Project managers must control all aspects of their projects, including reducing costs and spending financial resources wisely to complete the project within budget.
To manage costs, most project managers solicit procurements (bids) via a public bidding process to obtain as many competing bids as possible. The detailed list of project specifications, called a request for proposal (RFP), invites vendors to make their best offer to complete the project. In this way, vendors detail what they will charge for the work they pledge to perform.
The project manager evaluates each response or bid they receive and chooses the vendor that makes them the best offer, usually by meeting the project's material needs within the assigned budget. Since the RFP process can be time-consuming, it is best to begin soliciting bids as soon after the project has been approved as possible.
Cost management does not end here. Despite their best efforts to conduct a thorough cost assessment at the beginning of each project, experienced project managers know that unexpected changes frequently occur that threaten to negatively impact the project's bottom line (see learning outcome 5c).
To review, see Project Execution, starting at 30:00.
Communication is the most important tool project managers have at their disposal during the execution phase, where work on the deliverable begins. The project manager needs to provide feedback to the client, stakeholders, and team members on how things are going so everyone can plan accordingly and remove roadblocks that may prevent the project from continuing to completion.
As part of the communication process, a project manager may generate several reports:
Clients and other stakeholders often get nervous during the project execution stage: work has begun, and they worry about being hit with surprises that could delay project completion or increase costs. To calm their fears, the project manager should regularly update the key stakeholders on the project status even when there is no new information to report.
Despite careful planning, it can be difficult to predict what may occur during the project execution stage until the work actually begins.
For example, while you may have planned to simply replace an old carpet in your living room, you soon learn that you also need to fix the wooden floor that lay damaged and hidden underneath the carpet for so many years. You will need to adjust your project scope, materials needed, staff (you may need to hire some experts), budget, and completion date, accordingly.
Unexpected events occur frequently in business projects: we call them changes. For every new change (something different from the original plan), the project manager must identify the impact of the change, the ramifications, and who needs to approve the change. The project manager needs to integrate these changes throughout the project and adjust the reports, plans, and budgets accordingly.
These adjustments can be a lot of work for every small change. However, most projects begin with the understanding that changes will occur. Processes should be in place to manage them.
For example, at the beginning of the project, the client or stakeholders may agree to process a separate change order for every change that will affect the timeline by a defined number of days or increase the budget by a certain amount. However, the agreement may specify that a change order is unnecessary for smaller changes: the project team may need to resolve these relatively small issues at their own expense because they do not meet the criteria the stakeholders have set for a large change.
Managers should describe all of these changes in their weekly and monthly status reports, so the client and stakeholders are aware of them.
Project managers are usually concerned with quality assurance during the execution phase: their job is to make sure the plans they created during the initiation and planning phases are followed so the deliverable meets the quality expectations of the client.
The project manager expects the team will deliver the project in the format they had specified during the planning phase. The manager should take steps to ensure everyone follows the identified procedures with the understanding that team members who take shortcuts or fail to follow prescribed procedures could derail the whole team.
However, it is often wise for project managers to allow processes to change as needed. Managers should encourage team members to share their thoughts about improving the process laid out during the planning phase. However, keep in mind that project management is all about working together as a team to accomplish the project's goals, and quality assurance is built around doing the right thing the first time, so valuable time and money are not wasted reworking the project to fit a new process.
Individuals who create their own procedures without support from the rest of the team could negatively affect team cohesiveness and the quality and cost of the end product.
Following the prescribed procedures usually increases the likelihood that the project deliverable meets the client or stakeholders' expectations. The project manager knows they have met the criteria of quality assurance when the expected deliverable is produced in accordance with the needs of the client.
To review, see Project Execution, starting at 11:06.
Project risk describes uncertain events or conditions that can affect at least one project objective. Risk management focuses on identifying and assessing risks to minimize their negative effects on the project.
During the initiation and planning phase, the project manager and team should identify potential risks to the project during the execution phase. They may create a risk register that lists as many potential risks as possible, with information on how these risks could impact the project in terms of time, money, and staff. The team should prioritize the register according to how they plan to manage the risk.
For example, an American project manager assigned to lead a project from November to February should expect to receive several requests for time off from staff members who want to spend the holidays with their families from late November to the end of December. The project manager who anticipates these requests can plan to manage this staffing risk by hiring more workers to cover the shortfall or assigning a process that requires fewer workers during this time.
This example of a staffing shortage is a known risk which the project manager has identified and managed. Let's compare this to an unknown risk.
Let's say everyone on the production staff gets sick at the same time. Although the project manager did not anticipate the flu outbreak, they can still manage the risk. As soon as the risk is identified, they can assess its impact on the project, devise potential solutions, and act accordingly. We can retire the risk once it has passed beyond its ability to negatively affect the project.
Here are a few strategies to mitigate the effect of a risk: