1 Introduction
PRINCE2 (PRojects IN Controlled Environments) is one of the most widely used methods for managing projects in the world. It is a structured project management method based on experience drawn from thousands of projects and from the contributions of countless project sponsors, project managers, project teams, academics, trainers and consultants.
PRINCE2 has been designed to be generic so that it can be applied to any project, regardless of project environment, scale, type, organization, geography or culture. It achieves this by:
• separating the management of project work from the specialist contributions, such as design or construction. The specialist aspects of any type of project are easily integrated with the PRINCE2 method and, used alongside PRINCE2, provide a secure overall framework for the project work.
• focusing on describing what needs to be done, rather than prescribing how everything is done.
The value of PRINCE2 is that it can be used on any project because the method is designed to be tailored to meet the specific needs of the organization and scaled to the size and complexity of individual projects.
The purpose of tailoring PRINCE2 is to ensure that:
• the project management method used is appropriate to the project (e.g. aligning the method with the business processes that may govern and support the project, such as human resources, finance and procurement)
• project controls are appropriate to the project’s scale, complexity, importance, team capability and risk (e.g. the frequency and formality of reports and reviews).
Because PRINCE2 is based on proven principles, organizations adopting the method as a standard can substantially improve their organizational capability and maturity across multiple areas of business activity, such as business change, construction, IT, mergers and acquisitions, research and product development.
1.2 The importance of projects
A key challenge for organizations in today’s world is to succeed in balancing two parallel, competing imperatives. These are to:
• maintain current business operations (i.e. profitability, service quality, customer relationships, brand loyalty, productivity, market confidence, etc.). This is what we would term ‘business as usual’
• transform business operations, or introduce new products, in order to survive and compete in the future (i.e. looking forward and deciding how business change can be introduced to best effect for the organization).
As the pace of change accelerates (in technology, business, society, regulation, etc.), and the penalties of failing to adapt to change become more evident, the focus of management attention inevitably moves to achieve a balance between business as usual and business change.
Projects are the means by which we introduce change and, although many of the skills required are the same, there are some crucial differences between managing business as usual and managing project work.
1.3 What makes projects different?
A project is a temporary organization that is created for the purpose of delivering one or more business products according to an agreed business case.
There are a number of characteristics of project work that distinguish it from business as usual:
• Change Projects are the means by which we introduce change.
• Temporary As already stated, projects are temporary in nature. When the desired change has been implemented, business as usual resumes (in its new form) and the need for the project is removed. Projects should have a defined start and a defined end.
• Cross-functional Projects involve a team of people with different skills working together (on a temporary basis) to introduce a change that will impact others outside the team. Projects often cross the normal functional divisions within an organization and sometimes span entirely different organizations. This frequently causes stresses and strains both within organizations and between them (for example, between customers and suppliers). Each has a different perspective and motivation for getting involved in the change.
• Unique Every project is unique. An organization may undertake many similar projects and establish a familiar, proven pattern of project activity, but each project will be unique in some way: a different team, a different customer, a different location. All these factors combine to make every project unique.
• Uncertainty Clearly, the characteristics already listed will introduce threats and opportunities over and above those we typically encounter in the course of business as usual. Projects are more risky.
1.4 Why have a project management method?
Project management is the planning, delegating, monitoring and control of all aspects of the project, and the motivation of those involved, to achieve the project objectives within the expected performance targets for time, cost, quality, scope, benefits and risk.
For example, a new house is completed by creating drawings, foundations, floors, walls, windows, a roof, plumbing, wiring and connected services. None of this is project management, so why do we need project management at all? The purpose of project management is to keep control over the specialist work required to create the project’s products or, to continue with the house analogy, to make sure the roofing contractor does not arrive before the walls are built.
Additionally, given that projects are the means by which we introduce a change, and that project work entails a higher degree of risk than many other business activities, it follows that implementing a secure, consistent, well-proven approach to project management is a valuable business investment.
Increased business performance through the effective use of project management methods across organizations has been demonstrated through the use of maturity assessments. These measure an organization’s capability to manage projects, programmes and/or portfolios. Maturity assessments can be undertaken using the AXELOS Portfolio, Programme and Project Management Maturity Model (P3M3®).
1.5 The role of senior management
The project management structure has four levels, three of which represent the project management team and a fourth that sits outside the project. Figure 1.1 illustrates these four levels of management.
PRINCE2 enables effective governance by defining distinct responsibilities for each of these levels.
The project board represents the most senior level of management within the PRINCE2 project management team. Project board members are accountable for the work they direct, but the extent of their business responsibilities is usually much wider than the project. They can rarely afford to get involved in the detail of every project for which they are responsible. This means that the effectiveness with which they delegate responsibility for the different aspects of the project is crucial.
In PRINCE2, the project board delegates the management of the project to the project manager in a series of stages, each based on an approved stage plan. Provided that the project manager can deliver the stage within the tolerances defined in the plan, there is no necessity for the project board members to maintain close contact with the work. Should the project manager forecast that the tolerances will be exceeded, however, the project board will be alerted through an exception report. The project board will then review and approve the options for addressing the exception.
The stage boundaries represent major control milestones, enabling the project board to review whether the project manager has delivered the previous stage properly and to approve a plan for the succeeding stage. The PRINCE2 processes provide other checks and balances within the stage but, essentially, this is how senior managers on the project board are able to ‘manage by exception’.
To fully understand the project board’s responsibilities, it is important to be aware of the underlying duties and the behaviours that are expected of the board members (see Figure 1.2). Why is this important? Because lack of executive/senior management support is frequently cited as one of the top causes of project failure.
