PROJECT MANAGEMENT

MBA 844

PROJECT APPRAISAL TECHNIQUES

Examine the following project appraisal techniques-

NPV, IRR, ARR, ROI, PB, STP,SOC
 Project Defined

A project is a temporary endeavor undertaken to produce

a unique product or service

Temporary Unique

The Main Objective of a project is to service debt and maximise shareholder wealth.
 Project Defined
Projects
are time /
have
resource
defined
They are consuming
goals
dissected Have steps
into tasks and consist
involving of
activities processes

Teams Trust Integrity

 Project Management

Project management is “the application of knowledge, skills, tools and

techniques to project activities in order to meet project requirements”
(PMI*, Project Management Body of Knowledge (PMBOK Guide), 2000,
p. 6)
A project appraisal is an assessment/ analysis of various aspects of a project
to determine viability

• Management
• Resource Use
Requirements
PROJECT
APPRAISAL
• Sustainability
• Feasibility

• Outcome • Payback
 Project Appraisal Techniques
• Project appraisal techniques are the methods used to assess a proposed
project's Potential Success and Viability.

• They Check the appropriateness of a project considering things such as

available funds and the economic climate

• They answer the question : Is the project worthwhile?

 • Justifies spending money on
a project

• Decision making tool

Importance of Project
Appraisal • Gets the systems right

• Lays foundation for

delivery
 PROJECT APPRAISAL TECHNIQUES

Net Present Value

1 Social Time
NPV 5
Preference
Internal Rate of
2 PROJECT
Return Payback Method 6
APPRAISAL
Accounting Rate TECHNIQUES
3
Return Social
Return On Opportunity Cost 7
4
Investment

Increased debt servicing and

shareholder wealth
 NPV DEFINED

Net present value (NPV) is the difference between the present value o
cash inflows and the present value of cash outflows over a period of
time. NPV is used in capital budgeting to analyze the profitability of a
projected investment or project. (Investopedia,218)
 NPV
Net Present Value
(NPV) calculates the
monetary value now
of the projects future
cash flows.

1. Measures value
creation(-/+)
2. Adjusts for timing
of project
cashflows
3. Adjusts for risk of
expected cashflows
4. It is additive
 NET PRESENT
VALUE (NPV)
In this equation:  Formula
Ct = net cash inflow during the period t

Co = total initial investment costs

r = discount rate, and

t = number of time periods 

 NPV

A positive net present value indicates that the projected earnings

generated by a project or investment (in present dollars) exceeds the
anticipated costs (also in present dollars)

Generally, an investment An investment with a negative NPV

with a positive NPV will will result in a net loss
be profitable
 NPV RULE

“The only investments that should be made are those

with positive NPV values.”
For example, if a retail clothing business wants to purchase an existing
store, it would first estimate the future cash flows that store would
generate, and then discount those cash flows into one lump-sum present
value amount — let's say $500,000. If the owner of the store were willing to
sell his or her business for less than $500,000, the purchasing company
would likely accept the offer as it presents a positive NPV investment. If the
owner agreed to sell the store for $300,000, then the investment represents
a $200,000 net gain ($500,000 - $300,000) during the calculated investment
period. This $200,000, or the net gain of an investment, is called the
investment’s intrinsic value. Conversely, if the owner would not sell for less
than $500,000, the purchaser would not buy the store, as the acquisition
would present a negative NPV at that time and would, therefore, reduce the
overall value of the larger clothing company.
 NPV
The financial
action which
Positive generates
NPV negative NPV
diminishes the
value of the
The financial firm and thus is
action which not desirable
generates
positive NPV
adds to the
value of the
firm and thus Negative NPV
is desirable
 INTERNAL RATE OF RETURN

Internal rate of return (IRR) is a metric used in capital budgeting to estimate

the profitability of potential investments. Internal rate of return is
a discount rate that makes the Net present value (NPV) of all cash flows
from a particular project equal to zero. IRR calculations rely on the same
formula as NPV does. (Investopedia, 2018)
0 = P0 + P1/(1+IRR) + P2/(1+IRR)2 +
P3/(1+IRR)3 + . . . +Pn/(1+IRR)n IRR
Formula

where P0, P1, . . . Pn equals the cash flows in periods 1,

2, . . . n, respectively;
And IRR equals the project's internal rate of return.
 INTERNAL RATE OF RETURN RULE
Should we proceed with the project????

IRR on a project is greater IRR on a project is less

than minimum required rate than minimum required rate
of return (cost of capital) of return (cost of capital)
then pursue then do not pursue
 INTERNAL RATE OF RETURN RULE

Project A Project B
Initial Outlay = $5,000 • Initial Outlay = $2,000
Year one = $1,700 • Year one = $400
Year two = $1,900 • Year two = $700
Year three = $1,600 • Year three = $500
Year four = $1,500 • Year four = $400
Year five = $700 • Year five = $300
 INTERNAL RATE OF RETURN EXAMPLE

PROJECT A IRR

IRR Project A: $0 = (-$5,000) + $1,700 / (1 + IRR) ^ 1 + $1,900 / (1 + IRR) ^ 2 +

$1,600 / (1 + IRR) ^ 3 + $1,500 / (1 + IRR) ^ 4 + $700 / (1 + IRR) ^ 5
=16.61%

PROJECT B IRR

IRR Project B: $0 = (-$2,000) + $400 / (1 + IRR) ^ 1 + $700 / (1 + IRR) ^ 2 +

$500 / (1 + IRR) ^ 3 + $400 / (1 + IRR) ^ 4 + $300 / (1 + IRR) ^ 5
=5.23%
 Decision

If the company's cost of capital is 10%, management

should proceed with Project A and reject Project B.
It has a higher IRR
Advantages NPV
•The NPV method is a direct
measure of the dollar contribution
to the stockholders.
•Considers time value of money
•Takes risk into consideration
Advantages IRR
• The IRR method shows the return
on the original money invested.
• Considers time value of money
• Takes risk into consideration
Disadvantages NPV Disadvantages IRR

•The IRR method can, give

•The NPV method does not conflicting answers when compared to
NPV for mutually exclusive projects.
measure the project size.
•The "multiple IRR problem" can also
be an issue
 NPV & IRR EXAMPLE
Example : NPV and IRR Analysis

Assume that DELTA needs to purchase a new machine for its manufacturing
plant. DELTA has narrowed it down to two machines that meet its criteria
(Machine A and Machine B), and now it has to choose one of the machines to
purchase. Further, DELTA has assumed the following analysis on which to
base its decision:
NPV & IRR EXAMPLE
 NPV & IRR EXAMPLE
Step 1: Calculate NPV for A & B

NPVA = ($5,000) + $2,768 + $2.553 = $321

NPVB = ($10,000) + $5,350 + $5,106 = $456

According to the NPV analysis alone, Machine B is the most appropriate

choice for Delta to purchase.
 NPV & IRR EXAMPLE
Step 2: Determine IRR for A & B

The IRR for Machine A is equal to 13%, whereas the IRR for Machine B
is equal to 11%.

According to the IRR analysis alone, Machine A is the most appropriate

choice for Delta to purchase.

The NPV and IRR analysis for these two projects give us conflicting results.
This is most likely due to the timing of the cash flows for each project as
well as the size difference between the two projects.
PAYBACK PERIOD
What is the 'Payback Period'
• The payback period is the length of time required to recover the cost
of an investment.
• An important determinant of whether to undertake the position or
project.
Formula
The formula to calculate payback period of a project
depends on whether the cash flow per period from
the project is even or uneven. In case they are even,
the formula to calculate payback period is:
When cash inflows are uneven, we need to
calculate the cumulative net cash flow for each
period and then use the following formula for
payback period:

Initial Investment B

Payback Period = Payback Period = A +

Cash Inflow per Period C

Examples

Example 1: Even Cash Flows Solution

• Company C is planning to • PB period
undertake a project requiring
initial investment of $105
million. The project is expected
to generate $25 million per year
for 7 years. Calculate the
payback period of the project.
Example 2: Uneven Cash Flows Solution
Company C is planning to undertake (cash flows in millions) Cumulative

another project requiring initial Year Cash Flow

Cash Flow

investment of $50 million and is 0 (50) (50)

expected to generate 1 10 (40)

2 13 (27)
• $10 million in Year 1 3 16 (11)

• $13 million in Year 2 4 19 8

5 22 30
• $16 million in year 3
• $19 million in Year 4 Payback Period
• $22 million in Year 5 = 3 + (|-$11M| ÷ $19M)
= 3 + ($11M ÷ $19M)
Calculate the payback value of the ≈ 3 + 0.58
project. ≈ 3.58 years
Advantages of payback method
• A useful capital budgeting method for cash poor firms.
• A project with short payback period can improve the liquidity position
of the business.
• An investment with short payback period makes the funds available
much sooner to invest in another project.
• Reduces the risk of loss caused by changing economic conditions.
• Easy to compute.
Disadvantages of payback method
1. Does not take into account the time value of money.
2. It does not take into account, the cash flows that occur after the
payback period.
 Decision rule

Accept the project only

if its payback period is
LESS than the target
payback period.
 SOC

 The Social Opportunity Cost approach is mainly concerned with

environmental issues
 The opportunity cost of a project is what is forgone by undertaking the
project i.e. the value of resources in next-best use
 The SOC approach starts from the premise that the annual percentage
real rate of return to public investment should be no less than the rate of
return from the money being left in the private sector.
 The social discount rate is therefore derived from market data, usually
as a weighted average cost of capital.
ARR
 ARR DEFINED
• Also known as the simple or average rate of return, measures the
amount of profit, or return, expected on an investment.
 ARR
Formula
Accounting Rate of Return Example
Question
A project's total profit from the
last five years is $50,000. During
this time, a total investment of
$250,000 was made.
Solution
• The average annual profit is
$10,000 ($50,000/5 years), and
the average annual investment is
$50,000 ($250,000/5 years).
• Therefore, the accounting rate of
return is 20% ($10,000/$50,000).
Accounting Rate of Return Drawbacks

• Does not provide insights on constraints, bottleneck ramifications, or

impacts on company throughput.

• The ARR isolates individual projects and may not capture the systematic
impact a project may have on the entity.
• Not ideal to use for comparative purposes because financial measurements
may not be consistent between projects and other non-financial factors need
consideration.

