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A Newsletter from Harvard Business School Publishing
Will Project Creep Cost You—or Create Value?
by Loren Gary
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Will Project Creep Cost You—or Create Value?
Strict rules that limit a project’s scope can be the key to its success.
But you need a system flexible enough to recognize value.
by Loren Gary
T’S A QUESTION THAT CAN BE THE BANE
of a manager’s ex-
you treat every project as utterly
unique, none of the learn-
Iistence: When do you permit changes to a major project? ing from one project to another—which essentially has to
Allow the wrong changes and the project you’re responsi-
do with recognizing patterns—transfers over,” says Steven
ble for can veer off course, run over budget, and miss key
Wheelwright, a professor and senior associate dean at
deadlines. Ignore the right change, and you fail to capital-
Harvard Business School (HBS) whose research focuses
Hence the dilemma: How to stay open to making mid-
And just what is this relevant learning Wheelwright is
stream changes that promise to improve your project’s
referring to? Conversations with project managers who
outcome without succumbing to the dangers of “creep,” in
have a track record of success underscore the importance
which small scope changes add up to irremediable budget-
of adopting, in the initial planning phase, key frameworks,
The answer lies in recognizing that while each project
• The right people have defined the project’s scope.
has its own unique characteristics, you do not need tobring a unique perspective to each project you manage. “If
• The project’s boundaries have been sharply
• The impact of potential alterations or slippage can be
A TALE OF TWO PROJECTS
When Dave Moffatt was overseeing the construction
In the implementation phase, the challenge is to orga-
of five supermarkets for Jewel Companies back in the
nize the work so as to minimize the inherent uncertainties.
1970s, work came to a halt in the middle of construc-
Whether you’re the manager or the executive sponsor of
tion while plans were redrawn to incorporate flower
any major project, a solid methodology that’s sensitive to
shops into the supermarkets—a very new concept at
creep can make it easier for you to decide, in the moment,
the time. What justified the lost time and added ex-
which project add-ons to say yes to and which to pass on.
pense? The vice president of marketing’s ROI analysisshowing that these costs would be more than offset by
The planning phase
the revenue the flower shops would bring in.
A surprising number of projects get under way without a
Midcourse scope adjustments to accommodate new
thorough attempt to define their parameters, specs, and
realities or incorporate new capabilities can pay off‚—
but only when they’re done very intentionally and
Haste is the chief culprit here, says Dave Moffatt, who
with a hard-nosed insistence on demonstrating up
brings 40 years of industry project management experi-
front where the money is going to come from. Such
ence to his role as senior operations adviser at HBS and
vigilance doesn’t just happen, which is why for every
project manager for the renovation of one of the school’s
story like Moffatt’s, there’s probably three or four that
main classroom buildings. “There’s a minimum lead time
that all projects require,” says Moffatt, and it’s the respon-
Need an example? Think of the Big Dig, the highway
sibility of the project’s manager to know what that lead
project to put Boston’s central artery underground, in
time is and to ensure that it’s not squeezed.
which scope changes were all too casually agreed to
Here are the key tasks of the planning phase:
when they were noticed at all. Construction for thisproject began in 1991 and was supposed to take 10
Differentiate scope from purpose.
years and cost $4.9 billion. Current projections sug-
As you define the parameters of a project, it’s critical to
gest that more realistic figures are, at minimum, 14
separate its scope from its purpose. “A project’s purpose is
the general benefit it will provide to the organization,” ex-plains Alex Walton, a Winter Park, Fla.–based project con-
Copyright 2005 by Harvard Business School Publishing Corporation. All rights reserved.
Project Creep (continued)
sultant who’s worked with computer, aerospace, financial,
and better prepare for potential trouble spots in the IT
and medical/nutritional companies. “Its scope comprises
projects that are on the docket for the coming years.
the particular elements (or product attributes) that theproject team can control and has agreed to deliver.”
Set the rules.
For example, a project’s purpose may be to create a new
One last piece of work in the planning phase that can
food item that will increase sales by $20 million. But the
minimize the chances of project creep involves creating
team developing the product needs to know what features
buffers or rules that make it difficult for significant
the product must have and what the budget for producing
changes to occur without conscious discussion and ap-
the product will be. This is the information that a three- to
four-sentence document known as a scope statement
• Set up a change control board.
In highly structured
vides; it spells out how the team intends to achieve success
project environments, such a group is responsible for
and, thus, the criteria on which it will be evaluated.
“gathering information about the impact that a pro-posed change will have on the schedule, budget, or
Involve key stakeholders.
scope; voting on the proposed change; and then
Make sure that you have the right people defining the
sending a request-for-change document on for the
project’s scope. “If you don’t have all the affected stake-
project sponsors’ signature,” says Bob Tarne, a senior
holders and sponsors at the table, either you won’t get an
consultant who specializes in IT and telecommunica-
accurate identification of the critical dependencies and
tions projects for Havertown, Pa.–based PM Solu-
functionalities or you won’t have the people who can en-
tions. Thus, for an IT project affecting the sales,
sure that the project hews to those critical dependencies
marketing, and logistics departments, the change
and functionalities,” says Brian Doby, a senior project
control board would comprise senior managers
manager for MedPlus, a Mason, Ohio–based subsidiary of
from each of these units. Smaller projects—those
QuestDiagnostics, who oversees the installation of elec-
costing less than $1 million and lasting less than 12
tronics systems in health care facilities.
months—can effectively function without such a for-
For this reason, it’s crucial to include “the end user’s
mal board, says Tarne. The project manager can sim-
perspective and needs when you’re scoping out the func-
ply solicit the advice of key stakeholders as needed.
tionality that’s required,” says Wheelwright. In the renova-tion of Baker Library at HBS, for example, project
• Establish thresholds for additional work.
planners solicited faculty members’ input about the proto-
Reed, an independent project management consult-
types of the new office spaces that were being designed for
ant in Oysterville, Wash., says, “Any change entailing
more than 5% of the original cost or hours budgeted for that particular line item in the project should trig-
Plan in the aggregate.
ger a formal request for a scope change.”
