What is a ‘controlled project environment’, how does PRINCE2 provide it, and why do we need it?

Businesses around the world must navigate rapidly changing environments that are volatile, uncertain, complex, and ambiguous (VUCA). Management guru Peter Drucker talks about “turbulent times”, whilst Nassim Taleb coined the term “black swans” for improbable, unpredictable events.

In such conditions, uncontrolled projects are a recipe for failure. Senior managers often say they don’t have enough control over their projects, lack sufficient timely, reliable information, and cannot make pre-emptive course corrections. Instead, they must try to put out the fires retrospectively when it may be too difficult or expensive to recover the project.

Uncontrolled projects experience frequent, unforeseen problems due to poor risk management, delays, and cost escalations and do not deliver anticipated benefits. Even today many projects suffer from a lack of control, leading to wasted money and decreasing team members’ motivation and morale for subsequent projects. This can feed a continuing cycle of underperformance and inefficiency. Fortunately, PRINCE2 offers advice for establishing strong project governance and the appropriate level of control.

PRINCE2 project controls

 The PRINCE2 method establishes controls at each management level – the board, the project manager, and the delivery team(s).

The first control element is “management by stages”. Each project is divided into several stages. At the end of each stage, the project board reviews progress and achievements, whilst ensuring the project is still justified and in line with the overall strategy. The project board has three options: to continue, to re-plan, or to cancel the project entirely.

These end of stage reviews, sometimes called “phase gates”, are important for ensuring senior management control and visibility over the project in the context of regularly changing business environment and competing priorities.

The second element of a project board’s control over a project lies in regular reporting during each stage. The project manager produces reports at pre-agreed intervals, ensuring the board has up-to-date and accurate information on activities within the stage, progress to date and any issues or risks. These highlight reports also contain forecasts by the project manager for how they expect the rest of the stage to go.

A third PRINCE2 control mechanism is its principle of managing by exception. Tolerances are defined at the outset for all aspects of the project, including:

• Time
• Cost
• Quality
• Scope
• Benefits
• Risk.

These six tolerances set out the permissible deviations above and below the plan’s target. They are set out by the project board and give the project manager freedom to make decisions without referring every decision up to the board, unless they forecast that a tolerance will be exceeded. In this case, the project manager should raise an exception report. Tolerances also cascade downwards – the project board sets them for the project manager, who sets them for the delivery team.

These three elements, when used together, give the project board an appropriate level of control. Overall control is ensured by making decisions at the end of each stage on whether the project should be continued, with the possibility of adjustments and changes in strategy. During the stage, the project board receives highlight reports to keep them updated on progress. If something happens during a stage that causes one or more tolerances to be exceeded, the project board will know immediately and will be able to take corrective action.

A flexible approach

Project controls should be designed to best suit the needs of the participants and stakeholders. The frequency and level of detail of reporting is flexible, agreed between the board and the project manager during project initiation. While information is vital, documents are often unnecessary, and software may be used to automate some reporting. A simple email or verbal conversation may be sufficient in many cases. Boards can take a hands-off approach yet remain confident that their projects are on track through management by exception.

PRINCE2 is not prescriptive about how to apply project controls. Organizations can flex the number of stages, and their duration, based on the scale of work and risks involved. A very simple project may only require one delivery stage. When considering how best to control your project, ask yourself the following questions:

• How long is the project likely to take?
• How often should the project board convene to review progress (stage length)?
• What level of detail in highlight reports does the project board need?
• How frequent should reports be?
• What reporting does the project manager need from their team(s)?
• How much tolerance should be allowed for time, cost, quality, scope, risk, and benefits?

Setting out the answers to these questions for everyone involved in the project will increase its chances of delivering the expected results.