisfactory results (value, user and sponsor satisfaction, and meets target requirements). Other measures of success are widely known and accepted as true such as getting requirements right, providing effective leadership, and having full support and engagement from sponsors and users. Without these, it’s unlikely that any project would succeed.

But there’s more to success than what is widely known and, apparently, rarely followed. To reduce the risk of failure for your tech project, here are  six key actions to take on the road to success.

1. Executive Vision and Involvement

Without a Executive Senior Sponsor Its Easy for Projects to Fail with the Organizational Resistance That Accompanies Large Change

Executive involvement is a primary variable in predicting the success of an IT project.   Having a leadership team aligned across an organization articulating the purpose, value, and rationale for a project goes a long way towards getting stakeholders and end-users pulling the proverbial rope in the same direction.

2. Have a clear view of scope and timetable

Oftentimes, a tech project flops because its developers fail to plan and rush forward with  an idea. However, some project  managers plan so meticulously that they end up falling behind and lose momentum. The best approach is somewhere in between.

Interviewing team members, documenting requirements, prioritizing what is “mission critical” versus “nice to have,” getting agreement across stakeholders can feel like a never-ending cycle.   As a result, requirement gathering has fallen out of fashion with many organizations  in the past few years.

However, the ideal starting point for a successful technology project is to have a set of fundamental requirements with sufficient detail to develop against.

Requirement Gathering Is Labour-intensive and Challenging but Remains the Roadmap and Measuring Stick for Software Projects

This approach allows you to maintain sight of the business benefits as well as engaging stakeholders and responding to their feedback.  In combination with a  clear business case, a  well-defined set of requirements also simplifies design and testing, two areas where projects tend to go  sideways.

Ensure that requirements for the project are clearly defined and agreed upon among stakeholders and that you have a way to track, measure, and manage changes in requirements as appropriate during the project.

3. Define how you will deliver

When it comes to delivering a major project, one size does not always fit all. All products are customizable to some degree, so what might have worked  in one company may not work in another company.

That being said, why reinvent the wheel if it’s already proven successful?  Sometimes it  can be more beneficial to  use an existing  off the shelf solution. Whichever direction you take,  choose the delivery mode that works best for your company.

4. Risk Identification and Management

Every project has risk and  there are many  factors out of your control. People leave the organization, for better or worse, leadership changes,   budgets get cut, however, many risks  to projects can be mitigated or even eliminated with some forethought and on-going management.    For example, do you have the resources you need to deliver the project (resource risk).   Are project goals clearly understood and requirements clearly defined (scope risk).   Do you have a realistic project plan and timeline (time risk).

Mitigating Risk Is a Combination of Science and Art, and Always a Balancing Process

5. Test your product again and again

A technology project is something that should overall support your business. It should not be something that dictates and forces you to  change your operations. If this is happening, you should shift gears and focus on tweaking the technology, rather than lowering expectations and adopting less ideal requirements.

Adequate testing is a must for any tech project. While some features may be fine with automated testing, the best approach is to have a dedicated testing team. Testing activities should mirror those with the development team throughout the project’s lifetime. With thorough testing, a project should deliver with less design flaws or missing requirements.

6. Prioritize simplicity and performance

Developers often leave the external look and feel of a product to the wayside thinking these things are not necessities for the consumer to enjoy. However, user experience is absolutely critical to the success of the project.

Developers must consider things like storage, network requirements, processing speeds and overall performance in order to satisfy the customer. If users are going to have to wait for an extended period to allow information to load, there must be a good reason for the wait, otherwise they won’t return for future products.

Simplification and Improved Efficiency Is What Adds Value

Ultimately, using the product should be a smooth and intuitive experience. Additionally, tools and alternative routes must be placed logically without being intrusive. The process can be complicated, but the finished product should emit simplicity. After all, that’s what makes companies like Apple so successful. Simplification and improved efficiency is what adds value.

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A Day in the Life of a Project Manager

Managing Daily Routines: A Day in the Life of a IT Project Manager

We all know that project managers are responsible for managing projects through to completion while remaining on time and within budget, but how exactly do they do it? What does a typical day look like for a project manager?

Here’s a sample of what a typical day might look like for a project manager.

The Early Bird Gets the Worm, Success Comes to Those Who Prepare Well and Put in Effort

8.30  am: Starting the day
After settling in for the day’s activities, it’s time to plan out the day. Start up the computer, email clients, draft team schedules, organize time sheets and  create the to-do list.

To-do lists help managers and their teams stay on track. If a manager notices that one team member has yet to deliver an assignment, they can address this issue first thing in the morning; otherwise, delays can build up and affect the project. Likewise, lists help managers see the next course of action for projects.

9:15 am: Time to get moving

Efficiency is a must and there is no time to be wasted in project management. After a quick review of project plans and to-do lists, the manager must be prepared to get his team moving right away.

Round up team members, review the project’s current position and emphasize the next course of action. In order to get the team moving on assignments, strong project managers set deadlines throughout the day.

Morning team meetings are also necessary to make sure each member understands the project and their assignments. It’s also a time to answer any questions for clarity or to get feedback or concerns from individuals.

While daily group meetings can be important, they are not always necessary and can be counter-productive. If the team is on the same page and everyone is ready to tackle the tasks of the day, spend a short period re-grouping so that the team can get on and complete their assignments. There’s no need to spend hours planning and reviewing.

10 am: Meetings, meetings, meetings
More than one project manager will be  more than likely  in the office  and they will all need to work together for the benefit of the programme. This is why meetings with other managers and higher ups are necessary in a project manager’s day.

Meetings allow each project manager to go through the status of their respective projects and to track the weekly schedule and other deadlines. It is also a time to address any business-critical tasks that might come up.

It’s worth considering that only 7% of communication is spoken. The other 93% is made up of tone (38%) and body language (55%). So although facts and figures are easily communicated via email, letter or phone, an actual discussion or negotiation is best handled where you can see the other person and therefore are able to see for yourself what their tone and body have to say on the matter.

10:30 am: Tackling the small stuff
Meetings will be on and off throughout the day for project managers, which is why it’s important to tackle the small tasks in between appointments. Small tasks include wrapping project reports, booking future meetings, answering correspondences with other colleagues, reviewing items and team reports among other things.

It’s also important to schedule post-mortem meetings with the project team  to review the success of  projects  in order  to apply any  lessons learnt to future projects.

11 am: Project kick-off meeting
When one project ends, another begins, which means it’s time for yet another project kick-off meeting. Kick-off meetings can take on various forms, depending on the type of business. However, they all share the same basic needs.

Every individual involved with the new project should be in attendance and have the latest version of project specifications in written form. As project manager, it might be wise to send this to team members several days before the kick-off meeting to ensure everyone has time to review.

During a kick-off meeting, it’s important to review the overall goals for the project, both commercial and technical details, break down functional requirements, and spend time for discussion and questions. By allowing team members to communicate questions and share ideas, it opens the lines of communication and may bring up potential concerns that might have been missed in the initial planning stages.

Conclude kick-off meetings with a definition of the next steps and be sure individuals are aware of deadlines and their assignments.

11:30 am: Reviewing project specs, budgets and scheduling submissions
Other important tasks to tackle in between meetings include reviewing specifications and budgets and schedules for future projects. If a project begins that day, now would be a good time to  apply the  finishing touches to the project documentation before presentation and approval.

When it comes to establishing project estimates and budgets, a project manager must bring all of his experience into play in order to create a realistic budget that includes wiggle room for factors such as project complexity, team experience and skill levels, stakeholders involvement, time needed, third-party services needed, and contingency allowances among many other things.

