The Scope says it all

A project is successfully managed when it is properly budgeted and stays focused, and has well-defined contours

Methodologies or techniques for cost estimation and cost management have evolved over a period of time and will continue to do so. At the outset would like to clarify that there is no specific formula or technique when it comes to scoping and managing budgets for projects. One can use a combination of various techniques or evolve some of his own depending on the industry for which the project is being implemented and the nature of the project itself. A technology company would like to focus more on its R&D and training functions while scoping budget whereas a non technology company may focus on mission critical application/infrastructure development and support services.

Scoping budget or so called planning budget is a typical constraint of any project. The scope definition will form the baseline against which potential changes are assessed and deliverables are defined along with objectives and time line. It is commonly seen that during a project one of the factor among timeline, performance (quality of final product, deliverable or output) and budget dominates other two. One should have fine assessment of the same while scoping of budget.

With poor scoping, managing budget goes out of hands and sometimes becomes uncontrollable. Few of the issue while scoping are
a)Ambiguity in scope leads to confusion and unnecessary work.
b)Incomplete or unclear data
c)Scope creep - uncontrolled changes in scope
d)Uncollaborative scope
e)Scope validation with stake holders

Issues are more than just common problems and will impede the progress of any project. The implications of such issues can be far reaching both in terms of cost and time. For example, cost overrun which is defined as excess of actual cost over budget is a very common occurrence in technology due to inaccurate scoping of a project. An industry study shows that as high as 40+ % of the technology budgets are overrun because of underscoping.
Underscoping is mainly because of imperfect forecasting, inadequate data, inadequate market awareness and insufficient knowledge about product life cycle.
Once the project starts off, changes are bound to happen but the reasons behind these changes need to be properly analyzed. Reasons for changes which lead to system/process improvement could be termed as good reasons or good change. One should be flexible in his approach and should also account for those reasons which may have been overlooked by the business management earlier. Change is inevitable and therefore an efficient manager should be flexible and resourceful in his project estimations and implementation.

Some of the change drivers could be
a) business needs have changed,
b) new legislations & regulations,
c) technology exploitation,
d) effect of other projects/initiatives and last but not the least
e) organizational structure changes

Business users / clients typically cannot identify every requirement and feature that will be required for the final solution and delivery. Even if they did, the business changes over time, and therefore the requirements of the solution may change as well.
Explicitly clarify the potential dangers and cost impact of subsequent changes but at the same time keep encouraging the changes which may have organizational benefit (this is what I termed as good change). It is wise to surface potential changes as early as possible and accordingly align the scope and manage budget. But now we arrive at a critical question How does one incorporated these changes in a project which is already underway? The answer to this is what the industry calls as scope change management. If the project manager doesn't invoke scope-change management, the project's success could be in serious danger.

Scope change management entails all changes in the scope going through a change management process for better understanding of all stake holders. A fine balance between flexibility and control needs to be struck by the project manager.

There are certain issues with scope change management too.
Many of the times we are more focused toward bigger changes and ignore smaller changes. Large number of such smaller changes eats up your budget and time.
If the process is too onerous, either valuable changes will be lost or the participants will ignore the rules - leading to uncontrolled scope and if the change management process is too easy, then many changes may be applied with insufficient thought given to their merits and consequences leading to cost and time overruns. All changes should not be considered unless approved appropriately.

Personally I as a technology Head prefer Granular Scoping, an industry concept which means scoping is done on individual initiative basis. This allows me to manage budget in steps and inherently provides me with greater control and transparency. The ultimate advantage is greater visibility over execution which proves to be invaluable for me as I estimate future initiatives with similar tasks.

Scope definition is just the first step toward successful planning ones budget. After preparing the scope, one must monitor the same and ensure it doesnt drain the budget. Budget needs to be tightly coupled with the activities and tasks to be performed and any deviations must be recorded and addressed.
The purpose of defining scope is to clearly describe and gain agreement on the logical boundaries of the project. Scope statements are used to define what is within the boundaries of the project and what is outside those boundaries. The more aspects of scope a project manager can identify, the better off the budget will be. Following information can be useful in defining scope
a)Type of deliverable in scope, out of scope,
b)major life cycle process like, designing, testing, training,
c)major functionalities like support, reporting, data management etc.

Technology Managers should as a thumb rule keep the corporate vision & mission of the organization in mind while preparing its technology road map which will ultimately influence the overall budget of any project. A technology project cannot operate in isolation as it may influence the very core of an organizations systems and processes.

The author is Head-IT, (Exchange Business), Reliance Capital

ethodologies or techniques for cost estimation and cost management have evolved over a period of time and will continue to do so. At the outset would like to clarify that there is no specific formula or technique when it comes to scoping and managing budgets for projects. One can use a combination of various techniques or evolve some of his own depending on the industry for which the project is being implemented and the nature of the project itself. A technology company would like to focus more on its R&D and training functions while scoping budget whereas a non technology company may focus on mission critical application/infrastructure development and support services.

With poor scoping, managing budget goes out of hands and sometimes becomes uncontrollable.

Few of the issue while scoping are

Ambiguity in scope leads to confusion and unnecessary work.
Incomplete or unclear data
Scope creep - uncontrolled changes in scope
Uncollaborative scope
Scope validation with stake holders

Underscoping is mainly because of imperfect forecasting, inadequate data, inadequate market awareness and insufficient knowledge about product life cycle.

Once the project starts off, changes are bound to happen but the reasons behind these changes need to be properly analyzed. Reasons for changes which lead to system/process improvement could be termed as good reasons or good change. One should be flexible in his approach and should also account for those reasons which may have been overlooked by the business management earlier. Change is inevitable and therefore an efficient manager should be flexible and resourceful in his project estimations and implementation.

Some of the change drivers could be

a) business needs have changed,

b) new legislations & regulations,

c) technology exploitation,

d) effect of other projects/initiatives and last but not the least

e) organizational structure changes

Explicitly clarify the potential dangers and cost impact of subsequent changes but at the same time keep encouraging the changes which may have organizational benefit (this is what I termed as good change). It is wise to surface potential changes as early as possible and accordingly align the scope and manage budget. But now we arrive at a critical question How does one incorporated these changes in a project which is already underway? The answer to this is what the industry calls as scope change management. If the project manager doesn't invoke scope-change management, the project's success could be in serious danger.

There are certain issues with scope change management too.

Many of the times we are more focused toward bigger changes and ignore smaller changes. Large number of such smaller changes eats up your budget and time.

If the process is too onerous, either valuable changes will be lost or the participants will ignore the rules - leading to uncontrolled scope and if the change management process is too easy, then many changes may be applied with insufficient thought given to their merits and consequences leading to cost and time overruns. All changes should not be considered unless approved appropriately.

The purpose of defining scope is to clearly describe and gain agreement on the logical boundaries of the project. Scope statements are used to define what is within the boundaries of the project and what is outside those boundaries. The more aspects of scope a project manager can identify, the better off the budget will be. Following information can be useful in defining scope