• Substitution of materials

• Use of outside contractors

• Providing bonus payments to contractors

• Single-sourcing

• Waiving drawing approvals

The corrective actions defined above can be used for time, cost, and performance. However, there are specific alternatives for each area. Assuming that a PERT/CPM analysis was done initially to schedule the project, then the following options are available for schedule manipulation:

• Prioritize all tasks and see the effect on the critical path of eliminating low-priority efforts.

• Use resource leveling.

• Carry the work breakdown structure to one more level, and reassess the time estimates for each task.

Performance trade-offs can be obtained as follows:

• Excessive or tight specifications that are not critical to the project may be eased. (Many times standard specifications such as mil-specs are used without regard for their necessity.)

• Requirements for testing can be altered to accommodate automation (such as accelerated life testing) to minimize costs.

• Set an absolute minimum acceptable performance requirement below which you will not pursue the project. This gives a bound at the low end of performance that can't be crossed in choosing between trade-off alternatives.

• Give up only those performance requirements that have little or no bearing on the overall project goals (including implied goals) and their achievement. This may require the project manager to itemize and prioritize major and minor objectives.

• Consider absorbing tasks with dedicated project office personnel. This is a resource trade-off that can be effective when the tasks to be performed require in-depth knowledge of the project. An example would be the use of dedicated project personnel to perform information gathering on rehabilitation-type projects. The improved performance of these people in the design and testing phases due to their strong background can save considerable time and effort.

The most promising areas for cost analysis include:

• Incremental costing (using sensitivity analysis)

• Reallocation of resources

• Material substitution where lower-cost materials are utilized without changing project specifications

Depending on the magnitude of the problem, the timeliness of its identification, and the potential impact on the project results, it may be that no actions exist that will bring the project in on time, within budget, and at an acceptable level of performance. The following viable alternatives usually remain:

• A renegotiation of project performance criteria could be attempted with the project sponsor. Such action would be based on a pragmatic view of the acceptability of the probable outcome. Personal convenience of the project manager is not a factor. Professional and legal liability for the project manager, project team, or parent organization may be very real concerns.

• If renegotiation is not considered a viable alternative, or if it is rejected, the only remaining option is to "stop loss" in completing the project. Such planning should involve both line and project management, since the parent organization is at this point seeking to defend itself. Options include:

• Completing the project on schedule, to the minimum quality level required by the project sponsor. This results in cost overruns (financial loss) but should produce a reasonably satisfied project sponsor. (Project sponsors are not really comfortable when they know a project team is operating in a "stop-loss" mode!)

• Controlling costs and performance, but permitting the schedule to slide. The degree of unhappiness this generates with the project sponsor will be determined by the specific situation. Risks include loss of future work or consequential damages.

• Maintaining schedule and cost performance by allowing quality to slip. The high-risk approach has a low probability of achieving total success and a high probability of achieving total failure. Quality work done on the project will be lost if the final results are below minimum standards.

• Seeking to achieve desired costs, schedule, and performance results in the light of impossible circumstances. This approach "hopes" that the inevitable won't happen, and offers the opportunity to fail simultaneously in all areas. Criminal liability could become an issue.

• Project cancellation, in an effort to limit exposure beyond that already encountered. This approach might terminate the career of a project manager but could enhance the career of the staff counsel!

The sixth and final step in the methodology of the management of project trade-offs is to obtain management approval and replan the project. The project manager usually identifies the alternatives and prepares his recommendation. He then submits his recommendation to top management for approval. Top-management involvement is necessary because the project manager may try to make corrective action in a vacuum. Top management normally makes decisions based on the following:

• The firm's policies on quality, integrity, and image

• The ability to develop a long-term client relationship

• Type of project (R&D, modernization, new product)

• Size and complexity of the project

• Other projects underway or planned

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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