Project Management: The Gap Between Want & Get
A dodgy specification combined with a fixed price is every project managers worst nightmare, yet despite us all being in agreement on this there is still often a huge gapm between a projects needs and the assigned budget/resource.
The main issue here is the question of risk and who is willing to take it. In cases of fixed price projects the risk is with the supplier, whereas with T&M it is the customer who bears the risk. Overrunning is the most common risk, and the cost of any extra time, work or resource has to be absorbed by wither the customer or the supplier.
When a project is fixed price, theoretically it should be the supplier who is willing to shoulder the risk (and any related cost), as it is they who have set the deadline and all associated milestones. If a fixed price project comes in late then the cost is covered by the contingency that they added into their pricing, and if it comes in early then it means they get more profit. So everyone is satisfied, unless the project is completed so late that it takes the profit and contingency along with it, but then that’s the suppliers fault- right?
In most cases it is unlikely that the supplier has had compete say over the cost and timescales as it is a very naive customer who doesn’t negotiate the estimates they are given. And of course suppliers are aware of this, and know that if they don’t come to an agreement with the client there are plenty of competitors willing to. This leads to them accepting fixed price projects scoped with very little margin for movement, which is definitely a risk.
Even when the deficit is entirely the fault of the supplier, they still need to stay in business and running unprofitable projects is not the way to do it! So to overcome this supplier’s will often scale back the project and under deliver, then hit back with the dreaded ‘change request’- and once you’re into this territory, then no one wins!
One potentially effective way out of the problem is to assess what the initial needs were, rather than how they are to be fulfilled or what the cost implication is. Then we can ascertain the difference between what the customer wants and what they are going to get.
Project Managers can minimize the size of the gap by ensuring that the customer can see what they are going to get as soon as possible, which may mean showing small portions of work at a time. By doing this the want vs get battle is reached and resolved sooner and the project can continue efficiently.
We call this ‘Minding the Gap’ and it takes a skilled project manager to employ this alone. By implementing strong project management software they can give themselves a helping hand, as bugs, issues and milestones are flagged automatically allowing them to be responsive and efficient
Want to find out more about project management software, then visit Countersoft’s site to see howagile project management can help you in your projects.
