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Quality & Risk in the Project Context

Video: Chapter 1

Introduction and purpose

This textbook aims to be a supplementary textbook to the classic books in the area of project management and not a replacement for any of those. However, the book can stand alone in its focus on the challenging issues of project quality and risk management.

Most project management textbooks highlight the management and control aspects of projects, with a particular emphasis on cost and schedule performance within proposed sustainable risk levels. They usually also address the organizational, leadership and team development topics.

The topics above are more crucial than ever for present and future business and project adventures, given a harsher business environment with tighter budgets, and shorter lead and execution times. Therefore, these dimensions ought to be afforded particular attention in the world of enhanced business and commercial awareness. Independent project reviews also frequently reflect a desire to confirm the presence of viable cost and schedule estimates before sanctioning and approving a proposed project.

These cybernetic dimensions should constitute the core elements of a project baseline, the requirements necessary for competent management, cost control, and associated progress.

The corresponding organizational and leader features in management and project execution may be assessed by different health checks or project maturity models, in which the PMI based OPM3 is the most widely used model for analysing issues related to culture, organization, roles, team development and leadership capabilities.

Classic project control and management focus on the following project dimensions: i) cost, ii) schedule and iii) product quality. For some projects, particular attention is given to cost and schedule control, with less focus on the actual delivery of output product or service. The output product quality is defined in the specification requirements and included in the project scope/range of work. The prominent issues of product quality and work range should be afforded the same level of attention as cost development and progress/schedule.

The success of a project is dependent upon a sensible approach which takes into account the desired project results,

the product quality itself, cost expenditure, as well as time spent on project completion under a predictable and manageable risk profile.

This book will address quality and risk issues in the context of project-specific constraints and conditions, as these aspects are as important as cost, schedule management, and control.

The goal is to achieve a balance between the quality of the delivered product/service and the efforts (i.e. cost and schedule control) needed to finish the product/service, thus generating an acceptable risk, efficiency, and effectiveness profile for the project in question.

Table 1 – 1 lists the fundamental elements of project management, in which the standard high performing project management includes managing product quality, cost expenditure, and project progress/schedule. Project cost and schedule are frequently estimated at a satisfactory level of accuracy and detail, thus establishing sound cost control and progress during project execution.

Experience from some industries and projects has raised the question of whether the actual product delivery and its product quality is specified,

planned, monitored and controlled at the same systematic and precise level as project cost and schedule.

Task/Scope

Product quality & functionality

Project cost estimates

Project schedule & timeline

Business benefit

The classic project control parameters

Requirement to a neutral and objective description of the scope of work.

Firm and realistic description of product quality and specification requirements.

Develop a realistic estimate of total cost and associated contingency and cost.

Derivation of a realistic time estimates, critical path and float.

Identification of potential business benefit by use of the project delivery.

Task/Scope

Product quality & functionality

Project cost estimates

Project schedule & timeline

Business benefit

The classic project control parameters

Requirement to a neutral and objective description of the scope of work.

Firm and realistic description of product quality and specification requirements.

Develop a realistic estimate of total cost and associated contingency and cost.

Derivation of a realistic time estimates, critical path and float.

Identification of potential business benefit by use of the project delivery.

Table 1-1 Primary control and performance parameters in projects.

Quality and risk management in projects are essential tools for improving project performance. They also contribute to the added confidence, efficiency, and satisfaction of the specified product quality requirements under an optimized risk and opportunity control regime, leading to a maximum benefit of the application of the project delivery for the user or client.

If the project product delivery does not meet the client's specific requirements and does not comply with the scope of work, it is of limited value to perform to the excellence in management and control of accumulated cost and the corresponding progress.

As a consequence,

project quality and risk management should include both the development of the actual product delivery/product quality, as well as the expected business benefit of the utilization of the product/delivery.

The project execution must be manageable and allow for a range of changing dynamics and uncertainties associated with all the primary project control variables. In other words, quality management in projects includes managing quality and risk on any variable associated with the planning and execution of the project in question.

One should always aim to establish an initial prediction of the desired or likely figure of the potential effect goal or business benefit to be used in the project product delivery.

The potential effect goal could be an enhanced reliability level, improved service level or operability, increased production capacity, extended operating life, enhanced high-performance organization resulting in higher efficiency with improved effectiveness, etc.

The business benefit could merely reflect the initial prediction of Net Present Value,

NPV, Internal rate of return, IRR, or Return on Investment, ROI, or even payback time. The simple questions are:

The predictions are summarized in the business case. The estimated business potential or business benefit provides ambition and direction for the desired delivery and should be thoroughly detailed in the scope of work. By succinctly describing the business potential/expected business benefit, one will significantly enhance the precision level in the scope of work. The apparent dependency between the variables listed in table 1–1 is particularly important.

A thoroughly formulated scope of work is a condition for derivation of a firm specification requirement for the product/service to be delivered from the project.Furthermore, this specification will provide the basis for the estimated costs and the schedule, as well as preliminary estimates for the potential business benefit.

Over the last 20 years, there has been a gradual change in the description of specification requirements, towards a focus on the functionality of specification requirements rather than a focus on specific details.

The rationale behind this is that detail-specific requirements have a relatively short lifetime, whereas functional requirements are longer lasting. Thus, it provides more predictability for the suppliers of requested products and services. However, establishing the optimal functional requirements will become particularly demanding as the goal will be to combine objectivity as well as sufficient clarity and commitment. It requires experience and holistic understanding to derive and design functional requirements.

Quality and risk are inherent to all projects. The basic principles are the same, but the necessary details in planning and control will vary depending on the type of project in question. Managing quality and risk in a reorganization project will typically be significantly different from a traditional construction project on land or offshore.

The primary objectives of quality and risk management are to continuously improve the project performance to satisfy the specified as well as expected features in an efficient way, thus optimizing the efficacy and utility of the project delivery. In that context, highly effective project environments will likely utilize the basic principles of lean and agile methodologies in project development.

In short, during dynamic conditions a planned mindset will most likely result in significant benefits compared to the classic methods of project execution in which rework may frequently occur due to insufficient planning. The latter approach is more a kind of a fire extinguisher approach, rather than professional high performing project management. Figure 1–1 briefly illustrates these aspects.

The left column in figure 1–1 illustrates the old fashion way that may give rise to a significant amount of rework, due to the lack of proper plans and control. An intensified focus on pre-project planning will pay off in the end, particularly concerning the time and effort saved by reducing the expected rework observed in the old-fashioned manner of project management.

Moreover, by making a thorough and eminent plan, the number of control activities may be reduced significantly, and the benefits increased accordingly. The right-side column of figure 1-1 illustrate this scenario schematically. This proposed condition follows the Six Sigma methodology, striving for highest performance and reliability in production. By utilizing the Six Sigma methodology, one is expected to significantly reduce the accumulated quality costs and enhance the efficiency and effectiveness of the output delivery.

The quality cost savings may be considered as benefits. Textbooks in quality management are covering these aspects in detail for regular production operations in manufacturing companies (e.g. Aune, 1996 and Oakland, 2004).

Figure 1–1 illustrates how the basic principles of better and more thorough planning improve quality and reduce the amount of rework to be done to satisfy specified requirements.

The goal is not necessarily to engage in more extensive planning activities, but instead more project relevant and "spot on" planning activities. In other words, it is not just doing things right; it is of utmost importance to ”do the right things right the first time, and in the right order or sequence.”

These perspectives give directions on how to plan and execute various tasks, which is entirely different in a project compared to normal line operations. Projects are to some extent extreme in the sense that they are by definition a one-time event and unique, in contrast to repetitive production operations. In projects, you have to do the work correctly the first time, and if not, rework will be necessary, thus increasing the risk of cost overruns and delay.

In regular production operations,

process management and control are critical issues to achieving the specified product quality and desired efficiency. In process management and control, any deviation in product quality and efficiency may be readily adjusted back on track by utilizing the appropriate process control parameters for the production line in question.

The quality improvement loop was initially derived by Juran (1989) and Deming (1986), and is the basis for the principles of continuous improvement and lean manufacturing. It consists of the following four steps, in the so-called PDCA wheel:

The PDCA loop is well suited for regular production operations. However, one may question its appropriateness for projects and project-specific constraints. The nature and characteristics of any project is to deliver a unique “one-of-a-kind” product or service. The ultimate experience for a project manager is to handover the project delivery either to (new) operators or users when the project is finalized.

Monitoring and control of the final product delivery will confirm the actual product quality. It has value for the handover process and the use of the delivery.

However, monitoring and control of the final delivery have little value for the project during its planning and execution phases.

During project execution, appropriate measures and control of quality development should be a part of progress and status reporting. Upon identification of any deviation at any point in time, the proper corrective actions should be executed, and the anticipated expected final quality should comply with the specified product quality requirements.

The corrective actions might follow the principles outlined in the PDCA improvement cycle. That is as important for specific projects as for regular production operations.

This textbook will address a range of important issues related to quality and risk management in projects. The model is primarily based on a process approach, as process mapping and management provides the opportunity for continuously monitoring and improving performance. Furthermore, the ISO standards for quality management, risk management, and quality management in projects are all based on a process approach. The corresponding quality models are derived and founded on core processes.

This textbook provides no guidance on the respective ISO standards.

It is not a catalogue of tools and methods for monitoring and control, nor is it a collection of checklists on various quality and risk issues in quality work in projects. The essential goal of this textbook is to provide comprehensive and detailed recommendations on how to execute quality and risk management in projects to a level which provides a project manager with project performance excellence by efficient use of appropriate quality and risk models in the ISO standards.

 

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