• Does not consider the increased risk of long-term projects and the increased
variability associated with long periods.
 ARR USES
• Report on growth from new contracts, including those with
different term lengths
• Report on net gross expansion and contraction from existing
customers

• Estimate future GAAP revenue

• Report on Cohorts (typically by customer start month, quarter or year)

• Assess trends in ASP (average selling price)

Advantages of ARR Method
1. It is very easy to calculate and simple to understand.
2. Recognizes the concept of net earnings i.e. earnings after tax and
depreciation.
3. Facilitates the comparison of new product project with that of cost
reducing project or other projects of competitive nature.
4. Gives a clear picture of the profitability of a project.
5. Considers the accounting concept of profit for calculating rate of return.
6. Satisfies the interest of the owners which are mainly centred on return
on investment.
7. Useful when measuring current performance of the firm.
Disadvantages of ARR
1. The results are different if one calculates ROI and others calculate ARR.
2. This method ignores time factor.
3. A fair rate of return cannot be determined on the basis of ARR.
4. This method does not consider the external factors affecting the profitability of
the project.
5. It does not consider cash inflows which are more important than the accounting
profits.
6. This method cannot be applied in a situation when investment in a project is to
be made in parts.
7. This method does not consider the life period of the various investments. But
average earnings is calculated by taking life period of the investment.
ROI DEFINED
• A performance measure, used to evaluate the efficiency of an
investment or compare the efficiency of a number of different
investments.
• ROI measures the amount of return on an investment, relative to the
investment’s cost.
 ROI
Formula
Example of ROI calculation
Question
• An investor purchases property
A, which is valued at $500,000;
two years later, the investor sells
the property for $1,000,000.
Solution
We use the investment gain
formula in this case.
ROI = (1,000,000 – 500,000) /
(500,000) = 1 or 100%
Limitations of ROI
1. Disregards the Factor of Time
2. Susceptible to Manipulation
Benefits of ROI
1. Simple and Easy to Calculate
2. Universally Understood
Developments in ROI
• Development of a new form of the ROI metric, called "Social Return
on Investment," or SROI.
• Developed in the early 2000s and takes into account broader impacts
of projects using extra-financial value.
 Social Time Preference Defined

The social time preference method is based on the idea that the
fundamental goal in welfare economics is to maximise the utility
of society.
 STP

Increased
future Capital
consumption
Savings

Per capita
Maximise consumpti Private
utility on Goods Non
market
Goods and
and market
services goods

Happines Public
Society s Goods
 STP
Formula
 Conclusion

 The basic purpose of project appraisal techniques is to achieve

better spending decisions for capital and current expenditure on
schemes, projects and programmes.
 There is no “one-size-fit-all” approach because different project
require different techniques.
INCLASS CRITICAL PATH TASKS
QUESTION 5 LOGIC TABLE
A project has the following durations and dependencies.

ACTIVITY IMMEDIATE DURATION No. OF STAFF

PREDECESSOR
A -
B A
C A
D B
E B
F C
G C
H D,F
I H
J E,I
K G,J
REQUIRED
3 6
15 4
6 4
6 10
6 6
6 4
6 10
6 8
9 7
9 7
6 9

a) Draw a network diagram, determine project duration and indicate the critical path.
Show any dummies and non critical activitie s
b) Show how a project management strategist can employ critica l path analysis in creating value
for the organiza tio n
 Q5 NETWORK DIAGRAM 6 24
4(a) 39
E
6
18
3 18
D
B 6 H 30 I J K
24 39 48 54
15 5 24 6
9 30 9 1039
11
48 6
12 54
9
0 A 3
1 0 2 3
3
C 15
6 F 7 24
6
9
4 KEY
18 EST/EFT
G
EN
6 LST/LFT
8
15 CRITICAL PATH
48
DUMMY ACTIVITY
Project duration =54
Critical path: A-B-D-H-I-J-K
CREATING VALUE FOR ORGANISATIONS USING CPA
• The CPA method can be used by a project management strategist to create value
for organizations through;
RESOURCE OPTIMISATION- Several options can be pursued to achieve this such
as:
- Planning Outsourcing Activities and Equipment Hire-The CPA method shows
the interrelationship of different activities and the duration these activities
take.
- This enables better management of the cost, scope, time and quality
constraints.
- Hence an organization can be able to plan on when exactly they need
specialized services and equipment hire to avoid incurring costs associated
with idle time.
CREATING VALUE FOR ORGANISATIONS USING CPM
cntd

Resource leveling; Technique in which the start and end dates of a project are
adjusted based on resource constraints with the goal of balancing demand for
resources with available supply.
In our case suppose our project site has constraint that a maximum number 8 of
people can work onsite due to site constraints or regulations. This can happen in
certain projects such as the installation of an electric sub-station underground,
where there is a confined space.
Such a constraint may result in increase in project duration.
The bar graph for activities labour resourcing will be as follows;
CREATING VALUE FOR ORGANISATIONS USING CPM
cntd
CREATING VALUE FOR ORGANISATIONS USING CPM

After leveling the project can further be subjected to optimization through the use of Resource
Smoothing. Resource smoothing will involve distribution of resources(labour in this case) across
the activities to ensure that there is even distribution

Resource smoothing may not change the project duration but ensures maximum utilization of
resources. After smoothing, the new bar chart will be as below;
CREATING VALUE FOR ORGANISATIONS USING CPM
cntd

Financial planning;
With CPA we can anticipate when certain events are supposed to start and end
and hence it is possible to stagger financial projects so that activities which
come in early in the project can be financed first and later ones provided for
during the project and thus avert huge interest rate associated with huge capital
borrowing.
Funds can be so scheduled that they will be provided when required so that cost
of borrowing can be minimized for projects.
Unnecessary costs are thereby avoided.
CREATING VALUE FOR ORGANISATIONS USING
CPM cntd

Crashing; Project duration can be shortened by adding resources on the critical path activities and
thus a trade off between time and cost for the triple constraint will be achieved. e.g hiring an
additional piece of equipment to complement the available ones can shorten construction projects.
Fast tracking; With CPA, activities that can be carried out simultaneously can be identified and this
allows projects to be completed on time and thus avoid penalties.
Supply chain Management:: With CPA inputs can be scheduled to arrive in time in correct quantities
and thus avoid unnecessary costs associated with stockholding . E.g. J.I.T principle
Corporate Image; Quality impacts on costs and in the process creates an impression, repeated
business and referrals. CPA enables better quality management which boosts corporate image.
Generation of stage completion certificates; Facilitate invoicing of the customers for stages that
would have been completed for prompt payment. This ensures better management of cash flows for
project companies.
 NETWORK DIAGRAM
Question 3 Solution
195
9 195
95
5 95 I
F G 60
30
D 40 H 225
25 135 10
6 7 225
135
0 A 10 B C 70 H
1 0 2 3 30
30
4
70
10 10 20 40
20 155
8
195
E
10

80 KEY
6 EST
95 EN
LST
CRITICAL PATH
DUMMY ACTIVITY
Project duration =225
Critical path: A-B-C-D-F-G-I
RESOURCE LEVELING AND
RESOURCE SMOOTHING
• It rarely happens that you have all resources as per your schedule to complete
the project. Even if you have them, during project execution any risk can take
away that freedom and you will have to manage with fewer resources.
• Even when you have all necessary resources, as a project manager it is your
responsibility to use resources efficiently and save costs for the company.
• To achieve these objectives, you use resource optimization techniques. Two
such resource optimization techniques are as follows:
Resource Leveling
Resource Smoothing
• These techniques allow you to complete the project with minimal obstruction.
A Real World Example

• Let’s say you want to apply for the PMP exam and have allocated 60
hours to study in three months. This translates to 20 hours per month.
• However, while scheduling the date for the exam you find that the only
available appointment is in four months. Now you have to distribute
these 60 hours throughout four months, meaning 15 hours per month.
• This is an example of resource smoothing. Since you have enough time,
there is no need to use all 60 hours in three months. You can ease the
burden of these three months and use the fourth month as well.
Difference Between Resource Leveling and Resource Smoothing

The following are a few differences between resource leveling and

resource smoothing:
• In resource leveling the project end date may change while in
smoothing it does not change.
• In resource leveling the critical path changes (generally increases)
while in resource smoothing it does not, and activities can be delayed
within their float.
• You also use this technique when you must keep some resource usage
at a constant level.
• In resource leveling, you are asked to optimize the limited resources
given to you. Here the schedule is not fixed.
• Resource leveling answers the question of when you will be able to
complete the project with the given resources.
• Resource leveling is sometimes called resource constrained scheduling
(RCS). If resources are not available, the project duration may change.
A Real World Example
• Let’s say you are developing a schedule for a project, which is to
construct a two-story building. To construct the first floor you have
enough scaffolding but for the second floor you need extra
scaffolding.
• So you look within your organization and find that you can arrange
extra scaffolding from another project, but one week later than what
you require.
• So, you delay construction activities on the second floor by one week.
• This is an example of resource leveling where you extend the
schedule to get the resource.
RESOURCE SMOOTHING
• Since you cannot extend the schedule, the project completion date
and the critical path will stay the same. Here the activities cannot be
delayed more than their total and free float.
• Using float in this technique will cause you to lose some flexibility
from your path; however, the schedule will be optimized, efficient and
cost effective.
• In resource smoothing, you must be careful to avoid any delay in
activity as it may affect your critical path.
• Time is the main constraint here. You have a fixed schedule and are
asked to optimize resources.
• Resource smoothing is also known as time constrained scheduling
(TCS). The project end date cannot be changed, and you have to
optimize resources within the float.
• Generally resource smoothing is usually performed after the resource
leveling.
• In resource leveling resources are the main constraint while in
resource smoothing project end date is a constraint.
• Resource leveling is used when resources are under or over allocated.
Resource smoothing is used when resources are unevenly allocated.
• Resource leveling can be applied to activities on the critical path while
in resource smoothing you do not touch activities on the critical path.
• Resource leveling and resource smoothing are different techniques
and they are used under different situations.
• It is not always necessary to use both techniquesThis is not true in all
cases; you may use either of them or both of them. However, if you
are using both them, usually resource leveling is followed by resource
smoothing.
Resource leveling is used when:
• A critical resource may not be available for a certain duration;
• A critical resource may not be available at a certain point of time;
• You have to share a resource with another project;
• The demand for a resource exceeds the supply.
Similarities Between Resource Leveling and
Resource Smoothing
• The following are a few similarities between these two techniques:
• They both help you optimize resource utilization
• They both help you in scheduling network analysis
When asked to show how an organization can employ
critical path in value creation show the following
The importance of properly sequencing activities
Show how an organization can increase resource utilization
Show how the proper sequencing and timely implementation of
activities will result in a profitable project. The management of time,
cost and performance should be emphasized
Show the extra costs that re likely to be incurred through penalties,
remobilization funding, blemished reputation etc
Give examples from an industry that you know
Need to show a strategic project management
approach
The strategic project management approach advocates for the long
term view of an organization through linking the business environment
to business strategy, structure and process
There is need for sustainable project management which aligns
organization strategy to overall organization strategy
Projects done by an organization should follow the generic strategy
followed by an organization e.g. cost leadership, differentiation and
focus
There is need to use appropriate processes
Show business alignment through the 7s framework
There is need to be conversant with the vision, mission , values, goals
and objectives, game plan, strategic maps, balanced scorecard,
departmental deliverables and individual deliverables
There is need to follow the strategic planning process which answers
3 questions
Where are we now?
Where do we want to be?
How do we get there?
What is the lay of the land?
Summary

• Resource smoothing and resource leveling are two resource optimization

techniques which, if used in any project, increase the chance of
completing the project within the approved cost and schedule baselines.
• Resource leveling is used to balance the demand and supply of resources
and resource smoothing helps ensure uniform resource utilization.
• These techniques are also used due to statutory or regulatory
requirements. Either way, these techniques help you optimize your
resources in your project.
• Have you implemented resource leveling or resource smoothing? If yes, I
would love to hear about your experience in the comments section.
CONTRACT AND
PROCUREMENT
MANAGEMENT
• John Donne famously wrote, “No man is an island.” He could have been talking
about a project, too, because projects are not done in isolation. Most require
obtaining other resources to get them done, be that through purchase or
contract.
• But most project management discussions focus on the process and knowledge
groups, which are important, but insinuate the idea that a project manager and
their team can do it all. That’s just not true. It’s crucial to know when you need
help, and then get help.
• That might sound like the start of a self-help book, but it’s not emotional but
rather practical advice. Project procurement management is when you have both
a process to fill the holes in your resources, and a way to manage that process
with proper techniques and project management tools.
CONTRACT MANAGEMENT
Learn the basics of contract management.
• Contract management is when someone takes on the responsibility of
managing contracts for employees or vendors or other parties.
• Contract managers need legal knowledge to accurately lead the
contract management process.
• Not all companies have set contract managers, but major defence
firms or companies that frequently work with the government tend to
use contract managers.
• Managing contracts is an overlooked form of management. Managers
interact frequently with employees, and some of those discussions
and situations naturally relate to compensation. Some of these
conversations will deal with contract management. Other times,
businesses need to manage contract agreements with other
businesses. It's not talked about much, but contract management is
an important business topic. If you're unsure of how the contract
management process works, it's important to understand the basics.  
What is contract management, and why is it important?

• Contract management is the process of managing contract creation,

execution, and analysis to maximize operational and financial
performance at an organization, all while reducing financial risk.
Organizations encounter an ever-increasing amount of pressure
to reduce costs and improve company performance. Contract
management proves to be a very time-consuming element of
business, which facilitates the need for an effective and automated
contract management system.
• The fundamentals of contract management
• When two companies wish to do business with each other, a contract specifies
the activities entered into by both organizations and the terms through which
they will each fulfil their parts of the agreement. Contracts affect business
profitability in a very large way due to the emphasis on revenue and expenses.
• When a contract is phrased poorly, one organization might lose countless
thousands of dollars over a simple technicality they lacked the resources to
identify. Effective contract management can ultimately create a powerful
business relationship and pave the road to greater profitability over the long
term, but only when managed correctly. It's a good idea to include a legal
department or a lawyer in contract management discussions. The precise
wording of contracts is crucial to contract management.
Elements of successful contract management

• It isn't enough that an organization has professionals in place to handle

contract management. Employees must be augmented with the presence
of processes and software companions to satisfy increasing compliance
and analytical needs. When a contract management strategy is
successfully implemented, organizations can expect to see:
• The expected business benefits and financial returns are being realized.
• The supplier is cooperative and responsive to the organization's needs.
• The organization encounters no contract disputes or surprises.
• The delivery of services is satisfactory to both parties.
Activities that comprise good contract management

• The foundation for contract management relies on the implementation of

successful post-award and upstream activities. During the pre-award stage,
employees should focus on the reason for establishing the contract and if the
supplier can fulfil the terms of the agreement.
• Additional consideration is needed to understand how the contract will work
once awarded. Avoiding unwanted surprises requires careful research and
clarity of purpose in the actual contract.
• Contract management requires a level of flexibility for both parties involved and
a willingness to adapt contract terms to reflect any changing circumstances.
Problems are inevitable, which means organizations must be prepared for the
unexpected and be able to adjust contract terms when needed.
What are the stages of the contract management process?

• While there are many components of contract management, we can

summarize the process by breaking it into five clear stages: creation,
collaboration, signing, tracking and renewal.
• We can further identify individual steps within the stages. In all, we
can break the process down into nine steps, each of which
contributes to one of the five overarching stages. This makes it easier
to manage the end-of-quarter crunch that tends to happen when it's
time for a new round of contracts. Here are the steps of each stage:
Creation
1. Initial requests. The contract management process begins by identifying contracts and
pertinent documents to support the contract's purpose.
2. Authoring contracts. Writing a contract by hand is a time-consuming activity, but through the
use of automated contract management systems, the process can become quite streamlined.
Collaboration
3. Negotiating the contract. After drafting the contract, employees should be able to compare
versions of the contract and note any discrepancies to reduce negotiation time.
Signing
4. Approving the contract. Getting management approval is the step where most bottlenecks
occur. Users can preemptively combat this by creating tailored approval workflows, including
parallel and serial approvals to keep decisions moving at a rapid pace.
5. Execution of the contract. Executing the contract allows users to control and shorten the
signature process through the use of electronic signature and fax support.
Tracking
• 6. Obligation management. This requires a great deal of project management to ensure
deliverables are being met by key stakeholders and the value of the contract isn't
deteriorating throughout its early phases of growth.
• 7. Revisions and amendments. Gathering all documents pertinent to the contract's initial
drafting is a difficult task. When overlooked items are found, systems must be in place to
amend the original contract.
• 8. Auditing and reporting. Contract management does not mean drafting a contract and
then pushing it into the filing cabinet without another thought. Contract audits are
important in determining both organizations' compliance with the terms of the agreement
and any possible problems that might arise.
Renewal
• 9. Renewing. Manual contract management methods can often result in missed renewal
opportunities and lost business revenue. Automating the process allows an organization to
identify renewal opportunities and create new contracts.
• Much of contract management comes down to handling these nine steps. Contract lifecycle
management is critical. As different contract types go through their various stages, contract
managers need to monitor any potential changes or breaches of contract. If an employee or
business is unhappy with their contract, it might be worth making alterations to the contract.
It's important to follow contractual obligations while also making sure both sides of the
contract are happy.
• There are many times during the contract management process when lifecycle management
becomes important. Vendor performance and risk management are important considerations
during the management of contracts. For example, if a vendor fails to meet their contractual
obligations, you may need to rework the contract or enforce some disciplinary measure.
What is Procurement Project
Management?
• Procurement Project Management is a structured process that is used
to define, plan, implement, control and transition an activity from a
current to a future state.
• Project Management is derived from the realisation a project needs
to be carried out. This realisation could be generated from a macro or
a micro factor.
• The management of the procurement project requires a range of skills
and competencies, knowledge, processes, methods and clearly
outlined objectives, if the outcome is to be as desired and in
accordance with stakeholders ’ needs.
• Project Management incorporates the understanding of the required
outcomes, being able to communicate effectively, being aware of associated
budgetary constraints as well challenges associated with people and resources.
Technical aspects and team management are also of key importance.
• Project Management is an all-encompassing activity which requires careful
planning from procurement professionals with a high level of business acumen
to ensure the end goal is achieved.
• Once the need for a project has been realised the project management
process should start.
• Without effective project management the optimum outcome of a project is
unlikely to be achieved.
What Is Project Procurement
Management?
• Procurement, in terms of project management, is when you need to
purchase, rent or contract with some external resource to meet your
project goal. These relationships, like any process in the project, need
management.
• Managing these relationships means getting the best quality from the
outside vendors employed by the company to assist in its doing
business. There are constraints in a relationship with vendors that
revolve around cost and time. Procurement management is a way to
more efficiently and productively handle the process of sourcing,
requisitioning, ordering, expediting, inspecting and reconciliation of
procurement.
• However, before making partnerships or purchases, the question of
whether the goods and services are required from outside vendors
must be answered. Therefore, weigh the pros and cons of producing
the goods or services in-house and contracting the work out. Is the
relationship with outsider companies necessary and cost-effective in
the long-term? Once an informed decision has been made, only then
can you move forward with confidence that the steps you’re taking
are financially sound and fit within your timeframe.
• Once you’re ready to procure goods from a vendor, project
procurement management is broken down into four processes.
• Why is Procurement Project Management Important?
• By having a strong and structured project management approach for
procurement activities the importance of this can be demonstrated.
• When conducted correctly project management gives many benefits
as outlined below which include having measurable objectives,
understanding risk, ensuring a transparent process and having more
opportunities to negotiate improvements within the supply chain.
What are the Steps in the Procurement Process?

