NOTHING will derail a project more than changes to the scope of work and whether it is new work added or an increase to the original, the scope must be rigorously controlled to assess the impact to the budget and delivery schedule.I have discussed in previous articles how the elements of scope, time, cost, resource and risk were integrated and this week I will detail the scope of work and how it forms the hub of the integration.
Upon award of any project the PM needs to understand the scope of work (SOW) that he has been tasked with delivering which is found in the signed contract document.
The unfortunate aspect of a contract document is that it is written by lawyers who don’t seem to visit the planet earth too often judging by the ‘language’ used therein, therefore the SOW needs to be extracted, interpreted and structured into a form that mere mortals can understand.
This is achieved by taking the contract document and breaking it up into identifiable work packages and developing the Work Breakdown Structure (WBS). The development of the WBS is considered an extremely important part of the project management process and if constructed correctly can become a powerful tool in the PM’s arsenal.
The WBS is simply a hierarchical structure that breaks the overall project SOW into meaningful portions known as ‘deliverables’. These deliverables are placed into a structure with a parent/child relationship to form the WBS.
When reviewing the SOW, the practitioner identifies what the project must produce and deliver to the client (deliverables). This is a crucial part in the process as any deliverable missed here can cause major problems during the construction phase.
In addition, if the client insists on work to be performed that cannot be categorized under an identified WBS element then that work is deemed to be ‘out of scope’ and a variation order (VO) should be raised, submitted and approval received prior to the execution of work.
Of course there are documented cases where the client has responded to the submitted VO stating the relevant clause in the contract that relates to the VO resulting in the contractors claim for additional funds and/or extension of time being rejected.
If this situation should occur late in the contract period or related to critical work then serious consequences could befall the contractor in the form of profit loss or liquidated and ascertained damages (LAD’s) being applied.
One of the major causes of project budget overrun is executing work outside the original scope without receiving appropriate client approvals, and by that I mean approval to proceed, not necessarily approval of additional cost or time, as that can be negotiated later. If out of scope work is undertaken prior to receiving approval the project will stand little or no chance of recovering the cost at a later stage and so scope management is imperative.
The WBS forms the foundation in the project schedule with activities defining what work needs be done to produce the WBS deliverables.
This is particularly useful as the activities hold the majority of the information such as the duration to complete each item of work, resource allocation, budgeted cost, and resource man-hours, hence the reason why the integration between scope, time, cost, resource and risk is paramount.
As a simple example let’s say you have been engaged to build a custom mountain bike. You receive a document that describes what the owner wants (SOW) and proceed to identify the components necessary to produce the bike (scope statement). It was immediately evident that there were no tires mentioned in the SOW to which the owner stated they would provide and fit the tires themselves.
Each identified components was then placed into a hierarchical structure to form the WBS that describes what is to be delivered. Activities describing how the deliverable is produced can be added to each WBS level together with the duration to do the activity, the required resources, a budget, and any identified risks.
This information can then be aggregated and rolled up through the WBS hierarchy to produce high level performance reports so management can monitor any divergences from the original baseline.
After the scope statement and WBS are formulated they are approved by the client as an accurate and concise definition of the required deliverables.
During the building of the mountain bike the client informs you that they now require you to supply and fit the tires. As this was excluded in the original scope and does not exist in the WBS it must now be added as a ‘child’ under the ‘Wheels & Spokes’ element.
The activities of work can then be added to this new element together with the required resources to undertake the work and calculate if the additional work can be achieved within the required delivery date. Resource labour cost together with the purchase cost of the tires can be added including any contingencies calculated after a full risk analysis is completed.
This information forms documented justification for additional ‘time’ and ‘cost’ claims submitted to the client for approval.
Scope management forms an integral process in measuring the health of a project and forms the critical hub for the integration of time, cost, resource and risk elements of the project.
Phil Palmer holds a MSc. In Project Management and is Managing Director of PCSS Consultancy Sdn Bhd. You are welcome to post your comments about this article at http://projman-meth.blogspot.com/ or visit the PCSS website at www.pcss.com.my