It’s Not Easy to Squeeze in a Lunch Break, but It’s Often Necessary for the Project Managers Health and Sanity

12 pm: Lunch
In the midst of the seeming chaos that is project management, be sure to fuel up for the rest of the day’s work. Lunch is also a great span of time to check in with team members to make sure they are still on target for later-day deadlines.

2 pm: Launching the next project
After digesting lunch, it’s time to launch the next project. Get the whole team ready to go live and present the project to the client and begin testing aspects of the project in a live environment. It’s a time to spot problems and address them and review schedules and deadlines and other project needs.

3 pm: Time for everything else
The final two hours in the office are spent addressing everything else on the project manager’s plate. A project manager must be good at multi-tasking and whatever duties couldn’t be accomplished throughout the day are reserved for the final hours. Most of the time, lower priority tasks are reserved for afternoon hours. These tasks could include project update meetings with various departments, logging finances, reviewing monthly project schedules, approving time sheets, writing weekly reports, sorting purchase orders and communicating with suppliers. There are so many other small to-do list items that project managers are responsible for, but are often overlooked.

Spending Time at the End of the Day as Well as the Beginning to Review and Plan Will Only Help You Succeed as a Project Manager

5 pm: Review the day, plan for tomorrow
Before heading home, review the day’s list and what’s been accomplished. Anything that has been added or was left unfinished should be scheduled for the next day or sometime throughout the week. Reflect on your team’s work and clear the email inbox. Use a filing system that makes sense for you and be ruthless about deleting stuff. The beauty of an empty inbox is a thing to behold. It is calming, peaceful and wonderful.

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65% of Mega-projects Fail

There’s a reason why  Mega-projects are simply called “Mega-projects.” Extremely large in scale with significant impacts on communities, environment and budgets, mega-projects attract a lot of public attention and often cost more than 1 billion. Because of its grandiose, a successful mega-project requires a lot of planning, responsibility and work. Likewise, the magnificence of such projects also creates a large margin for failure.

Mega-projects Come with Big Expectations. But a Project’s Success Is Often in the Eye of the Beholder

Despite their socio-economic significance mega-projects – delivering airports, railways, power plants, Olympic parks and other long-lived assets – have a reputation for failure. It is thought that  over optimism, over complexity, poor execution, and weakness in organizational design and capabilities are  the most common root causes of megaproject failure.

Blinded by enthusiasm for the project, individuals and organizations involved with mega-projects often miscalculate the complexity of the project. When a mega-project is pitched, its common for costs and timelines to be underestimated while the benefits of the project are overestimated. According Danish economist Bent Flyvbjerg, its not unusual for project managers who are competing for funding to massage the data until it is deemed affordable. After all, revealing the real costs up front would make a project unappealing, he said. As a result, these projects are destined  for failure.

For example, building new railways spanning multiple countries could prove to be disastrous if plans are overly complex and over-optimized. Such a large-scale project involves national and local governments, various environmental and health standards, a wide range of skills and wages, private contractors, suppliers and consumers; therefore, one issue could put an end to the project. Such was the case when two countries spent nearly a decade working out diplomatic considerations while building a hydroelectric dam.

Complications and complexities of mega-projects must be considered thoroughly before launch. One way to review the ins and outs of a project is through reference-class forecasting. This process forces decision makers to look at past cases that might reflect similar outcomes to their proposed mega-project.

Poor execution is also a cause for failure in mega-projects. Due to the overoptimism and overcomplexity of a project, it’s easy for project managers and decision makers to cut corners trying to maintain cost assumptions and protect profit margins. Project execution is then overwhelmed by problems such as incomplete design, unclear scope, and mathematical errors in risk assessment and scheduling.

Researchers at McKinsey studied 48 struggling mega-projects and found that in 73 percent of the cases, poor execution was responsible for cost and time overruns. The other 27 percent ran into issues with politics such as new governments and laws.

Low productivity is another aspect of poor execution. Even though trends show that manufacturing has nearly doubled its productivity in the last 20 years, construction productivity remains flat and in some instances has even declined. However, wages continue to increase with inflation, leading to higher costs for the same results.