• Within all procurement project management several similar steps will be required. This model
outlines the tasks that should be undertaken in accordance with each aspect of a project.
• Commencement - At the “Commencement” or start phase of a project the project management
should create a business case, research the scope and identify their stakeholders.
• Preparation - Within the “Preparation” phase tasks such as developing a Gantt Chart, finalising
resources including time available, deadlines, ensuring the team is briefed and required skills are
secured should be completed.
• Implementation - The “Implementation” phase requires tasks such as managing teams and
ensuring strong leadership throughout.
• Performance Management - “Performance management” as a phase which requires tasks
including, but not limited to, undertaking reviews to evaluate whether the project is on schedule
against the budget and making sure any milestones outlined in the project are being met.
• Completion - The “Completion” phase whilst seemingly the end of the process is
not the final phase. Within “Completion” the tasks undertaken should include
rolling out the finalised project, seeking feedback and reflecting on how well the
project was managed
• Lessons Learned - The final phase is “Lessons Learned” and here the tasks are
very important as part of continuous improvement. Here the gained feedback
should be analysed and any constructive criticism accepted. A SWOT analysis can
be undertaken to help to understand what strengths and weaknesses were
apparent internally during the project management and what opportunities and
threats presented themselves externally.
• Once those tasks have been completed then actions for improving the project
management process can be put into place for future procurement activity.
What are the 5 Main Processes of Project
Procurement Management?
• The management of all successful projects should follow the same process. The SQERT model
shows the process which is explained in detail below:
• “Scope” - At the start of any project it is imperative to understand the Scope i.e. what is
required to be delivered or what the desired outcome is.
• “Quality” - is key as this is where the standard, grade or expectations of the level of delivery
are agreed. This could be in accordance with a specification or an agreed standard such as ISO
or EN. 
• “Risk” - is the next element on the SQERT model. Here risk analysis and evaluation should be
conducted to understand what possible challenges could present themselves.
• “Time” - within this model represents the amount of time needed or expected for the project
to be completed and will most likely include a deadline date for delivery.
• “Effort” - is about what levels of resource are required. The understanding of how many
people, how much money and what skills are needed should be identified and covered here.
Project Procurement Plan