Senior managers acting as project board members must provide leadership and direction to ensure that their projects remain aligned with the organization’s strategic aims. The project board is seen as a guiding coalition and, together with the project manager, they must make proactive choices and decisions on how PRINCE2 will be tailored for the project. Effective tailoring requires information (not necessarily documents) and good decisions (not necessarily meetings).
As with company boards, if the composition of the project board is deficient in the required skills and behaviours, then the project is likely to struggle (for example, if the project board is affected by personality clashes and in-fighting).
Key message
Appointing the right project board is probably the single most important factor in achieving a successful project.
1.6 What does a project manager do?
In order to achieve control over anything, there must be a plan. For example, when building a house, it is the project manager who is responsible for planning the sequence of activities, working out how many bricklayers will be required, and so on.
It may be possible to build the house yourself, but being a manager implies that you will delegate some or all of the work to others. The ability to delegate is important in any form of management but particularly so in project management, because of the cross-functionality and the risks involved.
With the delegated work under way, the aim is that it should ‘go according to plan’, but we cannot rely on this always being the case. It is the project manager’s responsibility to monitor how well the work in progress matches the plan’s objectives (see Figure 1.3).
Of course, if the work does not go according to plan, the project manager has to do something about it, i.e. exert control. Even if the work is going well, the project manager may identify an opportunity to speed it up or reduce costs.
Key message
One aim of PRINCE2 is to make the right information available at the right time for the right people to make the right decisions about the project. Those decisions include whether to take corrective action or implement measures to improve performance.
1.7 What is it we wish to control?
There are six variables involved in any project, and therefore six aspects of project performance to be managed. These are:
• Costs The project has to be affordable and, though we may start out with a particular budget in mind, there will be many factors which can lead to overspending and, perhaps, some opportunities to cut costs.
• Timescales Closely linked to this, and probably one of the questions project managers are most frequently asked, is: ‘When will it be finished?’
• Quality Finishing on time and within budget is not much consolation if the result of the project does not work. In PRINCE2 terms, the project’s product must be fit for purpose.
• Scope Exactly what will the project deliver? Without knowing it, the various parties involved in a project can very often be talking at cross-purposes about this. The customer may assume that, for instance, a fitted kitchen and/or bathroom is included in the price of the house, whereas the supplier views these as ‘extras’. On large-scale projects, scope definition is much more subtle and complex. There must be agreement on the project’s scope and the project manager needs to have a sufficient understanding of what is and what is not within the scope. The project manager should take care not to deliver beyond the scope as this is a common source of delays, overspends and uncontrolled change (‘scope creep’).
• Benefits Perhaps most often overlooked is the question: Why are we doing this? It is not enough to build the house successfully on time, within budget and to quality specifications if, in the end, we cannot sell or rent it at a profit or live in it happily. The project manager has to have a clear understanding of the purpose of the project as an investment and make sure that what the project delivers is consistent with achieving the desired return.
• Risk All projects entail risks but exactly how much risk are we prepared to accept? Should we build the house near the site of a disused mine, which may be prone to subsidence? If we decide to go ahead, is there something we can do about the risk? Maybe insure against it, enhance (underpin) the house foundations or simply monitor with ongoing surveys?
PRINCE2 addresses the planning, delegation, monitoring and control of all these six aspects of project performance.
The PRINCE2 method addresses project management with four integrated elements of principles, themes, processes and the project environment (Figure 1.4):
• PRINCE2 principles These are the guiding obligations and good practices which determine whether the project is genuinely being managed using PRINCE2. There are seven principles and unless all of them are applied, it is not a PRINCE2 project.
PRINCE2 is a flexible method and one of the principles is that it should be tailored to the type and size of project.
• PRINCE2 themes These are aspects of project management that must be addressed continually and in parallel throughout the project. The seven themes explain the specific treatment required by PRINCE2 for various project management disciplines and why they are necessary.
• PRINCE2 processes These describe a progression through the project lifecycle, from getting started to project closure. Each process provides checklists of recommended activities, products and related responsibilities.
• The project environment Organizations often want a consistent approach to managing projects and will tailor PRINCE2 to create their own project management method. This method is then embedded into the organization’s way of working.
Key message
For a project to be following PRINCE2, as a minimum it must be possible to demonstrate that the project:
• is applying PRINCE2’s principles
• is meeting the minimum requirements set out in the PRINCE2 themes
• has project processes that satisfy the purpose and objectives of the PRINCE2 processes
• is either using PRINCE2’s recommended techniques or using alternative, equivalent techniques.
PRINCE2 assumes that there will be a customer who will specify the desired result and a supplier who will provide the resources and skills to deliver that result. PRINCE2 refers to:
• the organization that commissions a project as ‘corporate, programme management or the customer’. This organization is responsible for providing the project’s mandate, governing the project, and for realizing any benefits that the project might deliver or enable.
• a supplier as the person, group or groups responsible for the supply of the project’s specialist products.
Projects can exist within many contexts; they may be stand-alone (with their own business case and justification) or they may be part of a programme or wider portfolio as illustrated by Figure 1.5. In addition, projects may be wholly managed within the commissioning organization or be part of a commercial relationship.
1.10 PRINCE2 and delivery approaches
The project approach is the way in which the work of the project is to be delivered. It may rely on one or more delivery approaches, which are the specialist approaches used by work packages to create the products. Typical approaches include:
• a waterfall approach where each of the delivery steps to create the products takes place in sequence (e.g. in a construction project where requirements gathering and design take place before building begins) and the product is made available during or at the end of the project
• an agile approach where requirements gathering, design, delivery and testing all take place iteratively throughout the project.