According to McKinsey studies, efficiency in delivering infrastructure can reduce total costs by 15 percent. Efficiency gains in areas like approval, engineering, procurement and construction can lead to as much as 25 percent of savings on new projects without compromising quality outcomes. This proves that planning before execution is worth its weight in gold.

We Tend to Exaggerate the Importance of Contracting Approach to Project Success or Failure

Finally, weaknesses in organizational design and capabilities results in failed megaprojects. For example, organizational setups can have multiple layers and in some cases the project director falls four or five levels below the top leadership. This can lead to problems as the top tier of the organizational chain (for example, subcontractors, contractors and construction managers) tend to focus on more work and more money while the lower levels of the chain (for example, owner’s representative and project sponsors) are focused on delivery schedules and budgets.

Likewise, a lack of capabilities proves to be an issue. Because of the large-scaled, complex nature of mega-projects, there is a steep learning curve involved and the skills needed are scarce. All the problems of megaprojects are compounded by the speed at which projects are started. When starting from scratch, mega-projects may create organizations of thousands of people within 12 months. This scale of work is comparable to the significant operational and managerial challenge a new start-up might face.

In the end, it seems that if organizations take the time to thoroughly prepare and plan for their mega-projects, problems like overcomplexity and overoptimism, poor execution, and weaknesses in organizational design and capabilities could be avoided. After all, mega=projects are too large and too expensive to rush into.

 

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How To Deliver On The Promise of MegaProjects

Due to the large scale and outlook attached to them, mega-projects have a large opportunity for failure. Typically, the failure begins at the outset of the project, whether that be due to poor justification for the project, misalignment among stakeholders, insufficient planning, or inability to find and use appropriate capabilities.

Underestimated costs and overestimated benefits often offset the baseline for assessing overall project performance. This is why it is important for organizations to first establish social and economic priorities before even considering what projects will answer their needs. Once social and economic priorities are established, only then can a project be considered. Selecting projects must be fact-based and transparent in order to ensure accountability with stakeholders and the public.

Successful Megaprojects Must Have Robust Risk-analysis or Risk-management Protocols

It’s also important to maintain adequate controls. Successful megaprojects must have robust risk-analysis or risk-management protocols and provide timely reports on progress relative to budgets and deadlines. Typically, progress is measured on the basis of cash flow, which is less than ideal as data could be out of date and payments to contractors do not correlate construction progress. Instead, project managers should deliver real-time data to measure activity in the field. For example, cubic meters of concrete poured relative to work plans and budgets.

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Overall, improving project performance requires better planning and preparation in three areas: doing engineering and risk analysis before construction, streamlining permitting and land acquisition, and building a project team with the appropriate mix of abilities.

Project developers and sponsors should put more focus into pre-planning such as engineering and risk analysis before the construction phase. Unfortunately, most organizations and sponsors are reluctant to spend a significant amount of money on early-stage planning because they often lack the necessary funds, they are eager to break ground and they worry the design will be modified after construction is underway, making up-front designs pointless.

However, it’s proven that if developers spend three to five percent of capital cost on early-stage engineering and design, results are far better in terms of delivering the project on-time and on-budget. This is because through the design process, challenges will be addressed and resolved before they occur during the construction phase, saving both time and money.

It’s not unusual for permits and approvals to take longer than the building of a megaproject. However, if developers look to streamline permitting and land acquisition, that would significantly improve project performance. Best practices in issuing permits involve prioritizing projects, defining clear roles and responsibilities and establishing deadlines.

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In England and Wales, developers applied these approaches to cut the time needed to approve power-industry infrastructure from 12 months to only nine months. On average, timelines for approval spanned four years throughout the rest of Europe. Likewise, the state of Virginia’s plan to widen Interstate 495 in 2012 was able to cut costs and save hundreds of homes thanks to land acquisition planning by a private design company.