• Planning of project procurements is carried out within the procurement process and
results in developing a plan. A procurement plan is a convenient tool for organizing
and managing activities and tasks related to the procurement management process. A
template of the plan is to be designed by the purchasing department in cooperation
with the project manager. A project procurement plan should be reviewed and
approved by the project manager before any supplier relationships get started.
• A project procurement plan template documents:
• Deliverables to be procured by proposed agreements/contracts.
• Effective resource management strategies for negotiating and managing the
agreements/contracts.
• The need for staged delivery and desirability of testing the procured items before
introducing them into the implementation process (this item is optional).
• The chosen procurement method (payments, expressions of interest,
request for price/quote, request for tender).
• Key stages of the process for selecting suppliers and vendors.
• The model of procurement funding.
• The sample of procurement contract/agreement.
• References to quality approvals, quality assurance and risk
management.
What Is the Project Manager’s Role in Procurement?
• The project manager is involved with procurement, same as any other aspect they control
in the project management process. However, this is a process they might not own with
the same authority as other parts of the project.
• While the project manager does have the authority to make agreements with contractors
on behalf of the company, the project manager is often not the person who administers
that contract once in place. Regardless, it’s important that the project manager is in the
loop.
• That means knowing the six processes with the project procurement management
knowledge areas as outlined in the Project Management Body of Knowledge (PMBOK).
The first being the plan purchases and acquisitions, meaning determining what external
resources are needed for the project. The project manager will have control over this, as
they are more knowledgeable about overall project needs.
• Plan contracting is the creating of requirements for whatever
products or services are needed, including what companies offer
these products or services. Then request seller responses by
narrowing down the companies to a handful, and then selecting the
sellers, which is usually the purvey of the purchasing department.
• Contract administration is the management of the contract with the
vendor. The project manager will work daily with the vendor’s
account manager. When the contract is fulfilled, there is contract
closure. This is usually handled again by the purchasing department.
SELF ORGANISING TEAMS
•At the simplest level, a self-organizing
team is one that does not depend on or
wait for a manager to assign work.
Instead, these teams find their own
work and manage the associated
responsibilities and timelines.
Key characteristics of a self-organized team
• Teamwork and collaboration. When there is no manager to bring the
team together and push orders, it is up to the members to
communicate effectively and work with each other. ...
• Competency. ...
• Continuous improvement and growth: ...
• Respect and trust in the team. ...
• Ownership.
Let's take a look at 7 essentials of a self-organizing team:
• Motivation. Team motivation is key! ...
• Teamwork. Team members should work as a team rather than as a group of
individuals. ...
• Trust and respect. It's important that team members trust and respect each
other. ...
• Commitment. ...
• Continuity. ...
• Improvement. ...
• Competency.
• Introducing Agile self-organizing teams
• Self-organizing teams are a key part of Agile project management. 
• Though self-organization was initially intended for software
development, companies have found that it helps all sorts of teams
become more productive. Any product innovations or boost in staff
morale is a bonus.
• Research from McKinsey found that smaller teams using Agile
methodologies and self-organization in their enterprise operating
models were better able to handle the impact of COVID-19 on their
business. Where non-Agile teams struggled, Agile teams were able to
seamlessly deliver their predefined project requirements.
• But can Agile self-organizing teams be productive without the
presence of external leadership? You bet they can, and here's how it
works.
• How do self-organizing teams work? 
• Let's clear up one misconception straight away. Self-organizing teams
are not loose cannons; they're flexible, responsive teams that operate
within the organizational framework and who understand what is
strategic capacity planning. Here’s how self-organizing teams function.
• Strong sense of ownership
• There’s a strong sense of ownership built into self-organizing teams in
business. Project goals, milestones, and overall deadlines are decided
upon by the management, while the team independently handles the
day-to-day operations.
• These teams also use the principle of self-organization to help them
distribute tasks amongst themselves, set interim deadlines, and
decide the project goal roadmap.
• Strong individual competencies
• In the concept of self-organization, team members are encouraged to
work according to their individual competencies. Since there is no
designated manager or leader, members trust their own project
management skills and those of their team to deliver the required
deliverables.
• Team leadership is not set in stone but adjusts to meet the needs of
the project. For example, if a company is creating a new product, the
product developer may take the lead at the start of the process. A
marketing professional might take charge near the end when the
product is almost ready for delivery.
• Encourages self-actualization  
• The main aim of self-organization is to encourage the self-
actualization of the team members.
• By setting their own job responsibilities and deciding how to achieve
their goals, team members feel more motivated to execute their
duties.
• Boosts organizational innovation
• Here's proof that self-organization works. Research from
Deloitte confirms that Agile self-organizing teams are more customer-
focused and responsive, delivering better performance outcomes.
• Role of a manager in self-organizing teams
• So, what's the role of the management in this situation? In self-organizing teams,
managers check in rather than check up and keep an eye on scheduled checkpoints
and milestones.
• At those times, management can evaluate progress and decide if they need to make
changes and adjust the project scope and schedules.
• Any management influence is subtle and hands-off, allowing team creativity and
productivity to flourish. However, managers have a proactive role in training team
members in this new way of working.
• For example, if a specific team favours conservatism, management may consider
introducing a younger team member with a different background to encourage out-
of-the-box thinking.
• Management must select a diverse team with the technical skills and
knowledge to succeed, then subtly monitor the group to ensure its
smooth operation.
• For example, there may be a relatively inexperienced employee who
is yet to gain the trust of the entire team. If that person is made a part
of a self-organizing team, they can be advised to take up stretch
tasks that are a little beyond their scope of expertise.
• Experienced members can then guide them towards better
performance, resolving any trust issues between them while easing
the onboarding process for newer employees.
• Benefits of self-organizing teams
• There are several advantages to using self-organizing teams. For example, research shows that self-organizing
teams respond more efficiently to challenges and new situations, taking a flexible approach that results in more
innovative solutions.
• Since the team members feel trusted and respected, they are more motivated to succeed and honour their
commitments within the team.
• Increase in team productivity
• In a traditional project team, every decision needs to be referred to the management. However, a self-organizing
team can make its own decisions, provided it still meets the overall goals.
• Such situations can work especially well with distributed teams, where the approval process is stretched across
countries, time zones, and offices.
• Faster problem-solving
• The absence of a manager helps team members think creatively without the fear of any judgment or rebuttal.
• With greater levels of teamwork and collaboration, they can use premade templates to quickly brainstorm
diverse ideas, iterate faster, and come to a common solution.
• Focus on consistent improvements
• Members of self-organizing teams are focused on obtaining opportunities to grow their skills
and seek to enhance their individual and team outcomes.
• A properly selected team has a good deal of collective wisdom that influences the
development of products and services. Cross-functional teams also bring diverse perspectives
from across the organization.
• Greater focus on quality
• Imagine that your organization is moving offices. You could plan each detail for your team to
follow — alternatively, you could allow team members to make their own plan for moving
that suits their workload and schedule.
• The second approach is more efficient. If everyone can adjust things to their needs, you are
more likely to find an optimal solution for the whole team. Similarly, delivering innovative
solutions for your customers is more likely if all team members contribute to the process.
• Teams can produce high-quality work by taking customer
experience and feedback seriously and creating products that are
more aligned with market needs.
• Better employee satisfaction 
• Everyone likes having control. When employees can choose their
work schedules, project timelines, and tasks, they typically have
higher motivation levels.
• Lesser management presence also gives individual members the
freedom to complete their tasks in their own style, enhancing
accountability and team performance
• How to build a self-organizing team
• Wondering how easy is it to set up self-organizing teams in your company?
• The onset of the pandemic has triggered a 125% rise in remote work. As a result, team dynamics,
structures, and leadership roles are rapidly evolving. Change is the only constant in business today.
• A larger organization can be managed effectively by breaking it down into smaller, nimbler self-
organizing teams. Here's how you can create Agile self-organizing teams in your company:
• Identify the right team members across departments who are reasonably knowledgeable about the
project and aware of the deliverables
• Make sure they are capable of proactively completing their job responsibilities and duties without the
need for a manager
• Feel free to rebalance your team or move members into another group to optimize team sizes and
ensure peak productivity
• Before starting the process of creating self-organizing teams, ensure that all the team members
complete the following:
• Training
• Create a robust framework for training self-organizing teams in the key hard and soft skills required to function
effectively.
• Hard skills training
• Since team members are from cross-functional departments, some may not be completely up-to-date on the
project requirements. Introducing hard skills training for specific team members can help them understand how
to undertake their job roles efficiently.
• Hard skills training can develop the required competencies in your team members. It also delivers the right
context to perform tests that will pave the way for future enhancements.
• Soft skills training
• More than 97% of employers confirm that soft skills are equally or more important than hard skills at work. 
• A comprehensive training program can help team members understand what a self-organizing team is and how
it works. Once they are clear with the basic framework, they'll be able to practice the key principles of
commitment, confidence, communication, and collaboration in their teams.
• Coaching
• Coaching in organizational settings can be an invaluable step in developing employees across a multitude of
skills. 
• Over 80% of coached employees report a significant increase in their self-confidence — what’s more, about
70% reported an improvement in their work performance after undergoing coaching in the workplace.
• After completing training, deploy a coach for every self-organizing team. Instead of micro-managing
everything, a coach will support and offer guidance as and when required.
• Gradually, team members will start taking ownership of their work, building trust, and collaborating
seamlessly. Over time, the self-organizing teams will be able to function independently and a coach's
presence may no longer be required.
• Mentoring
• Even as team members start collaborating with each other, they may still require the support of a mentor.
Since they will be growing in their respective roles, the presence of a mentor can add balance and point their
efforts in the right direction.
• Mentoring self-organizing teams will encourage them to grow together, stay motivated, and take
accountability for their individual roles.
• Limitations of self-organizing teams
• One thing to note is that putting together a self-organizing team isn't like assembling
something from a model kit. One of the key roles of company management is to
assemble a team that can work together.
• Even though self-organizing teams are a key principle in the Agile Manifesto,
adopting the Agile mind set and methodologies across the organization may not be
easy. Implementing self-organization in business may give rise to a few challenges
such as:
• Failure to adapt 
• It's important to know where self-organizing project teams work and where they
don't. Organizations with a strict hierarchy, such as government bodies and banks,
may find it difficult to self-organize.
• Focus on consistent improvements
• Members of self-organizing teams are focused on obtaining opportunities to
grow their skills and seek to enhance their individual and team outcomes.
• A properly selected team has a good deal of collective wisdom that
influences the development of products and services. Cross-functional
teams also bring diverse perspectives from across the organization.
• Greater focus on quality
• Imagine that your organization is moving offices. You could plan each detail
for your team to follow — alternatively, you could allow team members to
make their own plan for moving that suits their workload and schedule.
• The second approach is more efficient. If everyone can adjust things to their needs,
you are more likely to find an optimal solution for the whole team. Similarly,
delivering innovative solutions for your customers is more likely if all team members
contribute to the process.
• Teams can produce high-quality work by taking customer experience and feedback
seriously and creating products that are more aligned with market needs.
• Better employee satisfaction 
• Everyone likes having control. When employees can choose their work schedules,
project timelines, and tasks, they typically have higher motivation levels.
• Lesser management presence also gives individual members the freedom to
complete their tasks in their own style, enhancing accountability and team
performance
• Self-managed teams are work teams that are not (fully) integrated into a
top-down chain of command and that do not have a single team leader with
complete authority over the team’s work. The term can capture varying
degrees of decentralized authority and could thus encompass both radical
and moderate approaches towards decentralized decision-making.
• Self-organized teams can be defined as a kind of self-managed team in
which decision-making authority does not lie completely with the team. For
example, the team’s purpose and goals are dictated from the outside, e.g.
from a boss role within the managerial hierarchy. But beyond those
decisions that are made from “above”, the team can organize itself and
could have decision-making authority about how to reach a given goal.
• Self-directed teams can be defined as self-managed teams that have
more decision-making power than “just” self organizing. The
authority of self-directed teams would extend, for example, to
strategic questions including the team’s purpose and goals. Such self-
directed teams could also be called self-governing teams, as
governance implies a wider scope than merely self organization.
• In short, self-directed teams are autonomous, whereas self-organizing
teams are autonomous only in how they do things (not in why they do
things or in what they do).
• Project teams
• Project teams are cross-functional groups with specialists from different departments who work together on
specific projects. A project manager often leads these teams.
• A project team usually works together for a fixed length of time and disbands once the project is complete.
These teams may be measured on outcome but are often measured on execution to a plan (e.g., completing
tasks with a defined time and budget).
• Self-managed teams
• A self-managed work team is a small group of employees who take full responsibility for delivering a service or
product through peer collaboration without a manager’s guidance. 
• This team often works together long-term to make decisions about a particular process. These teams may be
measured either by output or outcome, with outcome being the better choice.
• Virtual teams
• A virtual team consists of employees from different regions working remotely or in different offices. They
primarily communicate through video conferencing, phone calls, messaging, and email. Any of the other team
types may also be a virtual team.
• Operational teams
• Operational, or functional, teams are groups of employees dedicated to a specific ongoing role, like
customer support or sales. All the members of an operational team support one overarching goal
and process. They tend to measure themselves on output rather than outcome.
• What are self-managed teams?
• While self-managed teams aren’t new, they are seeing a surge in popularity as remote work
becomes the new normal. Plus, with managers feeling less supported by the organization and less
able to effectively navigate rapid change, more teams may experiment with self-management by
choice or necessity.
• Self-directed teams take full ownership and responsibility to drive business results for a particular
process. Unlike an operational team, most self-managed teams don’t have a hierarchy. Instead, self-
designing teams have more autonomy over their processes and roles within the bounds of what
team members agree is needed to achieve agreed upon team outcomes.
• What are the benefits of self-managed teams?
• Younger generations entering the workforce are more interested in
developing expertise than in rising through the ranks, which 51% of
managers see as an opportunity. Even among other generations,
workers are becoming more aware of the need to stay relevant and
gain new skills and experiences. Self-managed teams are a great way
to expand employees’ experience and allow them to try out and
master new capabilities through rotating roles and learning from
other teammates. 
• Good self-managed teams demonstrate many of the benefits of
having a great manager. These teams often develop more effective
decision-making practices that combine considering more viewpoints,
more natural collaboration and give-and-take, and moving toward
action to remove obstacles and stay focused on the shared outcomes.
• What are the cons of self-managed teams?
• Despite the benefits, self-managed teams are hardly a silver bullet to
productivity. Implementing and adapting to any new structure can be
difficult, and self-managed teams are no exception. 
• Self-managed teams often take a long time to set up and execute
effectively. Certain employees may not be the right fit for self-
management, and camaraderie, commitment, and competence are
needed before seeing the benefits of a successful self-managed team. 
• Plus, without the proper training, self-managed teams can flounder
and lose motivation.
• One major concern around self-managed teams is inequality.
Compared to traditional teams, some self-managed teams have seen
a 24% estimated pay gap for women. This inequality can lead to
stifled innovation when members fear sharing ideas and a team
succumbs to groupthink. 
• Excessive meetings and a disconnect from overall business goals can
also set a self-governing team off on the wrong track. Before
developing autonomous teams, it’s crucial to give members the right
training and guidance on their role in an organization.
What are the characteristics of self-managed teams?
• When self-managed teams are implemented right, they’re known for being highly effective, innovative, and
driven. 
• Here are a few key characteristics that distinctly set great self-managed teams apart from other team
structures. 
• They’re self-driven
• These teams collaborate on one central, common goal every day. They know the target, and they’re driven to
support their team and do their part. No one waits for a manager or another team member to tell them what
to do.
• They trust each other
• Self-managed teams are all-for-one and one-for-all. These teams innovate well because they are comfortable
with each other and share their ideas freely. They know their team is dedicated to doing the best work
possible together.
• 67% of employees say they would go above and beyond if they felt valued and engaged. These team members
embody employee engagement and often excel for the benefit of the team.
• Employee-driven decisions are the norm
• Leadership is a must for self-managed teams, but no one person takes on the leader role. Instead,
everyone contributes to decisions. These teams know their process best, and the organization
trusts them to make informed decisions within reason. 
• They have high self-awareness
• Self-managed team members are always looking for ways to improve their performance and the
overall process. These teams know that without their effort, a service or product doesn’t get
completed. 
• They have strong communication
• 63% of employees have wanted to quit because poor communication got in the way of their jobs.
• Being on a team that values and prioritizes open communication helps self-organizing teams
thrive. These teams readily contribute their opinions and unique experiences to drive the team
forward.
• How to move toward self-managed teams
• Here are some innovative steps that you can take to ease into self-managed teams.
• Gauge interest from possible team members
• Identify employees that could be a good fit for a self-managed team and see if they are interested in
participating.
• Provide guidance and guardrails
• Self-management should mean rudderless. These teams do best when they understand the organization’s
larger goals and values and cann check-in to stay aligned to them. Leadership can be clear about the
boundaries for teams and help them define what outcomes will matter most.
• Define team objectives and goals
• Clarify why a self-managed team is best for a service or process, then define your new team’s guiding
principles and goals.
• Develop team roles and decision-making standards
• A self-managed team needs base guidelines to thrive. Defining who does
what and how decisions are made can set your team on the path to
success.
• Offer training for employees
• Provide training on how self-managed teams work and how the process
will adapt to the new team style.
• Practice on a project with a volunteer team
• Before diving in, set up your employees to walk through a particular
process together for practice, slowly adding self-management features.
PROJECT RISK MANAGEMENT
• Every organization and business faces uncertain risks or harmful
events costing to the company’s finances or may lead to a permanent
closure of it. In this scenario, risk management is the only way to
remains safe and conquered challenges. Risk Management
contributes to projects success to a wider range and ensures potential
risks can be identified, mitigated and resolved within the given time
frame.
• A successful project manager pays close attention to communication
and solicits the input of meetings in order to secure achievements of
projects objectives hence reducing the rework costs (Rouse, 2020). 
The blog is going to represent the importance of risk management in
project management. It highlights the effective way to identify the
early risks, secure the objective of a blog that also helps in reducing
the rework costs.
What Is Risk Management?
• As defined by Bessis, project risk management has become a
standardized concept increases the chances of project success to a
great extent. This is termed as action plan consisting of various steps
and ensuring removal of risk via techniques and tools. Some of the
key benefits of applying risk management while working on any sort
of projects are-
• Helps in avoiding business disasters and saving capital
• It establishes pathways for successful implementation of projects
• It increases the sense of accountability
• It enables the project manager to review the project and create an
effective response
• Brainstorming all the opportunities that have been skipped
• It increases the stability of the project and decreases legal liabilities
Why Is Risk Management Important In Project Management
• The timeframe in which risk occur will have an impact should be identified
as soon as possible. Also, it is important to cost, schedule, scope, and
quality in detail as per the nature of risk. Hence it can be said, in all the way,
the exposure of risk to a project critically impact the project and might be
an agreement with the stakeholders (Duggan, 2019). In this case, a risk
management schedule the ground rule to monitor risk triggers also one
that can define the best measurements. To combat the overall impact of
the risk management process on the project can be defined in given points-
• Risk management contributes to the success of projects  by determining the
external and internal risks
• In order to ensure the project run smoothly, the project manager can
communicate their plans with stakeholders
• This helps project managers to maximize the outcomes and reducing
the chances of falling of projects.
• A risk management plan helps you to become proactive and
developing actions to reduces the likelihoods
• As suggested by essay typer, this will help in evaluating the project
success at one go. In case you want assistance to develop a risk
management plan for your assignments, then get in touch with
SourceEssay online assignment writers team as soon as possible.
Rules To Manage The Risk