Getting the right people involved in defining the scope
• Stipulate that projects be of a certain size.
and devoting sufficient time to the project planning phase
product development, software companies often say,
aren’t enough to ensure that the project has clear bound-
‘Since the projects we do best are either $5 million or
$1.5 million in size, we want to make sure that any
“Organizations also need to do aggregate project plan-
project we undertake fits into one of these two size
says Wheelwright, “in which they develop a strategy
that lays out a pattern and rhythm for when subsequentprojects will occur.” This is especially important for new
• Limit the number of new features.
Set guidelines for
product development. Without such a schedule for future
how many new major and minor features can be in-
projects, a product engineer with a new idea can grow con-
cluded in a project of a certain size. This helps the
cerned that it will never be implemented; as a result,
project team control the inherent fuzziness of front-
there’s a strong temptation for the engineer to try to slip
end planning by forcing it to choose, from among all
that idea into the product that’s currently in develop-
the possible useful features, only the ones that are
ment—regardless of its impact on the cost and schedule.
most important to customers right now.
The analysis of prior projects serves as a valuable ad-
junct to aggregate planning. For example, study the past
The execution phase
10 internal IT projects your company has undertaken—
Once you’re into the actual implementation of the project,
what patterns emerge? The findings can help you identify
break it into smaller components with shorter time frames
Project Creep (continued)
and focus first on work with the least uncertainty and vari-
SCOPE CHANGES IN SERVICE PROJECTS
ability. For example, a software development team work-ing on a product with four new features—the fourth of
A few words of caution about assessing scope change
which it is not yet sure the market really wants—might
requests to service or outsourcing projects. First, it’s
choose to create the other three features first because it is
difficult to make money in service projects without
confident that the market wants them. The freeze date for
the buffer and rules discussed in the article. The rea-
the fourth feature would be set to occur later, after the
son, explains project management consultant Michele
team has been able to gather enough additional customer
Reed, is that “service organizations are taught never to
input to confirm that the feature is critical.
say no to a customer, so there’s a temptation to agree
Operating in this manner helps a team “subdivide the
to a client’s request to expand the project’s scope for
areas of uncertainty,” says Wheelwright. It also helps the
free without carefully calculating the cost.” With ser-
team be more alert to the danger of creep because its atten-
vice projects, it’s usually over the long term that you
tion is concentrated on a few specific areas, instead of the
make your money. So before you say yes to more work
at no extra charge, make sure there’s a good chance
But don’t wait until all subprojects are complete before
that such a goodwill demonstration on your part will
checking whether the whole project (or product) is going
translate into a long-term contract with that client.
to be a success, says Wheelwright. Use a procedure knownas periodic system prototyping, he advises. “At regularintervals during the execution phase, link up all the
When considering a scope change, make sure that the
subprojects for a system test. This helps ensure that the
change control board (or the informal group of stakehold-
subprojects you’ve created are coming together as
ers you rely on for advice) fully understands what the pur-
pose of the change is. For example, have changing marketconditions made it important to accelerate the schedule so
Should this add-on be approved?
that the product can ship earlier than originally planned?
During construction of McArthur Hall, HBS’s residence
Do new industry standards, adopted since the planning
for students in executive education programs—some of
phase, need to be accommodated? Or has the proposed
which last as long as eight weeks—a scope-change deci-
technological solution to one phase of the project not
sion was made to create 10 rooms that would enable guests
panned out, requiring a different approach?
of the program attendees to visit for a few days at a time.
Next, guide the board through an examination of how
To accommodate these new rooms, the initial thought was
the proposed change affects everything: the scope state-
to reduce the number of rooms for exec-ed students by 10.
ment, the work-breakdown structure, the available re-
But doing that would have diminished the exec-ed pro-
sources, the total cost, and the schedule. Finally, encourage
gram’s long-term revenue potential by reducing the avail-
the board to consider what will happen if the change is not
able space for attendees; better to build 10 additional
made. In these deliberations, says HBS’s Moffatt, the opin-
rooms to accommodate guests, the project’s executive
ions of board members who represent the end users
sponsor argued, and to pay for the additional cost over
should be given the greatest weight.
several years out of the larger income stream that would
As the executive sponsor or project manager, if you’re
result from keeping the number of exec-ed suites as origi-
lobbying for the change to be approved, you’ve got to have
nally planned. Careful ROI analysis, in other words,
a plan for funding it once the earned-value calculation has
helped the project’s overseers find the optimal way of deal-
determined the cost. If the future revenue generated by the
add-on is insufficient to cover the cost, then you’ve got to
Similar near-term financial calculations should help
find other places in the project where you can save money
you determine whether to proceed with proposed changes
and focus on things you can directly control—that is, ac-
tivities along the critical path—that will occur within the
Following the recommendations for the planning and
next 30 to 90 days in the project schedule, advises Reed. ◆
execution phases will help you eliminate scope changesthat are not worthy of the kind of analysis that went into
Loren Gary can be reached at .
the McArthur Hall change. If you’re vigilant up front,change requests that make it past the initial hurdles arethus much more likely to be worth serious consideration.
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