Project Management in Practice

Beyond the alphabet soup of PRINCE2, MSP, MoP, PMBOK, ITIL, Agile

Tag Archives: Expectation

How much do you think it’ll cost?


How many times have you heard that? “Oh, I’m not going to hold you to this, but just a ball park figure?” Sounds even more familiar? And now the clincher, “You know our systems, surely you have an idea.” Trying to answer this sort of question from the client too soon causes enormous headaches in projects.

Cost is something that is never a black and white answer. Cost of the same project will differ markedly depending on what technology and process choices you make, what functional and non-functional standards you sign up to, how much of the subject matter expertise your clients are willing to provide to the project team and even some mundane things like what time of year you want the project to be implemented. A cost estimate therefore must accompany the scope, assumptions and conditions that it is based upon.

Many times you will have technical staff working with clients that will be put on the spot by these kinds of questions. They will have the best interest of the client and their own organisations by trying to answer the question. Unfortunately, this sets the expectation of cost from the client’s point of view. Some of the technical staff may be very skilled in their own responsibilities, but may lack the full project life cycle knowledge. Therefore the risk of underestimating or completely missing required activities is high.

In all likelihood the client has not had the time to frame what it is that they want. If they have a figure to go by, they will form the scope in due course and wrap that around the figure. This happens inevitably, even if there is significant gap between any cost figures you may have provided and when they had the time to form scope. There may not be any malice involved at all. This is how we as human beings operate – piece together bits of information to build the picture.

If you try to reset the expectations of the client at this point, it is tricky. There is always a chance to give the impression that now that they are interested, you are trying to squeeze them. Chance to set the correct expectation has long gone. By trying to be helpful, you have a situation on your hands.

You may come up with the same situation with your sales staff as well. They may be the ones that are responsible for communicating costs to your customers. Your challenges will be equally as pronounced if they miss the caveats. There is a fine balance between the cost appetite a customer has and the benefits they wish to gain from a project. In the quest of landing a sale you should not set a project up for failure. If the project is a keenly desired one for which your organisation is happy to make a loss on, then your management must be in a position to knowingly take the risk on. This should not come as a surprise during the project.

How can you go about ensuring the correct expectations at the outset? The first thing I make a policy on is to never provide estimates on the spot. I have only seen bad outcomes in trying to do that. Have standard estimating methodologies that you follow. The methodology may be different depending on the type of project you are managing – i.e. software development, construction, policy development etc. But there must be a methodology. Document the risks, assumptions and constraints that accompany the particular estimate. This way once the customer has had the time to think of the whole solution and the cost is different than the first one you provided, you can have an open and honest discussion on why that has transpired. This must extend to the whole team. Train them to tell the client that they will take the information back and follow up with an estimate.

First impressions do last long with customers – especially when costs and timelines are involved.

Expectation is reality


We hear about perception being reality in service management space. When you are dealing with projects, expectation become the be all and and end all. How your project is perceived is proportional to the level of expectation about the outcomes that you have built.

Expectation Management

In the project paradigm, cost is the easiest attribute to communicate. If the expectation in the business is that a particular deliverable will cost 100 hours and your team delivers it in 105, it will receive somewhat begrudging acceptance. 110 will get people thinking whether it was worth the effort. Conversely, if you had built the expectation that the cost would be 120 hours, then even if you spen 115, the business will consider it a great delivery.

This may sound non-sensical, but it is the truth. How does one go about building this expectation? Do you just inflate estimates to achieve this? You cannot necessarily do that. If you are a monopoly supplier like inhouse team, then you may be able to get away with consistently over estimating the effort. In a services business, there is competition for this work and you do not want to turn away business by being too conservative.

At the same time, you do not want to be forever undercutting your competition to get work. In that scenario, you are always left with the scraps to fight over. You are in it to make a profit. If my cost is going to be more than my fees, then it makes no sense to take the work on. This can be a difficult juggling act unless your sales and services teams work closely.

Expectation is not only some thing that you as a Project Manager end up managing from the customer side. What is a good project from a deliverables point of view, may not be a great financial success. If you are running a project on a time and materials basis and are accomplishing things much quicker than anticipated, you are in fact depriving yourself of income. How do you avoid that? I recommend undertaking additional testing and documentation to ensure higher quality.

If the same project is being delivered on a fixed fee basis then the drivers are different. Your motivation now is to ensure the minimum effort you can spend to have the outputs delivered. You can make good profit by being efficient. Yet, some customers will begrudge that. Your work may have saved the client 100 hours of pain and priced accordingly. But if you achieve that in 80, the client is upset with you being accused of taking them for a ride. Yet, the same customer conveniently forgets that you carried the risk on this and had the project taken 120 hours, you would have been forking out services for no fee. We want to have our cake, and eat it too.

Then here are always those projects, where the customers have a want that is far out of proportion of their cost appetite. Be wary of this. It is a very common occurrence. It may sound like a good idea at the inception of the project to sharpen your estimates to land the work. This can only lead to bad work. You are setting the project team up to having to cut corners. If you really have to discount, do so on the basis of rates. The work is what it is. There is no up-side to compromise on quality.

What makes things difficult is that there is no right or wrong answer. It totally depends on the environment.

Image Credit: pretensesoup.wordpress.com

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