• 1- Identify The Early Risk Associated With Projects– Risk management is intended to reduce
the chances and frequency of risk occurrence. Essentially organizing well-planned risk
management structured is nothing but a quality problem-solving under which the foremost
priority of a project manager has to identify the risks and reviewing all the resourced
associated with risk exposure. On that note, make a clear list of who is responsible for risk
(Almeida et.al, 2019).
• 2- Communicate Risks– Pay close attention to the risk and the solicit input into the meeting
and discuss it with team members. Focuses entail the risk exposure frequency with the
project sponsor or major stakeholders and decide on top risks.
• 3- Consider Opportunities And Thread– According to online assignment help experts, as risk
has a negative connotation for being harmful to the projects, there can be some
opportunities and positive risk might have associated with it is neglected somewhere,
henceforth make sure you are dealing with the opportunities with a high pay off that may not
require bigger investment and accelerate the growth of the project.
• 4- Risk Prioritizing– Some risk has a higher probability to impact the project progress while
some may have lesser. To do so, evaluates the tendency of risks and develop contingencies
(Gleißner, 2019). This process of prioritization helps the project management team to manage
that risk has both a high probability of occurrence and a greater impact on project growth.
• 5- Assessing Risk– Identify risk occurrence at what level to determine its causes to have
happened. The information gather will provide insights among a range of risk occurrence and
provide time to optimize it.
• 6- Developing A Contingency Plan– To prevent the risk or reduce its likelihood chances of
occurrence, develop a contingency plan and considered it as a task. Make sure these actions
should be taken promptly.
• 7- Tracking Risk– Last but not the least, as defined by assignment writer, record the risk and
effective Responses to track the if the risk happens derails the project or not. The daily efforts
must be made by the project manager focusing on the current situation of risk.
PM METHODOLOGIES/ APPROACHES
• 39% of the companies surveyed in 2021 said that their organization
implemented hybrid project management practices.
• In today’s project management world, forward-thinking managers and leaders
don’t adhere to a single methodology—they become well-versed in many of
them, and they learn how to mesh together various practices in order to
accommodate whatever the project calls for.
• That said, my goal here is to help you identify methodologies—and particular
aspects of methodologies—that you can bring to your practice and deliver
projects effectively in the world of digital agencies. You’ll find an overview of PM
methodology, descriptions of popular project management methodologies,
examples from real companies, and steps to help you choose the right
methodology.
• How Do You Define Project Methodology?
• Let’s take a stab at understanding what a project management methodology is. The
PMI project management methodology definition is helpful:
• A methodology is a system of practices, techniques, procedures and rules used by
those who work in a discipline.
• But!
• A methodology has to be rooted in something more fundamental that dictates why we
choose to do things a certain way, so I’d suggest it should also include themes.
• As project managers, there are many different ways to deliver projects. Broadly
speaking, these ways are our project management models—applying different
principles, themes, frameworks, processes, and standards to help provide structure to
the way we deliver projects.
• Types Of Project Management Methodologies
• Looking at project management method types, we can see differences in the
mechanisms that various methodologies use; how they give definition to a way of
working.
• Some project management methodologies simply define principles, like Agile.
Others define a “full-stack” methodology framework of themes,  principles,
and processes, such as Prince2. Some are an extensive list of standards with some
processes, like the PMI methodology PMBOK, and some are very light and simply
define processes, like Scrum.
• Maybe controversially, rather than debate what’s a methodology and what’s not, I
use the broad (yes, mis)understanding of PM methodologies to mean simply the
best practice frameworks we mash together to get projects done.
• In other words, I don’t think a methodology has to be a complete full-stack
implementation “system” to be considered a methodology.
• It’s a good and helpful definition because in reality, as project managers we use a
hodgepodge of principles, themes, and processes tailored for our clients and
projects.
• And let’s get one thing straight before we start, while there are many project
management approaches, there is no “right” methodology.
• Ultimately, the best methodology is what makes sense and is most suitable for the
project, team, and client.
• Let’s first take a look at some of the more popular project management
methodologies and understand some of the valuable takeaways for delivering
projects in the world of digital.
• How Do I Actually Use These Methodologies?
• Learn the fundamentals of project management with relevant, practical, expert-led
training.  Our online digital project management course provides expert instruction so
you can lead happy teams and deliver high-value projects in the digital world.
• How to choose the right project management methodology
• Choosing the right methodology is important because it defines how we work. It
provides the structures that can guide us toward project success or failure. And since
you already know there is no one-size-fits-all method that works for all business
types, sizes or industries, it’s important that you put some time and effort into
choosing the right project management methodology for your context.
• Here are a few steps to deciding which project management methodology to use in
your project:
1. Consider your project factors by their simplicity or complexity.
• This includes the project itself, as well as the client, our available resources and the project constraints (including the
appetite for change and risk), timeline, tools, and people. List these factors and label them according to their simplicity
or complexity.
2. Determine the rigidity or flexibility of your work environment.
• If you’re working in a dynamic environment where there’s an appetite for evolution and change, an Agile methodology
can work well for you. If you’re working within very fixed requirements, timelines, and budgets, you might be better off
with a Waterfall approach. Along with this consideration of your flexibility, take a look at your constraints and risks. How
can you enact processes that minimize your key risks and help your teams fit their projects neatly within your
organizational constraints?
• Regardless of whether you’re more on the flexible side (think nimble design studio with a small team where most team
members wear multiple hats) or more on the rigid side (think in-house agency where activities need to comply with lots
of internal regulations) now is also a good time to ask yourself whether your organization should remain as rigid or
flexible as it is. You can choose a methodology or hybrid methodology that pushes your organization in the direction you
want to go—just be careful to choose methods that are actually realistic for your teams to implement as they currently
are.
3. Consider what delivers the most value.
• Ask what delivers the most value to the client (or the stakeholder, or the end-user).
Make a list of their needs and use it to pick a way of working that best meets those
needs.
• For example, if your clients generally make ongoing requests and expect constant
updates and changes, then an iterative methodology with short cycles will help the
client feel like they are getting more value. Using this methodology will help you deliver
value and maintain positive relationships with clients.
4. Leverage your organizational goals.
• Use the goals or project objectives you’ve already created as a team or organization in
order to guide your selection of a project methodology. Clearly, your methods should be
a means to achieve your goals—the best method is the one that guides you towards
your strategic objectives most directly with the greatest gains and least negative impact.
5. List your organizational and team values.
• Lastly and importantly, do a deep dive into your values. Methodologies, at the end of the
day, are carried out by people—people with habits, opinions, and values. Instead of taking a
trending methodology and throwing it at your people, use the ways your people think,
relate, and work to build out a methodology that’s a natural fit.
• Your organization’s and team’s values can give shape to a truly sustainable methodology
that is less a theoretical standard (that you never really meet) and more a way of
systematically acting out a living, breathing processes that are easier to sustain long-term.
• Remember, no methodology is better than the others. It all depends on how well it meets
organizational goals and values, the constraints the project team has to deal with, the
needs of stakeholders, the risks involved, as well as the project size, cost, and complexity.
PROJECT MANAGEMENT
METHODOLOGIES
Overviews Of The 9 Most Popular Project Management Methodologies
• Below, I’ve put together a project management methodologies list describing the
most popular PM approaches. There are links in each section to learn more about
each approach.
1. Agile – collaborating to iteratively deliver whatever works
• Let’s start with everyone’s favourite buzzword: Agile. The truth is, Agile isn’t
actually a methodology at all, but a set of principles for developing software. The
principles are outlined in the Agile manifesto outlines four values:
• Individuals and interactions over processes and tools;
• Working software over comprehensive documentation;
• Customer collaboration over contract negotiation;
• Responding to change over following a plan.
• Being Agile is more of a philosophy and set of values to follow, rather than a
process you can directly apply to a project.
• So, in short (and to make things confusing) Agile isn’t a methodology or process.
Even if you’re on board with the principles, you still need to define the processes
for delivering projects.
• When people talk about an Agile project management methodology, what
they’re usually describing is a flexible, iterative design and build process. Agile
projects are characterized by a series of tasks that are conceived, executed and
adapted as the situation demands, rather than a pre-planned process. Being Agile
helps teams respond to unpredictability through incremental, iterative work
processes.
• In much the same way that a good cook tastes the food as they cook it, adding missing
ingredients as they go along, an Agile project management process requires project teams to
cycle through a process of planning, executing, and evaluating as they go along. For another
way to look at it, PM Column offers an interesting description of Agile in their article
on explaining Agile to kids.
• Agile is different from other project management methods which usually assume that things
affecting the project are predictable, and so it emphasizes adaptability to changing situations,
adequate and ongoing communication among the project team and between them and the
client. Agile methodologies are great to use in dynamic environments where there’s potential
to adjust and adapt estimates such as software and game development.
• As a set of principles, Agile is the Big Daddy. Agile tends to be used as an umbrella term used
for flavors of Agile including Scrum, eXtreme Programming (XP), Kanban, and Scrumban. In
Agile project management, you might use any of these versions of Agile (Scrum, eXtreme
Programming, Kanban, Scrumban).
2. Scrum – enabling a small, cross-functional, self-managing team to deliver fast
• Scrum is a project management methodology that proposes principles and processes to improve
delivery. Within software development, Scrum methodology is one of the most popular and
simple frameworks to put the principles of Agile in practice.
• The goal of Scrum is to improve communication, teamwork and speed of development. If you hear
people talking about aspects such as sprints, scrums, backlogs and burn downs, they’re probably
talking about Scrum, or some derivative of it.
• Scrum isn’t really a project management methodology but a framework for the ongoing
development and maintenance of complex products. Scrum is a light approach and defines a
simple set of roles, meetings called Scrum ceremonies, and tools to efficiently, iteratively and
incrementally deliver valuable, shippable functionality.
• Fundamentally, Scrum is about empowering a self-managing Scrum team to deliver and defines
roles and responsibilities to create a healthy tension between delivering the right thing, the right
way, as fast as possible.
• Scrum advocates using a small, cross-functional team of up to 9 people who work on items in a
backlog (a collection of user stories or requirements) that have been defined and prioritized by a
Product Owner.
• Work is divided into “sprints”, a development cycle of usually 2-4 weeks, during which, daily
“Scrums” take place where the team report on progress and impediments. At the end of each sprint,
work is then reviewed in a sprint review meeting to determine together with the Product Owner if it
passes the Definition of Done (DoD).
• Scrum is facilitated and served by a Scrum Master. They lead the Scrums, sprints, demo’s and
reviews, and a “sprint retrospective” after each sprint, to ensure the team is continually optimizing
and improving.
• Scrum was originally designed for software development. Therefore, while there are Agile artifacts
from Scrum though that can be leveraged, Scrum doesn’t fit neatly into the typically more strategic
and creative agency world. Even on agency web projects, fixed budgets, timelines and scope provide
a lack of flexibility for a Scrum self-managing team, on a project with a defined beginning and end.
3. Kanban – improving speed and quality of delivery by increasing visibility of work in progress
and limiting multi-tasking
• Kanban is a project management methodology focused on Lean principles and a strict process
to increase efficiency. It’s similar in many ways to Scrum – it’s all about releasing early and often
with a collaborative and self-managing team. But compared to Scrum, Kanban is a more
evolutionary change, a softer landing into the world of Agile as it’s less prescriptive.
• Kanban methodology is light on process, flexible, doesn’t have prescribed roles, and simply
tries to improve throughput by increasing the focus of the team on the things that really
matter. The core practices are visualizing the workflow, limiting work in progress, measuring the
lead time, making process policies explicit and continually evaluating improvement
opportunities.
• Kanban’s focus is on work that is continually released, faster, and with better quality. It’s great
for operational or maintenance environments where priorities can change frequently. Kanban
focuses on measuring Lead Time – how long it takes, after being briefed, to deliver.
• With Kanban, project managers typically use sticky notes on a Kanban board (such as a
whiteboard or online tool like Trello) to represent the team’s workflow, with categories
as simple as “To-do”, “Doing” and “Done”.
• This visualizes what you want to do and limits work in progress (WIP) so that the flow of