Investors and Owners Must Take an Active Role in Creating the Project Team

When it’s all said and done, projects cannot deliver the best possible return on investment without a well-resourced and qualified network of project managers, advisers and controllers. Investors and owners must take an active role in creating the project team.

It’s not enough to have a vague overview of what the project might look like in the end. Instead, it’s necessary to review risks and costs and draft a detailed, practical approach to tackle various issues. An experienced project manager cannot do it all alone. The project team must include individuals with the appropriate skills, such as legal and technical expertise, contract management, project reporting, stakeholder management, and government and community relations among others.

Failure to Properly Plan for These Projects Could Have a Negative Impact on Society

While mega-projects are important in filling economic and social needs, failure to properly plan for these projects could have a negative impact on society.  Take  Centro Financiero Confinanzas (Venezuela), the eighth tallest building in Latin America at 45 stories, located in the financial district of Venezuela’s capital, Caracas for example.

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To those unaware of its history, the Centro Financiero Confinanzas is actually home to over 700 families, a “vertical slum” that is a truly fascinating example of reappropriation of space in an urban environment. An ironic symbol of financial failure that was intended to represent the unstoppable march of Venezuela’s booming economy.

It’s much more than an unbuilt building, bridge or tunnel, failed mega-projects are a blow to the economic growth and social improvements of communities around the world.

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Why Should I Hire a Project Manager for My Church Project?

Is it worth hiring a project manager when any seemingly knowledgeable pastor or church member might do?

The truth is, project managers can be a valuable asset to any organization. Whereas the average church member who is only familiar with certain tasks might be overwhelmed by the complexity of major organizational assignments, project managers are trained to handle programs with elaborate factors such as high budgets, increased manpower and layers of duties.

An Astounding 97% of Organizations Believe Project Management Is Critical to Business Performance and Organizational Success. (Source: PricewaterhouseCoopers)

On the flip side, some professional bodies disagree, arguing that professionals like pastors, marketers, and accountants are able to manage projects just as well as any project manager with some effort.

Barely over Half (56%) of Project Managers Are Certified  (Source: Wrike)

“It’s a raging debate,” said Tony Marks, author of the 20:20 Project Management guide.

“Some industries, such as oil and gas, are hesitant to hire outside project management specialists because they may lack industry knowledge. Instead, these industries prefer to employ technical experts and put them through project management training.”

“The danger is that these  people  are more likely to get  sucked into their comfort zone dealing with the nitty-gritty and technical detail they understand and are fascinated by when they should be managing the project,” said Tony Marks.

In addition to being trained to juggle tasks efficiently, project managers spend an enormous amount of time honing their skills. Much more goes into the craft than obtaining Prince2 or APM certifications.

According to Mike Savage of Thales Training and Consultancy, the International Project Management Association requires its professionals to have at least 15 years of experience and training. The association has four grades from D to A. At the A level, project managers must have a minimum of five years project management experience, five years of program management and five years of portfolio management.

“So to Say That Anyone Can Be a Project Manager Is like Saying Anyone Can Be a Brain Surgeon, Said Savage.”

But just because there are individuals specializing in project management doesn’t mean non-specialists can’t learn the techniques as well. Ian Clarkson of training course provider QA encourages everyone to learn project management practices.

“The skills, leadership, planning and stakeholder engagement techniques are vital to all disciplines,” he said.

“Projects which are run by engineers with project management training are less likely to be successful than the reverse,” said Lloyd’s Register energy program director Roger Clutton. “If there is a lack of technical expertise that will show up in the risk assessment. But a lack of project management skills is much less likely to be detected.”

With that, it seems that the argument on whether or not hiring an outside project management is necessary will continue. But the debate only seems relevant to rival professions as there is projected to be 15 million new project management jobs within the decade. (Source: Project Management Institute).

No matter how you look at it, though, it seems that trained and experienced project managers  must be  worth their weight in gold.

 

 

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