work is improved as you measure and optimize the average time to complete items.
• It also gives the team a visual display of what is coming up next, which makes it easy to
reprioritize, uncover process problems and prevent tasks from stalling. It also helps them
to see how any new task may affect the ongoing work.
• Kanban is well-suited to work that requires steady output, like production or support and
maintenance. Within the world of agencies, it can also be a helpful tool as it’s more
accommodating to changes, and clients like to change their minds constantly. If Scrum
seems too rigid an approach, but you want to “do Agile”, Kanban is a simpler alternative.
4. Scrumban – limiting work in progress like Kanban, with a daily stand up like Scrum
• Scrumban methodology is a relatively new hybrid project management methodology that combines a mixed scrum
and Kanban approach to project management. It takes the flexibility of Kanban and adds some of the structure of
scrum to create a new way to manage projects.
• Rather than working in potentially restrictive, timeboxed sprints, Scrumban uses a planning on demand principle to
fill the backlog and tasks are assigned by the team pulling in tasks as they can accommodate them, as in Kanban. This
means that work in progress is limited and the development team stays focused on the task at hand rather than
worrying about the sprint review meeting and what the team committed to delivering in the sprint.
• It’s not all Kanban, though. Scrumban retains the daily Scrum with reviews and retrospectives to improve the process
only used when needed. Furthermore, without the constriction of sprints, planning is done on an as-needed basis
rather than around a sprint, which potentially saves time.
• Scrumban really just adds some flexibility to Scrum by removing sprints and allowing an adaptive approach to
planning. Or you could see it as adding some much-needed structure to Kanban with meetings that can help with
collaboration and optimizing the process.
• Scrumban can be good for product development where there is an unclear vision, where there are evolving
requirements or no clear roadmap and if the process needs to include support and maintenance work in the process.
• 5. Lean – streamlining and eliminating waste to deliver more with less
• Lean methodology is a project management methodology focused around the
theme of efficiency. Arguably the Godfather of Agile, Lean is all about doing more
with less. It starts by identifying value and then maximizes it through continuous
improvement by optimizing the flow of value and eliminating wastage.
• It’s a theme with principles, rather than a methodology dictating process and
things to do. It suggests you can do more with less by addressing the three
dysfunctions that create waste; Muda, Mura and Muri, also known as the 3Ms.
• Muda is about eradicating waste—removing process or anything that’s not
ultimately adding value to the customer. In the world of digital, this could be
eliminating rounds of revisions.
• Mura is about eliminating variations—removing the overhead that variances to the standard
process create. For us, this could mean standardizing briefs and approval processes.
• Muri is about removing overload—the optimal capacity is working at 60-70%. Any more than
that, and everything slows down. We could apply this to be minimizing the number of
projects we’re trying to run through the agency.
• Lean is focused on changing the way we operate to be laser focused on delivering value. It’s
about shifting the focus from optimizing separate technologies, assets, and vertical
departments to optimizing the flow projects through entire value streams that flow
horizontally across technologies, assets, and departments to customers.
• Lean can be a helpful mindset to adopt when reviewing your project delivery process. Think
about how you can strip your project process back to the bare essentials that deliver value
and cut out the things that are just fluff, or the way you’ve always done it, and you’ll be
thinking Lean.
• 6. eXtreme Programming methodology (XP) – doing development robustly to ensure
quality
• eXtreme programming (XP) is a software development project management
methodology which defines values and processes to improve software quality and
ensure responsiveness to evolving customer requirements. The values, or principles
are very similar to Scrum, around simplicity, communication, feedback, respect, and
courage.
• Where it really deviates from Scrum is in defining rules or prescriptive processes. Some
of these are similar to Scrum but there are rules around technical practices around
designing coding and testing that make it specific for development projects. These
rules include making mandatory; Including user stories, Test-driven development
(TDD), Pair programming, and Continuous integration among many others.
• 7. Waterfall – planning projects fully, then executing through phases
• Waterfall methodology, often referred to as SDLC (Software Development Life Cycle) is a project
management methodology theme with a very simple approach that values solid planning,
doing it once and doing it right, rather than the Agile approach of 
incremental and iterative delivery. It’s simple to understand because you simply make a good
plan, and execute on it.
• The project manager tends to be large and in charge, and work is planned extensively up front
and then executed, in strict sequence, adhering to requirements, to deliver the project in a
single, and usually very long cycle.
• Requirements are defined in full at the beginning, at the top of the Waterfall,  before any work
starts. Work then cascades, like water down a Waterfall through phases of the project. In a
Waterfall model, each phase must be completed before the next phase can begin and there is
no overlapping in the phases. Typically, in a Waterfall approach, the outcome of one phase acts
as the input for the next phase sequentially.
• After the plan is approved, there’s little scope to adapt the plan unless absolutely necessary, and
changes that are needed usually require change requests. The project then flows through the
process from requirements gathering, through design, implementation, testing and into
maintenance.
• Because of the single cycle approach, in a Waterfall project, there’s little scope to reflect, revise
and adapt once you’ve completed something. Once you’re in the testing stage, it is very difficult to
go back and change something that was not well designed in the concept stage. There’s also
nothing to show and tell the client as you go along. You complete the project with a big fanfare
and pray the client likes it. That’s potentially very risky.
• Waterfall is generally regarded with some disdain within agencies as an inefficient and passé
traditional project management approach. But Waterfall can be a useful and predictable approach
if requirements are fixed, well documented and clear, the technology is understood and mature,
the project is short, and there’s no additional value gained from ‘going Agile’. A Waterfall approach
can actually provide more predictable end result for budget, timeline and scope.
• 8. PRINCE2  – controlled project management that leaves nothing to chance
• PRINCE2 methodology is a “full stack” Waterfall project management methodology that
includes principles, themes and processes, created by the UK government in 1996 for IT
projects. The acronym PRINCE2 stands for PRojects IN Controlled Environments. It is a 
process-oriented methodology, dividing projects into multiple stages, each with their own
plans and processes to follow. The methodology defines inputs and outputs for every stage of
a project so that nothing is left to chance.
• The system emphasizes justification of the course taken by a business, and so the first step is
identifying a clear need for the project, who the target customer is, whether there are
realistic benefits, and a thorough cost assessment. A project board owns the project and is
responsible for its success. They define the structures for the team, while a project manager
oversees the lower level day-to-day activities. PRNCE2 methodology is based on eight high-
level processes and gives teams greater control of resources and the ability to mitigate risk
effectively.
• As a methodology, it’s incredibly thorough—it’s a great framework for how to
run large, predictable, enterprise projects. It clarifies, what will be delivered,
ensures a focus on the viability of the project, clearly defines roles and
responsibilities, endorses management by exception (arguably an Agile principle)
and similarly to PMBOK, provides a common vocabulary which we can apply to
other methodologies. On the flipside, while the principles and themes are great,
the process can make it laborious and onerous for small projects.
• PRINCE2 is designed for large scale IT projects so would never work in an agency
as a project management methodology. However, the emphasis on developing a
good business case with KPI’s and value earned, clear roles and responsibilities,
managing change and risk are helpful when we consider managing projects for
our clients.
• 9. PMI’s PMBOK – applying universal standards to Waterfall project
management
• The Project Management Institute’s PMBOK, or Project Management Body of
Knowledge, is not really a methodology. Instead, the PMBOK “methodology” is a
framework of standards, conventions, processes, best practices, terminologies,
and guidelines that are accepted as project management industry standards.
Even so, the PMBOK framework from the PMI is often thought of as a traditional
methodology.
• The PMBOK refers to the five process steps of project management: initiating,
planning, executing, controlling, and closing. It contains many processes and
techniques of project management by which to evaluate or complete the way
you run your projects or the methodology you use.
• The PMBOK best practices are useful as a foundation, but in order to
implement it as a methodology, you need to determine which processes you’ll
apply, when, by whom, and to what extent. You also have to factor in your
organization’s structure, governance, and workflows, adapting the general
foundations of the PMBOK to your specific circumstances.
• It is, therefore, more theoretical, a reference guide, which you can be certified
in which although popular in IT, doesn’t really fly in the agency world. You
can’t actually run a PMI or PMBOK project, but you can leverage the
standards to create a universal language and best practice around a project. In
comparing PMBOK vs. PRINCE2, you could consider PMI’s PMBOK and
PRINCE2 as complementary to one another rather than two different or
separate Waterfall approaches.
• Other Project Methodologies
• The list of project management methodologies above is by no means an exhaustive list—it simply a list of the most
common methodologies in the agency PM world that we’re focused on. Here are a few brief definitions of additional
project methodologies:
• Crystal Method
• Project processes are given a low priority, while team communication, team member skills, people, and interaction
are emphasized.
• Adaptive Framework methodology
• Project scope is variable, but the time and the cost are constant, making it possible to adjust the project scope during
execution in order to get the maximum business value from the project.
• PRiSM
• PRiSM (Projects Integrating Sustainable Methods) is a methodology often used in construction and real estate
development. It’s based on 6 principles (Commitment & Accountability, Ethics & Decision Making, Integrated &
Transparent, Principle & Values Based, Social & Ecological Equity, and Economic Prosperity) that guide practitioners to
consider the value of the total asset lifestyle. It extends beyond the project lifecycle to encompass pre-project
planning as well as benefits realization in the environment where the project is being realized.
• Critical Path Method
• Technique for modelling and scheduling project activities used in industries like construction, software development, and
engineering. In this method, you determine the activities needed to complete a project, the time that each will take, the
dependencies between them, and their deliverables or milestones. You use these to calculate the longest and shortest
paths to completing your project, which helps you understand the key activities of the project—which activities can be
delayed without affected your milestones, and which activities can’t.
• PERT
• PERT (Program Evaluation Review Technique) is a method for modelling, scheduling, and coordinating tasks within a
projects. In PERT, project activities are represented as nodes on a network diagram, with their durations listed on the lines
connecting the activities.
• Rational Unified Process
• Rational Unified Process (RUP) is a process used in software development to reduce waste and development costs. It
involves 4 phases (Inception, Elaboration, Construction, Transition) with specific plans that lend structure to the software
creation process.
• Get Relevant, Practical, Expert-led Training
• Watch this overview of our upcoming digital project management course—get expert instruction for leading happy teams
and delivering high-value projects in the digital world.
• Discover the 7 main reasons that can lead to project failure:
• Unclear or shifting goals. ...
• A communication problem. ...
• A lack of planning. ...
• Lack of risk management. ...
• A lack of follow-up. ...
• Too many or unsuitable tools. ...
• Context and timing issues.
• 5 Reasons why project work plans fail
• Misaligned vision and a lack of stakeholder buy-in. ...
• No clear communication process. ...
• Unrealistic goals and deadlines. ...
• Poorly allocated resources and team members. ...
• Disconnected tools and lack of flexibility to course correct.
• 7 common causes of project failure (and their solutions)
• Unclear objectives. Problem: Your team isn't aligned on project goals,
and there's no way to measure success. ...
• Scope creep. ...
• Unrealistic expectations. ...
• Limited resources. ...
• Poor communication. ...
• Scheduling delays. ...
• Lack of transparency.
• What Are the Challenges of Project Management?
• Keeping Teams on The Same Page 
• Poorly Defining the Goals And Objectives
• Unrealistic Deadlines
• Finding The Right Project Management Software
• Scope Creep is Insidious And Creepy
• Insufficient Team Skills
• Miscommunication Cause Conflicts
• Risk Management
• Challenges of Teamwork
• Lack of Accountability
• As I started ProofHub and began to grow, I have worked with and hired a great number of project
managers. Throughout the years, I have noticed the many challenges project
• managers are facing in project management. 
• The right mix of planning, controlling, and monitoring can make a difference in 
how project managers complete the project on time, on budget, and with high-quality
results.  
• A project manager is supposed to be a leader, not only for the project, but also for the
team. Only 2.5 percent of companies successfully complete their projects. Aren’t the
numbers staggeringly disappointing? They are, for sure. 
• Managing projects is no less than running a small city. You have to take care of the projects,
resources, deadlines, manage the budget, ensure proper communication, foresee potential
risks and what not.
• Taking care of so many things can be nerve-wracking and it’s not surprising if something
slips out of your mind. Every day we hear the same stories, common challenges and issues
in project management. Yet we fail to learn our lesson out of those stories. 
Challenge #1: Keeping Teams on The Same Page 

• Managing a team that is widely spread out is one big challenge for project managers. Keeping
your team on the same page will make things happen interactively. Each team member will
know exactly what’s going on, what they need to do, and what each of them is working towards.
• We have a growing team at ProofHub, but it has never been a challenge for me to keep track of
teams on the same page and ensure no missing tasks, because we have everything under control
with ProofHub. 
• Solution: 
• Bring all your team and client conversations about a specific task on a single page to avoid
digging through long email threads.
• Every project includes a schedule and a team working for that project. Stay on top of your
schedule and know what’s coming up with calendar views. 
• Know who works on what part and get notified of tasks moving from one stage to another,
keeping everyone together. 
Challenge #2: Poorly Defining the Goals And Objectives

• Poorly defined goals or goals without objectives pushes a project in danger. An important step in
a project is to define goals and objectives—and that becomes a major challenge. 
• The project managers and team members might not be knowing what exactly to expect from the
project. If the goals and objectives are not clearly defined, the project is doomed to fail. When
no one is aware of the whats, whys and whens of the project, what will follow is a lot of
confusion and chaos. 
• Starting a project without clear objectives, a specific direction and a prepared plan; it’s like
going on a road trip with no idea where you’re going and how to get there. You will waste gas,
time and effort. Likewise, your business suffers when there is no clarity and forethought before
starting a project.
• Solution: Setting a goal is inclined towards developing  a proposal and then defining objectives
that would help to achieve the goal. When you know your goals, you can define the objectives
that is the how, why, and what you need to do for project planning. This is why it’s recommended
to hold a kickoff meeting and use project planning software to define clear goals. 
Challenge #3: Unrealistic Deadlines

• Do you always impose a deadline on your project members that they possibly can not meet? A
big thing that most teams or project managers struggle is unrealistic to project deadlines and
expectations clients and stakeholders have from them. Most project timelines do eventually slip
due to the unrealistic ‘initial deadlines’. As we live in a world, where competition is getting
aggressive and targets are set either unrealistic or unachievable rather than driven by
calculated business requirements. From then, what begins is a desperate attempt where the
team tries to fit the requirements in the already drawn boundaries. 
• Solution: First, talk about the concerns with your client or manager and look if there are any
unknown factors that drive the project deadline. Although it may seem that the deadlines are
foolishly imposed that you can’t meet, that surely needs a quick look over.
• Project managers can take care of the project deadlines and other related issues with
impeccable planning, alternative analysis and proper communication of the real-time progress
to project participants and other key decision-makers. Plan your events, manage your schedule,
and keep track of important dates with a project calendar. 
Challenge #4: Finding The Right Project Management Software

• It can be tedious to identify the right technology for your project team
that is within your budget, to implement your projects. A well-
designed project management software will ensure that projects are
progressing as planned and allow you to get visibility into all your
projects. At times, it can be difficult to find such a tool, especially
those that meet your needs.
• Solution: We know finding the right software is important but this
leaves us with a very important question, “Which software is right for
my team?”
Challenge #5: Scope Creep is Insidious And Creepy

• Scope creep arises naturally and it becomes a challenge – sneaking up suddenly and hitting your project. For
example, at times when the project takes a different shape because the client wants more functionality for the
same price and this is the fear of every project manager. Many clients don’t know how to define their project needs,
and “I’ll know it when I see it” is tough to meet. This can put project managers and team members in a difficult spot
as unpredictable or new changes can often lead to the project failure. Remember, a lot of little changes are as bad
as one big change.
• Solution: If you are a project manager you know that avoid scope creep will definitely increase the chance of
delivering the project on time and budget. 
• Make a clear schedule to outline every step of the project. 
• Make sure that everyone is on the same page about the requirements.
• Determine project goals (cost, schedule, quality) through a systematic process with proper planning and
understanding of the customer needs.  
• Make realistic assumptions about resource availability and deadlines to achieve quality results. As, there is no 100%
anti-scope-creep solution but documenting what is happening and communicating challenges to stakeholders,
team, and management in advance might help.
• Use Gantt charts for better project planning and tracking and stay on top of project plans. 
Challenge #6: Insufficient Team Skills

• A team is as good as its team members. If team members are not smart or are not
trained enough to perform assigned tasks, it can put the development in a risky
spot. But most of the times, the team members are assigned on their availability, not
for their expertise for many projects. If team members are not skilled or trained
enough to meet the challenges and perform assigned tasks, it can put the
development of the project in a risky spot. 
• Some projects are challenging or demand a certain level of knowledge and expertise,
so it is up to project managers to decide whether team members need to be trained or
to add someone with the required skills. Besides this, qualities like the lack of
accountability, blaming each other, and finger-pointing can also halt a project.
• Solution: Document the core set of skills needed to accomplish the workload and
analyze the strengths and weaknesses of the team members. If required, train them to
enhance their knowledge and end the skill gaps.
Challenge #7: Miscommunication Cause Conflicts

• How many times have you heard of communication issues as an excuse or explanation to
unfinished tasks, projects don’t meet deadlines, conflicts or not working together?
Miscommunication, poor communication,  is one of the biggest project management
challenges that get in the way to deliver projects successfully. 
• Communication skills are the project manager’s greatest asset. No matter if you are giving
instructions, asking questions or seeking information, there’s always a challenge to provide
clear and open communication.
• There’s a reason why project managers emphasize a lot on effective communication. Because,
most often, successful communication translates into successful projects as 57 percent of
projects fail due to breakdown in communications.
• Solution: Determine proper communication flows for project members and develop a way to
inform what information needs to be informed to project members. You can
also use collaboration software such as ProofHub to ensure that project members are in the
loop of the recent developments in the project. 
Challenge #8: Risk Management
• Risk management is the identification, assessment, and prioritization of risks followed
by coordinated application of resources to minimize, monitor and control the events.
• Oftentimes, projects don’t go as planned so risk management is one of the major
project management issues that project managers have to deal with. Management
experts can tell how seasoned a project manager is with his ability to oversee risks
that might creep up in a project anytime. These risks can be an uncertainty in the
financial market, hidden flaws in the project plan or unknown factors that can impact
the success of a project.
• Solution: Although it’s impossible to predict every potential risk but with strategic
planning and collecting information beforehand, project managers can anticipate
which part of the project is likely to fail. With that information, he can develop control
measures that can help them to deal with the risks accordingly.
Challenge #9: Challenges of Teamwork

• In a study published in The Harvard Business Review, we learn that ‘‘over the past two decades
the time spent by managers and employees in collaborative activities has ballooned by 50
percent or more.”
• Teamwork isn’t really teamwork unless the team actually works. A team consists of multiple
members, each having a different personality, managing and catering to their needs can be a
daunting task at times. With so many people working on a project together, there can be
disagreements and differences in a team that can have a negative impact on the project and
work environment.
• Issues and incongruities amongst team members is often a challenge for project managers to
deal with. They have to constantly look for ways to take everyone in a team together for the
betterment of the project.
• Solution: The best way to eliminate any issues or negativity in a team is to create a positive
work environment. Build trust in the workplace to break down barriers and establish
interpersonal relationships. 
Challenge #10: Lack of Accountability

• Everyone wants accountability but a few teams have it. I’m sure we are well aware
of the challenge. A project manager has to make sure that the team is accountable
throughout their daily workloads. Accountability is visible in the form of blame
game when things go wrong but is rarely in the picture when the things are right. 
• Solution: To embrace accountability, make sure you begin it at the start of a
project to build it into your workflow. The good news is that effective project
management skills can be developed through project management training and
skill development. 
• In fact, there are many online project management courses and certifications that
can do the job for you. Whether you are a college graduate or experienced
professional, such courses are helpful in expanding career opportunities and
successful project implementation.
 The End

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